Coastal Gold has shelved a piece of work required for the start of a new gold mine at Hope Brook, near Burgeo.
The former Hope Brook gold mine pit, which closed in 1997.
The junior mining company has halted its preliminary economic assessment (PEA) work in response to a low stock price and a general lack of investment, despite positive results in its efforts to prove up the available gold at site.
The company had good results from exploratory drilling in recent years, adding to the proven resource, and also discovered that further gold could be recovered from tailings left from previous mining operations in the area.
“Basically, even though we put out some excellent results with that resource update and the tailing resource, obviously our stock hasn’t moved anywhere because of the overall market conditions that have been decidedly negative on the junior mining sector,” said Bill Pearson, Coastal Gold’s president and CEO, when reached in Toronto Tuesday.
“We’ve made a lot of progress on the PEA. We clearly need to do some more engineering work, but at the present time we felt the best move was to put everything on hold for the moment, conserve funds and wait until this market turns.”
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He said the issue is not the price of gold.
“The problem right now is that the market psychology is just totally out of the resource area,” he said.
Regardless of the reason, the decision means a longer timeline before a new mine might be seen in the area.
Pearson, a veteran geologist, has been working on exploration at the Hope Brook site since 2010, when Coastal Gold was operating as Castillian Resources, prior to a merger that resulted in a cash injection into the junior’s exploratory work.
“I’m still very, very positive on the potential of Hope Brook,” he said.