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LeaGold suspends Riacho dos Machados mine in Brazil due to regional drought

LeaGold Mining Corp. has temporarily shut down its Riacho dos Machados mine in Brazil's Minas Gerais state due to continued regional drought conditions, it said Oct. 10.

"Our plan is to delay the restart and align it with the commissioning of the grid powerline in December, which also allows for ample water to accumulate in the reservoir to support stable and continuous operations," said CEO Neil Woodyer.

LeaGold was prompted to close the mine in August 2017 on an intermittent basis due to insufficient water supply. Operations were resumed in early November 2017 with the onset of the region's rainy season.

The company will be evaluating opportunities to reduce overall water consumption and the minor plant modifications needed to ramp up the processing rate from 7,000 tonnes per day to 9,000 tpd, supported by increased power supply from the grid connection, Woodyer added.

Expenditures during the mine shutdown are estimated to be around US$5 million per month in October and November, while the CapEx to complete the powerline is estimated at US$1.5 million. During the suspension period, the company is targeting to complete an in-progress tailings dam lift with total costs of around US$4 million.

LeaGold expects the completion of these projects at the RDM mine to support stable production at the site going into 2019.

Due to the unplanned two-month shutdown of RDM, LeaGold will update its 2018 production guidance with its third quarter financial results.

The company said in a same-day release that it appointed Adriaan Roux to a newly created role of COO for an initial term of six months.