Hancock Prospecting's lawyer, Noel Hutley SC, says no mining tenements were ever issued from the reserves DFD Rhodes's multi-million dollar claim is based on.
"Which we submit is fatal to the Rhodes' royalty claim," he told a complex legal case over mining reserves and tenements in Western Australia's northwest on Monday.
Mr Hutley also said the Rhodes' rights of occupancy held over a series of temporary reserves expired in 1969 and '70.
"No ore was ever produced by anyone from any of the rights of occupation or before the cancellation of those temporary reserves," he said. as he attacked the legal case put forward in the Supreme Court by the family company of deceased prospector Don Rhodes.
"The temporary reserves themselves were cancelled in 1989."
DFD Rhodes claims it's entitled to 1.25 per cent royalty share of the production from Hope Downs, a lucrative iron ore project that's half owned by Rio Tinto.
It says a deal was struck in the 1960s with mining pioneers Lang Hancock and his business partner Peter Wright, in which the rights to ore-rich reserves in the Pilbara were handed over.
Mr Hutley said the case would turn on the construction of a 1969 agreement and its references to those temporary reserves, and what the court accepts the definition of a reserve was.
He pointed to clause five in the agreement, which he said stipulated a royalty was only payable if ore was produced from the reserves by the men's company, Hanwright.
"The Rhodes parties cannot get over that limitation. Their contractual royalty claim fails," he said as he led Justice Jennifer Smith through the history of the reserves.
The high-stakes legal stoush also involves Mr Wright's heirs, who are fighting through their company, Wright Prospecting, for a series of Hope Downs tenements and royalties.
The massive mining complex near Newman is one of Australia's largest and most successful iron ore projects, comprising four open-pit mines.
Mrs Rinehart, the executive chair of Hancock Prospecting, helped develop the mines after signing a deal in 2005 with Rio Tinto - which has a 50 per cent stake in the project - from mining tenements she inherited from her father, Mr Hancock.
Her two oldest children, John Hancock and Bianca Rinehart, are also represented at the hearing, where about two dozen lawyers are packing the Perth courtroom for the case that is expected to run until November.
The pair assert they are also entitled to a hefty share in the Pilbara operation, which they say defeats both Wright Prospecting and DFD Rhodes' claims.
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