Canada’s Mandalay Resources (TSX:MND) has put its Cerro Bayo underground silver-gold complex in Chile on care and maintenance as a result of a June incident that caused one of the three mines to flood, killing two workers.
Together with mothballing the mine, the Toronto-based company has “substantially” reduced its workforce at the site to preserve its financial capacity to invest in restarting operations once a technical investigation and risk assessment is concluded, it said in the statement.
Mining operations at Cerro Bayo’s three mines were suspended on June 9, right after the flooding of its Delia NW mine, in the Laguna Verde area, which contains more than 70% of the mining complex’s current reserves.
In July, Mandalay declared force majeure, cutting its guidance for the year shortly after based on the likelihood of Cerro Bayo not resuming operations before the end of the year.
Shares in the company have been hit hard since news of the accident became public, losing more than 43% of its value since its June 8 close of 56 Canadian cents. The stock was falling again on Monday, last trading 1.49% lower to 33 Canadian cents at 10:09AM ET.
Cerro Bayo, which produced around 14,000 ounces of gold and 1.7 million ounces of silver last year, is located in Chile’s Aysén region, one of the country’s least populated, but which is known for its abundance of lakes and glaciers.
The technical investigation and risk assessment to support safe future mining in the Laguna Verde is expected to be completed before year-end.