Australian miner MMG will halt gold operations at its Sepon mine in Laos,and concentrate on copper production, effective December 2013, the HongKong-listed producer said in a filing to the Hong Kong Stock Exchange Monday,citing exhausting ore reserves and reduced margins.
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"This will cause the gold plant being placed on care and maintenance,while the Sepon operation concentrates on copper production," MMG said. "Halting gold operations at Sepon is needed to preserve the Seponbusiness' strong contribution," CEO Andrew Michelmore said.
"Sepon gold oxide reserves have been exhausting for some time now, withprevious forecasts that production would stop in 2011," he said.
"Higher strip ratio and lower gold price is boosting production costs."
In spite of some shared fixed costs between copper and gold operations,the C1 cost of producing gold has doubled since 2012 to $1,880/mt in the firsthalf 2013, while the gold price at end-H1 was about $1,198/mt, MMG said.
Meanwhile, Sepon will keep on exploration activity for both gold oxideand primary gold in Laos and review restarting gold operations when value canbe made for shareholders, it said in the filing.
Since the start of operations in December 2002, the Sepon gold operationhas produced more than 1.2 million oz of gold through open pit mining andconventional treatment of oxide gold ore, MMG said.
The Sepon copper operation began production in 2005, and by early 2011 acopper expansion project had boosted annual cathode production capacity from65,000 mt/year to 80,000 mt/year, the company said.
--Joshua Leung, firstname.lastname@example.org--Edited by Haripriya Banerjee, email@example.com