Uranium One has announced it will be closing its Honeymoon uranium mine in South Australia, with around 90 people set to lose their jobs.
Sluggish uranium prices and high operating costs are behind the decision to mothball the mine, 75 kms from Broken Hill.
The 100 people employed at the mine is set to be cut to just 10, ABC reported.
The company's vice-president Kuzma Otto said the transition to care and maintenance will take around 5 months.
"We will transition down to the care and maintenance phase over a period of four or five months, depending on the consultation process with various stakeholders.
"This is not a closure phase, so the option to reopen is there. Some production problems during the commissioning process, as well as the yields from the well field being lower than we had anticipated, as well as uranium prices, played a contribution."
Otto said the company was committed to supporting all employees affected by job cuts.
"A very important part of this process for us is the wellbeing and care of our staff. Counsellors are available and we will be providing them with an outplacement service."
The company announced yesterday that it would be halting expansion projects in Russia and elsewhere due to stubbornly low uranium prices.
"We cannot discount the dramatic fall in natural uranium prices, as a result of which over 50 percent of global uranium production is currently loss-making," Vadim Zhivov, chairman of Atomredmetzoloto and president of Uranium One Holding, told Reuters in emailed comments on Wednesday.
"Given the unfavourable market environment, we have decided to freeze expansion projects both in Russia and abroad," Zhivov said.
Uranium prices dropped by more than 50 per cent after the Fukushima nuclear plant suffered a meltdown in March 2011. Prices are yet to improve.
However most analysts are optimistic a turn-around is not far off, with global demand for uranium is set to outstrip supply by more than 11,000m, with most predicting a price rebound by 2017.
Resources and mining analyst Peter Strachan said the when prices rise over the next two years, production at Honeymoon will restart.
“With a business like in-situ extraction at Honeymoon, you just turn the pumps off and if the price of uranium moves up again, as I'm pretty confident it will over the next two years, then you just come back and start the pumps up again and away you go.”
Image: The Australian