Harmony’s Target 3 placed on care and maintenance

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Gold Fields earnings rise as low-cost mines boost output

“Additional development and equipping is required to access the targeted South Block to sustain operations at Target 3 and, in particular the build-up in Basal reef stoping,” [DATA HAR:Harmony Gold] said.

“While the targeted South Block remains a valuable resource, the shaft will be placed on care and maintenance once the requirements of a section 189 process have been fulfilled. Target 3 currently employs approximately 1,500 people.”

The gold mining company also stated that consultation with labour has begun and that job loss avoidance measures are a priority.

(WATCH VIDEO: Harmony Gold falls into Q4 loss)

“The cessation of operations at Target 3 will have an impact on employees and contractors. As far as it is possible to do so, measures will be taken to minimise and/or avoid job losses,” it said.

“Such measures include offering voluntary separation packages to eligible employees, early retirements, transferring employees where skills match current vacancies at other Harmony operations and re-skilling employees for redeployment into alternative jobs where possible within the company.”

According to Harmony, Target 3 had made a cumulative loss of approximately 260 million rand in the past four to five years.

“Despite numerous initiatives by both management and organised labour to return Target 3 to profitability, this operation has continued to record cash flow losses,” said the company.

“Given the current gold price environment, and the significant capital investment required to sustain operations at this shaft, Target 3 is predicted to continue to make a loss in the foreseeable future.”

(READ MORE: Harmony Gold production for FY stable)

Harmony further announced a guidance of approximately 1.2 million ounces at an all-in sustaining cost of 410,000 rand to 430,000 rand/kg for the 2015 year ,in order to support the company’s medium and long-term objectives.

The company’s chief executive, Graham Briggs, said, “In developing our safe and realistic operational plans for FY15, we were informed by the need to improve our margins, carefully assessing the ability of each of our assets to be profitable at current gold prices.”