Colossus Minerals warns of Brazil project delay, more capital needed
TORONTO (miningweekly.com) – Gold junior Colossus Minerals this week announced that first production from its Serra Pelada mine, in Brazil, would be delayed as a result of higher-than-expected water inflow at the site.
The Toronto-based company said management was currently evaluating the amount and timing of additional funds required to deal with the impact of the delay.
As a result of the announcement, investors punished the company’s TSX-listed stocks on Monday, shaving half the value off its shares. On Wednesday, the company’s stock traded at C$0.81, compared with a price of C$1.70 on Thursday last week.
Colossus said it had encountered challenges with dewatering wells and pumps in the central mineralised zone at Serra Pelada, which required additional dewatering capacity and had delayed gold production.
The company was continuing its decline development to have multiple horizons ready for mining in 2014 and had made progress with the construction of its process plant.
Gold streaming company Sandstorm Gold said the delay in production was not expected to impact Sandstorm's 2013 production guidance of between 33 000 and 40 000 attributable gold-equivalent ounces.
The delay at Serra Pelada was not currently expected to affect the development timeline for the platinum/palladium flotation circuit, which was expected to start processing material in late 2014.
Sandstorm had a precious metals stream agreement with Colossus to buy 1.5% of the gold and 35% of the platinum produced from Serra Pelada at $400/oz of gold and $200/oz of platinum.
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