Newmont ends Peñasquito strike, Pan Am La Colorada robbed

The company said the preliminary deal has to be approved by a federal labour tribunal for mining to restart.

The National Union of Mine and Metal Workers of the Mexican Republic, representing 2000 workers at the mine, began the strike in June, seeking higher pay. The strike had a political undertone for Newmont to navigate, given that the union president is senator Napoleon Gomez, a close friend of president Andres Manuel Lopez Obrador.

Details of the breakthrough include the pay raise being backdated to August and a commitment for mine workers to receive at least two months' pay if the mine fails to report profits this year. Workers will also share a bonus of 152 million pesos (US$8.3 million).

The end to the strike will be welcome news for Newmont, which saw a tough June quarter that disappointed analysts, with the September quarter - which Newmont is due to report on October 26 - certain to be dinged by the strike.

Prior to the strike, production guidance on Peñasquito was 330,000-370,000oz of gold this year in addition to 31-35Moz of silver, 170-190Mlb of lead and 420-460Mlb of zinc. In the June quarter, it produced 38,000oz of gold, an almost 70% fall from the prior year.

June quarter production for the company was 1.24Moz of gold and 256,000oz gold equivalent from copper, silver, lead and zinc, below Canaccord Genuity's forecast of 1.39Moz of gold.

In its June quarter financials, Newmont said it had incurred $23 million in operating costs and $15 million in depreciation and amortization due to the strike.

La Colorada

While Peñasquito is due to restart, operations at Pan American Silver's La Colorada mine, also in Zacatecas, have been temporarily suspended due to security concerns following an armed robbery in the early hours of October 5 of two trailers of silver concentrate.