Oceana Gold's Macraes mine operation in East Otago is going through "tough times" in an attempt to rectify a fall in ore tonnage and gold production.
The market capitalisation of the country's largest gold producer has plummeted 85% from $A668 million to $A97 million over 14 months, following restructuring and moving its principal listing to the Toronto Stock Exchange in June 2007 - making it ripe for a takeover.
Its share price has fallen from the $A4.15 listing price to trade at A60c yesterday.
Oceana Gold chief executive Steve Orr, who has recently said Oceana was in negotiations for a partner in the Philippines and is looking to raise $US185 million, could not be contacted yesterday.
Oceana Gold's copper and gold development in the Philippines is also under scrutiny.
The Didipio mine budget had blown out and doubled to $US320 million in May, followed by suspension of work in late June as more funding was sought.
At Macraes, Oceana Gold management and the 500-strong workforce are understood to be at odds over proposed changes to working conditions, to be implemented by September 1.
Management have rejected claims it could be "crunch time" for the future of the 18-year-old mine.
Vice-president of New Zealand operations John Kinyon said a combination of high staff turnover and bad weather had affected Macraes operations, meaning less ore was being shifted, reflected in it missing a target of more than 20,000oz of gold by 335oz last month.
"There have been delays and some tough times on several fronts. But we'll be here for life-of-mine [forecast until 2013]," he said.
He confirmed staff had been briefed recently on proposed changes to combat the problems, but the company was still negotiating with unions and declined to reveal details.
A senior mine employee, who spoke on condition of anonymity, said the management had been "harsh" in the delivery of their proposed changes to working conditions.
"There's plenty out here who don't realise this could be crunch time for the mine.
If these changes don't get some traction, there's jobs at stake," he said.
Mr Kinyon said: "Nothing here is going to hell but we need to install a sense of urgency to become more efficient and effective. It should have been done six months ago."
The mine had capacity to haul more than 8000 tonnes of ore per hour but this was down 15% to 6800 tonnes, which meant the daily target of shifting 150,000 tonnes had at times swung from 18% down to 5% above target.
Mr Kinyon said general fuel and electricity costs were hitting the mining sector, with an almost doubling of electricity costs at Macraes, but August production was "on target" to produce 21,000oz of gold.
The Reefton open pit, Macraes pits and Frasers underground had provided a healthy 54% boost to ounces produced for the quarter to June at 58,831 ounces, while the average price for gold rose 30% to $US902.
However, Oceana booked a $10.6 million loss for the quarter and its share price had continued to fall.
