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UPDATE 1-Excellon declares force majeure at Mexico mine
August 8, 2012 / 6:30 PM / 5 years ago

UPDATE 1-Excellon declares force majeure at Mexico mine

By Bhaswati Mukhopadhyay

Aug 8 (Reuters) - Silver miner Excellon Resources Inc declared force majeure at its La Platosa silver mine in Mexico due to a month-long blockade by members of a local land cooperative and said it was looking to lay off workers at the mine and the mill.

La Platosa, Excellon’s only mine, produced 1.3 million ounces of silver in 2011.

“We are looking into that (layoffs) right now as we are not able to meet our delivery contract ... and all our production has halted,” said Joanne Jobin, vice-president for investor relations.

Excellon’s concentrate delivery contracts were with Consorcio Minero De Mexico Cormin Mex S.A. DE C.V.

Jobin said there was no more ore to be processed. “We have gone through our stockpile now.”

Jobin declined to give the number of workers who will be affected. The company has about 50 workers at the Miguel Auza mill in Zacatecas state and about 250 workers at the La Platosa mine in Durango.

Excellon said in July the action was illegal and filed criminal charges against all groups participating in the protest.

“We believe this blockade is being funded and led by the unions and the NGOs,” Jobin told Reuters. “We are not in any contravention of our contract whatsoever.”

Jobin declined to comment on how much production has been or will be lost or how soon the force majeure will be lifted.

Force majeure is a contract clause that allows a company to miss shipments due to circumstances beyond its control.

“We are looking for a solution to end this conflict quickly,” Jobin said. She said the company was meeting with government officials on a regular basis.

Excellon has also struggled in the past with local landowners who want a new water treatment plant and other concessions.

This is not the first time that struggles with workers at the La Platosa mine have led to work stoppages. In 2011, the simmering conflict led to seven days of lost output and a review by Canada’s mining watchdog.

The mine will remain under care and maintenance during the blockade, the company said in a statement.

Shares of Excellon, which has a market value of about C$132 million ($132.7 million), fell as much as 5 percent to 46 Canadian cents on Wednesday on the Toronto Stock Exchange.

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