TORONTO (miningweekly.com) – The TSX-listed stock of North American miner Veris Gold lost more than half its value on Wednesday afternoon after the company revealed that it had defaulted on two forward gold purchase contracts with Deutsche Bank’s (DB’s) London branch.

The Vancouver-based midtier company, which is operating the Jerritt Canyon processing plant and gold mines located 80 km north of Elko, Nevada, said it had failed to make the monthly December gold delivery, or pay the cash equivalent of the gold delivery shortfall. This was the result of an electrical accident resulting in a fire that occurred in the primary crushing building at the Jerritt Canyon mill operations.

The fire resulted in a temporary suspension of operations, which negatively affected output during December.

Veris said the forward gold purchase contracts with DB did not contain a force majeure provision, that would have allowed Veris to temporarily suspend its obligations under the contracts owing to circumstances beyond its control.

The company said that DB had now issued it with a ‘notice of default’ and that DB was considering what actions, if any, it would take. This included assigning DB's rights and obligations under the agreements to a third party, or taking ownership on the security pledged, which was Veris’ direct and indirect interest in the Jerritt Canyon mine.

Veris said that DB had recently announced it would close and divest its mining loan portfolio over the next few months, which had prompted Veris to start negotiations with several third parties to buy the existing DB forward gold loans with restructured and lengthier terms.

Veris ownership of the Jerritt Canyon property began in June 2007, when Queenstake Resources merged with YGC Resources to form Yukon Nevada Gold (YNG). As part of this merger, YNG acquired the wholly owned subsidiary of Queenstake Resources USA, which owned and operated the Jerritt Canyon mine. As of October 5, 2012, YNG changed its name to Veris Gold. In January 2013, Queenstake Resources USA changed its name to VUSA.

The Jerritt Canyon mine has been in operation since 1980 and has produced more than eight-million ounces of gold. Ore is currently sourced from the Smith, SSX-Steer and Starvation underground gold mines.

On Wednesday morning, Veris’ stock traded as high as C$0.30, only to close at C$0.13 apiece.