Shares in Straits Resources have dropped after it suspended mining activities at its Indonesian operation in response to an order from the local government.
The West Perth-based miner today said while it did not agree with the directive, it had ceased mining at its Mt Muro gold operation on a short-term basis in a “sign of good faith”.
The mill will continue to operate to treat stockpiled ore.
Straits did not say why the Provincial Governor of Central Kalimantan had ordered mining to stop. The miner said it would "seek to address the matters raised in the directive".
Shares in Straits shed 1c, or 11.1 per cent, to 8c at 1020 AWST.
“It is extremely disappointing that this type of action is occurring as it disrupts the continuity of production during a critical period as we ramp-up production,” managing director Andre Labuschagne said.
“It also has a flow-on financial effect in the local community surrounding the Mt Muro operations, as we will be standing down some of our workforce, during this period.”
Straits had only restarted operations at Mt Muro one month ago after halting work due to heavy rainfall. The miner aimed to achieve the production of 100,000 ounces of gold equivalent at the operation for the current financial year.
Mr Labuschagne today said Straits has secure tenure over its mining leases through its third generation contract of work (CoW).
“The directive does not have any impact on either validity or the continuation of the CoW.”