Acacia Mining has said it will cut down on operations in its largest gold mine in Bulyanhulu, Tanzania, in a process that will see it reduce workforce by about 400.
The gold producer, which has been locked in tax dispute with the government, said it will stop mining and processing of underground ore in the next four weeks.
In a statement on Monday, the firm said the scale-down will be completed in three months and will include one-off costs of up $25 million.
"Regrettably, the implementation of this programme will lead to a significant reduction in the workforce from the current 1,200 employee and 800 contractor roles," the miner said.
"As a result of the planned reduction in operating activity at Bulyanhulu, Acacia now expects annual production to be in the order of 100,000 ounces lower than the bottom of the previous guidance range of 850,000-900,000 ounces."
In late July, the Tanzania Revenue Authority claimed that Acacia, through Bulyanhulu Gold Mine, owes $154 billion, and $36 billion from the Buzwagi mine.
The tax demand in addition to a concentrate export ban has put a strain on the London Stock Exchange-listed firm cash flow.
In its unaudited results for the six months to June 2017, the gold producer said it was considering pulling back operations at the Bulyanhulu mine.
In the half year results, the firm saw its revenue drop by 22 per cent to $391.7 million, largely because the firm has been unable to sell 127,000 ounces of gold concentrate from its Tanzania operations since March, when the ban was imposed.
In the six months to June, revenue fell 22 per cent its pre-tax profits dropped marginally by 2 per cent to $99.5 million.
"The impact of the ban, in addition to the deterioration of the current operating environment, has led to negative cash flow of approximately US$15 million per month at the mine and thus has made ordinary course operations at Bulyanhulu unsustainable," Acacia said.