IndiOre Ltd. said Jan. 7 that it has cancelled the phase three expansion of the company's Kurnool plant in India's Andhra Pradesh state after poor results from recent drilling.
A drilling program, which aimed to provide confidence in the resources available to underpin the mine plan associated with the expansion, was completed on two mining leases owned by the company and three areas in which it has agreement with lease owners. One area, which was considered a likely location to be included in the mine plans, was not drilled as IndiOre did not acquire permission to access it.
After 965 meters of reverse circulation drilling was carried out, there were no intersections of any mineralization of adequate grade or thickness to justify mining on any of the project areas.
IndiOre has immediately cancelled the phase three expansion project, and has started the process to dismantle the process plant and site equipment, reducing employee counts and remediating the sites.
The company has initiated an independent review in Australia and India to determine the project's history to determine what led to the decision to build the project, in particular the phase three expansion, without sufficient defined resources.
IndiOre is working with equipment suppliers to terminate purchase orders where possible, and sell or safeguard newly purchased capital items. The process is expected to be completed over the coming weeks, following which the company will confirm its financial position.
In September 2018, IndiOre increased the expansion cost for the Kurnool wet beneficiation plant in India to A$11 million from A$8.5 million. The additional capital requirement was expected to be funded by a A$6 million convertible note facility IndiOre secured from major shareholder First Samuel.
First Samuel verbally agreed to leave the A$6 million facility in place, subject to an agreement over the company's strategy moving forward.
In addition, IndiOre is in discussions and undertaking due diligence on a number of projects, both in India and Australia, to mobilize the existing and new plant and equipment for a positive economic outcome.
The company's shares will remain suspended until there is more clarity on the ongoing discussions. IndiOre will provide an update by Jan. 28.