Mexicans Celebrate End of Cerro de San Pedro Mine

Published by MAC on 2009-11-23
Source: FAO, Reuters, CP, Associated Press

Mexicans Celebrate End of Cerro de San Pedro Mine

MiningWatch Canada - Frente Amplio Opositor FAO

19 November 2009

Mexicans Celebrate End of New Gold Inc.'s Cerro de San Pedro Mine

Criminal and civil proceedings to begin against company management in Mexico and Canada.

(Ottawa/Montreal/Cerro de San Pedro) - Yesterday, PROFEPA, the Mexican environmental enforcement agency, shut down New Gold Inc.'s (TSX:NGD) Cerro de San Pedro open-pit gold mine on the outskirts of the city of San Luis Potosi, Mexico. The agency was enforcing decisions rendered by the Ninth Circuit Administrative Court1 and the Federal Tribunal of Fiscal and Administrative Justice.2

Patricio Patrón Laviada of PROFEPA announced in Mexico City today that New Gold's mine has been operating illegally since its 2005 permit was thrown out by Mexican courts. He declared that recent statements of the company that it will appeal the decision are just strategies to retain investor confidence.3

"After weeks in which New Gold has ignored and publicly denied these decisions, we are thrilled PROFEPA has finally put an end to this mine," said Dr. Juan Carlos Ruiz Guadalajara, spokesman for the FAO (Frente Amplio Opositor), the coalition that brought New Gold to trial.

The case is without precedent, according to Kneen. "I can't think of a single example internationally of a Canadian mining operation that has been shut down by the authorities for operating illegally - but then I can't think of another company that has fought so hard for so long to operate without all its permits in place."

The company's Mexican subsidiary, Minera San Xavier, was informed of the Tribunal's ruling on October 14th. On November 10th the FAO filed a complaint with the British Columbia Securities Commission (BCSC) and the Toronto Stock Exchange accusing the company of withholding and misrepresenting information that "is of central importance to shareholders."

Mario Martínez of the FAO also notes that New Gold's land-use contract with the ejidatarios (communal landowners) of Cerro de San Pedro was thrown out by the Federal Agrarian Courts when it was discovered that a number of the signatories to the contract were fraudulent. Under Mexican law, to operate, a company needs all applicable permits and contracts to be in order.

Now that the mine has been shut down, lawyers for the FAO are preparing criminal charges and civil suits against New Gold and its Mexican subsidiary. The FAO is also launching what it calls a "Mega-remediation project" to restore this zone of unique environmental and historical importance for Mexicans.

For more information please contact:
David Schecter, 514-209-2666, cerrodesanpedro@gmail.com (English)
Lazar Konforti, 514-827-7486, cerrodesanpedro@gmail.com (Français)

1. D.A. 65/2004-873: unanimous and without appeal
2. Exp. 170/00-05-02-9/634/01-PL-05-04: one dissension; without appeal
3. http://www.mvsnoticias.com/ver_noticia.cfm?id=11724

CORRECTION: An earlier statement referred to reported attacks against three villagers of Cerro de San Pedro. It has now been confirmed that while there have indeed been some confrontations there has as yet been no physical violence against opponents of the mine.

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New Gold suspends mine after Mexico court ruling

Reuters

19 November 2009

TORONTO (Reuters) - Shares of New Gold Inc dropped 15 percent on Thursday after the Canadian miner said it had suspended mining at its Cerro San Pedro operation in Mexico following an order from environmental authorities.

The company said it was pursuing all legal appeals and cooperating with Mexican authorities after the country's environment ministry, acting on a federal court ruling, revoked the mine's 2006 environmental permit last week.

New Gold said in the statement the mine, which was expected to produce between 90,000 and 100,000 ounces of gold this year, has been operating in full compliance with required permits and government authorizations. "We are taking all possible steps to respond to the challenges to our legal ability to operate the mine, and believe that we will resume full operations," Chief Executive Robert Gallagher said.

New Gold said mining has been stopped, but gold recovery continues from mined ore.

The mine has faced opposition since it began operating in 2006 from local groups and environmentalists, who say the site in the northern state of San Luis Potosi is historically important and the operation threatens local watersheds.

The mine is a heap leach operation, which uses cyanide to remove gold from the mined rock.

George Albino, an analyst at Macquarie Equities Research, said he expects the situation to be resolved, but said the company's shares will suffer until that happens.

"In our view, Mexico is a pro-mining country and will ultimately allow New Gold to resume mining operations at (Cerro San Pedro) in spite of the current setback," he said in a note.

