JOHANNESBURG (miningweekly.com) – The Buffelsfontein gold mine, south-west of Johannesburg, may have to retrench up to 500 employees in the next two months, unless it manages to improve performance, Simmer & Jack Mines (Simmers) said on Thursday.

Simmers would start a consultation process with organised labour aimed at optimising the business and ensuring that production targets were met.

The optimisation process was aiming to improve the operating margins of its No 12 shaft and smaller sections of the mine’s six other operational shafts.

“Failure to conclude an optimisation plan could result in the retrenchment of approximately 500 people within the next two months,” the gold and uranium producer cautioned.

The company announced earlier this month that Buffelsfontein would be focusing on its margins and taking a far stronger line on those sections of the mine that did not contribute to cash flow.

"We are experiencing unprecedented increases in the costs of materials required for mining and milling and management intends to engage all stakeholders to ensure the long-term sustainability of Buffelsfontein gold mine,” said CEO Gordon Miller.

Since 2005, the company has invested considerable capital to ensure that the mine has the necessary infrastructure to produce according to its life-of-mine plan.

“In the current economic climate, it’s essential that all sections produce optimally," said Miller.

Its six operating shafts include the high-grade No 5 shaft which was in the process of being refurbished, after being damaged in a seismic event in 2005. The rehabilitation would be completed in March.

Buffelsfontein has created 5 440 new jobs since the start-up of its underground operations in 2005.

The Buffelsfontein mine produced 30 688 oz in the September quarter, and said earlier this month that it expected to produce between 31 500 oz and 34 000 oz in the December quarter.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.