JOHANNESBURG (miningweekly.com) – Gold miner Harmony Gold on Tuesday announced that it would place its Target 3 operation, in the Free State, which employed 1 500 people, on care and maintenance as the shaft continued to record cash flow losses.

The company said that, given the current gold price environment and the significant capital investment required to sustain operations at this shaft, Target 3, which had made a cumulative loss of about R260-million over the past four-and-a-half years, was expected to continue making a loss for the foreseeable future.

“In developing our safe and realistic operational plans for the 2015 financial year, 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,” Harmony CEO Graham Briggs commented.

The gold miner pointed out that Target 3’s south block remained a valuable resource; however, additional development and equipping would be required for the south bock to sustain operations at Target 3 and, therefore, the shaft would be placed on care and maintenance once the requirements of a Section 189 process have been fulfilled.

The company further stated that, while the cessation of operations at Target 3 would have an impact on employees and contractors, as far as it was possible to do so, measures would be taken to minimise and/or avoid job losses.

Such measures included offering voluntary separation packages to eligible employees, early retirements, transferring employees where skills matched current vacancies at other Harmony operations and reskilling employees for redeployment into alternative jobs within the company where possible.

Engagement with the Department of Mineral Resources, the Matjhabeng local municipality and the Free State provincial government had begun, the company added.

Meanwhile, Harmony also announced its 2015 production guidance of about 1.2-million ounces at an all-in sustaining cost (AISC) of R410 000/kg to R430 000/kg, which supported the company’s medium and long-term objective of positioning itself as a competitive, value-focused gold mining company.

During the 2014 financial year, the company had produced 1.17-million ounces of gold at an AISC of R413 433/kg.