Bauxite Resources, Yankuang dispute referred for mediation

The dispute between ASX-listed Bauxite Resources and its joint venture (JV) partner Yankuang Resources has been referred to a Perth-based barrister for mediation.

Bauxite Resources said on Friday that its representatives had met with Yankuang between June 9 and 18 to resolve the dispute over a budget and work programme for the Felicitas project, in Western Australia, but that they had failed to reach a resolution.

The dispute also involved the interpretation of the JV parties’ obligation under the resource agreement and the alumina refinery agreement, which was designed to see a full refinery bankable feasibility study (BFS) completed by a predetermined date.

Bauxite Resources said on May 19 that the quality and size of the Felicitas deposit represented an opportunity for the JV parties to undertake the refinery BFS at present, adding that the current market conditions and exchange rates were such that the input costs for the study, the availability of service providers, and the staffing costs would likely be substantially lower than they have been in recent years.

Bauxite Resources and Yankuang Resources inked a heads of agreement (HOA) in 2010, which would see Yankuang earn a 49% stake in the southern Darling Range tenements with a view to establishing a 150-million-tonne resource to provide a source of bauxite to a proposed alumina refinery.

Yankuang subsequently agreed to fund 90% of the refinery feasibility study costs, provided that the Australian firm agreed to grant its JV partner a 70% interest in the bauxite rights across a much larger tenement package than originally subject to the HOA.

While Bauxite Resources had approved the 2015/16 budget for the project, Yankuang had failed to do so.