Sepon mine to halt gold production
Sepon mine to halt gold production
The Sepon mine, one of the two largest gold and copper mines in Laos, will cease gold production next month due to depleting ore reserves and lower margins.
MMG, which owns the Lao mining operation in Savannakhet province , announced on Monday the mine will cease gold production effective December after more than a decade of operation.
The decision means the gold plant will be placed in care and maintenance, while the Sepon operation will focus on copper production, MMG announced in a media release posted on its official website on Nov ember 18.
“The decision to cease gold operations at Sepon is necessary to preserve the strong contribution of the Sepon business,” MMG CEO Andrew Michelmore said.
“Sepon gold oxide reserves have been depleting for some time now, with previous forecasts that production would cease in 2011.”
“The combination of a higher strip ratio and weaker gold price is driving increased production costs,” he said. “It is no longer economic for us to produce gold at Sepon.”
MMG said that despite some shared fixed costs between copper and gold production, the cost of producing gold has doubled since last year to US$1,880 per ounce in the first half of 2013 while the gold price at the end of the first half was about US$1,198 per ounce.
The decision will result in the need to review the overall structure of the operation to meet the future needs of the business. This will regrettably result in a change to resourcing requirements which the company will work through over the coming months.
“MMG acknowledges that this is disappointing news for our workforce. We are committed to working closely with our people, communities, suppliers and the Lao government to make the transition as smooth as possib le,” Mr Michelmore said.
MMG says the Sepon mine will continue exploration activity for both gold oxide and primary gold in Laos and review the recommencement of g old production when value can be created for shareholders.
According to miningweekly.com, since the start of operations in December 2002, the Sepon gold mine has produced over 1.2 million ounces of gold. The copper op eration, in turn, delivers some 80,000 tonnes a year of copper cathode.
The mining industry has been one of the major driving forces of the Lao economy in recent decades.
Direct revenue from MMG LXML Sepon to Laos has climbed to more than one billion US dollars. US$1 billion in direct revenue comes from profit tax, royalties, dividends, income tax and tenement rental. Laos also benefits from hundreds of millions of dollars each year in indirect revenue generated by the mine, through payments to Lao employees, local businesses and suppliers.
vientiane times
