report from the age and 2009 on legal issues

"GR finally reveals hit

GR ENGINEERING Services finally revealed yesterday afternoon that it has been hit with a $25 million legal claim hanging over its head from work it did on Allied Gold Mining's Solomon Islands mine - and the result will not be known until November.

Its shares fell more than 10 per cent to 93¢ on the news, dropping the company's market worth below $140 million, compared with the $345 million peak last July.

As Insider pointed out yesterday, GR Engineering had given no previous indication of any sizeable claim against it. The claim over its work on Allied's Gold Ridge mine seems to be claiming that the GR-designed and built plant and gold recovery circuit were inefficient.

It did, though, only land on May 18 (just two days after GR Engineering issued a profit warning), but was only admitted by the arbitrator of the case yesterday - hence the announcement.

It was a counterclaim to GR Engineering's own suit against the mine over $4.5 million of unpaid work. GR Engineering tried to argue yesterday that the reason it had said nothing specific before was because the legal action was a ''confidential'' matter, and that it had made ''general references'' to claims, and that a $1.5 million doubtful debt provision in last year's results related to this.

Insider thinks the claims do not wash, and that in the context of GR Engineering's size, even the initial $4.5 million claim was a material matter. The market clearly agrees.

Read more: http://www.theage.com.au/business/divorce-settlement-causes-pain-20120605-1zu9e.html#ixzz1x0LieoXS"

Interesting to note that ALD also took action in 2009 as set out below from "MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 2009" as below:

"Commencement of legal action
In December 2009, a controlled entity of Allied Gold Limited commenced legal action against Intermet Engineers
(Pty) Ltd (“Intermet”) and a director of Intermet in respect of breaches of contract entered into between the
controlled entity and Intermet whereby Intermet were contracted to design, procure and manage the construction of
gold processing and related facilities for the Simberi Oxide Gold Project. Under the legal action, the controlled
entity is claiming damages of not less than $12 million.
Interment have advised that they will defend the claim and have indicated that they will make a counter claim for an
amount of $1.2 million for outstanding monies due from the controlled entity under the contract. This amount has
been fully accrued as a liability by the controlled entity pending the outcome of the litigation"

It seems that ALD are prone to legal issues over plant construction. Maybe we should ask for more detail at the AGM on 20/6