Ascot shares plunge after suspending Premier gold mine

Ascot Resources announced on Friday that it will suspend operations at its Premier gold mine in the Golden Triangle in northwestern British Columbia to prioritise mine development. 

The suspension comes less than five months after first gold was poured at the mine on April 20. Following the announcement, the North American developer's share price plunged 65%, closing at C$0.19 on Friday - the lowest level since 2018.

Over the past two months, the company has reported positive progress with its mill operations, with gold production targets exceeded. But delays in mine development at the Big Missouri deposit and the Premier Northern Lights (PNL) mine have resulted in insufficient ore supply to sustain the mill's capacity, Ascot said in a statement. 

"The mill operations have progressed well; however, mine development has fallen behind schedule," the company said.

While the Canadian miner expects to receive the first development ore from PNL this month, further work is necessary to access deeper resources, which could extend the development period.

As a result, Ascot will temporarily suspend operations to focus on necessary mine development. This will allow the company to increase ore production from Big Missouri and PNL to meet the mill's requirements for profitable operation. The company is currently seeking funding to complete this development work.

The initial estimate suggests three to six months of development, primarily at PNL, with the final timeline subject to further assessment and cost calculations. Ascot said it has sufficient cash reserves to manage the suspension through the winter and maintain environmental compliance programs. Discussions with secured creditors regarding obligations during the suspension period are ongoing.

"This is a difficult decision for all stakeholders, especially our employees and contractors," chief executive Derek White said. "We believe prioritising mine development is crucial to maximise asset value and ensure a sustainable and profitable future for the operation."

There is no guarantee Ascot will secure the necessary funding or successfully restart operations after development, but the company remains optimistic about the long-term viability of the project.