Junior miner Focus Minerals has announced plans to halt operations at its Laverton Gold project due to rising costs and falling commodity prices.
In a business update yesterday Focus said a “dramatic” fall in gold prices, coupled with rising costs, had made the project unprofitable.
The Laverton project is an open pit operation that produces around 100,000 ounces of gold per annum, with the ore processed at Barrick Gold's nearby Granny Smith mill.
Focus chairman Don Taig said the tough economic climate meant Laverton had to be closed down in order to protect its assets.
“We have a significant, highly prospective landholding in the Laverton region surrounding four major mines with over 20Moz between them. We are not about to deplete our current reserves base just to break even,” he said.
Taig said improvements to the business had not been enough to keep up with rising costs, and he painted a dim outlook for the sector unless stakeholders were able to work together to introduce new practices.
“The high cost base in the Australian mining industry and rising mining inflation of the past few years has seen all of the reductions and operational improvements we have been delivering continue to be consumed,” he said.
“These are pressures that are being felt right across the industry and impacting the competitiveness of Australian mining.
“A sharp fall in commodity prices always provides a clear lens for the industry on just how bad this has become.
“The high Australian dollar is not assisting business either and it is my view that unless all industry participants – capital, labour and government work quickly and earnestly together – the industry is in for a lean time.”
Taig said a strategic review of the business had been underway since early this year, and Focus was exploring new opportunities for organic growth, and had “one of the largest bank balances of any gold miner on the ASX”.
You can read Focus's full business update here.