Plummeting gold prices is hitting gold miners hard, with OceanaGold announcing its Reefton mine in New Zealand will be transitioned into care and maintenance mode two years early.
In a statement the company said the mine plan will be adjusted, and pending an improvement in the gold price its Globe Progress pit will be put into care and maintenance half way through 2015.
OceanaGold said that is would continue to explore underground mining options at the site.
“However, mining operations must generate sufficient risk-weighted returns in order to remain sustainable and unfortunately the decline in the gold price over the past two months has eroded much of the profitability at Reefton which has lead to this revised plan,” OceanaGold managing director and CEO, Mick Wilkes said.
The move will see Reefton gold production fall by about 110,000 ounces for the period 2015-2017 but the revised plan will deliver “significant cost and risk reductions”.
The new plan will result in almost $US32 million to $36 million cut from the company’s capital expenditure budget over the next two years.
“While we are hopeful for an improved gold environment, we have taken necessary steps to ensure a sustainable and profitable operation at Reefton over the next two years and we will continue to evaluate other opportunities across the goldfield,” he said.
Wilkes said the company has enjoyed strong community and government support since commencing gold mining at Reefton in 2006.
“During this time we estimate that approximately $NZ45 million of direct and indirect benefits are derived from the Reefton mine annually for the West Coast region alone,” he said.
Earlier this week Australian Mining reported the miner was looking at freezing the wages of hundreds of employees and shortening the mine’s life.
A drop in the bullion market has triggered operational reviews of gold miners around the world.