Raub Australian Gold Mining Sdn Bhd (RAGM) has halted its operations in Raub, Pahang, pending resolution over a number of additional requirements set by the authorities.

 

In a Dec 2 statement to the London Stock Exchange where it is listed, Peninsular Gold Limited which owns RAGM, said the authorities have sought to include these to its current environmental consent.

 

It said the authorities had requested changes relating to the location of RAGM's tailings storage facilities, which would require significant changes to its tailings management plan, said Peninsular Gold Limited.

 

"RAGM has taken the decision to halt gold production at Raub pending resolution of this issue in order to ensure continuing compliance with the revised tailings management requirements.

 

"RAGM remains in discussion with the authorities as to the requirement for this new condition and whether it may be reviewed or appealed."

 

The company added that the suspension of production will nevertheless enable RAGM to undertake "important plant maintenance and improvement work during the monsoon season" which brings heavy downpours.

 

It said given the monsoon season, when tailings management is particularly important, “this is considered a prudent course of action under the circumstances”.

 

“This (suspension of production) should enable a future increase in productivity as well as better position the business to operate more efficiently, in light of the continuing low gold price.”

 

The company said operations could re-commence in Raub in the second quarter of 2015, should there be satisfactory resolution of this situation.

 

Bukit Koman villagers living near the gold mine have previously expressed a number of environmental concerns, among others over the storage of the tailings that contained cyanide to ensure that it does not contaminate the underground water in the area.

 

RAGM has last year filed a spate of lawsuits against a number of the villagers as well as Malaysiakini over its reports on the issue.

 

Suspension on trading

 

Peninsular Gold Limited also announced that it had requested a suspension of trading of its shares on London Stock Exchange’s AIM market pending clarification of its uncertain financial position.

 

The suspension was effective as of 7.50am on Dec 2.

 

The company is currently reviewing its working capital requirements during the proposed care-and-maintenance period at Raub.

 

As of Nov 30, it has available funds of approximately £320,000 and is currently looking to raise additional funds to finance its operations.

 

It currently has £1.2 million in convertible loan notes which are due for repayment on Dec 22 as well as debt facilities with its Malaysian banking partners - Bank Rakyat Kerjasama Rakyat Malaysia Bhd (Bank Rakyat) and Alkhair International Islamic Bank Ltd (Alkhair) - with £18 million of outstanding loans and which require servicing in the region of £140,000 per month.

 

The first Alkhair quarterly repayment instalment of US$750,000 is due in December 2014. The first principal repayment instalment of the Bank Rakyat loan is scheduled for June 2015. 

 

“The group will be entering into negotiations with its banking syndicate, trade creditors and other creditors. These negotiations may include suspension of capital and interest payments.

 

“In the event that the group is not able to either agree (on) appropriate terms with its creditors and, or raise new funds, then the group would not be in a position to meet its financial obligations,” it revealed.

 

“As a result of the financial uncertainty regarding the group, the board has requested that trading in the company's shares be suspended on the AIM Market, pending clarification of the group’s financial position.”

 

Attempts by Malaysiakini to contact Peninsular Gold chairperson Andrew Kam for his comments failed.