Newcrest closes gold mine on Halmahera
Newcrest closes gold mine on Halmahera
MELBOURNE (Dow Jones): Unrest on the Indonesian island of Halmahera has again forced Australia's Newcrest Mining Ltd. to shut its Gosowong gold mine and evacuate staff.
Some 300 people have been shifted to Manado, since violence escalated on the island last week. Eight people died and another 18 were injured on Halmahera last Friday and Saturday in religious clashes, according to the official Antara news agency.
This is a "precautionary measure" following further civil unrest in the northern part of Halmahera island, the company said in a statement.
Newcrest said the mine won't reopen until "stability is reestablished."
Similar troubles at Gosowong last year have already wiped the value of the mine off Newcrest's share price, but further disruptions could still damage the company's cashflow and its appeal relative to other Australian producers, said analysts.
Shares in Newcrest Mining fell 4.6 percent, or 20 cents, to A$4.15 on the Australian Stock Exchange Tuesday while the gold sector fell 1.9 percent. The broader market lost 0.6 percent.
Newcrest owns 82.5 percent of Gosowong and the balance is held by PT Aneka Tambang, a gold and nickel producer controlled by the Indonesian government.
No threats have been made against the mine or its employees, the company said.
Gosowong poured its first gold in July, and is designed to produce 154,000 ounces of gold a year over a five-year period.
Production has been running at a higher annualized production rate as the mine works through high grade ore. In the quarter ended Dec. 31, Gosowong produced 81,291 ounces of gold, representing 30.8 percent of Newcrest's total output of 263,898 ounces for the period.
In August, the mine had to close for nearly a week due to unrest at two villages about 30 kilometers away, and in October the mine was operating with skeleton staff due to similar troubles.
Last week, Iluka Resources Ltd.'s 75 percent owned PT Koba Tin unit halved its output at operations on Bangka Island due to increasing tensions in the province.
Koba Tin, which is 25 percent owned by the Indonesian government's PT Timah, "has been affected by a breakdown of law and order in the region resulting in the uncontrolled theft of tin concentrate from the production sites," ILuka said.
Broken Hill Proprietary Co. and Rio Tinto Ltd., the largest Australian resource companies with Indonesian operations, both said they haven't been affected by the unrest.