Shares in Vancouver-based Pacific Rim Mining fell 34,18% on Thursday, after the company said that it had begun scaling back operations at its gold projects in El Salvador, and would halt drilling until it was awarded a long-awaited mining permit for its El Dorado project in the country.
“The company can not continue to invest millions of dollars annually in advancing its El Salvador gold projects, particularly El Dorado, until such time as the government of El Salvador signals its willingness to proceed with development of El Dorado by granting the mining permit,” the firm said in a statement.
Pacific Rim emphasised that it would continue to work towards securing the permit, but, in the meantime, would shift its exploration spending to Costa Rica and Guatamala, which were “geologically similar but more politically stable for mining investment”.
“Unfortunately, the government of El Salvador is now stalling the process without regard to the company's rights deriving from its substantial investments in the country,” said president and CEO Tom Shrake.
“While we would vastly prefer the negotiated solution we seek, we are being forced to consider all options in order to pursue our rights under El Salvadoran law and international treaties,” he added.
The company has retrenched 42 El Salvador-based employees effective June 30, and expects that additional layoffs will occur if the permit issue is not resolved soon.
The El Dorado gold/silver project is located 65 km east of San Salvador, and could produce some 80 497 gold-equivalent ounces over about six years, according to a 2005 prefeasibility study.
Pacific Rim shares fell C$0,27, to C$0,52 a share in Toronto on Thursday.