Eastern Goldfields scales back operations

Michael Fotios-led Eastern Goldfields has suspended its gold processing operations at Davyhurst, as the company completes a strategic review of its business and searches for a recapitalisation deal.

The company said it had taken steps to mitigate spending due to lower-than-expected production in the first two quarters of 2018.

“Processing operations have been temporarily suspended and open-pit and haulage contractors placed on standby pending the recommencement of processing operations,” Eastern said in a statement to the ASX.

“The gold room circuit and underground mining operations will continue to operate.”

Eastern also revealed that a review of its operations was under way.

“The company is currently completing a comprehensive analysis of the mine plan, coupled with a strategic review of mining, processing, exploration and development activities, which is expected to supersede any previous guidance provided to the market,” it said.

Shares in Eastern have been suspended since July 23, pending the release of an announcement regarding a capital raising.

The company said today it was currently in discussions with a number of potential investors.

“The company is currently reviewing a number of alternative approaches and sources of funding, but is not yet in a position to provide a definitive update to the market,” Eastern said.

The news comes after Eastern was forced to pay GR Engineering Services $8.3 million in relation to a contract dispute at the miner’s Davyhurst operation.

Shares in Eastern last changed hands at 11.5 cents each.