UPDATE 2-Mexico Penoles lifts force majeure at MetMex plant

(Adds details about the union)

MEXICO CITY May 18 (Reuters) - Mexican miner Penoles, which operates Latin America's largest metals refinery, said on Monday it was lifting a declaration of force majeure following a strike that shut down its precious metals unit.

Some 300 striking workers in the gold and silver refinery section of the sprawling MetMex metals complex in northern Mexico laid down tools on Feb. 8, demanding a salary increase of up to 9 percent.

Penoles (PENOLES.MX) said on March 13 it could not fulfill all contracts due to the strike.

The strike ended a month later, with the union accepting a 6 percent wage hike, but the company said it will still take weeks for operations to return to normal.

"Operations will be normalized in the coming weeks," the company said in a statement to the Mexican stock exchange.

Penoles' precious metals unit Fresnillo (FRES.L), which is listed in London and operates the world's largest silver mine, processes all the gold and silver from its mines at the MetMex plant.

Another group of some 900 workers at the base metals section of the plant did not go on strike and production there continued without incident throughout the labor spat.

But the partial strike did cut into Penoles' first-quarter earnings, which plunged 125 percent to a net loss of 255 million pesos, which was $18 million at the end of March. Shares in Penoles rose 1.62 percent to 196 pesos in mid-day trade.

Mexico's national miners and metalworkers union has been at the forefront of a nearly two-year strike at the giant Cananea copper mine owned by Grupo Mexico (GMEXICOB.MX).

The union's leader Napoleon Gomez is living in Canada to avoid corruption charges in Mexico, which he says have been fabricated for his tough stance against the mining companies.

Infighting at the union pushed out the organization's main spokesman Carlos Pavon last week as the resolution to the Cananea dispute drags on. ($1 = 13.244 peso) (Reporting by Mica Rosenberg and Adriana Barrera; Editing by Lisa Shumaker)