Australia-based Mayur Resources said on Wednesday that its partner in the Orokolo Bay vanadium, titanium and iron sands project, in Papua New Guinea, had pulled out, citing “sudden financial difficulties” related to the depressed state of the global nickel market.
Mayur and Indonesia-based PT SEA First Nickel Industry (PTSFNI) last month entered into a cooperation agreement, which would have secured the project’s construction and operational finances.
As part of the strategic partnership, PTSFNI would have also gained ownership exposure to Mayur’s Central Lime project and other company assets by agreeing to acquire a 9.9% stake in the parent company at 21.99c a share.
The price represented a 25% premium to the then 30-day volume-weighted average price. However, given that Mayur’s share price is currently trading at a 43% premium, the company agreed with PTSFNI that it no longer had the opportunity or right to acquire such proposed stake, stating that it would not be fair, or reasonable to Mayur shareholders to do so.
Should PTSFNI’s financial situation improve, the companies could re-engage on similar terms previously announced, in the absence of other development partners for Orokolo Bay.
“While the Orokolo Bay project is an attractive asset, and the Mayur board is disappointed at these developments, Mayur purposely embarked upon a structure to bring in a 51% majority controlling strategic investor, as the asset is viewed as a noncore asset.
“Mayur’s focus is to become a carbon-neutral downstream processing lime and cement manufacturing business,” it said.