ZINC miner CBH Resources has slashed the size of its workforce for the third time in five months as it struggles to break even at its Endeavor mine near Cobar.
CBH, which employed 602 people in June, has cut its workforce to 115 from 233 as part of the latest restructure.
CBH will operate day shifts only and expects to produce 78,200 tonnes of zinc and 38,700 tonnes of lead this year, down from a target of 114,000 tonnes of zinc and 57,500 tonnes of lead announced in August.
"We simply cannot continue to produce metal at a loss," CBH managing director Stephen Dennis said.
CBH has not revealed its September-quarter production costs but has said it was cash-flow positive in September.
Mr Dennis said the mine was cash-flow negative in October, when it failed to meet its production targets. He said the latest restructure would target cash costs of US60¢ a pound by increasing the grade of the ore processed and only operating its processing plant for nine to 10 days a month.
But with a spot zinc price of US50¢ a pound, CBH could still be losing money at its new production target level, depending on variables like the exchange rate and lead by-product price.
Mr Dennis said CBH was doing everything in its power to keep the mine open, but he could not offer any guarantees about its future if the zinc price did not recover in the longer term.
"Operations like Endeavor, if you were to put them on care and maintenance, that is a very dramatic decision," he said. "To recover from care and maintenance … would be extremely difficult."
The latest job cuts at CBH will have a devastating effect on Cobar, which has a population of about 6000.
Cobar mayor Lilliane Brady said the town had been able to cope with the other job cuts in recent months as the two other mines operating in the area, the Peak gold mine and the CSA copper mine, had been able to employ many of the sacked workers.
"They took up some of the slack, but I don't think it will happen this time," Ms Brady said. "I think it is going to be disastrous for businesses and some of our services, but we will get through it."
CBH takeover target, Perilya, has been forced to slash its workforce at Broken Hill in recent months, also due to the low zinc price. CBH is expected to release its Bidder's Statement for Perilya next week. CBH owns a neighbouring, undeveloped deposit at Broken Hill, which could be processed through Perilya's plant.
Mr Dennis said CBH expected to resume the stalled development of its Rasp mine if its takeover bid was successful, since that would position Broken Hill for a rebound when the zinc price improved.
