Unity Mining is planning to close its Henty Gold Mine on the west coast of Tasmania by the end of 2015, as a recent operational review revealed that the extension of its life is not feasible.
The company reviewed the operational performance of the mine in the first quarter to discover Henty's ore reserves, ability to generate cashflows at current gold prices and the life of the mine.
Unity Mining said in a statement: "From the outcome of that review, the company has determined that the best economic outcome for Unity shareholders is to focus on maximising cash generation through the recovery of the remaining higher confidence and higher margin reserves."
Henty began operations in 1996 with an initial mine life of around four years, and produced around 1.2 million ounces of gold.
Unity acquired Henty in 2009 and invested heavily to extend its mine life. Earlier mine extensions were possible as the depleted mineral inventory was replaced with additional exploration drilling, the company said.
"However, while mineral resources remain broadly unchanged at 282,000oz, recent drilling has not been successful in converting resources to reserves in-line with expectations based on historical results," Unity added.
A company spokesperson was quoted by Australian Mining as saying that the shutdown will affect 150 full-time workers and contractors at the mine.
Unity Mining managing director and CEO Andrew McIlwain said the company will continue to pursue the mine's financial performance and evaluate other opportunities in-mine, particularly the Darwin South Offset target that is currently being drill tested.
"Our current plans and budget also include continuing to explore our highly prospective regional tenement package adjacent to and along strike from Henty. Any significant discoveries within the region may lead to a re-evaluation of the Henty mine's future," McIlwain said.