JOHANNESBURG (miningweekly.com) – Junior Frontier Resources has terminated negotiations with GoldRidge Community Investment Limited (GCIL) to acquire 80% of the Gold Ridge project, on the Solomon Islands, the ASX-listed company reported on Monday.
Frontier claimed that GCIL had not negotiated in “good faith” or exclusively as required by the terms of a heads of agreement, which the parties signed in May. GCIL had allegedly conducted multiple negotiations with at least 11 other parties, including the Solomon Islands government through a memorandum of understanding for funding.
Frontier stated that it had conceded on each of the points as requested by GCIL, agreeing to a cash component totalling A$4.4-million over 24 months (in lieu of the deferred 5% Frontier shares), payment of a historic debt to the landowners of A$1.6-million over 12 months and full liability for the tailings storage facility. The proposed equity of 19.9% shares in Frontier remained part of the proposed consideration and a second board of director position was also offered to GCIL.
Frontier MD Peter McNeil said in statement issued to the ASX that Frontier had become aware that GCIL was negotiating with other potential investors during the exclusivity period. “GCIL then formally provided Frontier with an ultimatum to accept a joint venture (JV) based unrealistically on ownership of only the removable assets (chemicals and storage containers) on-site, but not the processing plant or resources, in violation of the spirit and intent of the heads of agreement,” he said.
The Australian company, which intended to recover costs from GCIL, further stated that it was committed to returning the Gold Ridge mine to production and managing the lack of storage volume in the tailings storage facility dam upon signing the JV with GCIL. However, Frontier said GCIL misled it regarding the permission to build a new spill way and believed that immediate action should be taken to decrease the level of water in the tailings storage facility to prevent the possibility of a dam wall breach.
Fellow Australian gold miner St Barbara in May sold the Gold Ridge project to GCIL for an undisclosed amount. Operations at the Gold Ridge mine were suspended in April last year, owing to torrential rainfall and ensuing flooding.