By Peroshni Govender JOHANNESBURG (Reuters) - South Africa's AngloGold Ashanti plans to cut staff through voluntary severance packages as the bullion producer feels the pinch of lower gold prices and rising costs, it said on Tuesday. A union source close to negotiations with the company said 1,200 positions were affected in South Africa, with AngloGold considering moving 300 staff into other positions and laying off 900 employees. The company, which has around 32,000 employees in South Africa, declined to provide details. "We have offered voluntary severance packages to staff, which is part of our self-help measures we announced at our quarterly results to further reduce costs and enhance efficiency." spokesman Chris Nthite said. AngloGold reported a sharp fall in third-quarter earnings earlier this month in the face of a lower gold price, inflationary pressures and higher tax charges, and pledged "self-help measures" to cut costs. The company said in an internal memo obtained by Reuters that all employees could apply for severance packages. Applications will open on Tuesday and the company wants to cut jobs in over-staffed areas, with a preference given to employees who are over 55 years old, according to the memo. The planned cuts could provide food for thought for trade unions ahead of wage talks for 2015. "As unions we now have to seriously consider our demands so we don't aggravate a situation that can lead to more job losses," the union source said. The potential lay-offs come as gold dropped 1 percent to $1,145.50 an ounce, close to a 4-1/2-year low reached last week, before recovering slightly [GOL/]. That hit producers' shares, with AngloGold's down 5.8 percent at 1110 GMT. Gold prices could tumble toward levels last seen at the height of the 2008-2009 financial crisis, between $800 and $900 an ounce, as the metal is no longer seen as an attractive way to diversify an investment portfolio, metals merchant and hedge fund Red Kite said on Monday. Another South African bullion producer Harmony Gold said earlier this month it might have to cut jobs as it contends with depressed prices and operational problems.