New Gold shuts mine after Mexico court ruling

UPDATE 1-New Gold shuts mine after Mexico court ruling 10:09 EST Thursday, November 19, 2009

* Cerro San Pedro mine suspended after ruling

* Gold recoveries from mined ore continuing

* Shares down 17 percent

TORONTO, Nov 19 (Reuters) - Shares of New Gold Inc dropped more than 17 percent on Thursday after the company said it had suspended mining at its Cerro San Pedro mine in Mexico following an order from authorities in the country.

In a statement, the Canadian company said it was pursuing all legal appeals and cooperating with Mexican authorities following the order, which was issued on Wednesday.

New Gold said mining has been stopped, but gold recovery continues from mined ore.

It said the Mexican environmental protection agency nullified the mine's 2006 environmental impact statement following a ruling by a Mexican federal court.

New Gold said the mine, which was expected to produce between 90,000 and 100,000 ounces of gold this year, has been operating in full compliance with required permits and government authorizations.

New Gold's shares were down 78 Canadian cents at C$3.76 on the Toronto Stock Exchange. ($1=$1.07 Canadian) (Reporting by Cameron French, editing by Gerald E. McCormick)