Business reporter Lisa Steyn explains the high salaries of mine bosses and how it impacts on wage negotiations.
Village Main Reef, a South African gold producer, fell in Johannesburg trading and headed for its lowest close in more than a month after suspending funding for a mine it has operated since June 2012.
Village Main dropped as much as 9.5% to R0.3838. It was 4.8% lower at R0.40 by midday on Wednesday. A close at that level would be the weakest since June 24.
The company has invested about R190-million since it took control of Blyvooruitzicht, near Carletonville and west of Johannesburg, Village said on Tuesday in a statement. The mine lost R88-million in the three months ended June, Village said.
“What is unfortunate is that they spent all that money.” Percy Takunda, an analyst at Johannesburg-based Imara SP Reid, said by phone on Wednesday.
Gold has dropped 20% this year, including a record three-month plunge in the second quarter, after some investors lost faith in the metal as a store of value.
“The current gold price coupled with rising costs and a series of recent operational infrastructure challenges has rendered the operation unsustainable,” the company said of Blyvooruitzicht.
Village Main lost R10.5-million in revenue after workers at its Consolidated Murchison gold and antimony operations held a 10-day underground sit-in earlier this month. – Bloomberg