IMX puts up $20M to give Chinese partner more time Tania...

IMX puts up $20M to give Chinese partner more time
Tania Winter
Wednesday, 1 February 2012

IRON ore miner IMX Resources and its Chinese joint venture partner and biggest shareholder seem to have buried the hatchet after IMX agreed to provide a $A20 million short-term loan, secured against its Cairn Hill magnetite asset in South Australia, to the JV.

It also is close to finalising long-term sales deals at higher prices than its current life-of mine contract with other parties for Cairn Hill magnetite.

However, this remains subject to process testwork by the potential customers.

The loan facility was provided after Taifeng Yuangchuang International Development Co baulked at paying its share of costs at Cairn Hill last month.

Taifeng has also failed to complete a review, which was due yesterday, of the operational changes IMX has proposed at the Cairn Hill site, which Taifeng is blaming for the dispute.

The loan will provide the necessary funding for work to continue at Cairn Hill while Taifeng completes its review.

Cairn Hill is located 55km southeast of Coober Pedy and is 51%-owned by IMX with Taifeng holding the balance.

Details of the escalating tensions between IMX and its Chinese partner were revealed last month when IMX released a statement to the Australian Securities Exchange in which Taifeng had asked for time to “consider the impact” of recent studies completed at the property before making more payments.

These included a management review of the operation, revised work plan and an independent external review of the mine, commissioned by incoming IMX managing director Neil Meadows last year.

It is not the first time the two parties have butted heads.

In December, Taifeng refused to meet $4.1 million in obligations but changed its mind only a week later.

It followed this up weeks later when it refused to accept ore it was contracted to take, blaming plant bottlenecks at the time for its decision.

Since then, IMX has been in negotiations for long-term contracts with other parties to take up the gap and it is this ore that is currently the subject of testwork.

The timing on just how long this would take is unclear.

At the end of the latest quarter the seventeenth shipment of ore was made from Cairn Hill bringing total volumes since exports started in December 2010 to around 1.26Mt.

In the latest three-month period a total of 372,077t of ore was shipped compared to 453,995t in the September quarter, bringing year to date volumes to 826,072t.

Stockpiles at the end of December at the Port of Adelaide stood at 88,466t and were valued at $8.1 million.