TORONTO (CP) -- Central Sun, already operating the Limon gold mine in Nicaragua, had earlier entered into a non-binding term sheet with the bank for $22.5 million to complete the Orosi project, on which it has spent $31 million to date and which was expected to be competed next spring.
However, "due to the current global financial situation, the banking institution was unable to proceed with the debt financing," the company said.
It is "continuing active discussions with various other financial institutions," but has "temporarily suspended" work at Orosi, acquired in July 2006 and being converted from a heap leach operation to a conventional milling system to increase gold recoveries.
The company "will implement various cost-cutting reductions throughout its activities, where necessary," while continuing to operate the cash-flow-positive Limon mine.
"Central Sun has unfortunately been negatively impacted by the current financial situation," stated CEO Peter Tagliamonte.
"We continue to work diligently to secure the required funding to restart and complete the Orosi mine expansion project. We are confident that we will be successful, as the Orosi mine project is very advanced with approximately six to seven months remaining to bring the mine back into operation at a production rate of 80,000 ounces per year."
Central Sun stock declined two cents to 20 cents on the TSX, down from $2.50 last spring and representing a market value of $12.2 million.
(c) The Canadian Press