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Shonky $1 mine deal gets worse

The Department of Natural Resources and Mines has removed significant conditions from the indicative approval for transfer of the mining lease for Blair Athol mine from Rio Tinto to the debt laden TerraCom Resources.

The removal of those conditions means that TerraCom may be able to cut ties with its subsidiary Orion Mining at some time in the future, leaving Orion with the mine rehabilitation responsibility.

The department has also removed a condition that the company must demonstrate that the government would have priority over any other debtors in relation to the cash financial assurance for rehabilitation.

In a letter to TerraCom yesterday, the department indicated it would grant approval for the on condition that the company demonstrated access to a wash plant, rail transport and a supply of water.

The company is also required to provide a bank guarantee of $13.5 million.

Previously the department had suggested it would impose conditions including requiring a guarantee from TerraCom that it will meet the debts of its wholly owned subsidiary Orion Mining in relation to its obligations under the Mineral Resources, Environmental Protection, Coal Mine Safety and Health Acts.

Natural Resources and Mines also said it would impose conditions on the financial assurance for Blair Athol to ensure any money paid in cash was available first to the state of Queensland for mine rehabilitation.

“This $1 deal is becoming shonkier by the day. The people and environment of Queensland will suffer if this company fails” said Mackay Conservation Group coordinator, Peter McCallum.

“We know from government documents that the current rehabilitation bond for the mine is at least 25% short on what would be needed. In fact, it is likely rehabilitation of Blair Athol will cost more than double the current calculation.”

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