Jul. 17, 2009 (China Knowledge) - Shenzhen Zhongjin Lingnan Nonfemet Co Ltd<000060> today announced that Perilya Ltd, an affiliated Australian mining firm, will end two silver contracts, the Wall Street Journal reported.
Zhongjin Lingnan said in a statement filed with the Shenzhen Stock Exchange that Perilya will halt a silver deal signed in 2005 for the supply of 17.2 million ounces of silver. Around 6 million ounces have been delivered so far; Perilya will not deliver the remaining 11.2 million ounces.
Perilya will owe US$55 million in cash for the termination of the contract. Bank of China<601988><3988>, which is the guarantor of Zhongjin Lingnan, will pay US$50 million, and the Chinese miner will pay US$5 million.
The contract terminations came as a response to current market conditions and were agreed upon by the buyers and sellers.
Zhongjin Lingnan said the move will help its Australian affiliate improve profitability.
Meanwhile, Perilya subsidiary Perilya Broken Hill Ltd has also inked agreements with CDE Australia Pty Ltd and Coeur d'Alene Mines Corp to end silver contracts, according to Zhongjin Lingnan's statement.