Focus Minerals has put its Laverton gold mine on stand-by, after a review of operations found the project is no longer commercially viable due to increasing costs and the falling gold price.
Focus chairman Don Taig said the company’s board of directors was reviewing its options for the Laverton mine, including moving to an exploration-only operation or pursuing acquisition opportunities in the region with its strong cash balance.
Mr Taig said the long-term outlook for gold as well as escalating processing costs over the past six months and escalating processing costs made the decision to halt operations at Laverton necessary.
Gold bullion fell $US300 an ounce in one fortnight to below $US1,400/oz earlier this month, but has since rebounded to close sales at Perth Mint today at $1,422.25/oz.
“We have a significant, highly prospective landholding in the Laverton region surrounding four major mines with over 20 million ounces between them,” Mr Taig said.
“We are not about to deplete our current reserves base just to break even.”
Mr Taig said the company’s efforts to cut costs through increasing operation efficiency had been cancelled out by the rising costs in the Australian gold sector.
“There are pressures being felt right across the industry and impacting the competitiveness of Australian mining,” he said.
“A sharp fall in commodity prices always provides a clear lens for the industry on just how bad this has become.
“The high Australian dollar is not assisting business either and it is my view that unless all industry participants – capital, labour and government – work quickly and earnestly together, the industry is in for a lean time.”
Focus is also reviewing operations at its Coolgardie gold mine, which suffered rising costs and slowing production during the March quarter.
The mine produced 8,684 ounces of gold over the quarter, 3,316oz below expectations.
Mr Taig said the review would determine the best way forward for the Coolgardie asset.
“the opportunity we have at Coolgardie is to determine the best economic outcomes for our operations in this current environment and that may mean changes in how we use the processing plant and how we focus our resources,” he said.
“As part of this process we are looking to achieve a 20 per cent improvement in productivity in the medium-term, translating to fundamental savings at an operating cost level.
“The strategic review therefore at Coolgardie is less black and white compared to Laverton and will be best reviewed in phases to ensure we maximise the outcome.”
Focus Minerals shares were steady on the ASX today, closing trade at 1.7 cents.
