Aureus Mining suspends processing after cyanide leak

Aureus Mining has suspended processing activity at its New Liberty gold mine in Liberia after a cyanide spillage.

Shares in the company slumped 44% to 3.63p in early trade on Tuesday after the AIM- and Toronto-listed outfit said heavy rainfall had combined with problems with the detoxification circuit in the process plant, leading to a dangerous spillage.

Aureus, which has continued mining activities at the site to build up ore stockpiles, was hopeful that operations can recommence “in the near future”, though approval will be first be required from Liberia’s Environmental Protection Agency (EPA) and the local mines ministry.

Aureus said the detoxification circuit at New Liberty facility had not been operating to its original design specifications, which has resulted in higher concentrations of cyanide WAD (weak acid dissociated cyanide) in the process effluent, though this had not led the company to cease operations.

Some recent heavy rainfall “inadvertently” then resulted in a “small overflow” of effluent from the tailings facility onto the wetlands area within the mining lease area.

Aureus said there appeared to be "no adverse impact" on any human settlement as the discharge took place within the mining lease and some five kilometres from the nearest settlement.

Remediation work was said to have begun to fix the detoxification circuit, with the EPA is "in the process" of reviewing and approving this remediation work and to manage future water discharge from the tailings storage facility.

During this temporary suspension of processing operations, the company is taking the opportunity to carry out the planned mill reline and other preventative engineering maintenance and repairs, as well as modifications to the detox circuit proposed by external consultants.

"Oh dear," said analyst Yuen Low at broker Shore Capital, noting this rather spoiled news earlier this month that Aureus’s lenders approved a further deferral of the first debt repayment to 31 May after the company completed work on its updated life-of-mine (LOM) plan.

"The spillage there has occurred at a particularly inopportune time, potentially throwing a spanner into negotiations works.

"We therefore suspend our 'buy' recommendation pending greater clarity on operational restart, punitive measures that might be imposed by the Liberian government, the impact on debt repayment negotiations and Aureus’s financial position."