Mandalay Resources' subsidiary has started giving notices to primary customers, suppliers, and contractors of its Cerro Bayo mine complex in Chile in an effort to terminate its contractual obligations.
The move to issue a notice of force majeure comes in the wake of a flood last month that hit the Delia 2 ramp section of the Delia NW mine, a part of the Cerro Bayo complex.
Simultaneously, the miner is also holding talks with its unions about the possible repercussions on employees during the period of suspended production.
Mandalay has started detailed investigations to understand the cause of flooding, as well as risk analysis relating to the reopening of Coyita, Delia SE, Marcela and the Raul mines.
It is also exploring several alternatives regarding the future of mining at Cerro Bayo.
As part of the review process, the company is consulting with various stakeholders, including employees, unions, and government officials.
Mandalay said it expects to provide a further update on its plans for Cerro Bayo and the impact of suspending operations on the company’s production guidance for this year.
Earlier, the company indicated that investigations will take several months and that the Coyita and Delia SE mines were not flooded and intact.
As a result of the flood, two miners went missing. The company conducted search operations in partnership with Chilean authorities, military agencies, local companies and other bodies.
Operations were later called off and the miners were declared dead.
Based in Canada, Mandalay Resources has producing assets in Australia, Chile, and Sweden.