Bloomberg News

Goldcorp Gets Reprieve on Returning Land at Biggest Mexico Mine

June 20, 2013

Goldcorp Inc. (G), the world’s biggest producer of the metal by market value, received a reprieve from a court order to return land at its biggest mine to Mexican farmers.

A federal judge in Mexico halted the order from a district court to return the land at Goldcorp’s Penasquito mine, district court clerk Sol Angelica Ferreira Garnica said in a telephone interview. A second group of farmers sought the suspension of the order, she said.

Local farmers were supposed to regain today about 600 hectares (1,483 acres) within the Penasquito open-pit mine, after the district court voided Goldcorp’s temporary lease, according to court documents and the court clerk. Penasquito is Mexico’s largest gold mine and the Vancouver-based mining company’s biggest mine by revenue. The company has said the site will be its “main driver” of gold output growth in the next five years.

The second group of farmers who requested the suspension argued that returning the land would halt work at the mine, affecting their livelihood, Alfredo Phillips, Goldcorp corporate affairs director for Mexico, said in an interview today. Phillips said a federal judge will hold a hearing June 27 to discuss whether the temporary suspension should be made permanent.

“We’re basically bystanders trying to figure out what’s going to happen,” Phillips said by phone from Mexico City. “But we’ll continue to pursue the best interest of workers and communities and contractors.”

Mine Lease

Hugo Teniente, a lawyer for the group of farmers that brought the lawsuit against Penasquito, didn’t immediately return phone messages seeking comment. He said in an interview yesterday from Zacatecas that the company hadn’t presented a viable offer to renegotiate the land lease.

The district court agreed with 29 communal farmers who said they weren’t given vital information about the value of the land, its use for an open-pit mine or possible environmental damage before signing the lease. Goldcorp said its excavation isn’t damaging the environment and it has acted responsibly.

The farmers have expressed their willingness to rent the land to Goldcorp for closer to the $5 million-a-year rate they say neighboring communal farms have received, rather than their 30-year lease for a lump sum of about 3 million pesos ($224,000), Teniente said in an interview last month. A final value for a lease would be determined by an expert’s evaluation, he said.

The 23,000-acre gold mine is set to produce as much as 400,000 ounces of the precious metal this year after bringing in $1.6 billion in revenue last year, the most of any of Goldcorp’s mines, the company said in its 2012 annual report. The mine also produces silver, lead and zinc.

Goldcorp fell 7.9 percent to C$24.81 at the close in Toronto.

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net


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