Australia-based exploration company Aquila Resources has announced the termination of a A$109m ($112.6m) coal joint venture agreement with Sumisho Coal Australia, a wholly owned subsidiary of Japan's Sumitomo.
A Memorandum of Understanding (MoU), signed by the two parties in April 2012, provided Sumitomo with an option to acquire a 20% to 50% stake in Aquila's coal projects in Queensland, excluding Washpool Hard coking coal project and Talwood coal project.
The agreement was made in line with Aquila's strategy to raise funds for the $7.6bn West Pilbara Iron Ore project through sale of assets.
But Aquila said in a statement on Monday that, following the conclusion of two independent valuations, averaging A$108.8m ($112m) on a 100% basis, Sumitomo has elected not to acquire any stake in the tenements.
The West Pilbara project, in which Aquila owns 50% stake, was halted in September following the failure to conclude a budget for the year ending June 2013 by other stakeholders, including American Metals and Coal International (AMCI) and South Korean steel giant POSCO.
In February 2103, Aquila announced that it will continue to keep operations on hold at the mine due to a lack of funding amid increasing costs and volatility in the commodity market.
Through its subsidiary, IP Coal, Aquila also signed a deal in April 2012 to sell its 50% stake in the Isaac Plains coal mine to Sumitomo's wholly-owned subsidiary Ocean Coal Mining for A$430m ($444.2m).
Image: Aquila has signed a deal to sell stake in the Isaac Plains coal mine to Sumitomo's subsidiary Ocean Coal Mining. Photo: Aquila Resources.