PERTH (miningweekly.com) – Junior Alara Resources has encountered some difficulty with its joint venture (JV) partner in the Khnaiguiyah zinc/copper project, in Saudi Arabia, reporting on Thursday that United Arabian Mining Company (Manajem) had filed a financial claim against the company.

In March, Alara announced that it had entered into an agreement to acquire an additional 10% interest in the project to take its stake to 60%. However, Alara said on Thursday that the implementation of the new JV has reached an impasse.

The Australian junior said that while it had maintained an open stance and approach with Manajem to advance the new JV agreement and the project, any attempt to work with the JV partner had proved "impossible".

Manajem has now also filed a financial claim against Alara before the Board of Grievance in Riyadh.

The company has not been provided with a copy of Manajem’s claim, with the company awaiting the lodgment of an original legalised power of attorney appointing Alara’s Saudi lawyers to act on the company’s behalf.

Alara has expressed its disappointment with Manajem’s actions and its lack of compliance with its legal obligations under the JV agreement, with the company saying it has acted in good faith to advance the JV relationship and the project, including making advance vendor payments to Manajem.

The ASX-listed junior further said that it would defend itself against its JV partner's claims and was prepared to present a series of specific counter-claims against the project partner or individual shareholders and directors.

Alara has been involved in the Khnaiguiyah JV since 2010. A 2013 definitive feasibility study found that the project, which would require a capital spend of some $257-million, could deliver 1.4-million tonnes of zinc concentrate and 210 000 t of copper concentrate over its 13-year mine life.