Cobalt Blue has served a joint venture dilution notice over the Thackaringa cobalt project in New South Wales to Broken Hill Prospecting.
It claims to now hold 93.68 per cent interest of the joint venture, while Broken Hill has the remaining 6.32 per cent after the latter failed to submit payment for the project’s bankable feasibility study (BFS).
Thackaringa includes areas covered by two mining leases and two exploration licences around 23 kilometres from the Broken Hill township.
The BFS timetable was fast tracked into a period of only 12 months, a decision that Cobalt Blue said was “unanimously approved” by the joint venture management committee resolution.
According to Cobalt Blue, work programs and budgets were discussed and agreed on November 16.
A billing statement was issued, requiring payment from both JV partners within seven days. But Broken Hill claimed it was “flawed in a number of respects” and the meeting resolutions “invalid”.
Broken Hill believed the drilling campaign budget and program fell within the earning period – before Cobalt Blue’s election to withdraw from the stage three earning period, and is hence “at the sole cost of Cobalt Blue.”
Cobalt Blue’s dilution notice obliges Broken Hill to transfer 23.68 per cent of its stake to Cobalt Blue.
“As Broken Hill’s optional dilution notice means [it] has elected not to contribute to the current approved work programme and budget, Cobalt Blue believes Broken Hill’s joint venture interest will reduce to below 5 per cent once the drilling campaign expenditure for November and December 2018 has been incurred,” Cobalt Blue said in an ASX statement.
“Cobalt Blue expects this further recalculation to occur in late January 2019.”
The Thackaringa agreement sets out a 5 per cent minimum interest in the JV, below which a partner is deemed to have withdrawn from the arrangement.
Broken Hill will review Cobalt Blue’s dilution claims in the context of the dispute.