KINGSGATE Consolidated shares have slumped after the gold miner announced job cuts and a $300 million impairment charge caused by weak gold prices.
Kingsgate said it would reduce staff as it undertakes a new mine operation plan at its Challenger gold mine in South Australia.
The company plans to cut mine development costs by 30 per cent and slash capital and operation expenditure.
"Given the new life-of-mine plan, the operational changes at Challenger and the lower gold price environment, it is likely that a significant non-cash impairment charge in the order of $300 million will be made against the carrying value of Challenger as part of Kingsgate's 2012/13 financial accounts," the company said in a statement.
Part of the reduction in expenses would come from fewer employees, it said.
Kingsgate shares dropped by 9.5 cents, or 7.0 per cent, to $1.265.
Gold is trading around three-year lows at just above US$1,200 per ounce.
"The new mine plan is the result of a strategic review of the Challenger Gold Mine in response to recent gold price volatility and the operating performance over the last 12 months," Kingsgate said.
The Sydney-based company said it would shift its focus to the Challenger West ore body over the next three months.
The new mine plan has the potential to produce between 70,000 to 80,000 ounces for the next two to three years, the company said.
Over the next two months Kingsgate will undertake an estimation of its resources and reserves.
A new mining contract with lower mining costs is expected to be implemented from August 1.
The company expects to be cash flow positive by September at current spot prices.
Gold production at the Challenger mine was 87,388 ounces in fiscal 2012.
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