Even though Aquila sold its 50% interest in Isaac Plains to Sumitomo Corporation in July 2012, it retained its 50% economic interest in the insurance claim for property damage and business interruption due to the flooding event that occurred at Isaac Plains in December 2010.

The insurance claim for property damage and business interruption has been lodged by legal advisor Herbert Smith Freehills on behalf of Aquila’s wholly owned subsidiary, IP Coal and Vale Australia, and will be assessed by the underwriters, the company said.

It was nearly 18 months after the flooding event before the effects were fully rectified and coal production returned to full capacity at Isaac Plains.

“As part of the claim process, Aquila worked with Vale to assemble a team of professional advisors including Herbert Smith Freehills, Marsh - Forensic Accounting and Claims Services, and other relevant consultants, which have undertaken an extensive review of the damages and subsequent lost production associated with the flooding event over the 12-month indemnity period to December 2011,” Aquila said.

“Aquila continues to work with Vale and the team of professional advisors to provide further information at the request of the underwriters and awaits feedback on the outcome of the claim.”

Shares in Aquila plunged by more than 10% last month on the news that Japanese giant Sumitomo would not proceed with a $108 million Queensland coal exploration joint venture.

It is a serious setback for Aquila, which sold its half share of the Isaac Plains to Sumitomo in July for $430 million and was hoping to secure extra funds for its iron operations in Western Australia through the sale of the exploration stake.

Sumitomo was able to make the Isaac Plains acquisition after Aquila’s former JV project partner, Vale, did not take up its pre-emptive right on the stake.

Aquila penned a memorandum of understanding with Sumitomo subsidiary, Sumisho Coal Australia, last April for the potential formation of a JV encompassing Aquila’s portfolio of Queensland-based coal exploration permits excluding the Washpool hard coking coal project and Talwood coal project.

The MoU provided for the potential acquisition by Sumitomo of a 20-50% interest in the tenements, based on independently determined valuations.