Layoffs is basically good newsThe new operating planis bad & good news.
The bad is news when theywill lay-off 50 % of the work force. There is bound to be labour unrest. The governmentwill be pissed off too. There could be strikes etc. Plus compensation will bepaid to laid off workers. This will be a huge onetime expense.
The rest is all very goodnews. If the mine is not profitable & sucking in lot of cash then it has tobe stopped. The earlier it is done the better. This also shows that themanagement has wasted lot of time & resources in the endless pit. A goodplan for rapid profitability has been delayed for a long time like quite a fewother things.
Now the question is ifthis new operation plans will this turn the mine into lean, mean profitable or atleast break even operation immeadiltey or in a short while.
Lot more information isrequired to properly asses the validity & success of this new plan. If theyare able to contain this mine by reducing the size of the operation then it isa right move.
This layoff of 1850people should also put some pressure on the government & send a very clearmessage. They should realize that it is the foreign money, which is helping tocreate jobs & develop the natural recourses of the country, & they haveto facilitate & ensure that foreign capital continues to come to thecountry & continue to take risk of developing difficult & at timeuncertain & unprofitable recourses.
The international investmentcommunity does not feel that S A is an investor friendly country. That is whyall S. African assets will be rated at a discount to their actual true marketvalue.
FIU was on my list for tax loss selling trade. Iwas planning to pick up some shares this week till Dec 23, 2011. Now I willwait for the conference call to establish the viability of their new plan tobuy any shares in the company. Hope they will shed some light on the trailingponds issue & the situation of their cash & timelines for break evenfor Ezulwini mine & how they will deal with the bond falling due in June2012