Leagold closing Brazil mine for two months due to drought

The RDM mine is located in Minas Gerais State, Brazil, about 560 km north of the state capital city of Belo Horizonte. (Image courtesy of Leagold.)

Canada’s Leagold Mining (TSX:LMC) has had to temporarily shut down its Riacho dos Machados (RDM) mine in Brazil as a result of continued drought conditions in the country’s Minas Gerais State.

The Vancouver-based miner said it planned to resume operations in early December, with the commissioning of the grid powerline project.

RDM was closed in August last year and restarted, on an intermittent basis, in early November with the onset of the region’s rainy season.

Riacho dos Machados (RDM) mine will be closed for about two months.

This year, the mine remained operational until earlier this month as the processing plant benefitted from the water dam and pipeline that became operational in the second quarter of 2017, chief executive Neil Woodyer said in the statement.

The shutdown, Woodyer added, is expected to provide time for water to accumulate in the reservoir to support continuous operations.

Leagold expects to spend about $5 million a month in October and November during the mine shutdown, with $1.5 million needed to complete the powerline and $4 million to finish a tailings dam lift. It will also evaluate ways to reduce water consumption and ramp up the processing plant from 7,000tpd to 9,000tpd.

Due to the unplanned two-month, Leagold will have to update its 2018 full-year production guidance when delivering earnings report for the third quarter of the year.

The Latin America-focused company had disappointed the market in August with a lower-than-expected updated 2018 production guidance, reflecting the inclusion of the RDM, Fazenda Brasileiro and Pilar mines in Brazil through its acquisition of Brio Gold.

It had then put guidance at 325,000-350,000 ounces of gold at an all-in sustaining cost of $940-$975 an ounce.