Australasian Resources Ltd (Australasian) has terminated its project agreement with China's 4th largest steelmaker, Shougang Corporation (Shougang), Australasian said on Thursday, adding that it has begun talks with other interested parties.
Australasian on Thursday announced that it failed to finalize negotiations with Shougang under the terms of the Susan Palmer Deposit Project Agreement (SPDPA), and the agreement has been terminated.
Under the original SPDPA signed in March 2007, Shougang had exclusive rights to deliver a Finance Offer to International Minerals Ltd, which would provide the necessary funding to implement the development of the Project.
The original deadline for the delivery of the Finance Offer was 20 September 2008; however the deadline was re-set to 31 March 2009. Shougang reset the deadline for the third time on a non-exclusive basis to 30 June 2009, which allows Australasian to seek other potential strategic partners.
Australasian's major shareholder Clive Palmer also failed to sell part of his shareholdings in the company with Shougang, according to the company.
It is disappointing not being able to conclude the arrangements with Shougang, said Australasian Managing Director Mr. Andrew Caruso.
Australasian is now free to retain 100% interest in International Minerals Ltd (a wholly owned subsidiary) and to optimize product mix to potentially gain greater economic value from the project for all shareholders, Caruso said.
Shougang took up placement shares offered by Australasian on March 21, 2007, raising the AU $56 mln needed for feasibility studies into the development of its Balmoral South iron ore project in Western Australia's Pilbara region.
Following an initial placement, the state-owned steelmaker held 12.8% of Australasian.
They have also agreed if Shougang decides to take part in the project at the conclusion of the studies it will fully finance the development costs, estimated at $2.1 billion, and will also guarantee the purchase of 100% of the iron ore produced, Australasian said.
Australasian holds the rights to mine one billion metric tons of magnetite iron oreat South Balmoral which is part of the Susan Palmer deposit in the Pilbara region.
Australasian will continue negotiations with Shougang (without the Agreement), together with other interested parties to develop the Project, the firm said in a statement.