PERTH (miningweekly.com) – The share price of ASX-listed Bauxite Resources rose nearly 31% on Thursday on news that the company had signed a memorandum of understanding (MoU) to solve a dispute with joint venture (JV) partner Yankuang Resources and the Yankuang Group Company.

In May, Bauxite Resources issued a notice of dispute against Yankuang Resources after the two parties failed to agree on a budget and work programme for the Felicitas project, in Western Australia.

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.

In an August mediation, the possibility of terminating the JV agreement was raised, with Yankuang acquiring Bauxite Resources' interest in the JV and in the Fortuna bauxite project.

Under the terms of the MoU signed this week, the JV would officially be terminated, with Yankuang paying Bauxite Resources A$7.15-million for its interest in the JV assets, including its shareholding in the Bauxite Alumina JV and in the Fortuna bauxite rights.

Further, Yankuang and the Bauxite Alumina JV would pay Bauxite Resources a 0.9% royalty on the free-on-board price for the first 100-million tonnes of bauxite mined from the Fortuna and Felicitas tenements.

Subject to an agreement with the tenement holder, Bauxite Resources would assign its rights in the Fortuna bauxite resource to Yankuang, and in the event that the tenement holder did not agree, the royalty right would be reduced from 100-million tonnes to the first 87-million tonnes.

Bauxite Resources, in turn, would buy back Yankuang’s 19.7-million shares in the company for A$1.15-million, which would result in the Yankuang nominee director resigning from the Bauxite Resources board.

The proposed transaction, once approved by the various boards, would be subject to approval by Bauxite Resources shareholders and the Foreign Investment Review Board.

Bauxite Resources was expected to seek shareholder approval in December.

The company’s shares were trading at a high of 8.2c, up from an opening price of 6.3c.