[miningmx.com] — FIRST Uranium could retrench up to half of its employees at struggling Ezulwini, saying workers would have to prove their worth over Christmas to minimise layoffs.
In an announcement released on Monday, the company said it would look at a new operational plan for Ezulwini, which has continuously missed its production targets due to ramp-up problems and safety-related stoppages.
Such a strategy may affect up to 1,850 of the mine’s 3,750 employees, the company said.
“While the company continues to believe in the inherent value and potential of the Ezulwini Mine, decisive action is required..to stem ongoing operating losses,’ said CEO Deon van der Mescht. “Although it is the holiday season and the timing is unfortunate, management has determined that action must be taken now to mitigate the effects of the Christmas shut down and provide employees with an opportunity to improve productivity levels.’
Ezulwini was unable to meet its contribution to First Uranium’s revenues in the first half of the fiscal year (to end-September) due to two safety stoppages following fatalities. Production over this period was 26,000oz, with cash costs averaging $2,191/oz.
The group has already revised the mine’s target for the full financial year down from between 105,000oz and 125,000oz to 70,000oz. It is at this stage not known how a third fatality in November had affected output.
Also, First Uranium has to deliver 19,660oz of gold produced in 2011 to Franco Nevada at $400/oz in terms of an earlier financing deal. As from 2012, this burden would lessen to 7% of production for the life of the mine, also at $400/oz.
“For the past nine months, the Ezulwini mine has been the subject of an intensive turn-around process,’ said Van der Mescht. “The extremely unfortunate fatal accidents in the latter half of the calendar year have had a significant impact on employee morale and productivity, and as such the expected improvement in production has not been forthcoming.’
Van der Mescht said employees would receive notice of the restructuring and possible retrenchments on Monday. The process would, however, not involve any of First Uranium’s staff at Mine Waste Solutions.
National Union of Mineworkers spokesperson Lesiba Seshoka said on Monday afternoon the union has not yet been informed of First Uranium’s plans. “I’m not aware of this, so it comes to me as a surprise,’ he said.
Van der Mescht is due to host a conference call for investors about the issue on Tuesday.
First Uranium’s shares traded at R1.50 at around 1:20 on Monday, down 3.23% for the day and equal to its 12-month low.
