Watpac has warned Pluton Resources its tolerance for the iron ore miner's cash flow crisis is limited, despite yesterday agreeing to further payment delays on its mining contract at Cockatoo Island.

Pluton is trying to finalise its second major capital raising this year, needing at least $40 million to buy out its estranged joint venture partner at the Cockatoo Island mine, and recapitalise.

The company raised $17 million in May but saw limited support from shareholders for the renounceable rights issue, with underwriter Patersons Securities taking up a 60 per cent shortfall.

Watpac is one of a number of major Pluton creditors that has agreed to swap $17.5 million of debt for equity. But the mining services provider warned yesterday it still reserved its rights under its $93 million mining contract if Pluton failed to meet a revised payment schedule.

Pluton suspended its shares from trade last month after the majority of its board, including chairman Richard Mehan, quit. The company was valued at $30.2 million at the time.

Pluton said last week its major shareholder would tip in another $13.5 million through a rights issue, and $17.5 million in debt would be converted to equity.

Pluton has also agreed to buy out 50 per cent joint venture partner Wise Energy Group to settle a dispute over its contribution to mining costs at Cockatoo Island.

The West Australian

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