THE PARENT company of South Crofty tin mine operator has written to one of its key stakeholders formally notifying them of braking their contractual agreement to fund exploration work at the mine.
Cornish Minerals Limited (CML), which owns mine operator Western United Mines, has issued a formal notice of default to Canadian investor Celeste Mining Corporation.
It comes after Celeste announced last week that it would not contribute further expenditure to fund exploration works at the Pool-based mine because of deteriorating equity markets, the financial position of the company and operational complexities.
CML said today that costs incurred at South Crofty have been steadily reduced since the beginning of the year due to funding not being received from Celeste.
As a result, both exploration and development activities have been curtailed instead of advancing in accordance with the project programme.
Alan Shoesmith, CEO of Western United Mines, said today: "The path towards production has been far from easy.
"I don't think any of us who have been working at South Crofty since 2001 could possibly have imagined the huge obstacles we would have to overcome.
"Regardless of what has happened, however, the fact remains that, as evidenced by the results of all the exploration we've been doing, the mine remains an extremely attractive investment. I know I speak for all the management team here when I say that our enthusiasm to progress the mine has not been dented.
"We want to see this project through to fruition and will do all we possibly can to make that happen."
Mr Shoesmith further said that during the past year, both the economic potential and development methodology for Dolcoath and South Crofty have been more closely defined.
Analysis of historical sampling data has identified exploration targets of between eight and 16 million tonnes of ore at depth at grades between 1.2 and 1.8% tin, in addition to substantial polymetallic resources closer to surface.
He continued: "A strategic plan to sequentially dewater Dolcoath and eventually South Crofty has been developed and positively reviewed by an international mining consultancy."
Mr Shoesmith also said that Western United Mines majority shareholders are working closely with South Crofty's management team to source alternative funding for the project. He added: "They understand the huge importance of South Crofty's mineral resource and are doing all they can to help during this difficult period."
Celeste said it had received the formal notice of default.
A In a statement the company said: "Management continues to actively engage strategic partners in an effort to explore alternative funding strategies, which may include a brokered convertible financing in order to finance the expenditures at the South Crofty Mine provided that the company and its joint venture partners at the South Crofty Mine can agree on appropriate cost cutting measures and a suitable budget and plan."
Mr Shoesmith has resigned from Celeste's board of directors but he remains the CEO of Western United Mines.
