Iron Ore Holdings (IOH) and Rio Tinto are in dispute over their iron ore sales agreement on the terms of access for IOH to deliver ore to Rio's Yandicoogina site.
On December 18, IOH announced that it had entered into two agreements with Rio, an Iron Ore Sales Agreement for production from the Phil's Creek Project and a Relationship Agreement relating to IOH's Iron Valley deposit.
In a statement IOH said, "Negotiations to date have not resulted in the parties agreeing the terms of access by the required date. If the parties are unable to agree the terms of access by 8 August 2010 then the Ore Sales Agreement will automatically terminate."
IOH has disputed Rio's claim that the company has not complied with its obligations under the agreement.
IOH shares were down 31 cents or almost 18 per cent to $1.46 at 11am.
IOH statement below:
On 18 December 2009 the Company announced that it had entered into two agreements with Rio Tinto (RTIO), an Iron Ore Sales Agreement for production from the Phil's Creek Project and a Relationship Agreement relating to IOH's Iron Valley deposit
Since entering into the agreements the Company has achieved many of the milestones required to progress the Phil's Creek Project including a Definitive Engineering Study, Native Title Agreements and the grant of mining leases.
The Ore Sales Agreement requires IOH and RTIO to agree the terms of access for IOH to deliver ore to RTIO's Yandicoogina site. Negotiations to date have not resulted in the parties agreeing the terms of access by the required date. If the parties are unable to agree the terms of access by 8 August 2010 then the Ore Sales Agreement will automatically terminate.
The effect of termination of the Ore Sales Agreement is that the Relationship Agreement will also terminate.
RTIO have advised that it does not believe IOH has complied with its obligations under the Ore Sales Agreement. IOH does not agree with RTIO.
As advised previously, the Company is also reviewing the financial viability of the Phil's Creek mining operations, given changes in economic parameters since the Ore Sales Agreement was entered into.
Subject to the Company and RTIO agreeing terms on access the Company will continue this review including potential funding options for the project.
IOH continues discussions with RTIO.
