JOHANNESBURG (miningweekly.com) – Gold mining group Pan African Resources has confirmed the closure of the Evander 8 underground mine, in Mpumalanga, resulting in the retrenchment of 1 700 employees by the end of this month.

The company reported on Wednesday that it had concluded the consultation process with the relevant Evander Mines’ stakeholders, as determined by the Section 189 Process, under the auspices of the Commission for Conciliation, Mediation and Arbitration.

The Section 189 process was initiated following continued operational losses, which have been exacerbated by the prevailing weak rand gold price.

An internal and external review of the existing Evander 8 underground operation concluded that there was no realistic prospect of mining on a sustainable and profitable basis from this operation in the current weak rand gold price environment, the company reported.

Consequently, the current underground mining at Evander 8 would cease and the affected employees would be retrenched.

Pan African Resources CEO Cobus Loots commented that the decision to cease mining from Evander Mines’ underground operations was not taken lightly, particularly given the socioeconomic conditions prevailing in the country and the impact on a large number of the employees.

“All South African gold producers have been adversely affected by the recent strengthening of the rand, and it is imperative that we act decisively to ensure the future of our group and stakeholders that rely on our operations,” he said.

Retrenched employees would be provided with opportunities for reskilling and the group reported that it was in the process of identifying employment opportunities for retrenched employees in new, lower-cost operations at Evander, such as the new Elikhulu tailings retreatment plant and also in post-closure environmental rehabilitation works.

The Elikhulu project has created about 250 new employment opportunities and Pan African remained confident that future growth projects would create further long-term employment opportunities.

The Evander rehabilitation provision is fully funded by means of a R311-million rehabilitation trust and these funds will be used to fund Evander’s underground closure costs and associated rehabilitation.

The retrenchments would cost Pan African about R160-million, which would be funded from the group’s existing debt facilities.

To ensure that Pan African Resources has adequate working capital and continuation of funding for operations and growth projects, the group is also in the process of finalising an additional standby facility of about R100-million.

Pan African further said that it would continue to assess the technical and economic merits of its Egoli underground project at Evander’s 7 shaft and that it was in the process of updating the feasibility study on a project standalone basis.