Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Canada’s Star Diamond (TSX: DIAM) said Thursday that Rio Tinto (ASX, LON, NYSE: RIO) had no right to call or hold a meeting of the joint venture management committee, saying such entity does not yet exist.
In a letter to Rio’s head of exploration growth & innovation, Dave Andrews, the diamond miner said Rio misused its economic clout to grab a significant portion of the C$2 billion ($1.6bn) Star-Orion South diamond project.
This is not the first spat between the parties, which are embroiled in a long-running dispute over the development of a diamond project in the Canadian province of Saskatchewan.
Saskatoon-based Star Diamond entered in 2017 an earn-in agreement with Rio Tinto Exploration Canada, giving the Anglo-Australian miner an option to earn up to a 60% interest in Star-Orion South.
The miners are embroiled in a long-running dispute over the development of a diamond project in the Canadian province of Saskatchewan
The diamond producer later said Rio overspent on the project located within the Fort a la Corne diamond district and didn’t comply with the terms of the agreement to exercise its options.
Based on a court undertaking, Rio Tinto previously agreed that it would not call or hold a management committee meeting under the JV agreement between the two partners for a 120-day period following the completion of the ten bulk sample trenches – the release notes that this would include processing, diamond recovery, and results reporting.
On February 8, Rio Tinto advised Star Diamond that the 120-day period has started, with plans to call a management committee meeting once the 120 days have passed.
“Compounding its misconduct, Rio Tinto now seeks to wrongfully add to the first joint venture budget approximately $56.2 million of alleged expenditures from 2020 and 2021 that were not part of the then-current ‘work plan’ as of November 6, 2019,” Star Diamond said in the letter.
Rio believes the comprehensive diamond breakage study is not required by the undertaking.
A 2018 preliminary study estimated 66 million carats of diamonds could be recovered from the project over a 38-year mine life.
The project, located 60 km east of Prince Albert, is known to host larger stones, including high-value Type IIa diamonds.
Comments
BOB HALL
Quip squabbling and start digging. A few million dollars can work things out.