February 15, 2017 / 10:49 PM / 2 years ago

Canadian miner Primero's Mexico mine operations halted by strike

(Reuters) - Some 1,000 unionized employees at Primero Mining Corp P.TO have gone on strike at the Canadian gold miner’s San Dimas mine in Mexico, halting mining and milling operations, the company and union said on Wednesday.

Depending on its duration, the strike could have a negative impact on the company’s 2017 production, Primero said. As a result, it has decided to postpone releasing its 2017 production and cost forecasts.

The National Union of Mine, Metal, Steel and Allied Workers of the Mexican Republic said about 1,000 workers began the strike at midnight. The union said it had been negotiating a labor agreement when the company “reversed the important advances already achieved and proposed starting again from scratch.”

Primero said the workers struck after the union and company were unable to reach an agreement during collective bargaining negotiations.

Primero said it had started cutting jobs, including contractors, at the San Dimas mine in an attempt to increase productivity and make the operation profitable again.

The company wants to “better align” the mine’s short-term bonus structure with its performance and shift workers onto a more continuous shift cycle to improve productivity, it said.

“We expect a negative reaction from Primero’s shares to the company’s announcement,” RBC Capital Markets analyst Dan Rollins said in a note to clients. The strike was announced after the market’s close.

The San Dimas mine produced 151,355 ounces of gold and 8.3 million ounces of silver in 2015, according to the company.

Last year, Primero said it expected to increase production capacity to 215,000 ounces of gold a year.

Reporting by Nicole Mordant in Vancouver and Natalie Schachar in Mexico City; Editing by Lisa Shumaker and Grant McCool

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