Golden Band Resources (TSXV: GBN) is indefinitely suspending its Roy Lloyd and Golden Heart gold mines and the Jolu mill in northern Saskatchewan, starting Jan. 1, 2014.
The Saskatoon-based firm expects its operations to be offline for at least six months and is not certain when they may restart. Over 200 employees are set to lose their jobs as a result.
The junior producer notes that despite the improvements and cost reductions on its operations, the falling gold price and lower-than-planned grades from the Roy Lloyd underground mine and Golden Heart pit have undermined its ability to produce a profit.
To maintain its cash position, Golden Band will place the mines and mill on care and maintenance and evaluate ways to make the operations economic. On that end, it plans to retain consultants to outline “more effective mining plans.”
It says temporarily shutting down the operations is the best way to preserve its dwindling cash balance. Golden Band had $3.4 million on hand at the end of July 2013.
Paul Saxton, the company’s CEO, said that while the mines will shut down in January, milling will continue throughout the month until the stockpiled ore on-site is processed.
For the operations to resume and be profitable, Saxton noted the gold price should be at least US$1,400 per oz.
Meanwhile, Golden Band is completing a 5,000-metre drill program at Roy Lloyd to better define the ore grade and extend the mine life. It is also continuing geological, mining and permitting studies at its other deposits in the La Ronge gold belt in northern Saskatchewan. Some of its priority La Ronge targets include: Decade, Komis, Golden Heart and the 50%-held Greywacke deposit. Masuparia Gold (TSXV: MAS; US-OTC: MUPGF) owns the rest of Greywacke.
On Feb. 26, 2013, Golden Band froze mining at its 100%-held Komis gold deposit to finish a detailed mine plan and free up equipment and personnel to build a road access to the Golden Heart deposit. It also stopped milling at Jolu and spent the next five months upgrading the plant, which restarted on Aug. 1. Meanwhile it continued mining at Roy Lloyd and stockpiling ore. The Komis project remains under review.
Golden Band recently closed at 1.5¢, within a 52-week range of 1¢ to 14¢. It has a $4.3-million market capitalization and 284.7 million shares outstanding.
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