Bathurst secretary Jason Hungerford said the company denied it was in default under the agreements, as asserted by L&M Coal Holdings, a position supported by legal advice.
``The original deals [between Bathurst and L&M] would have been struck when the coking coal price was very high and the scope for coking coal deposits in the Buller coalfield was strong,'' Mr Hungerford said in an ASX statement.
Before Bathurst received its coal permits in New Zealand, L&M held several coal permits on the West Coast, he said.
Bathurst spent more than $330million in permitting, consenting and developing its controversial West Coast coalmines, including the Denniston Plateau above Westport.
However, by the time Bathurst fought off two years of court challenges by environmental groups, over its consents, the global coking coal price had tanked and it could not viably mine export-grade coal.
The original agreements between the companies would have involved Bathurst's former managing director Hamish Bohannan, who resigned in March last year, and L&M's principal Geoff Loudon who, during the past year, had eased away from some corporate roles.
It was understood, but not confirmed, that L&M Coal Holdings was sold about a year ago to a Hong Kong-based company, and was no longer under the umbrella of the wider L&M Group, which still operates in New Zealand.
The dispute arose from a sale and purchase agreement, and later amendments, between respective entities then representing Bathurst and L&M Coal Holdings and a related royalty deed, and its subsequent amendments, going back to 2010.
Mr Hungerford said L&M Coal Holdings had asserted Bathurst was required to make a $US40million performance payment under the sale and purchase agreement.
``Bathurst will defend any legal action brought by L&M Coal Holdings,'' he said.
Mr Hungerford said ``Bathurst Resources' view, supported by its legal advisers, is that Bathurst has continued to make the relevant royalty payments under the deed, that there has been no breach of the deed and therefore there is no actionable breach or default of the sale and purchase agreement''.
Bathurst, which has recently delisted from the NZX to save cash, has maintained cash flows from the annual production of about 400,000 tonnes of thermal coal for domestic industrial use in the South Island.
In early November, Bathurst announced it was seeking to raise $31.9million, which would be its 65% share of a $46million joint venture with Talley's group, to buy three Solid Energy coalmines, including Stockton on the West Coast and two in the North Island, near the Huntly power station.
Bathurst had estimated its annual production could top 2million tonnes by 2018, if the venture went ahead. A month later, Bathurst rejected a joint venture funding proposal, without revealing the amount or the organisation's identity.
