Reefton braced for mine end

By Tui Bromley

The vast majority of Oceana Gold’s 240 workers at the Globe-Progress open-cast goldmine near Reefton could be cast on the scrap heap when the mine is placed into ‘care and maintenance’ in mid-2015.
The cost saving exercise, brought about by a 25% drop in the gold price, will cost the West Coast economy about $45 million in direct and indirect benefits for every year that the mine is idle.
Buller Mayor Pat McManus said today he hoped a recovery in the gold price would avoid the planned shutdown but it would be another “big blow” for the West Coast, which had over the past six months lost at least 700 Solid Energy coalmining jobs from Greymouth and Westport with the mothballing of the Spring Creek Mine and downsizing at Stockton.
“The announcement is a bit of a shock, but the planned action is quite a way out from now and we can always live in hope that the gold price will rise again and it won’t eventuate,” Mr McManus said.
“It will be another big blow for the region if it happens but we also hope that they are doing enough drilling and exploration now that they can open up more economic mines in the area to maintain many of the workforce.”
He was surprised that Oceana, like Solid Energy, had not budgeted for the bad times, while enjoying record gold prices over the past few years.
Oceana Gold chief executive Mick Wilkes said the Reefton plant and equipment would remain on site with a view to resuming mining when the gold price rose to the point where the mine was again economic.
The company would also continue to explore other options within the Inangahua goldfield including the underground potential of the Globe Progress ore body and the Blackwater project at historic Waiuta.
“The progression of this (Blackwater project) is unchanged and should it demonstrate positive economics and receive board approval, development activities could commence as early as 2014-15,” Mr Wilkes said.
Oceana intends to maintain its current access arrangement with the Department of Conservation through to 2019, but gold production at Reefton will be reduced by some 110,000 ounces for the period 2015-17, resulting in about $40-$45 million being reduced from the capital budget over the next two years.
Mr Wilkes said the trans-Tasman mining company had enjoyed strong support from the Reefton and regional communities as well as DOC, but mining operations needed to generate sufficient risk-weighted returns in order to remain sustainable and the decline in the gold price over the past two months had eroded much of the profitability at Reefton.
“While we are hopeful for an improved gold environment, we have taken the 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.”