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Sibanye may close loss-making Cooke 4 mine, puts 2,500 jobs on the line

Sibanye’s net debt is 2.6 times underlying earnings and almost as high as its current market value. (Image courtesy of Sibanye Gold)

South Africa’s Sibanye Gold (JSE:SGL) (NYSE:SBGL) said Monday it may close its Cooke 4 mine and Ezulwini gold and uranium processing plant, as the operations failed to meet production goals.

The miner, the country’s top gold producer, said that financial losses at the mine “threaten the viability of the rest of the Cooke operations.” For that reason, Sibanye said it had begun talks with unions for job cuts, which could affect about 2,500 workers.

The miner has begun talks with unions that may affect about 2,500 jobs.

Sibanye first considered the possibility of job cuts at Cooke 4 in November 2014. Since then, the mine has continued to fall short of production targets and accumulate losses forcing the producer to re-open talks, the company said.

The Cooke operations, which include four mines and three processing plants, had an operating loss of $274,000 (or 4 million rand) in 2015, the company said.

According to the company’s website, the Cooke 1-3 shafts have estimated gold reserves of 2.8 million ounces and resources of 22.65 million ounces – enough to sustain operations for 13 years, whereas Cooke 4 is the site of the Ezulwini uranium processing facilities.

Sibanye, which spun out of Gold Fields in 2012 with three aging South African gold operations, has cut costs and increased production by mining more efficiently and buying nearby resources. Several times this year, it has said it wants to expand its portfolio to include more platinum, coal and uranium mines.