This announcement has come following the board meeting last Friday to decide the future of Tolukuma.
Petromin board chairman Sir Brown Bai said in a statement that the decision is being considered as attempts to bring in a credible partner has not been successful.
"High operating costs and continuous subdued gold price has been a challenge for TGM and Petromin to continue with the operation and sustain the cash support required on an on going basis.
"Petromin has been losing money funding TGM for the last four years and with falling gold prices, Petromin can no longer sustain TGM," Sir Bai said.
He says the management has been advised to consult with appropriate regulators and stakeholders before a final decision is taken.
"The Board is aware of regulatory issues that Petromin has to comply with and as a Papua New Guinean company owned by the State, we wish to be responsible in terms of meeting various compliance requirements.
"The process of consultation will commence with relevant stakeholders," he said.
He also adds that other companies within the industry have also been affected by the price cycle and have made some tough decisions to cut back on their operational expenditure.