The company said the cuts, which would reduce its workforce to around 350 employees, was part of a move to focus on the most profitable elements of the business.

“As a key player in the resources sector in north Queensland, the company deeply regrets the impact of these measures on its workforce,” Kagara said in a statement.

“Meetings are being held by senior management representatives across the business and a recruitment consultant has been engaged to assist people impacted by these regrettable but necessary decisions to restructure the business.”

As part of the restructure, Kagara is refocusing its operations around zinc and copper production from the Balcooma underground operation and Baal Gammon open pit operation in the Central Mt Garnet region with ore processed through the Mt Garnet treatment facility.

Kagara said that by focusing on its core Central Mt Garnet region it would be in a strong position to weather the current downturn and be well placed to achieve growth as conditions improve.

The company will also mothball the development of the West 45 underground mine at Thalanga and place the mine on care and maintenance until an improvement in the zinc price.

Kagara also announced it would move the Thalanga processing plant onto care and maintenance towards the end of this month and suspend exploration activities across north Queensland until market conditions improve.

Meanwhile, Kagara posted a net loss after tax of $48.9 million for the half year, down from a $2.5 million profit for the first half last year.

The company said the delay in its financial results for the half year was due to Kagara electing to delay submission for an audit opinion of the accounts following the recent introduction of new financial modeling processes as well as ongoing improvements to accounting and cost management systems.

Revenue from concentrate sales increased from $90.9 million to $130.5 million.

Kagara said the stronger Australian dollar and falling commodity prices resulted in a higher zinc cash cost for the half year of 82c per pound while copper cash costs increased to $1.87/lb.

The company also said the highly volatile commodity price during the half year also impacted on its revenue line.

Production guidance

Kagara has also slashed its production guidance from its north Queensland base metal operations on the back of the restructure.

Zinc production guidance for 2012 financial year is now in the range of 43,000-47,000t compared with the previous guidance of 53,000-59,000t.

Copper production guidance for the year is now in the range of 14,000-17,000t compared with the previous guidance of 17,000-20,000t.

Kagara will also be making an announcement on its board restructure in the coming weeks.

Kagara’s core executive team will be reduced to managing director Geoff Day, chief financial officer Paul Warme, chief operating officer Evan Spencer and executive general manager corporate and company secretary Mark Hands.

Shares in Kagara are currently in a trading halt.