March 31, 2011 / 2:10 PM / in 7 years

UPDATE 2-Mexico union sees quick end to Primero mine strike

* Strike over workers’ bonus payments at San Dimas mine

* National mine union official says strike could end soon

* Primero shares fall 3.2 pct in early trade on TSX (Recasts with union quotes, changes dateline, pvs TORONTO)

MEXICO CITY, March 31 (Reuters) - Mill workers who laid down tools at Primero Mining’s San Dimas gold-silver mine on Wednesday over bonus payments expect a quick end to the strike, Mexico’s National Mineworkers union said on Thursday.

Canada’s Primero P.TO, which last year acquired San Dimas from mining giant Goldcorp (G.TO), said depending on its duration the strike could hurt its production forecast for the year.

But the National Mineworkers Union, which has led multi-year-long strikes at other mines in Mexico, said it hoped to avoid a prolonged stoppage at Primero.

“I hope this could be resolved tomorrow, but I can’t give an exact timeframe,” Javier Zuniga, an official at the national union told Reuters after some 200 mill workers walked off the job mid-day on Wednesday. “We don’t want a drawn-out strike.”

San Dimas is Primero’s only operating mine. It produced about 100,500 gold equivalent ounces in 2010 and expects between 110,000 and 120,000 of gold equivalent ounces in 2011.

The mill workers are demanding a bigger bonus as prices for gold and silver soar to record highs, Zungia said.

Primero offered an eight percent increase in bonus payments to parallel an eight percent wage rise, but the union wants the company to up the bonus percentage, he said.

Gold XAU= was set for a tenth straight quarterly gain on Thursday, rising by nearly 1 percent on a weakening dollar to bid at around $1,437.50 an ounce.

The union local that represents the mill workers is one of three union sections at San Dimas, which are all part of the National Mineworkers Union.

Primero said the other two union locals, which represent underground mine workers, have accepted the company’s bonus structure with terms similar to those proposed for the mill workers.

Zuniga said there are around 400 underground mineworkers that decided not to join the strike because they are on a different contract.

Mining, development and exploration activities continue without disruption, the company said.

Primero, formerly known as Mala Noche, said it is continuing its efforts to resolve the dispute.

Shares of Primero were down 3.2 percent at C$3.63 on Thursday morning on the Toronto Stock Exchange.

The National Mineworkers Union led a three-year-long strike at Mexico’s largest copper mine, which finally ended after a legal wrangling in courts ruled against the workers. Mine owner Grupo Mexico (GMEXICOB.MX) took back control of Cananea last year with the backing of federal police.

Napoleon Gomez, the union’s head, is living in exile in Canada to avoid arrest on corruption in Mexico. He says the charges were fabricated because of his labor activism. ($1=$0.97 Canadian) (Reporting by Mica Rosenberg in Mexico City and Euan Rocha in Toronto; Editing by Marguerita Choy)

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