Production has been suspended at the Malaga Inc. (TSX:MLG,OTCQX:MLGAF) Pasto Bueno tungsten process plant. The Plant is currently in care and maintenance due to the hydro-electric transmission line being accidentally severed and several transmission poles damaged causing a complete power outage to the plant and mine.
As quoted in the press release:
Work to repair the power line is expected to take four weeks. The Corporation is maintaining its mining operations at a reduced pace.
Cash flow from operations at the Pasto Bueno property has been lower than expected in 2012 due to the decrease in the production of tungsten caused mainly by lower head grade of the ore extracted and a reduction in selling price of tungsten. Operational improvements have not yet been fully implemented and there have been delays in building a decline ramp to access ore in lower levels of the Huayllapon zone (see news release of August 15, 2012 and management discussion and analysis of Q2-2012). The cost of building the new tailing pond is also higher than expected. Malaga is implementing various cost reduction measures at the Pasto Bueno property, the head office in Montréal and its office in Lima, Peru.
Malaga President and CEO Pierre Monet said:
We intend to return to full production once we secure the necessary financing and will also review the mine development plan to improve our operational efficiency.