Heron Resources has made 90 employees redundant at its Woodlawn Mine near Tarago.
Newly appointed CEO Tim Dobson cited the metal market downturn and government imposed restrictions due to coronavirus as key factors. But he's also hinted at "past under-performance" of the zinc, lead and copper operation.
On Wednesday, the company advised the Australian Securities Exchange that Woodlawn's operations were suspended. It suspended trading on Tuesday, pending the announcement.
"...Due to recent travel restrictions imposed by the federal and state governments in response to the Covid-19 pandemic, along with related health and safety concerns for site personnel, operations at Woodlawn will be ramped down and suspended from March 24. This decision is also being made to safeguard the financial position of the company," the statement read.
The 90 workers include locals and those who moved to the area when Heron resurrected the lead, copper and zinc operation in 2019.
The Post understands Pybar Mining Services, engaged in February 2018, has 100 employees onsite, alongside another 60 to 70 contractors, many of them technical experts whom Mr Dobson said were affected by the coronavirus travel bans. All will go, with only a skeleton maintenance staff remaining.
The company broke the news at a staff meeting on Tuesday. The CEO said emotions ranged from sadness to fear and anger, while others were focused on the shutdown. One person immediately walked out.
Mr Dobson, who only started in the role on Monday, told The Post it had been one of the hardest days in his 30-year career in the industry.
"As the government reaction escalated, we had to move fast while doing it as empathetically and professionally as posssible," he said.
"...It's these hard days that you most remember. It's a very human part of the job, dealing with people's livelihoods."
All workers will receive their entitlements but with only 12 months of operations, redundancy payouts won't be large.
Heron chose employee redundancy over stand-down.
"As a board and management we had to look at how long this (coronavirus impact) would go on. While the government is indicating six months, we'd need the metals market to recover and we think that would take another six to 12 months," Mr Dobson said.
"If we stood people down they wouldn't get redundancy payments and would only be able to access support. We thought it was better to give redundancy and ask them all if they would consider being re-employed when things turn around. We would look favourably on people with experience. There's a good chance they will be re-employed at the end of this."
The move comes just six months after a $91 million recapitalisation of the venture. It included institutional and retail shares and $52m in convertible notes by existing major backers, Orion Mine Finance, Greenstone Finance of London and Minneapolis-based Castlelake.
Mr Dobson said operations suspension was a 'default' under the loan agreement with Orion. But Heron had secured a waiver on the default until April 23, 2020.
In the meantime, technical reviews on operational improvements and exploration are underway.
"It's a precursor of support for our three main shareholders because they're showing support for us," Mr Dobson said.
"We'll protect cash in the bank because the metal market has crashed, so if we can weather the storm and do the necessary work...the intent is that once the metal market has recovered, we'll be in a position to start up again."
He couldn't tell how long this would take, but said the mining industry generally was in the same boat, given "huge" fluctuations in ore prices.
While coronavirus was partly to blame, Mr Dobson said Woodlawn had been "under-performing and missing the mark" on quantity and quality of resource, particularly for the Asian market.
"The silver lining is that this (suspension) gives us time to see what's working and what can be improved," he said.
"...My first priority is to look after employees and suppliers as best we can and then to put improvement operations in place so we're ready for a re-start."
All Heron's tenements surrounding the mine will be retained.
Big hit on area
Gill Shepherd has sat on Heron's community consultative committee for the past three years.
She told The Post that the company was always proud of employing locals, including people from Tarago and Goulburn, who in turn spent money in the area.
"Another impact (of the job losses) will be on the rental and accommodation market. The Loaded Dog (hotel) had a lot of people staying there," Mrs Shepherd said.
"The mine has generated a lot of income and Heron has been very generous with community things. It will be a big loss until they get up and running again."
The news comes on the back of lead contamination at the town's railway siding. Transport for NSW recently admitted it knew about the lead's presence in soil in 2015 but only recently advised authorities and the community.
It was thought to have come from the loading of lead ore for the former Woodlawn Mine. The land was disturbed when the rail siding was built recently and has resulted in community demands for comprehensive testing.
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