FREE ARTICLE PREVIEW: You are enjoying a free sample of exclusive
subscriber content. There is a limit of three free articles per week.

TABLE OF CONTENTS Apr 21 - 27, 2014 Volume 100 Number 10 - 0 comments

Goldcorp suspends ops at Los Filos as negotiations break down

TEXT SIZE bigger text smaller text
2014-04-16

VANCOUVER — One of the trickier elements for mining companies in Mexico involves negotiations over land use with communities that fall under Mexico’s National Agrarian Registry ejido system, and even large-scale miners like Goldcorp (TSX: G, NYSE: GG) are not immune to the related socio-political challenges.

On April 2 the company announced it was forced to suspend operations at its Los Filos gold–silver mine — located 230 km south of Mexico City in Guerrero state — after failing to negotiate a land-use contract with the Ejidatarios of Carrizalillo in the municipality of Eduardo Neri.

After a March 31 deadline elapsed the representatives of the ejido released a statement indicating they would “close the workers’ access to the mine and suspend mine operations until the company demonstrates greater disposition to negotiate.”

Goldcorp reported that activities related to environmental safeguards and site security would continue during the suspension, and said it would hold discussions to “expeditiously resolve the situation with the goal of ensuring the long-term sustainability of operations amid a lower gold-price environment and significantly higher Mexican tax obligations.”

Goldcorp’s director of corporate communications, Christine Marks, told The Northern Miner by email that the company wouldn’t comment on the specifics of the negotiations, but said it remains “confident a reasonable arrangement can be reached.”

Carrizalillo representatives released more specifics on negotiations, however, including compensation details. According to a March 31 press release, the ejido is requesting an increase in rental rates to 4 oz. gold per hectare, including a productivity bonus totalling 1.8 oz. for each 100,000 oz. produced annually. Data on the size of the land package at Los Filos that occupies ejido lands was unavailable at press time.

The press release also reports the offer from Goldcorp directors at Los Filos, which includes 3.5 oz. gold “at its current value,” with a commitment to guarantee the price over a 10-year agreement, plus a 4% annual increase. Goldcorp declined to clarify the accuracy of the reported offer during an email correspondence.

Los Filos had operated under a five-year agreement that Goldcorp brokered in 2009. The company has run into brief suspensions during negotiations with Carrizalillo.

The mine produced 332,400 oz. gold in 2013 at all-in sustaining costs of US$1,002 per oz. Los Filos was expected to chip in between 330,000 and 345,000 oz. in 2014, which represents 10% of the company’s overall yearly production guidance.

Goldcorp is finishing an upgrade on its heap-leach pad at the site — including another contingency solution storage capacity — with completion expected late in the second quarter of 2014.

Carrizalillo representatives have requested help from Goldcorp’s vice-president of Mexican operations Horacio Bruna. In a statement the ejido requested Bruna “come as soon as possible to the blockade and directly deal with [the negotiating team].”

Goldcorp’s shares were unaffected by the news, and rose 28¢ during the two days of trading after the announcement en route to a $27.36 close at press time. Goldcorp has traded within a 52-week window of $21.87 to $33.80, and has 813 million shares outstanding for a $22.2-billion market capitalization.



© 1915 - 2014 The Northern Miner. All Rights Reserved.

Related News
Silver Wheaton a top pick for Salman Partners
David Jones talks Guerrero discoveries, Minaurum play
U.S. equities waver on global tensions, June 9-13
Related Press Releases
Cerro Negro Achieves First Gold Production
Goldcorp Declares Seventh Monthly Dividend Payment for 2014
Goldcorp to release 2014 second quarter results and host conference call and webcast on July 31st
 

Companies in This Story

Goldcorp Inc

Properties in This Story

Los Filos Mine



Horizontal ruler
Horizontal Ruler

Post A Comment

Disclaimer
Note: By submitting your comments you acknowledge that Northern Miner has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *



* mandatory fields