Magellan lays off staff at WA operation

23/10/2008 - 15:05

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Falling lead prices and costs associated with maintenance works at its suspended Wiluna operation in Western Australia have prompted miner Magellan Metals to lay off 18 people.

Magellan lays off staff at WA operation

Falling lead prices and costs associated with maintenance works at its suspended Wiluna operation in Western Australia have prompted miner Magellan Metals to lay off 18 people.

The Wiluna lead mine has been on care and maintenance since early last year after it was found that higher than normal lead levels were found in the blood streams of residents living in Esperance, where the company exports its lead from.

Magellan's parent company Ivernia said today that it needed to reduce costs to ensure it was in a strong position to bring the mine back into production.

The company is currently in long-running negotiations with the government to remove the lead stockpiles from the Esperance port and to make future lead shipments through Fremantle.

 

Below is the full announcement:

 

Unprecedented turmoil in global financial and commodities markets has resulted in reports of mine closures and regular production cut-backs due to free-falling metals prices, including lead. Within this environment the management of Ivernia Inc, parent company of Magellan Metals, is among many companies in the resources industry reassessing mine production plans and being required to take tough operational decisions.

Ivernia finds itself in a position of needing to reduce costs to ensure it is in a strong position to bring its Magellan mine back into production when lead prices eventually return to higher levels.

Ivernia's commercial situation has been compounded by the lack of cashflow from its Magellan mine near Wiluna, which has been on care and maintenance since early 2007. The company's financial situation has been impacted by the ongoing costs associated with care and maintenance and the long-running negotiations with the Western Australian State Government to obtain approvals for the sealed shipment process through the Port of Fremantle. The
company has been negotiating and working with government authorities on the approvals processes for the past year and is still awaiting those approvals.

Today Magellan Metals and Ivernia have made the difficult decision to terminate the employment of 18 team members Western Australia. The company recognises the hard work that each of those employees has contributed to its operations and looks forward to the possibility of working with them in the future.

Looking ahead Ivernia is now focused on preserving its remaining cash and directing its resources to completing Magellan's key priorities in Western Australia, which are:

1. working diligently to obtain final sealed shipment approvals from the Western Australian Government

2. removing the lead stockpile from Esperance and meeting our commitments to the community and government oncontributing towards the lead clean-up in Esperance

3. initiating the containerized shipping of our stockpiled lead concentrates on site

4. maintaining high environmental, health and safety standards, and

5. planning for the restart of Magellan when commodity prices allow.

It is important to note that today's decision in no way lessens the company's commitment to removing its lead concentrate stockpile from the Port of Esperance or to finalising a significant financial contribution to resolving lead issues in Esperance. Both of these activities are in the final stages of approval or discussion with the Western Australian State Government.


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