PERTH (miningweekly.com) – Nickel miner Mincor Resources on Thursday withdrew its production guidance released earlier this month, after failing to reach an agreement with mining major BHP to amend an existing offtake agreement.

The company told shareholders that Mincor had been combining ores from its Northern and Southern operations to deliver a blended product to BHP’s Kambalda nickel concentrator, with the ore subject to product specification requirements, including nickel-to-arsenic ratio.

During the ramp-up period, Mincor has delivered off-specification product.

The company said on Thursday that while BHP had been accepting off-specification product, both parties had been working together to explore and trial methods to better manage off-specification product going forward. This work remained ongoing.

Mincor recently initiated discussions with BHP regarding potential amendments to the offtake terms to provide ongoing flexibility with respect to product specification requirements and provide Mincor certainty as to its ability to deliver 100% of mined ore to BHP, however, BHP has informed the company that it would not agree to amend the offtake agreement specifications.

Mincor told its shareholders that given the lack of certainty regarding the future acceptance of any off-specification product, and the incomplete status of potential solutions, the company had been forced to withdraw its guidance.

The company will continue to deliver on-specification ore to BHP and is conducting work to improve orebody knowledge to enable the optimsation of its forward mine plan, and will stockpile any ore that BHP indicates will not be accepted, allowing for blending with other Mincor ore sources at a later date.

Mincor recently received an on-market takeover from shareholder Wyloo Metals, which is offering A$1.40 in cash for every Mincor share not already owned by the company, valuing the takeover target at A$760-million on a fully diluted basis.

Wyloo already holds a 19.9% interest in Mincor.