The strike at the El Cubo mine in Mexico is over for Gammon Gold (GAM-T, GRS-N).
Workers went on strike after their previous collective agreement expired at the end of April. Gammon insisted at the time that the workers take on a seven day work week — the standard in the mining industry.
With the union now agreeing to the seven day week they will receive the 8% increase in basic wages and a 3% increase in benefits that was originally tabled by Gammon. Those increases represent a 3.5% increase in total payroll costs to the company.
Halifax-based Gammon says the new work schedule could further improve El Cubo’s productivity and its operating margins over time.
When Gammon first announced the strike on April 29th it said El Cubo only represented 21% of the Company’s 2009 production and with costs at the mine high due to the shorter work week, the company said it was prepared to let the workers stay on strike.
The hard-ball tactics appeared to have work and the good news comes on the heels of getting a larger land package at its flagship project Ocampo approved.
On June 1 the company announced it had received presidential approval for the acquisition of roughly 42 sq. km of prospective land around Ocampo.
The mine sits roughly 235-km southwest of the city of Chihuahua which is the capital of the State of Chihuahua in Mexico.
Ocampo went into commercial production at the beginning of 2007 and produces gold from both underground and open pit operations. It turned out roughly 42,000 gold equivalent oz. for the first quarter of this year.
El Cubo produced 13,483 gold equivalent oz. for the first quarter of 2009, down from the 19,234 it produced for the same period in 2008. The mine is located in the village of El Cubo — roughly10 km east of the city of Guanajuato which is the capital city of the State of Guanajuato.
In Toronto on June 15th, Gammon’s shares finished the day 3% or 27¢ lower at $8.45 on 354,000 shares traded.
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