Argentinian precious metals miner Patagonia Gold has announced the closure of its Lomada de Leiva mine and the idling of the Cap Oeste operation, owing to lower-than-expected production volumes from both operations.
The Aim-listed company said on Tuesday that the Lomada de Leiva, which was reopened in November, would be closed at the end of February. The company had planned to recover 10 000 oz of gold over a 12-month period from Lomada de Leiva, but the mine had failed to deliver to expectations and was not covering operating costs.
“Given the nature of the project there are no options for scaling production and therefore the company has decided to cease production.”
At Cap Oeste, the mine was closed in July 2018 and for the remainder of 2018 operations consisted solely of reprocessing of the ore previously placed on the heap leach. The re-processing of ore was expected to cease in May 2019 following production of an estimated 6 300 oz of gold equivalent. However, given that current monthly production is about 1 000 oz, which is not expected to increase over coming months, the company has decided to place the operation under care-and-maintenance.
The company is still evaluating the development of the high-grade underground resource which contains about 300 000 oz of gold equivalent at 20 g/t gold.
Patagonia reported that it was discussing future financing alternatives with its major shareholders.
Shares in the company dropped sharply on the news, halving to 47.30p a share by 13:40 in London, compared with 95p a share the previous day.