TORONTO (miningweekly.com) – Vancouver-based Pacific Rim Mining will defer the completion of a feasibility study for its El Dorado project, because of volatility in the capital cost estimates, as well as permitting uncertainty, the firm announced on Thursday.
Pacific Rim will conserve its cash until the input costs for the project have stabilised, and the study can accurately reflect factors like commodity prices and capital equipment costs.
“We see no need to spend precious capital to complete a study with an already invalid cost basis. We will wait for clarity on the timing of our permit and stabilization of the prices for capital and operating inputs,” said president and CEO Tom Shrake.
As prices for steel and fuel decline, miners are finding that capital equipment is becoming cheaper and easier to acquire and operate.
“Key input parameters used in the feasibility study have become obsolete as the global recession runs its course,” the Pacific Rim commented.
“The company believes this volatility will continue and that capital costs and commodity values will remain in a state of flux for the coming months, a position echoed by numerous industry analysts.”
The El Dorado gold/silver project is located 65 km east of San Salvador in South America, and could produce some 80 497 gold-equivalent ounces over about six years, according to a 2005 prefeasibility study.
The company has been waiting for some time for the mining permit to be awarded, and announced in July 2008 that it would scale back drilling activities and reduce its workforce until the government of El Salvador indicated its willingness to move ahead with the permitting process.
The firm has since begun to initiate international arbitration proceedings against the government.
Pacific Rim shares declined 1,75% on Thursday, to C$0,28 apiece by 12:14 in Toronto.
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