Xtract Resources PLC (LON:XTR) has pulled the plug on its Chepica gold mine in southern Chile after deciding the costs and technical challenges made it unviable.
Chepica was the linchpin of the company’s original strategy to generate cashflow quickly, but Xtract now does not think the mine can consistently produce 10,000 ounces of gold per year.
Transport and equipment costs are coming in higher than previously forecast and with revenue to take longer than expected to build up funding this would be prohibitive.
Accordingly Xtract will not make any future option payments and will relinquish its option and mining rights at Chepica on 15 October said executive chairman Colin Bird.
"The Chepica mine has been challenged technically and commercially for an extended period.
“The technical challenges received a further set back in late 2015 when the region experienced a major earthquake and, separately, a tragic dual fatality at the surface plant.
Our internal review concludes that a new operator, with a separate input capital structure and operating experience in Latin America, may be able to achieve the operating returns required for new investment.”