KMP, retained last April to mine the Jamieson property in Kentucky for NAG US, submitted its suit March 17 in the District Court for the Eastern District of Kentucky.

According to NAG US data, KMP mined about 2400 tons of coal during its time as Jamieson’s operator. After coal purchasers refused the last 1000t of mined coal, NAG US chose to discontinue the relationship.

“KMP felt that their quality of work was standard and that they unjustly enriched NAG US and that NAG US unfairly ended the joint venture relationship,” the producer said.

The former contractor is seeking between $US75,000 and $15 million in damages, a claim which it is “vigorously defending”, according to NAG official Charles Desjardins.

“Firstly, KMP has targeted the wrong party since NAG US was the entity which contracted with KMP, and not the Canadian-based NAG,” he said.

“Secondly, the misrepresented claims are unfounded in light of NAG US's openness and cooperative work during KMP's due diligence period. KMP's claims of a joint venture agreement with NAG US will be defeated by KMP's actions and KMP's request for a new independent contractor agreement.”

The producer intends to file several counter-claims should the suit not be summarily dismissed, citing KMP's negligent mining operations and its “tortious interference” with the company’s business relationships.

Since the federal court where the suit was filed has a limited jurisdiction, trial judge Van Tatenhove has requested a full response to whether or not its jurisdiction applies, NAG said. A ruling will be made on that by May 1.

Last December, NAG selected M3 Energy Resources as its operator partner for the North American Gem No. 2 and fully permitted No. 3 operations in Kentucky.

Just a few months before, the company filed state applications for exploration permits at five of its Kentucky properties: the Swan Pond (NAG No. 3), Gilliam Hill South and Arkle Hollow leases as well as the No. 2 and No. 3 mines.