Business
Gammon Gold Announces Shutdown of the El Cubo Operations
Gammon Gold Announces Shutdown of the El Cubo Operations
About this update from Auq Gold Mining Inc.
[{"type":"text","content":"\n\n\n\n Jun. 17, 2010 (Canada NewsWire Group) -- Gammon Gold Inc. ("Gammon") (TSX:GAM and NYSE:GRS): Gammon Gold announced today that due to continued illegal labour disruptions at its El Cubo operation as well as the untenable financial demands made by the union workforce, as reported on June 3, 2010, it has terminated 397 union workers as of June 16, 2010 and is in the process of filing criminal charges against seven union executives. Operations at the El Cubo mine have been suspended indefinitely.\nSince acquiring the mine Management has believed that El Cubo is a modest sized operation with the potential to be reasonably economic, however its economic viability has been wholly undermined by a legacy of unacceptably low union productivity. This low productivity arises from an outdated collective agreement and an interfering union executive office that appears to have put its own interest ahead of the livelihood of its workers, their families and local communities. The El Cubo mine will be placed on care and maintenance until management determines its next course of action.\nSince 2008, the Company has invested in new equipment, introduced more efficient mining techniques, launched a more effective work schedule, significantly improved the mine's safety performance, introduced a production bonus program and launched an aggressive and strategic exploration program. Nonetheless, this investment has not delivered the anticipated productivity improvements due to the continued resistance of union workers to fully leverage these strategic initiatives. Management, supported by the Company's Board of Directors, have concluded that there is a need for the Company to take a firm and decisive stance with the union and is confident that this decision is in the best interests of the Company's shareholders.\n"Although the Company continues to believe in the potential of this property, given its location in one of the most prolific mining districts in Mexico, the Board and Management have a fiduciary responsibility to invest in operations that provide a positive rate of return for its shareholders. The ongoing challenges caused by the relentless distractions of union labour disruptions and sub-optimal performance have rendered the El Cubo mine uneconomic and any further investments, including management's time and effort, are...