Silver Lake Resources has conceded defeat at its Murchison operation, announcing this afternoon it would shut down the gold mine, costing 127 workers their jobs.
The job losses would comprise 42 Silver Lake employees and 85 contractor jobs.
The company has struggled to make the mine pay since the falling gold price last year forced it to rethink the opening of higher grade underground mines at Murchison.
Silver Lake made the announcement that it would shut the mine in the June quarter while announcing a $47 million loss for the six months to the end of December.
The gold miner said it would instead focus on its profitable operations at Mount Monger.
After finishing the December half with only $8 million in cash and $8.7 million in bullion, Silver Lake has also launched a $39 million capital raising by way of a placement priced at 60 cents a share.
The company said it would use the cash injection to cover the costs of mothballing Murchison and for its expansion plans at Mount Monger.
About $12 million is anticipated for redundancy payments and site contract restructuring expenses.
The ongoing care and maintenance cost for the mine is estimated at $120,000 a month.
Silver Lake managing director Les Davis said continuing production at Murchison was unsustainable at the current gold price so the company had to take decisive action by placing it on care and maintenance in the June quarter.
"This decision preserves a number of strategic options for the company including recommencing operations in the event of a higher sustainable gold price," he said.
"The company intends to focus capital on further optimising and funding growth projects at the low cost Mount Monger operations."
Silver Lake shares were in a trading halt today, having last changed hands for 68 cents.