vatukoula

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Emperor shuts down Vatukoula



EMPEROR Mines has shut down its historic Vatukoula gold mine in Fiji citing low ore grades, poor productivity and infrastructure problems as key reasons for the mine's first closure in more than 70 years.



Narrow, high-grade orebodies are the order of the day at Emperor's Vatukoula operation.

The ASX-listed company revealed late Tuesday it had temporarily stood down 1800 workers, with around 1500 to be re-employed over the next few months as the mine reopens in stages.

A return to full production is not expected for a further six months.

Emperor, Fiji's largest private employer, said the mine closure would "allow a major reorganisation to go forward" with first production expected in around two months.

"The object of the reorganisation is to bring the mine back to profitability and ensure its long-term future," the company said.

Emperor had previously flagged significant dewatering issues in the Philips shaft at Vatukoula.

Vatukoula, a multi-shaft underground mine, was producing around 115,000 ounces of gold annually prior to the temporary shutdown. The mine has been in operation since 1933, producing around 7 million oz of gold over the 70-year period.

A total of 19,658oz were produced in the December quarter, down from 23,854oz in the June quarter of last year. The company also reported a significant jump in cash costs for the December quarter – a rise of 18% to $A762 per ounce. As at June 30, 2005, the mine hosted reserves of 674,000oz.

In making the decision to restructure operations at Vatukoula, Emperor said it engaged the Prime Minister of Fiji as well as the Mine Workers Union of Fiji and the Vatukoula Mine Workers Staff Association.

Emperor said a memorandum of agreement was reached between the parties with regards to a redundancy package for the 300 workers who will not be re-employed. The agreement was said to ensure that those employees stood down receive the equivalent of their normal weekly pay.

The Fijian Government has also provided an assistance package of $300,000.

Emperor recently became a 88.3% subsidiary of major South African miner DRDGold via a $US230 million cash and scrip deal that saw Emperor acquire a 20% stake in the Porgera joint venture in PNG and also the Tolukuma gold mine.

The mine closure suggests the tens of millions spent on an expansion over the past 2-3 years has proved less than successful.

Some 18 months ago Emperor reported roughly $46.8 million had been spent on the planned expansion to 180,000ozpa, and that a further $27.2 million was still required.

Shares in Emperor closed up 2.5c (5.4%) to 48.5c.

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