Coretrack is planning to wind down its Globe Drill business after disclosing a legal dispute over its license agreement and poor performance of its GT3000 drill rig.
The company said today that Strange Investments has terminated the IP license agreement (signed in January 2010), which permitted the manufacture and use of the GT3000.
Coretrack has said that it will commence legal action immediately against Strange Investments for loss of earnings and damages.
Strange Investments has alleged Coretrack breached the IP license agreement by fitting improvements or accessories to the rig and promoted and used the GT3000 for its contract at Newcrest’s Telfer gold mine without licensor agreement.
Coretrack disputed the alleged breaches.
However it also confirmed that a review of the performance of the GT3000 drill rig, when deployed at Telfer, found that the rig did not meet its technical and functional specifications.
This followed an announcement last month that the Telfer drilling program had been terminated early.
Coretrack advised that the drill rig would require costly and time consuming modifications to meet the required level of output.
The termination of the licensing agreement means Coretrack would be unable to secure funding to address the drill rigs’ apparent limitations, required for Newcrest’s specifications.
Coretrack CEO Bernie Kelly said the company would look to move away from its Globe Drill business.
“We will now have to immediately downsize Globe Drill and commence the hiring out or selling of our drilling and workshop equipment,” he said.
Globe Drill currently has over $16 million worth of assets, including its GT3000 drill rig.
"Our employees and shareholders, who have invested millions of dollars, will no doubt be extremely disappointed by Mr Strange's actions at this important stage of Coretrack's development," Mr Kelly said.
"Rest assured that we will leave no stone unturned in our efforts to pursue Strange Investments for loss of earnings and damages, on behalf of our shareholders through the courts."
Coretrack’s share price fell 12 cents to close at 21 cents.
