Diversified miner Straits Resources has put its Mt Muro operation in Indonesia on care and maintenance and is seeking to sell the mine as soon as possible.
The company said it had made substantial progress in its turnaround strategy for the mine, reducing costs and redesigning the mine plan to reduce waste movements without decreasing gold production.
Straits, however, said falling gold and silver prices, as well as an incident during which several buildings vehicles and equipment were damaged by illegal miners at the end of June, had caused its board of directors to cease providing funds for the development of the mine.
The company's mining contractor at the mine is Emeco Holdings' Indonesian division.
Emeco said the Mt Muro contract utilised around 28 per cent of its Indonesian division's fleet, and 4 per cent of its global equipment.
The mine's operator, Straits subsidiary PT Indo Muro Kincana, owes Emeco Indonesia around $US9.8 million, a figure largely covered by credit insurance of $US8.3 million.
PTIMK will also be expected to pay $US1.2 million in fleet demobilisation costs, Emeco said.
"PTIMK has further ongoing contractual obligations to Emeco INdonesia and has not yet communicated its intended approach to these obligations," Emeco said in a statement.
Straits managing director Andre Labuschagne said the decision to place the mine in mothballs and divest the asset was not taken lightly.
He said the miner’s first preference was to try and turn the operation around.
“However, a weak pricing environment, and the recent disruptions on site have impacted our ability to continue to fund the mine until the operations can become cash self-sufficient,” Mr Labuschagne said in a statement.
“The board has decided that the continued allocation of material funding to the Mt Muro operations could potentially risk the future of the group, and has made this difficult but necessary decision in order to conserve shareholder value.”
Mr Labuschagne said the company would turn its focus to its portfolio of copper operations, led by its flagship Tritton mine and the prospective Temora project.
“We continue to work to optimise the Trittion mine with a focus on productivity improvements and cost reduction strategies, and are working with our financier in Tritton on solutions to restructure and re-profile the existing copper swap arrangements,” he said.
At 10:40AM, WST, Straits shares were steady at 1.2 cents.
