Monument Mining and Phoenix Lake Sdn Bhd (PLSB) have agreed to work together on magnetite iron ore operations within the Mengapur project in Malaysia’s central Pahang State. Canadian gold producer Monument holds a 70% interest in the project which does not include the free digging oxide magnetite iron ore material covering the skarn.
The agreement between the two companies confirms Monument is the sole operator of the magnetite iron ore operation and that PLSB will continue to participate in the operation as contractor whilst retaining its rights to share profits. The agreement also confirms other metals contained in the mined oxide magnetite iron ore material remain with the owner of the Mengapur project.
Until recently, PLSB was carrying out the oxide magnetite iron ore operation within a designated area of Mengapur, under an agreement with the previous owner. Monument’s acquisition of a 70% stake in the project resulted in the PLSB operation being terminated.
Monument’s president Robert Baldock says the company advised PLSB of its breach of the agreement which included extracting and removing other metals and not complying with environmental conditions. “Such breach has caused total damages estimated at $312 million during a 12 month period up until January 2012 to the owner of the mining lease, Cermat Aman Sdn Bhd (CASB), and potentially to Pahang State as a royalty recipient.”
In response PLSB filed a legal claim against Monument and its subsidiaries CASB and MMSB for $130 million damages.
Both parties have now agreed to act in good faith in harmonizing the oxide magnetite iron ore operation for the best interest of both stakeholders, with all legal claims to be dropped immediately after the agreement is duly signed.
Mengapur was first discovered by a geological survey in 1979. Four historical phases of drilling were completed at the site by its former owner Malaysia Mining. Monument is carrying out due diligence drilling and will provide data for a feasibility study. It plans to spend Can$13.4 million on drilling, metallurgical tests and topographic surveys at the site during the next year.