Goldcorp’s Largest Operation Halted by Argentine Union Strike

- March 13th, 2019

Goldcorp said operations at it Cerro Negro mine in Argentina were halted after a mining union created illegal work stoppages at the asset.

Goldcorp’s (TSX:G,NYSE:GG) operations have been halted by the Asociacion Obrera Minera Argentina (AOMA), as the union illegally stopped work at the company’s largest asset, the Cerro Negro mine in Argentina, the company said.

According to an announcement issued by Goldcorp on Tuesday (March 12), mining ceased when the work stoppage began late last Friday (March 8), with processing activities now discontinued thanks to the exhaustion of surface stockpiles.  

While the company did not give a reason for the strike, it did state, “[m]ining and processing could be safely restarted immediately following the return of the workforce.”

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For the union’s part, it did not state a reason behind the strike and did not respond to comment requests from the press.

Despite possible downsides that could stem from the strike, Goldcorp noted that its primary focus at this time is on “personnel safety, environmental protection and full permit compliance” while it engages with AOMA to find a speedy resolution.

“It is unlikely the work stoppage will materially impact the fundamental value of the mine,” analysts at Canaccord Genuity (TSX:CF,OTC Pink: CCORF) told Reuters. Adding, “[h]owever, we do note that a prolonged stoppage could impact the company’s ability to meet its 2019 production guidance of 2.2 to 2.4 million ounces.”

Cerro Negro is an underground mine that began commercial production in January 2015 and produced 452,000 ounces of gold in 2017.

The miner completed a ramp up of the Cerro Negro mine toward the end of 2018, mining 4,000 tonnes per day of ore.

The pause in production at Goldcorp’s Argentina asset is not expected to have any effect on its current US$10-million merger agreement with Newmont Mining (NYSE:NEM).

On Monday (March 11), the company revealed that it both consented to and supported the Nevada joint venture (JV) between Barrick Gold (TSX:ABX,NYSE:GOLD) and Newmont announced that same day.

With the proposed JV, Barrick and Newmont could garner an estimated US$500 million in average annual pre-tax synergies in the first five full years of the combination, which is projected to total US$5-billion pre-tax net present value over a 20-year period.

Goldcorp shareholders stand to benefit from this JV once the merger between Newmont and Goldcorp is complete.

As of 11:30 a.m. EST on Wednesday (March 13), Goldcorp was down 0.93 percent, trading at C$14.93.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.  

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