In disappointing move, Sumitomo Corp has pulled out of a coal exploration partnership with Aquila Resources. Aquila Resources has suffered a major set back in its plans to raise capital through asset sales to fund an Australian iron ore project worth Aus$7.4 billion or US$7.6 billion.
Aquila and Sumitomo formalized a memorandum of understanding last year to pave the way for Sumitomo's acquisition of between 20% to 50% shareholdings in the coal mining tenements owned by Aquila in the state of Queensland.
In a formal statement from Aquila, it said, "Following two independent valuations, averaging Aus108.8 million on a 100% basis, Sumitomo has elected not to acquire an interest in the tenements."
The proceeds from the tenement sale and the joint venture agreement added on with the cash reserves of Aquila would be the foundational funds for the West Pilbara Irone Ore Project.
Because of the withdrawal, Aquila share values fell by 10% to just Aus$1.83 in early trading.
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