The Canadian company said in a statement that the performance of Riversdale’s 74%-owned ZAC had “deteriorated to a material extent”, which Forbes believed was a breach of certain provisions within the September acquisition agreement.

Riversdale denied being in breach of the agreement, saying Forbes’ retraction constituted a repudiation of the agreement.

Forbes denied having repudiated the agreement and said it would not be liable for any damages suffered as a result of the cancellation.

Forbes president and CEO Stephan Theron said the decision was warranted.

“We are disappointed that the situation has necessitated this decision, but believe that cancelling the agreement is in the best interests of all our shareholders and other stakeholders in Forbes Coal,” he said.

“The parties have attempted to reach agreement on a mutually beneficial way forward in respect of the acquisition, but such discussions have, to date, been unsuccessful.”