Ascot Resources (TSX: AOT) has made the decision to place its flagship Premier gold project in northwestern British Columbia on care and maintenance after talks broke down with its mining contractor. Shares of the company plunged.In a press release Wednesday, the Vancouver-based gold developer said it had been locked in negotiations with Procon Mining after the latter proposed to raise price for services provided at Premier, but the talks did not result in a satisfactory outcome for both parties.In addition, it said negotiations with alternative mining contractors have also dragged on, resulting in delays in mobilizing a mining fleet to the Big Missouri deposit, which is a critical part of the mine’s restart plan. In order to preserve capital, the company has determined that the best path forward is to place Premier on care and maintenance, Ascot said.Shares of Ascot Resources sank to a new 52-week low of C$0.06 apiece, for a loss of 33.3% on the day. The company’s market capitalization has now fallen to C$97 million ($71 million).Strategic reviewWith the latest setback, the company has initiated a strategic review process. Pausing the Premier project, it says, would “provide the management team with the time and flexibility to assess strategic alternatives” to advance it toward sustainable production.“In the five months since the new management team took over, we have made significant progress. However, like many mine construction projects, operational challenges continue to surface, which in turn take time and capital to address,” stated Ascot CEO Jim Currie.“Over the next couple of months, we will be assessing our options to help us access the capital needed to successfully bring the project into sustainable production,” he added.Historic mineThe Premier gold project, located 25 km from the town of Stewart, BC, is home to a former underground gold mine that opened in 1918 and included four deposits – Silver Coin, Big Missouri, Premier and Red Mountain.While in operation, it was the largest gold mine in North America until its surface buildings burned down, leading to its closure in 1952. By then, the Premier mine had produced over 2 million oz. gold and 45 million oz. silver.Ascot has been working to return the historic site to production and successfully poured its first gold last April. However, operations were put on hold after just five months due to insufficient underground development.The company initially aimed to resume gold production again in August after securing over C$100 million since it halted mining last September.
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