Khnaiguiyah operations suspended – Alara

PERTH (miningweekly.com) – The Saudi government has taken steps to suspend mining operations at the Khnaiguiyah zinc-copper project, after the project’s environmental licence expired, reports ASX-listed Alara Resources.

The Khnaiguiyah project was a joint venture (JV) between Alara and Manajem; however, the Australian junior had not been active at the site for over a year after a dispute arose between the two JV partners.

Alara, in 2014, inked a heads of agreement (HoA) with Manajem to increase its interest in the Khnaiguiyah project from 50% to 60%. However, the implementation of the HoA, which included a roadmap outlining the steps the parties agreed to undertake to give effect to a new JV agreement, reached an impasse, which Alara said was owing to Manajem's failure to comply with its first step in the roadmap, namely to transfer the mining licence into the JV company.

Alara said this week that the renewal of Manajem’s environmental licence at the Khnaiguiyah project was unlikely, adding that the project would remain at an impasse.

The ultimate effect of the cessation of mining activities on the JV partners' legal dispute was yet to be seen, it added.

The company noted that while the possibility of a settlement with Manajem could not be dismissed, Alara had prepared for contingencies by establishing alternative means for advancing the Khnaiguiyah copper-zinc project to production while continuing to assert its right under the Khnaiguiyah shareholder agreement.