TORONTO (miningweekly.com) – Aim-, ASX- and TSX-listed Allied Gold has received a cease work order from the Mineral Resources Association of Papua New Guinea, where the company operates the Simberi gold mine, it reported in a statement on Wednesday.

The gold-miner also revealed separately that its local subsidiary has launched legal recovery action against contractor Intermet Engineers and a former director of that company, for alleged breaches of contract.

As far as the cease-work order is concerned, Allied said it has received legal advice that the order is invalid and has lodged an appeal.

In the meantime, processing and mining operations at Simberi have been temporarily suspended.

Since the Simberi mine started operations, the company has not been advised by any government department that it was in breach of any of its operating permits and conditions, Allied said.

The company said it is optimistic that operations will resume soon.

“The company will keep the market updated, however it is confident that through normal due process and negotiation the matter will be resolved satisfactorily and expediently.”

BREACH OF CONTRACT

Allied is seeking damages of not less than A$12-million from Intermet and former director Garry Thomas, the company said on Wednesday.

Intermet was contracted to design, procure and manage the construction of gold processing and related facilities for the Simberi oxide gold project.

Allied claims that “Intermet is in breach of the express and implied terms of the contract and Intermet and Garry Thomas have engaged in false, misleading and deceptive conduct,” the company said.

The firm is also seeking damages for contraventions of the Trade Practices Act, Fair Trading Act and damages.