Minmet said yesterday that production at its Bjorkdal gold mine in northern Sweden fell to 277,584 tonnes of processed ore from 296,852 tonnes a year earlier.

During the quarter, the company decided production should revert to stockpile ore to allow the board to re-evaluate the mining options available.

"It is unfortunate, but not uncommon, in mining that during the restart of in-pit mining operations that the anticipated ore grades required to operate a mine at a profitable level are not achieved immediately and that further definition drilling is required to add to the level of confidence," Minmet chief executive, Michael Nolan, said.

The company has taken various restructuring measures to minimise cash outflows at the mine, including staff reductions and renegotiation of longer-term supplier contracts.

Minmet said it was also focusing on the exploration potential of the Bjorkdal land package with the aim of a new satellite discovery.

It is also negotiating with potential customers for crushed rock, used in road building and production of tarmacadam, which can be produced as a by- product from the existing crushing process.

Minmet said it was making progress toward an initial target to sell this type of aggregate material to the value of 1.5 million Swedish kroner (€164,000) in 2005.

The company said it recently had "tentative approaches concerning joint venture and third party corporate actions over the Bjorkdal property".