Austral Gold Limited (ASX: AGD) functions in the area of production and exploration of precious metals. Austral Gold is comprehensively building a portfolio of assets in Latin America. The company is dual-listed on the Toronto Venture Exchange and the Australian Securities Exchange.
The company today, on 4 April 2019, announced that it has completed a detailed review of operations related to the 70% owned Casposo mine in Argentina, and the operator of the mine has decided to place the mine on care and maintenance temporarily during April 2019. A lower than budgeted silver prices and lower than expected production in 2018 and 2019, has induced the company to take this decision. The mine is currently operating at a loss and markedly reducing the inventory of mineral reserves of the project due to the abovementioned factors.
Lower head grades and lower tonnage of ore extraction continued to impact the Casposo underground mine during 2019, however, this was partially offset by the new Julieta open pit operation, which was started in January 2019. 3,207 gold equivalent ounces were produced during the March 2019 quarter, which was a 90% decrease from the production of 6,101 gold equivalent ounces during the previous quarter ended 31 December 2018.
The estimated costs to place the mine on care and maintenance is approximately US$3 million, along with the repayment of US$2 million of borrowings. This situation is expected to affect 200 employees and 50 contractors. The company is currently evaluating financing alternatives to fund these costs.
The company plans to enhance the exploration activities at Casposo soon with a focus on certain advanced targets. It is also exploring opportunities to process ore from third parties that have deposits surrounding the mine to position Casposo as a central processing hub and toll treater for local exploration and development companies.
These activities will be a significant contributor to the goal of recommencing processing operations in the future as per the company’s belief. A core team of employees to oversee the site will be retained by Austral, who will also meet environmental monitoring and legal obligations and continue with exploration activities during the care and maintenance phase.
The Casposo mine is approximately 150 kilometres from the city of San Juan, which covers an area of 100.21 sq. kms. It is an epithermal deposit of gold and silver with low sulfidation.
The recommencement of operations for Casposo took place in 2016, after acquiring 51% of the economic interests of the mine from former operator Troy Resources Limited and completed an updated mineral resource and ore reserve estimate reviewed by independent consultants, Roscoe Postle Associates.
On the price-performance front, at the time of writing, i.e. on 4th April 2019 AEST: 2:40 PM, the stock of Austral Gold Limited is trading at $0.110, with a market capitalisation of ~$58.76 million. The stock has generated a YTD return of 83.33% with 29.41% and 64.18% returns over the past six months and one-month period. Its 52-week high price stands at $0.155 with an average trading volume of approximately 25,078.
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