TORONTO (miningweekly.com) – The directors, senior management and staff of Anvil Mining have agreed to a 20% reduction in fees and salaries, as the firm moves to cut costs and conserve cash amid sharply lower copper prices.

On Tuesday, Montreal-based Anvil reported a net loss for the fourth quarter of $151,2-million, compared with a $21,7-million profit a year earlier.

Earnings were also affected by higher operating costs, lower production and realised copper prices – which pushed sales down 83% year-on-year, to $13,9-million - and one-off charges of $143-million.

The charges included write-downs, provisions for impairments and provisions for “doubtful” debts.

“These results reflect the sharp decline in the copper price that took place during the second half of 2008, the global economic slowdown and the response implemented by the company during the fourth quarter of 2008,” said president and CEO Bill Turner.

The firm said it had reduced its workforce by 84%, from 2 200 in November to 360 at present.

Anvil has put the fabrication and construction of its Kinsevere stage two solvent extraction-electrowinning project, in the Democratic Republic of Congo, on hold until it can secure additional funds, and until it sees greater certainty in global financial and commodity markets.

“Even though market conditions have changed dramatically, the Kinsevere resource is still a significant, high-grade copper resource with potential to increase in size and the 60 000 tt/y Stage II SX-EW development remains a robust project with an expected cash cost at the mine gate of $0.88/lb copper,” Turner emphasised.

“The company is currently committing every effort to securing the required funding of approximately $200 million to allow for recommencement of construction of the Stage II development.”

Anvil will need to raise an additional $200-million to complete the Stage II project, and is updating the technical report for the project to include a recent agreement with the DRC government, and will then seek credit approval for a debt facility in the next two or three months.

“While the company is aiming to have financing arranged in time to allow for the recommencement of construction works on the Kinsevere Stage II SX-EW development during the second half of 2009, with commissioning of the plant approximately twelve months thereafter, there is no assurance that negotiations with financiers will be concluded successfully or within a reasonable time frame and as a result, the company may be required to raise additional equity or sell its available-for-sale investments,” Anvil warned.

In the meantime, the firm has also suspended concentrate production at its Dikulushi mine, in the DRC, and put the operation on care and maintenance, as well as halting heavy-media separation (HMS) processing at the Mutoshi mine.

All but “essential” capital spending has been curtailed, and exploration activity has been suspended across the board, Anvil said.

It will also consider restarting the HMS plant at Kinsevere, and producing an oxide concentrate from the existing stockpiles at the mine of more than 250 000 t, at a grade better than 5% copper.

Shares in ASX- and TSX-listed Anvil fell 20,6% on Tuesday, to C$0,85 apiece by 11:43 in Toronto.

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