Malachite Resources is shedding its stake in the Lorena gold project in North West Queensland after a long-running dispute with joint venture partners.

The exploration company’s subsidiary Volga Elderberry holds the mining licence for Lorena, a producing gold mine, as well as related exploration prospects.

That is to be sold to joint venture partners Lorena Gold Mine Pty Ltd and Ore Processing Services (OPS) as part of the deal to resolve the dispute over the operation.

Malachite said it had already received an initial payment of $50,000 and was due to receive a further $130,000 within 90 days subject to agreed adjustments.

It will seek shareholder and any necessary regulatory approvals for the proposed sale of Volga.

Malachite will receive a 2 per cent net smelter return on gold produced from future underground operations at Lorena, and has entered into a Deed of Debt Forgiveness with Ore Processing Services.

It follows a dispute running more than a year between the joint venture parties.

Malachite describes operational performance at the Lorena project as being well below expectations and back in February last year Volga issued a Dispute Notice to the other joint venture parties.

At the same time Malachite received notice on behalf of (joint venture party) Ore Processing Services requiring payment of an outstanding loan amount (being $574,342.49 as at 20 February 2019).

“Entering an agreement to resolve this long-running dispute in relation to the Lorena gold project allows Malachite to focus on other opportunities, such as nickel in the Solomon Islands, while retaining an appropriate ongoing royalty interest and maintaining exploration upside at its two remaining gold prospects in the region, ” Malachite executive director and chief executive officer Geoff Hiller said.

Malachite will retain 100 per cent of EPM 18908 which holds the Bloodwood copper/gold and Lady Mary gold prospects.

The Lorena gold mine achieved gold sales of 1436 ounces in the March quarter.

The joint venture involves Malachite (holding a 55 per cent stake through Volga Elderberry), Cloncurry Gold Recovery Management (30 per cent) and Ore Processing Services (15 per cent). CGR is the manager of a joint venture between Chinova Resources and BIM Gold. BIM Metals is the
Lorena joint venture manager.