Minnow Maximus Resources has been forced to idle its Burbanks plant near Coolgardie, Western Australia because partner Empire Resources wants out of their gold processing partnership.

Maximus (ASX:MXR) inked a deal in July for the supply of up to 150,000 tonnes of ore from Empire’s Penny’s Find gold project to the plant.

But Empire (ASX:ERL) has now decided the Burbanks plant is too far away and has been trucking ore to the closer Lakewood plant near Kalgoorlie instead.

“The main thing is the transport cost,” Empire boss David Sargeant told Stockhead.

“It’s so much further to cart the ore … and they have been refurbing and it has been setting up time. So there has been a big lag — but the main reason is the transport. It’s so far away.”

Maximus shares fell slightly to 0.1c on Friday — valuing the company at just $3 million. Empire’s shares gained 15 per cent to  2.3c.

ERL shares over the past year. Source: Investing.com
Empire Resources shares over the past year. Source: Investing.com

The Burbanks plant was placed on care and maintenance in December 2014 and was later bought and recommissioned by Maximus.

Empire’s decision to terminate the toll treatment agreement has meant Maximus has had to “stand down” the plant and nine of its workers.

“I had to stand down eight or nine people three weeks before Christmas which I wasn’t overly happy about,” Maximus managing director Kevin Malaxos told Stockhead.

But Mr Malaxos expects to have the plant back in operation sooner rather than later, with a number of deals already in the works to secure more ore.

Maximus has a verbal agreement to process 8000 tonnes of ore and is also close to signing a deal that will secure supply for the mill for at least 12 to 18 months.

Empire, meanwhile, has given 30 days notice and agreed to continue trucking ore to the Burbanks plant through to early next year.

“That takes us out to very early January, when the termination final date kicks in, and then we should have 8000 tonnes sitting on the pad ready to go,” Mr Malaxos said.

“I’m also negotiating with another ASX-listed company to secure upwards of another 12 to 18 months worth of capacity.”

Another ASX-listed junior, Primary Gold (ASX:PGO) announced last week it had also reached an agreement with Maximus to process ore from its Coolgardie project between March and June 2018.

“So in terms of how we’re sitting, out of a bad situation, I suppose we’re looking reasonably good,” Mr Malaxos said.

“We’ll honour the agreement with Empire to the end and hopefully we’ll have some pretty full stocks going forward.”

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