Cobalt Blue has served a joint venture (JV) dilution notice to Broken Hill Prospecting over the Thackaringa cobalt project in New South Wales.
In a statement, Cobalt Blue has claimed to now hold 93.68 per cent interest in the JV, with Broken Hill retaining the remaining 6.32 per cent after the latter failed to submit payment for the project’s bankable feasibility study (BFS).
In late October, the BFS timetable was fast tracked into a period of 12 months, a decision which Cobalt Blue concluded in a statement “would significantly impair the project and pose undesirable risk”.
According to Cobalt Blue, work programs and budgets were discussed and agreed on at a TJV Management Committee meeting held on 16 November.
A billing statement was issued, requiring payment from both JV partners within seven days. But Broken Hill claimed it was “flawed in a number of respects” and the meeting resolutions “invalid”, reiterating that the drilling activities underway at Thackaringa “remain at the risk and cost of Cobalt Blue” as the drilling campaign budget and program fell within the earning period – before Cobalt Blue’s election to withdraw from the stage three earning period.
In a statement to the ASX, Cobalt Blue said that “as Broken Hill’s option dilution notice means that [it] has elected not to contribute to the current approved work programme and budget, Cobalt Blue believes Broken Hill’s JV interest will reduce to below 5 per cent once the drilling campaign expenditure for November and December 2018 has been incurred.”
According to the Thackaringa agreement, a minimum 5 per cent interest in the JV is required, below which a partner is deemed have withdrawn from the agreement.
Cobalt Blue expects this further recalculation to occur in late January 2019, whilst Broken Hill review Cobalt Blue’s dilution claims in the context of the dispute.