Centrex eyes exit at Bungalow
PERTH (miningweekly.com) – Metals developer Centrex Metals on Friday announced its withdrawal from the Bungalow magnetite joint venture, in South Australia, during 2016.
The Bungalow project was placed on care and maintenance earlier this year by joint venture (JV) partners Centrex and Baotou Iron & Steel, owing to the depressed iron-ore market conditions.
Centrex told shareholders that as part of its focus on the development of the Oxley potash project, in Western Australia, the company has now signed an agreement with JV partner Baotou to exit the JV at the end of October next year.
Under the new agreement, Baotou would have an option to purchase Centrex’s remaining interest in Bungalow for A$250 000. Alternatively, Baotou could choose to exit the project along with Centrex.
During the transitional arrangement period, the JV partners would work to minimise the holding costs while the iron-ore market remained depressed.
Centrex said on Friday that while the company saw potential long-term value in the iron-ore market, it recognised that an iron-ore price turnaround could be several years away, and therefore would instead focus its balance sheet on nearer-term revenue potential from its potash prospects.
The Bungalow project was the subject of a prefeasibility study before work was suspended, which had been targeting a five-million tonne a year magnetite concentrate operation, based on a mineral resource of 338-million tonnes.
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