CMD withdrew from the joint venture and farm-in agreement when it decided its obligations and the complex geology site made the project less attractive than other opportunities.

Under the agreement CMD would have earned a 70% interest in Dingo West by fully funding the development of the 1.9 million tonne per annum mine.

Of a $A9.65 million budget, $6.65 has already been spent on exploration. CMD will pay a minimum of $1.5 million of the un-spent funds to Bandanna as part of the withdrawal process.

Bandanna will take back 100% ownership of the project as well as assignment of a 2Mtpa Wiggins Island Coal Terminal feasibility funding agreement previously negotiated by the joint venture.

Bandanna said it now planned to pursue other partners.

The company said it believed the project could host a viable open cut mine, albeit at a smaller scale than originally planned due to the complex geology.

“Our initial studies indicate that, on a reduced scale, Dingo West is an attractive opportunity and far better suited to a company of the size and resources of Bandanna,” Bandanna managing director Ray Shaw said.

“We have, through the joint venture, obtained an extremely valuable data set including a number of studies and reports by consultants and contractors which will, when amended to incorporate the new scale of the project, provide a springboard for its accelerated development,” Shaw said.

Bandanna has started a mining study for an open cut mine producing 500,000t to 1Mt of thermal and PCI coal.

As part of the study the company is also looking at third-party tolling for coal preparation and washing to minimise capital expenditure.

Bandanna was trading unchanged this morning at 21c. Macarthur was trading down 1.2% mid-morning today at $4.94.