South Africa-based gold miner Anglogold Ashanti has unveiled plans to restructure operations at its open pit and underground Obuasi gold mine in Ashanti region, Ghana.
The company is currently working with the Government of Ghana, the Ghana Mineworkers Union and other key stakeholders to cut staff and introduce mechanised processes at Obuasi mine.
Anglogold plans to temporarily shut underground production at the mine this year and eventually bring in mechanised methods; however, surface operations will continue as usual.
Anglogold Ashanti CEO Srinivasan Venkatakrishnan said: "We must do all we can to stop the current cash outflows at Obuasi and define a sustainable future, and we appreciate the support of our partners in taking the decisive action necessary to achieve this."
Venkat was quoted by Reuters as saying: "The problem child in our portfolio is the Obuasi mine. The cash bleed rate is simply not affordable."
"It consumed $220m in 2013. And it has consumed $40m to date in 2014," he added.
The mine has a workforce of about 6,500 and those affected by the proposed plans would be offered a severance package of three months for every year worked.
Venkat said that the company would lower its exploration budget to between $150m and $175m in 2014, from $400m last year, to focus on other major projects, including a drilling project in Colombia and exploration blocks in Guinea.
For the first quarter, Anglogold Ashanti reported a 17% increase in year-on-year production driven by a ramp-up of Kibali and Tropicana mines.
Image: Obuasi mine in Ghana. Photo: courtesy of AngloGold Ashanti Limited.