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New Gold

(NGD) - Get Report

shares tumbled Thursday on above-average volume after the gold producer halted operations at its Cerro San Pedro mine in Mexico.

New Gold suspended mining activity after Mexico's environmental protection agency nullified the company's environmental permit, putting it out of compliance with Mexican regulatory agencies. The Canadian mining company said it is seeking to immediately resolve the issue and has appealed the ruling to revoke its license.

Although New Gold cited a long-standing record of cooperation with environmental and social standards , it has faced opposition from groups who oppose the company's presence in the historically significant area. Although mining activity can't continue until the matter is resolved, New Gold said it will move ahead with gold recovery operations in the meantime.

Shares of New Gold fell by 70 cents, or 16.1%, to close at $3.65. Earlier in the session, the stock touched an intraday low of $3.42. Nearly 13.5 shares changed hands during Thursday's trading session, compared to the stock's three-month average daily volume of 2.2 million, according to Yahoo! Finance.

New Gold has a 298.5 million-share float and 3.4% of the company's shares are held by insiders with another 35.7% owned by institutions.

-- Written by Melinda Peer in New York