PERTH (miningweekly.com) – ASX-listed Reed Resources has deferred the Stage 2 and 3 development of its Meekatharra gold operation, in Western Australia, citing the current price environment and the challenging equity markets as its reasons.

Reed has undertaken a staged development of its Meekatharra operation, with Stage 1 to result in the project producing up to 134 000 oz from an openpit source at the Bluebird, Surprise, Batavia and Whangamata deposits over a 19-month period to June 2014.

Stage 2 of the operation was based on the exploitation of the Paddys Flat, Yaloginda and Reedy project areas, with production sourced both from openpits and underground operations.

Stage 3, in turn, was based on converting the remaining resource ounces to reserves, while seeking to define further resources and reserves with the aim of increasing the mine life to ten years.

“Reed’s staged strategy was devised as a means of mitigating risk, allowing for further expansion as subsequent stages are fully evaluated in light of prevailing operational performance and market conditions,” the company said on Monday.

It noted that, while carrying out Stage 1 operations, the miner had been progressing the assessment of potential Stage 2 and 3 development operations at Meekatharra.

“In light of the current gold price environment and challenging equity and debt markets for gold producers, the company has decided that it is prudent to defer the further assessment and development of Stage 2 and 3 operations until there is a sustained increase in the prevailing gold price and improvement in market sentiment,” the company added.

Reed said that while the prevailing conditions did not justify further assessment of Stages 2 and 3, the company would remain focused on delivering strong cash flow from Meekatharra, which was expected to produce some 80 000 oz over the 2013/14 financial year.

The company has also initiated a series of cost reduction and risk mitigation measures to maximise cash generation and provide operational flexibility.

Meanwhile, Reed on Monday also reported that gold production for the quarter ended June reached 12 918 oz, with production adversely affected by lower head grades and the mine-to-mill ounce reconciliation, which resulted in less material than in previous quarters.

During the quarter, gold ounces sold increased by 84% on the previous quarter to 13 474 oz.