Shares of Boliden AB (BDNNF.PK) were gaining around 3 percent in the morning trading in Stockholm after the Swedish mining firm announced Monday that it has reached an agreement between worker´s unions and local management to reopen the mine at Tara on a more financially sustainable basis.
The Tara mine was put in care and maintenance in July 2023 citing negative zinc price development and overall cost level and operational challenges, among others.
The company has now secured the deal to significantly improve ways of work and productivity.
Employees will commence their return to work on a phased basis during the third quarter 2024 with an onboarding and retraining program.
Ramp-up of production will start during the fourth quarter 2024, and full production is expected from January 2025. The company expects operating loss during the second half would be about 25 million euros per quarter, compared to loss of 13 million euros per quarter during the care and maintenance period.
The company will record one-off restructuring costs of around 30 million euros in its second quarter 2024.
The restructuring costs are mainly associated with the reduction in headcount to around 400 full-time equivalent (FTE) employees, compared to over 600 employees before the care and maintenance period, among other things.
As per the deal, an optimized mining plan would reduce transportation distances and maximize metal output, starting with an annual production rate of 1.8 Mtonnes. The company also plans an organizational redesign, a reduction in employees and improved ways of working.
Altogether, the normal cash cost of the Tara mine is expected to be reduced to around 100 USc/lb Zinc, compared to 137 USc/lb Zinc for the first half year of 2023.
The reduction is attributed to an improved outlook on the price of energy as well as lower benchmark treatment charges or TC coupled with improved productivity levels.
In connection to the decision to reopen the Tara mine, exploration activities towards the Tara Deep deposit will be reinitiated during the second half of 2024.
In Stockholm, Boliden shares were trading at 364 Swedish kronor, up 2.5%.
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