Avocet Mining has announced the suspension of work of its Inata gold mine located in Burkina Faso after reporting the mine’s production and cash costs for the third quarter of 2016.

Total gold production at Inata in the third quarter was 17,694 ounces (oz) at a cash cost of $1,047 per ounce (p/oz).

In the second quarter, this mine produced 21,086oz of gold at the cash cost of $903 per ounce (p/oz).

Production in the last quarter was significantly less due to lower recoveries and maintenance work at the plant.

"Production in the last quarter was significantly less due to lower recoveries and maintenance work at the plant."

Furthermore, some mechanical issues affected the production.

In the last quarter, ore was mined from north, centre-west and south-east Minfo, while work continued towards the completion of the North Pit pushback.

The company also stated that after the seizure of a gold shipment from the Inata mine on 7 October, no further shipments have been made from the mine. They challenged this gold seizure on a hearing held on 24 October and the verdict is scheduled on 7 November.

With the potential threat of further gold seizures, Société des Mines de Bélahouro, the owner of the mine, has decided to suspend mine operations from 27 October.

A core team will remain at the site to ensure maintenance of the mill and a smooth restart in future.

A prolonged suspension of operations may, however, mean that the mine may not resume its activity without significant investment.

In particular, funding will possibly be required to support the Avocet's head office operations ahead of completion of the Tri-K transaction, which, subject to shareholder and regulatory approvals, will result in the receipt by the company of an initial consideration of $4m ($2.5m after costs).

In the near future, a meeting will be held in the capital of Burkina Faso Ouagadougou between the representatives of the mine, its workforce and government officials to find a resolution and avoid a prolonged cessation.

If funding is required before completion of the Tri-K transaction and such funding is not available from Inata or the company is unable to secure alternative funding, the company will potentially enter an insolvency process.