Mining gold in the Amazon forest in Brazil is always going to be difficult, the logistics of such an operation would be enough to dissuade most from trying, but Serabi Mining had assured investors in July that production was back on track after delays bringing heavy equipment to its Palito mine.

Yesterday, Serabi plunged 7.87p to 1.13p after it said that production at the mine had dropped below its targets and that Palito would have to be mothballed if talks with investors to raise new money failed. To increase production would require the opening of new, deeper seams, which would require a cash injection.

Palito, which Serabi bought in 2001 along with exploration rights in a 5km area around it, was supposed to be the model for future potential mines in a region that was the focus of a gold rush by artisanal miners in the Eighties. The company says that it is struggling to find and retain staff with expertise in narrow-vein mining, after several operators of key equipment have quit. The bigger picture is that the gold price has fallen 25 per cent from its record $1,000 high in March and rose yesterday only because investors sought a safe haven from the financial crisis.

This week, Arbuthnot highlighted Yamana Gold, up 64p at 505p, and Randgold Resources (see above) as likely to benefit. The Russian-based Highland Gold Mining rebounded 16¾p to 44p after a 36¼p fall on Tuesday. Roman Abramovich, the owner of Chelsea Football Club, bought 40 per cent of Highland in December on condition that he could appoint his own chief executive. Yesterday he did that, replacing Henry Horne, who is leaving “for personal reasons”, with Valeri Oif, the former Sibneft oil executive.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive