April 3, 2012 / 1:43 PM / 6 years ago

UPDATE 1-Merrex halts drilling at Mali gold project

April 3 (Reuters) - Merrex Gold Inc said it suspended drilling at its Siribaya gold project in Mali following a coup in the West African country.

Normal operations have been hit by factors such as operators and suppliers withdrawing expatriates from Mali, unreliable fuel supply and commercial banking interruptions, Merrex Chief Executive Greg Isenor said.

Mali is Africa’s third-largest gold producer and is regarded as a lucrative growth frontier by miners with relatively low costs.

The largely desert country relies on gold for about 70 percent of export revenue and 15 percent of gross domestic product.

Mali-focused Merrex is jointly developing Siribaya with Iamgold Corp, which operates the project. This year, the companies had planned to drill 60,000 meters at a cost of about C$11.9 million.

Merrex controls the entire project until Iamgold’s spending on the property reaches C$8.0 million, according to the Merrex website.

Merrex said drilling is expected to resume as soon as normal commerce can be conducted, but did not specify any time period.

Shares of Merrex fell 8 percent to 23 Canadian cents on the Toronto Venture Exchange on Tuesday morning, while Iamgold shares were trading marginally down at C$13.41 on the Toronto Stock Exchange.

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