East Otago-based Oceana Gold and Newmont Waihi Gold, in the central North Island, have collectively announced cuts, or pending cuts, totalling almost $US350 million ($NZ447 million).
At the annual New Zealand branch conference of the Australian Institute of Mining and Metallurgy (AusIMM) in Nelson yesterday, Oceana chief executive Mick Wilkes said a 20% fall over a month in gold prices effectively ''knocked off'' $US100 million in revenue, which could also equate to losing two years' mine life of its main pit, at Macraes in East Otago.
''A lower gold price requires further judicious allocation of scarce capital,'' Mr Wilkes said.
Oceana has signalled its Reefton open pit may be under care and maintenance by 2015, putting 260 jobs in jeopardy if mothballed, and up to 15 office jobs were understood to have been axed last week.
''We have seen some recovery in the gold price, but not enough to justify expenditure at Reefton,'' Mr Wilkes said.
Gold was trading yesterday at $US1394 an ounce.
Answering questions after his address, Mr Wilkes confirmed Oceana's New Zealand review was complete and the review focus was now on Philippine operations.
An announcement might be made in the future on any New Zealand job losses.
''We're talking to staff and still in negotiations,'' he said.
Newmont Waihi Gold general manager of operations Glen Grindlay more candidly outlined $US246 million in cost savings since the first quarter 2012, including $US50 million in advanced project funding, down almost 50%, and a 33% decline in exploration, down $US29 million, plus the loss of about 200 jobs during that period.
While consents for its new Correnzo underground mine were being appealed, Mr Grindlay was bullish about an extra estimated two million ounces below the existing Martha pit.
However, it would have to mined in tandem with underground operations.
He noted that Newmont, which employs 46,000 people worldwide, had its most expensive production costs at its Waihi operation, about $US900-$US1000 an ounce.
After his address to delegates, Mr Grindlay said if Newmont had not made its cost-cutting decisions a year ago, some of its Waihi mining could have been mothballed, as Oceana has signalled at Reefton.
The resource sector's predicament was worse than it was during the global financial crisis, in that costs had more than doubled in five years, so savings still had to be made.
For 2014, Newmont was basing all planning on $US1200 an ounce, expecting gains of about $US200 a year up to $US2000 an ounce by 2020.
When asked if the $US246 million in savings was enough, Mr Grindlay said it was hard to say.
More jobs could go.
Mr Wilkes told delegates a decision would be made by the end of the year on whether the Blackwater underground mine would go ahead.
• Business reporter Simon Hartley is a guest of AusIMM.
