PERTH (miningweekly.com) – Mining operations will stop at the Andy Well mine on November 1, miner Doray Minerals reported on Thursday, as the project will become unprofitable.

Doray told shareholders that while the company had undertaken a number of studies to assess the potential of combining the Andy Well underground mine and the Gnaweeda project, in Western Australia, into a single operation in order to optimise cash flow and profitability, the studies revealed a reduction in the strike length at the Andy Well underground orebodies.

As a result of this, gold production has been reduced and forecast unit costs of the operation are expected to remain high.

Doray has now taken the decision to shorten the current mine plan at Andy Well, with mining to cease at the start of November. The mine will be placed on care and maintenance.

Since starting production in 2013, the Andy Well operation has delivered some 300 000 oz of gold, and Doray told shareholders that despite a reduction in the strike length at the Wilber orebody at current mining levels, drilling has indicated that the orebody does increase in strike length at lower levels, with a significant amount of gold remaining in the estimated mineral resource.

Doray will continue to assess its options to extract value from the underground resource.

The miner said that the Andy Well underground mine had not been forecast to significantly contribute to Doray’s ongoing debt repayments, and as such, future debt repayment schedules would not be significantly impacted by the closure of the mine.

Meanwhile, a final investment decision on mining at Gnaweeda was only expected later in 2017, and current studies on the project indicated that ore could potentially be delivered as early as June 2018. Doray said that this could potentially include a recommissioning of the Andy Well processing plant.