The Vancouver-based company said the wash facility would ramp up over the next few weeks, however, in the meantime “geological challenges” at the operation’s longwall that began in early February are still ongoing, and it has opted to discontinue work there immediately.
The development of its Central longwall will continue, and officials still projecting a May 1 start for it. Once in production, EastCoal is aiming for a 7,000-tonne-per-month capacity from the Central longwall.
Production cutbacks also have been confirmed at the miner’s Ukrainian operations, to the tune of 400 workers. Officials said that the workforce cut was to improve operational efficiencies, however, did not indicate when the furloughs would go into effect.
About 1200 employees work at the Menzhinsky and Verticalnaya mines.
“As a consequence of the unexpected shut down of the wash plant at the Menzhinsky mine and the geological problems encountered at the Menzhinsky underground mine in January and February, very little revenue was received by the company during that period,” EastCoal officials said.
“As a result, the company's short-term working capital requirements need to be resolved to allow continued implementation of its current operational strategy.”
The British Columbia company called the challenges “temporary” and said long-term company value remained intact.
“We have moved swiftly to address the challenges at the Menzhinsky mine and while production over the next two months will still be impacted, the board is confident that the steps that we are taking should resolve these issues,” executive chairman John Byrne said.
“The reduction in staff is regrettable but reflects both current operational requirements and our continuing efficiency improvements.”
In related EastCoal news, the company said it had reached an agreement with Aponet Enterprises to amend its C65c conversion price of its $US4 million debenture that was previously issued as part of its takeover of Menhinsky mine owner Inter Invest to C23c.
Under the deal, it will convert the debenture into 17,391,305 EastCoal common shares effective Tuesday.
TSX-V approval is pending, though officials expect to receive it shortly.
Following admission of those shares, the company will have more than 343 million common shares on issue.
