Thistle warns of Steyn reductions

Corporate restructuring complete, Thistle Mining (THT-T) has turned its attention to returning the President Steyn underground gold mines in South Africa to profitability.

As part of its plan, the company has warned that it may eliminate up to 2,000 jobs, or 38% of the workforce, at the loss-making operation in South Africa’s Free State.

The company recently entered a 60-day period of consultation with the Union of Mine Workers and Solidarity union with the aim of avoiding jobs losses and, if redundancies prove necessary, the timing, selection criteria and severance terms covering such losses.

“Although management is committed to exploring all alternatives, job losses may be unavoidable,” the company said in a prepared statement.

Thistle is prohibited from dismissing any employees during the mandatory consultation period. The mine restructuring notice also includes a notice to defer wage negotiations.

The company also warned that production form the mine may suffer "given the climate of uncertainty during the 60-day consultation period," but that the potential loss of production was difficult to quantify.

Thistle hopes to have the mine generating free cash flow by early 2006, at current gold prices and exchange rates.

Earlier this year, the company closed down two of five operational shafts at the mine, owing to higher costs on the back of a strengthening rand against the U.S. dollar.

Operations are now focused on high-grade areas, which include the early mining of the No.1 and No.2 shaft pillars. The company has also shifted to continuous operations at the No.3 shaft by redeploying workers form shafts 7 and 9.

Production of around 500 to 1,000 tonnes of ore per day from a high-grade section of the Eldorado reefs at No.3 shaft has also begun. Further exploration aimed at determining how to best exploit the reef is planned.

During the first five months of 2005, President Steyn sold 73,400 oz. of gold at an average price of US$426 per oz; cash operating cost came in at around US$550 per oz.

Thistle’s shares have been suspended from trading on the Toronto Stock Exchange since January; the company’s shares were recently reinstated for trading on the London Stock Exchange – Alternative Investment Market (AIM).