GBM Resources not Proceeding with phosphate JV with Resource Kings

GBM Resources (ASX: GBZ) has advised that it will not be proceeding with the proposed joint venture agreement with the Singapore based Resource Kings Pte Ltd.

Resource Kings, a commodities based trading company with a focus on steel and fertiliser products, signed a binding term sheet last November to acquire a joint venture interest in GBM’s potentially large-scale phosphate projects in the Mt. Isa region of North Queensland.

Under the term sheet agreement, Resource Kings could earn a 90% interest in GBM’s phosphate assets by subscribing for 8.5 million new ordinary shares in the company for total consideration of $2.635m. Shareholders approved the transaction at a general meeting on 5 January 2010.

Over the period Resource Kings had sought to restructure its financing facilities and GBM agreed to settlement on or before 31 March 2010.

Resource Kings did not complete settlement as agreed. GBM advised Resource Kings that an extension of time would not be granted and therefore the proposed joint venture agreement is at an end.

Since signing the terms sheet last year the global market for phosphate has improved significantly and the price for the fertiliser diammonium phosphate (DAP) has increased from $US300 to $US490 per tonne, an increase of 63% over that period.

The phosphate assets are an increasingly valuable asset, particularly in the improving market and the directors are confident of attracting a strategic partner to further develop these assets.

GBM said its core focus remains its copper gold assets in northern Queensland and the current 6,000m drilling program which is underway at the Brightlands Cu Au project.

Peter Thomson, Managing Director, said GBM's working capital position is adequate for its planned exploration activities and it remains a key strategy of the company to potentially obtain additional working capital from the exercise of options expiring 30 June 2010.

http://www.proactiveinvestors.com.au/companies/news/6209/gbm-resources-not-proceeding-with-phosphate-jv-with-resource-kings-6209.html