Globe dispute stops work on Malawi BFS

Nick Evans
MiningNews.Net

GLOBE Metals and Mining says it is 'uncertain' when the company will be able to complete the bankable feasibility study on its Kanyika Niobium Project, after a dispute flared this week between Globe and its South African joint venture partner, Thuthuka Group.

The two companies signed a JV agreement in August last year that would have seen Thuthuka earn a 25% stake in the project by spending $US10.6 million (then $A11.76 million) on carrying out the metallurgy and process design, mining, social and environment, infrastructure, procurement, management, power plant study and design, as well as the transport and logistics study aspects of the BFS – effectively covering around 85% of the estimated cost of the BFS.

Globe managing director Mark Sumich would not be drawn on the exact nature of the dispute this morning, telling MiningNews.net only that it concerned the timing of the concentrate program, but it appears the dispute has been bubbling steadily behind the scenes since at least late last year.

Globe said it has also decided not to use Thuthuka to conduct the hydrometallurgical testwork at the project, which it said was outside the scope of the BFS. In its December quarterly activities report, revealed to the market in February, the company said it could not put an end date to the BFS due to substantive progress being 'a little slower than planned, especially in relation to some key metallurgical milestones'.

In a March investor update the company set an expected closing date of the end of the second quarter next year for the BFS, again citing delays with the metallurgical work for the slow progress. Sumich told MNn the company is continuing to work through the issues with Thuthuka.

He said that, while dispute resolution procedures were contained within the shareholder agreement between the two companies, he hoped matters would not come to that, with Globe still focused on resolving the issue through dialogue with the South African company.

Globe said in a statement this morning it does not believe Thuthuka has any right to suspend work on the BFS under the shareholder agreement between the two companies. The company had been eyeing a 20-year operation to start in 2012, producing 3000 tonnes per annum of niobium metal, principally in the form of ferro-niobium. Kanyika has resources of 55.3 million tonnes grading 3000 parts per million niobium.

Globe shares dropped sharply this morning on the news, with the company shedding 18.6% at one point to trade at a mid-morning low of 17.5c – though that drop was on only moderate volumes.