Cardero initially made a 50% stake deal for $C3.5 million in cash as well as 500,000 shares and warrants to purchase another million shares at $1.40 each for 18 months post-closing.
The Peace River coalfield property near Chetwynd is made up of 15 coal licenses and three license application areas totaling 9437 hectares.
“Following a period of due diligence, the company has determined that the contemplated Trefi investment does not fit with its current northeast coalfield strategy,” Cardero officials said but provided no further specific details.
Under the companies’ signed letter of intent, Cardero – owner of the nearby Carbon Creek met complex – will pay Anglo Pacific a break fee of $75,000 and will also be responsible for certain ancillary expenses incurred by Anglo Pacific in connection with the LOI.
The National Instrument 43-101-compliant resource for Trefi, according to a March 2010 technical report, totals 39.1 million tonnes measured and indicated and 51Mt inferred with moderate geological complexity.
“[We believe] that the lower volatility, low FSI and high BTU value of the Trefi coal product would make it well suited for potential blending with the Carbon Creek PCI product,” the company said last November at the time the deal was first announced.
“The coal from Trefi will also not be blended with Carbon Creek’s hard coking coal or semi-soft coking coal, which is expected to make up the majority of the deposit’s resource.”
Last week, Cardero reported it had carried out a bulk sample drill program on nine of the metallurgical coal seams within its Carbon Creek tenement, prompting it to pursue offtake agreements.
The completion of the coal quality analysis will now give the producer sufficient time to carry out negotiations with potential end-users.
Cardero Resource chief executive officer Michael Hunter said the completion of coal quality analysis on the seams represented a key milestone for the project.
“We are very pleased to have completed this important part of the bulk sampling program on schedule, allowing us to move towards timely offtake negotiations in Q2,” he said.
“Offtake agreements are one of several financing options potentially available to Cardero in 2013 and they could help limit share dilution as we move towards feasibility and a potential production decision.”
The miner said samples from individual seams weighed approximately 300kg.
The project is tipped to produce 2.9Mt of saleable coal per annum.
Cardero expects to complete a feasibility study on the project in early 2013.