The company said June 2 that it is no longer a party to the Peace River Partnership with respect to its freehold coal rights that formed part of the Carbon Creek project, but noted that the withdrawal will not have an impact on the joint venture agreement between CCP and Cardero Coal, which continues to be the basis for Cardero’s 75% interest in the Carbon Creek coal licenses.

Cardero officials said that it discussed potential alternatives with banking advisors at Macquarie Capital Markets, but cited the historically low current metallurgical coal commodity market and lack of a recovery timeline for its move, which was effective May 30.

“In the context of this market, the making of the scheduled aggregate $12.5 million in advance royalty payments over the coming five years was simply not justifiable and not in the best interests of Cardero shareholders,” the company said in a statement.

Despite the decision, Cardero’s CEO said it continues to look forward to the still-active JV with CCP.

“Cardero’s strategy at present is to maintain its interest in the Carbon Creek Licenses, moving them forward with expenditures appropriate to the current commodity cycle. Our fundamental belief is that the Carbon Creek metallurgical coal project is a valuable asset and for Cardero, retaining an ownership interest at the current time is in the best interests of its shareholders”, the company said.

As a consequence of the withdrawal, Carbon Creek’s 43-101 report and 2012 prefeasibility study are no longer valid; pending financing, a new report will be commissioned this year.

The Carbon Creek metallurgical coal deposit in the Peace River coal district of B.C. was most recently estimated to have a reserve of 121 million metric tons (mt), included within a 468 million mt measured and indicated resource.