Lynas suspends $25m Forge contract

Lynas Corporation's funding woes for its Western Australian rare earths project has hit Forge Group, which says its $25 million contract has been suspended until further notice.

Forge, through its wholly owned subsidiary Abesque Engineering, secured the concentration plant construction contract in September last year, and had already started work.

"As the civil works is well advanced the company has received instructions from Lynas Corporation to complete part of the scope of this area of works," Forge said.

"Furthermore, the company is advised by Lynas to continue with critical components of the design contract to allow an efficient re-start of procurement and construction works once the contract suspension is lifted."

Earlier this month, Lynas suspended work on the Mt Weld project after revealing it could not draw down its senior bank facility without the prior release of $US95 million in bond monies, which is currently being disputed.

This week, Lynas told shareholders it could take some six to 12 months to secure a suitable funding arrangement for the project, given the state of the credit market.