Galmoy restarts activity despite €42m losses
GALMOY Mines, which laid off most of its workers in Kilkenny last summer, reported a loss of over €42m in 2008 as it wrote down the value of its assets and made provisions for costs associated with winding down the operation.
Owned by Canada-based Lundin Mining, the zinc and lead mine at Galmoy was earmarked in September 2008 for closure, with the loss of over 220 jobs.
The workers had originally anticipated that the mine would be closed on a phased basis by 2011, but this plan was later revised and the facility closed last June.
Most of the employees were laid off at that stage and the company paid €10.3m in redundancy costs in 2008.
Galmoy Mines had made a profit of €22m in 2007, as zinc prices on the world market remained high.
The metal had been trading at nearly $4,600 a tonne in 2006, but it fell sharply last year to $1,300.
It has since staged a partial recovery, and is selling at nearly $2,500 a tonne on the London Metal Exchange. Galmoy Mines said the fall in commodity prices had resulted in the Kilkenny operation becoming economically unviable.
However, accounts just filed for the business note that last month a decision was taken to recommence mining activities for a "certain period of time", but that site rehabilitation works would continue regardless. That site restoration is expected to cost nearly €11m.
Turnover at the company fell from €122m in 2007 to €81.7m in 2008, while the cost of sales jumped from €42.6m to €70.4m.
The operating loss for 2008 was €42.3m.
Due to the decision to close the mine, an impairment review of the mineral interests at the site was also undertaken and an associated charge of €15.7m was accounted for in 2008.
A net realisable value of €3.8m was attributed to the land and buildings at the location.
The value of mining equipment at the site was also impaired to the tune of €19m in 2008 and had a net book value of just €1.5m at the end of 2008.