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Xstrata closes book on Windimurra

XSTRATA Alloys has reached an agreement with Precious Metals Australia over the contentious Windimurra vanadium project at Mount Magnet in Western Australia. Under the agreement the subsidiary of the Swiss miner will pay PMA $10 million. Half of this is due to PMA in royalty payments for its 15 per cent interest, with the other half as final settlement of all outstanding claims over the dispute following Xstrata’s closure of the facility in May last year. In a separate transaction, Xstrata, which has spent $186 million on the facility, will sell to PMA the tenements, remaining Windimurra project assets and all project information on Windimurra. This transaction will void the previous earnings agreement between the two mining companies. Xstrata Alloys chief executive Peet Nienaber said “the agreement represents Xstrata’s final exit from the Windimurra project and transfers all liabilities and any potential opportunity to exploit the resource to PMA”. Over the next six months Xstrata will rehabilitate the Windimurra site as part of the agreement. This will be guaranteed through a payment of $7.5 million to PMA in an environmental bond. Under the settlement, costs to Xstrata associated with the rehabilitation of the site can be recouped through deductions from this bond. PMA started legal proceedings against Xstrata in August last year seeking damages in relation to the May 2004 closure of the facility. “We are keen to work with Xstrata and the government of Western Australia to expedite a rapid transfer of the tenements and to assess the viability of a new vanadium plant at Windimurra,” PMA chief executive Roderick Smith said. The Windimurra site has also been the subject of a dispute between the State Government and Xstrata. The Government had contributed $30 million in supportive infrastructure for the project, which was lost when Xstrata failed to develop the site, resulting in a parliamentary inquiry. Opponents of Xstrata’s recent unsuccessful hostile takeover of WMC Resources also alleged that the Swiss miner had dismantled the machinery required for the Windimurra project’s continued operations. The Xstrata/Precious Metals Australia settlement news follows a dispute between Xstrata and WA-based CopperCo over the control of Universal Resources. Xstrata has committed to partner Universal in the development of the South Australian Roseby copper project, which CopperCo has opposed in its conditional offer for Universal. News of the settlement sent shares in PMA soaring to a high of 33.5 cents, up from 12 cents.

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