PERTH (miningweekly.com) – Gold developer Tanami Gold has called a halt to its current Coyote mine operations, and has deferred a development decision on its Groundrush project as gold prices declined.

The miner said this week that an operational review had been undertaken in response to the prevailing market conditions, with the board assessing the current status of both operations, and feasibility studies currently in progress, as well as the development case for the company’s future projects.

The board took the decision to place the Coyote treatment plant on care and maintenance, noting that mining from the nearly exhausted Motley lode was winding down.

It was expected that this would take place by the end of June this year, and that the future of the Coyote mine would be dependent on the possible development of the Kavanagh lode, which was recently discovered and was undergoing feasibility studies.

However, Tanami said that the uncertain commodity price and the development case for Kavanagh did not justify that the company fund the capital cost to develop the project at this stage.

The gold miner would now broaden the scope of its feasibility studies on the Kavanagh deposit to investigate the options and costs to further upgrade the mineral resource to strengthen the investment case at the current prevailing gold price.

Furthermore, Tanami’s board took the decision to defer the development decision on the Groundrush project, switching its focus to a renewed exploration effort in order to meet key mineral resource criteria necessary to justify the project, and to secure funding for its commercial development.

Tanami chairperson Arthur Dew said that this was a disappointing outcome for the company, but noted that the board of directors believed it was in the best interest of shareholders, given the sharp fall in the gold price and the prevailing market conditions.

“We believe this is the prudent course of action to take at this time, although we are very aware of the frustration this may cause to many shareholders who have been supportive of Tanami in recent years.”

Tanami has now launched a review of its policies and procedures with a focus on restoring shareholder value. The board has also committed to a comprehensive rationalization of the company’s cost base to bring it into line with the revised operating profile and to reflect the reliance on the loan facility to meet cash requirements.

Dew said that shrinking the company’s cost base was crucial if Tanami was to restore value to shareholders.

“We fully appreciate the impact this will have on a large number of people, but the board’s primary responsibility is to respond to prevailing conditions in a responsible manner that will protect investor’s funds,” he said.

“At the appropriate time, and under appropriate conditions, Tanami will look to expand its operations again to take advantage of the underlying value of its assets.”