Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Endomines will adapt its mine production, by early 2016, to the prevailing and short-term forecasted gold price development. Production in 2016 will be based on the selective mining principle. During 2016, the Company intends to mine and process approximately 125,000 tonnes of high-grade ore. Mining will therefore be concentrated to earlier known as well as in 2015 discovered high-grade areas.
The reduced mine tonnage of some 125,000 tonnes will be processed in campaigns, approximately for 7-10 days per month. The Pampalo underground mine will operate continuously, but only during weekdays.
There will be a reduction in the workforce for both own and contractor employees. The Company’s fully owned subsidiary Endomines Oy has today concluded personnel co-operation negotiations. The outcome of these negotiations was that 7 officers and 28 workers are laid off temporarily. The lay-offs represents about 50 % of the total number of own employees.
The Company expects these changes to the mining and processing schedule, including the temporary lay-offs of personnel, to improve the profitability of its Pampalo Gold mine operations. Cash Cost is estimated to be reduced below the current and forecasted gold price level.
In the selective mining mode, the relatively lower grade areas will be not be mined at this stage but rather left secured and mined when the gold price turns upwards and the market conditions improve. The Company shares the widely held view in the market that the primary gold production from gold mines will peak in 2016 (“Peak Gold 2016”) and start to decline thereafter. “Peak gold” during 2016 is commonly expected to result in an improved gold price for year 2017 and beyond.
The recent underground exploration in the Pampalo mine has given exceptionally good results. The Company has therefore decided to concentrate its exploration activities to the same. Regional exploration activities will be temporarily reduced and activated when conditions improve.
The Exploration Manager Jyrki Bergström has, at his own request, decided to leave Endomines to commence working for an international mining company. The Company will, as earlier announced, complete “the Karelian Gold Rush – international exploration challenge” and announce the winners at the “Prospectors and Developers Association Conference” in Toronto (PDAC 2016) early March 2016.
“We will now concentrate our mining activities to the higher grade areas in the Pampalo underground mine. This will improve our profitability through optimal use of available resources until gold prices pick up again. Earlier we have been required to seek profitability by maximizing our mine and processing tonnage. Mining the high grade areas at this stage is the best option to secure the long term future of the Pampalo operations”, comments Markus Ekberg, CEO of the Company.
