Vanadium producer Atlantic has stood down some of its contractors after announcing that the damage caused by last week’s fire at its Windimurra plant is “extensive”.
The fire occurred in the beneficiation plant at the company’s Windimurra operation on February 4 and led to the company’s voluntary suspension of trading in shares last Thursday.
Atlantic said today the fire started when a piece of hot metal touched flammable material that ignited and spread through the high-density polyethylene piping in the beneficiation plant.
The company said although the formal fire investigation was not yet complete and engineering teams were assembled to fully assess the damage, the beneficiation plant had been significantly damaged and further studies would be required to decide whether it can be salvaged.
Atlantic said its iron ore business was not affected, but it had stood down contractors involved in mining and ferrovanadium production activities.
The voluntary suspension will remain in place until the company is able to provide further details on its business and financial position.
Ratings agency Standard & Poor's has meanwhile downgraded the corporate credit rating of Atlantic subsidiary Midwest Vanadium, the owner of the Windimurra project, to CCC- from CCC.
It has also placed Midwest Vanadium on "CreditWatch" with negative implications.
"The downgrade and CreditWatch negative placement reflects our view of Midwest Vanadium's continued 'weak' liquidity and lower-than-expected cash flows," S&P credit analyst May Zhong said.
"In addition, we believe the company will face difficulty to meet its interest obligations due on Feb 15 2014 if it fails to raise additional external funds."
Ms Zhong said the agency would focus on the willingness of Atlantic shareholders to continue to support the Windimurra project in future assessments.
