Newmont Goldcorp offers US$25 million to end blockade

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Newmont Goldcorp Corp. [NGT-TSX, NEM-NYSE] has offered US$25 million in community investments to resolve a conflict at its Penasquito gold mine in Mexico, according to a report by Reuters news service. However, the offer has failed to satisfy activists.

On September 15, 2019, Newmont Goldcorp issued a news release stating that the dialogue sponsored by the government of Mexico to resolve issues with a trucking contractor and the San Juan de Cedros community (one of Penasquito’s 25 neighbouring communities) has been suspended. The company also said an illegal blockade has resumed.

“In order to ensure the safety of people, assets, and the long-term viability of Penasquito, the company has temporarily suspended operations for as long as the illegal blockade persists,” Newmont Goldcorp said.

On Wednesday, Newmont Goldcorp shares rose 0.88% or 46 cents to $52.24.  The shares are trading in a 52-week range of $40.01 and $54.87.

Holding operations that result from Newmont Mining’s recent US$10 billion takeover of Canadian mining giant Goldcorp, Newmont Goldcorp now ranks as the world’s largest gold producer with forecast production of 6.5 million ounces this year at an all-in-sustaining cost of US$975 an ounce

Newmont Goldcorp recently said it was ramping up operations at Penasquito following the lifting of an illegal blockade and the establishment of a dialogue process sponsored by the national government.

The company previously suspended operations at the mine from April 29, 2019 to June 17, 2019 in response to a blockade held by the same parties which began on March 27, 2019. The previous blockade was lifted and operations resumed in June as a government-sponsored dialogue process was established with the parties. Published reports say it is unclear what triggered the most recent blockade action and how long it will last.

The Penasquito polymetallic mine is a key asset within the Newmont Goldcorp portfolio. It ranks as the fifth largest silver mine in the world and the second largest in Mexico.  It is located in the northeastern corner of the State of Zacatecas and is wholly-owned by Newmont Goldcorp.

The mine produced 272,000 ounces of gold in 2018 and directly employs more than 6,000 people, while supporting another 20,000 indirect jobs in the region.

Since 2005, Newmont Goldcorp said it has invested approximately US$5 billion in Penasquito, including US$420 million in the Pyrite Leach Plant in 2017-2018.

Over the years, Penasquito has enhanced water availability to neighbouring communities through a number of projects including water treatment plants, new wells, pipelines and water trucks, along with 90 other infrastructure and community development projects.

Through a government-sponsored dialogue process, the company said it has offered a number of additional enhancements, including identifying new opportunities for local suppliers to contract with the mine, reviewing existing contracts with local suppliers to ensure there is a balance with all the neighbouring communities, and building and operating permanent infrastructure to replace current water supplementation for San Juan de Cedros.

The company also said it has offered to invest in additional infrastructure and amenities for the Cedros community to further support long-term economic development.

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