Ascot Resources Ltd. (TSX:AOT) today announced it is suspending operations at its brand new Premier gold mine near Stewart, B.C., less than five months after pouring first gold.
The company is suspending operations in order to let mine development catch up to milling capacity.
Ascot’s shares slid 59 per cent on the announcement, from $0.44 per share to $0.18.
On April 20, Ascot Resources poured first gold at the Premier mine and said it expected to be in full commercial production by the end of July. The mine's capital costs were estimated at $340 million.
In a press release today, Ascot announced that it was shutting down operations the gold mine due to delays in mine development at its Big Missouri mine. The company also cited delayed production at its Premier Northern Lights (PLN) mine, all of which means there is not enough ore being produced to feed its mill.
“The mill operations have progressed well,” Ascot said in a news release. “However, we believe that the amount of mine development at the Big Missouri mine has fallen behind schedule by approximately one to two months, and with the delay in the start of the Premier Northern Lights…ramp from July to December last year, PNL production is also delayed.
“As a result, the number of stoping areas is not sufficient to provide enough production to adequately feed the mill.
“After careful consideration, the company has decided that, to enable sufficient mine development, it will suspend operations. Ascot will focus on mine development until the combination of the Big Missouri and PNL mines can sustainably deliver enough ore feed to profitably run the operation. The company’s intention is to seek funding to complete the necessary mine development.
“The company’s initial estimate is that approximately three to six months of development will be required to be undertaken, primarily at the PNL mine, subject to further investigation and cost determinations.”
The company said it will need to raise more money to complete the work.
"There is no certainty the company will be able to raise the funds required to complete the necessary mine development work and to restart operations," the company warned in its press release. "While the company expects that operations will be sustained once restarted following development work, there is no certainty that this will be the case."
“This is difficult news for all of our stakeholders, and especially all of our employees and contractors who have worked extremely hard during the commissioning period," said Ascot CEO Derek White. "The company believes we need to focus on mine development to prioritize asset value and ensure we have the best path forward to sustainable and profitable operations.”
