Red 5 cites regulatory uncertainty as it shuts Philippines gold mine

PERTH (miningweekly.com) – Mining operations at the Siana gold mine, in the Philippines, have been suspended with immediate effect, ASX-listed Red 5 reported on Tuesday.

The company said the decision was taken on the back of uncertainty around regulatory and government mining policy and the group’s assessment of the likely resulting changes to openpit operations after taking into account the delays in the approval of the environmental compliance certificate amendment for the long-term tailings storage facility and other mining challenges.

Red 5 was in January forced to revise its operational strategy and openpit mine plan for Siana, after delays in obtaining regulatory approvals for the amendments to its environmental compliance certificate.

The company stated on Tuesday that while the decision to suspend mining was not taken lightly, it was the best way to preserve the significant inherent value of the large in-situ gold inventory and the infrastructure at Siana, and to protect the company’s balance sheet and shareholder interest.

Underground mine development has also been suspended, and a notice will be given to the underground mining contractor to cease activities and demobilise equipment. A February 2016 feasibility study forecast underground production of about 60 000 oz/y at an all-in cost of $930/oz to 980/oz over eight years. Underground development started in the second half of last year.

Based on Red 5’s current cash position, the company had sufficient funds to maintain the assets in good standing, and if necessary, continue the suspension of operations for a period of at least two years.

The Siana mine produced 35 527 oz in the first half of the 2017 financial year.

Red 5 is listed on the ASX and the Siana mine is its only producing asset. The company’s stock fell 32% to A$0.04 a share on Tuesday.