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Avnel to keep loss-making Mali mine open til new project starts

Published 2015-09-08, 09:29 a/m
Avnel to keep loss-making Mali mine open til new project starts
AVK
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BAMAKO, Sept 8 (Reuters) - Canada's Avnel Gold AVK.TO will
continue production from its loss-making Kalana underground mine
in Mali until the start of a new $188 million open-cast project
at the site in the second half of next year, company and
government officials said.
The Malian state holds a 20 percent stake in the Somika
venture that has operated the mine since 2003, with the
remainder held by Avnel.
Somika is in the process of converting the underground mine
into a larger, open-pit project, but a slump in international
gold prices has made its operations unprofitable.
"If all goes well, the construction of a new processing
plant should begin in the second half of 2016 and the start of
production in the first quarter of 2018," Abdoul Karim Maiga,
Somika's country manager, said in an interview with Reuters.
The new mine has estimated gold reserves of 1.46 million
ounces and is expected to produce 138,000 ounces of gold a year
for the first four years of operations.
Production will then fall to 98,000 ounces a year for the
remainder of its 14-year life.
Company officials said that it was continuing operations to
avoid the negative impact of laying off more than 360 staff on
the local community.
"It would be pointless to dismiss workers just to hire them
back a year later, with the risk of not getting them all back
and with the damage it would do the community," Maiga said. "The
company will shoulder the losses until the start of the new
project."
The new mine is expected to have a permanent workforce of
around 600 workers, company officials said.

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