Pegasus Gold Inc. announced Friday that it will write down $353.3 million, or $8.55 per share, on the Mt. Todd Mine in Australia.
Pegasus is suspending operations and placing the mine on maintenance status “given the continued deterioration of the gold price and cost of this project,” said Werner G. Nennecker, company president and chief executive officer.
During the third quarter, Mt. Todd reached 84 percent of through-put capacity, but gold production and operating costs fell short of feasibility expectations, the company said.
Due to the write-down, Pegasus is in default of certain restrictive covenants under the terms of a $150 million revolving credit facility.
Nennecker said the company is working with its lenders and financial advisers who specialize in restructuring “to investigate alternatives.”
As part of a “cash conservation plan” Pegasus is considering curtailing certain mining operations, scaling down its exploration program and deferring capital expenditures.
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