(Alliance News) - AEX Gold Inc on Wednesday said it is deferring the development of its Nalunaq property in Greenland, saying travel restrictions imposed by the Greenland government to combat the Covid-19 pandemic make it difficult to deploy workers and meet the time frames initially envisaged.
The Greenland-focused gold miner said it would need further external capital to push Nalunaq forward, as the project has suffered a number of "very significant" cost increases compared to budget. Many of the cost overruns are related to the increased cost of logistics due to the virus crisis, it said, while others are due to price inflation for mining activities and equipment resulting from higher commodities prices globally.
Shares in AEX Gold were down 40% at 33.00 pence in London on Wednesday.
Additionally, AEX said the bulkhead supporting historic tailings at Nalunaq has been assessed as unsafe following an external consultant assessment. AEX cannot proceed with its previous development plan until this is rectified, it said.
In light of Covid-related restrictions to the movement of personnel, AEX said this represents a material risk to the successful completion of the summer 2021 development programme, while also potentially delaying production and reducing initial head grade, with a consequent drop in early stage revenue.
"The board has taken the difficult but ultimately prudent decision to defer development and gold production from Nalunaq until such time as the current pandemic subsides and the company is able to make an accurate assessment of costs and schedule," said Chief Executive Eldur Olafsson.
"AEX's intention is unwavering in executing its objective to maximise value from its vast southern Greenland gold licences. The potential to add a flotation circuit is an example of adding significant value through increasing recovery rates. Whilst we would prefer not to defer the development schedule this is a necessary action in the context of our current circumstances. We will now engage our shareholders as part of the process in developing the forward plan and report to all shareholders in due course," Olafsson added.
By Zoe Wickens; zoewickens@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
