/ 21 December 2011

‘Safety delays costing gold mines 30% in production’

First Uranium Corporation (FUM), the junior miner that is focused on the development of uranium and gold mines in South Africa, on Tuesday indicated that safety stoppages were costing gold mines between 10% and 30% of their production.

The company on Monday said it might have to lay off more than half the workforce at its Ezulwini mine after the operation failed to improve profitability — largely due to lost time after fatalities.

Speaking on a conference call, First Uranium CEO Deon van der Mescht said while mines were typically shutdown for between three to five days following a fatality, it took a few weeks to adjust for compliance and get restarted after a total shutdown.

The company reported four fatal accidents in the latter part of the year, which it said had a “significant impact on employee morale and productivity”.

As part of its plans to renew its focus on safety, improving mining efficiency and reducing fixed costs, the company said it might have to cut as many as 1 850 jobs. This is more than half of its 3 745-strong workforce.

The company had been reviewing the operation since April this year but it has now taken the first steps towards refocusing the company as a gold miner.

Job losses
While Van der Mescht said it was too early to ascertain the impact the job losses would have on its production, he did say that “decisive action” was required to mitigate losses.

The company is now assessing options to develop and implement a new operating plan at Ezulwini to optimise cash flow and overall profitability with a view to providing a stable platform for the mine’s sustainability.

“This is a necessary step if we are to safeguard the considerable investment made to date in this operation and the future sustainability of the mine,” he said.

Reporting its quarterly results in November, First Uranium said it sold 40 529 ounces of gold in the September quarter, compared to 33 809 ounces in the September quarter of last year and 34 439 ounces in the June quarter.

In October, the company said Ezulwini would sell as much as 80 000 ounces of gold and as much as 130 000 pounds of uranium in the year to end-March 2012.

First Uranium’s other asset, Mine Waste Solutions (MWS), is not expected to be impacted by the restructuring.

On Monday, the company’s stock dropped 3.2% on the JSE, bringing its year-to-date plunge to 82%. Its shares fell a further 5.81% on Tuesday to trade at R1.46 by the time the JSE closed. — I-Net Bridge