West African gold producer Aureus Mining (AUE:AIM) slumps more than 21% to 3.25p as it reports a hit from 'unscheduled downtime' due to issues with the processing plant at its New Liberty mine in Liberia.
Aureus' share price has failed to rally with the gold price and is further weakened as the AIM and Toronto Stock Exchange (TSX) constituent warns it is 'likely to require further funding for capital investment activities to deliver improvements in operational performance'.
The £42 million cap's main focus is on the development of the New Liberty Gold Mine in Liberia, though it also owns 100% exclusive rights to the Batouri gold project in Cameroon. In a second quarter and operational update, Aureus says it produced 8,274 ounces of gold, at a cash cost of US$1,253 per ounce, prior to the shutdown of gold processing operations at its Liberia plant.
The bad news is that since the restart of processing operations at New Liberty, Aureus has experienced 'periods of unscheduled plant downtime as it works to resolve processing plant performance issues, testing and further optimisation activities'.
Unfortunately, the mining operations 'continue to be hampered by low equipment availability, with a consequential adverse effect on unit mining cost. The company is currently undertaking a review of the options to remedy the situation.' In addition, Aureus says 'management is also undertaking a full supply chain review to identify opportunities for efficiency improvements.'
Since the restart of processing operations, gold shipments have resumed, with Aureus pouring and shipping around 3,500 ounces of gold, while the Kinjor and Larjor open pits have been delivering good gold grades. Aureus explains it will apply to Liberia's ministry of Lands, Mines and Energy (MLME) for approval of the full and continued operation of the plant, 'once it has achieved steady state operations for a continuous period of 60 days'.
Aureus recently raised US$30 million from MNG Gold, now a 55% shareholder, in a move that resulted in a boardroom reshuffle. This fundraising has strengthened the balance sheet and topped-up the working capital coffers as Aureus completes the restart of the processing plant at New Liberty.
Clearly unimpressed with the update is broker finnCap, analyst Martin Potts writing: 'Notwithstanding the recent US$30 million investment by MNG Gold, the business remains undercapitalised and is likely to require further funding. Our forecasts and price target remain under review pending release of a new mining schedule, funding details and a revised debt repayment scheme.'