Shares in Aquila Resources slumped after it announced it would maintain minimum expenditure on its flagship West Pilbara iron ore project for the remainder of the financial year because of an ongoing budget dispute with its joint venture partner.

Its dispute with AMCI had been referred to arbitration in September last year but no resolution has been found.

"Aquila advises that it has given notice to AMCI which Aquila considers brings to an end the arbitration about the budget for the 2012/2013 financial year," the company said in a statement.

"In conjunction with this decision, Aquila has also agreed to maintain the project on minimum expenditure for the remainder of the 2012/2013 financial year."

Aquila said it would continue to focus its efforts on how best to progress the project.

Today's news follows more positive announcements for the West Pilbara project on Friday that Aquila had secured State environmental approval for its proposed Anketell port development and had settled a dispute with Brazilian mining giant Vale over the valuation and sale of its 24.5 per cent stake in the Belvedere hard coking coal project in Queensland.