New Gold was down 68 Canadian cents at C$3.86 on the Toronto Stock Exchange. ($1=$1.07 Canadian) (Reporting by Cameron French, additional reporting by Mica Rosenberg in Mexico)

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New Gold pursues legal appeals in shutdown of Mexican mine over ecology issues

Canadian Press

19 November 2009

VANCOUVER, B.C. - Investors hammered New Gold Inc. on Thursday, a day after Mexican authorities ordered the shutdown of mining operations at the company's Cerro San Pedro property over environmental concerns.

New Gold stock was down 69 cents or more than 15 per cent at $3.85 by early afternoon in heavy trading on the Toronto Stock Exchange with over 12.3 million shares changing hands.

The Vancouver-based company said it was co-operating with Mexican officials while at the same time pursuing legal appeals in the case.

"Although mining has been suspended, gold recovery operations of existing inventory on the leach pads are continuing," New Gold pointed out in a news release.

The shutdown came in a ruling by the Federal Court of Fiscal and Administrative Justice that upheld a decision by the Secretariat of Environment and Natural Resources or SEMARNAT that nullified the mine's environmental impact statement issued in 2006.

PROFEPA, the Mexican environmental enforcement agency, issued the order requiring MSX to suspend mining as a consequence of the nullification.

New Gold said that besides seeking immediate legal remedies to the actions by the two environmental agencies, Minera San Xavier, as the mine is known locally, has also filed a new environmental impact statement with SEMARNAT.

"This (ruling) is a continuation of a decade of challenges from a group of individuals largely from outside the area who are opposed to the mining operations at Cerro San Pedro," New Gold chief executive Robert Gallagher said in a statement. "We are taking all possible steps to respond to challenges to our legal ability to operate the mine and believe that we will resume full operations," Gallagher said.

The company said its Cerro San Pedro mine has been operating in full compliance with required permits and authorizations and has had an "enviable record of meeting its environmental and social responsibilities."

The intermediate gold miner also operates the Mesquite Mine in the United States and Peak Mines in Australia and forecasts production of between 270,000 and 300,000 ounces of gold in 2009.

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Mexico orders Canadian company to end mining

By Mark Stevenson, Associated Press

19 November 2009

MEXICO CITY -- The Mexican government has ordered a Canadian-owned gold miner to halt operations in a colonial-era hamlet where residents say blasting has damaged the landscape and chemical runoff threatens to contaminate the water supply with cyanide.

New Gold Inc. of Vancouver vowed Thursday to appeal the order, which caps a three-year battle by activists against the open-pit mine in San Pedro, in north-central San Luis Potosi state.

Authorities revoked the mine's environmental permit last week in accordance with an October court ruling that the license was improperly granted. But operations apparently continued until the government sent an inspection team to the mine on Wednesday and explicitly ordered a shutdown.

"We are going to apply the law so that this company ceases its activities," said Rene Carmona, a spokesman for environmental prosecutors.

Since beginning operations in 2007, New Gold subsidiary Minera San Xavier has blasted apart hills that loom over the village of San Pedro, founded in 1592. Workers destroyed old mine works and tunnels to get at low-grade ore left behind by colonial-era miners, then trucked the rubble to giant beds and doused it with cyanide-laced water to leach out flecks of gold. The town's centuries-old stone church and houses are just a few dozen yards (meters) from the blasting sites.

New Gold said Thursday that mining activity has been halted for the time being, although "gold recovery operations of existing inventory on the leach pads are continuing."

"New Gold Inc. is cooperating with Mexican government authorities and pursuing all legal appeals after the company was notified yesterday that it must suspend mining operations at its Cerro San Pedro Mine," the company said in a statement.

New Gold, which has said it recovers or reuses most of the cyanide and takes measures to protect historic structures in the town center, expressed optimism that it will win on appeal and be allowed to resume full operations.

But Carmona said the shutdown order means the mine is finished, and the company will now have just weeks to present a closure and cleanup plan. "This would basically be a closure, a gradual closure," he said.

Anti-mine activists said they were happy about the closure but angry the mine was allowed to operate as long as it did. They pledged to use civil disobedience to prevent it from ever reopening.

Juan Carlos Ruiz Guadalajara of the Broad Opposition Front, a group of residents and environmentalists, estimated it will cost at least $300 million to recover leaked cyanide, close the leach heaps and start restoring some natural covering to blasted hills. "The damage is irreversible, but they have to remediate the cyanide," Ruiz Guadalajara said.