Investors in Avocet Mining (AVM) have been spooked by the threat of a potential long-run work suspension at its jointly-owned Inata gold mine in Burkina Faso, West Africa.
Earlier this month bailiffs seized a 1,400 ounce gold shipment from the mine forcing the firm to stop future shipments.
The bailiffs work on behalf of former employees of Societe des Mines de Belahouro (SMB), the joint owner of the Inata gold mine alongside Avocet. These miners were laid off in 2014 following strike action that the mine owners claim was illegal.
Representatives of the ex-employees say the legal basis for the seizure is to address outstanding unpaid benefits. A court agreed ‘elements of pay’ are due, but an official amount has yet to be determined. SMB believes any back pay and benefits would amount to 'considerably less' than the equivalent $3.4m value of the seized gold haul.
Avocet shares have been hammered 16.9% lower at 69p. Avocet and SMB hope to continue shipments once it can ensure that they will not also be intercepted.
There is also a court hearing later today to request the lifting of the seizure, or in other words, get the gold back. But the market is concerned that if the matter cannot be resolved quickly it could lead to the shutdown of the mine with its owners concerned about their ability to meet operational costs.
