Excellon Resources Inc. (TSX:T.EXN, Stock Forum) Executive Chairman Peter Crossgrove is speaking out for the first time about a controversial blockade, which has halted production at the company’s La Plasosa silver mine in Mexico.
Recent reports say the peaceful blockade has been set up by land owners (also known as the Edijo) who want to see a water treatment plant constructed near the mine site.
But in an interview with Stockhouse, Crossgrove said that the high profile blockade has little to do with land use issues.
Rather, he said the company is caught in the middle of a battle between three unions, who are fighting for control of the mine workers.
“In our view, it has nothing to do with the Edijo. It has to do with the Steel Workers who lost the election.’’
Crossgrove went on to say that the two unions who lost the right to represent the mine workers in a recent election have launched a formal complaint with the Mexican Government about the way the election was run.
Located in Durango State, La Platosa is Excellon’s flagship asset. It produced 436,351 ounces of silver in the three months ended March 31, 2012, compared to 202,077 ounces a year earlier.
However, operations have been stalled by the blockade which was set up in early July and is preventing equipment and supplies from being moved in and out of the site.
The Excellon Chairman explained that the company was initially planning to build a processing mill at the site. If the company had stuck to that plan, it would have needed to construct a water treatment plant, he said.
However, the company decided to buy a mill which is located about 200 kilometers from the mine site.
“All we’re doing is pumping water out of the ground to operate the mine, we’re not affecting the water,” Crossgrove said. “All we ever had to do is provide agricultural water, and our water coming off that property meets all those requirements.”
“The government is controlling the water, not us. They’ve never given us permission to give anyone the water,” Crossgrove added.
However, in an interview with Stockhouse, Chris Benoit, a representative with ProDesc said the "Edijo issue is separate from the union issue.'' ProDesc is a non-governmental organization that defends economic, social and cultural rights in Mexico.
Benoit, said the recent election was marred by irregularities.
The original union, Los Mineros, is challenging the election for this reason and because they lost by one vote.
Los Mineros is working with ProDesc and is strategically aligned with the United Steel workers.
Even with the issues surrounding the unions, according to Benoit it does not change the fact that the blockade is about the original land use contract signed between Excellon and the Edijo in 2008.
The dispute at La Platosa is also being closely observed by MiningWatch Canada, an Ottawa-based company that works to change public policy and mining practices to ensure the health of individuals, communities and ecosystems.
Jennifer Moore from MiningWatch Canada said “that there is no reference in the contract clause referring to the construction and installation of a water treatment plant to any related mill.”
The original contract ensured the building of a water treatment plant whether a mill was to be built or bought.
Currently, the state and federal government are meeting to determine how to resolve the problem.
On Tuesday, Excellon was trading at $0.53 a share. The company has a market cap of $146.2 million, based on 276 million shares outstanding. The 52-week high and low was $0.85 and $0.43 respectively.