Mexican court rules Goldcorp must renegotiate Penasquito land rights


A mining engineer examines a drill core sample at Goldcorp’s Penasquito mine in Mexico.

Goldcorp Inc., the world’s biggest producer of the metal by market value, must renegotiate for land at its biggest mine after losing a legal appeal in Mexico.

An agrarian district court in the state of Zacatecas voided Goldcorp’s temporary lease of the land at a mine it calls its “main driver” of gold output growth in the next five years, and ordered the territory be returned to the farmers, according to court documents. Local farmers will regain about 600 hectares (1,483 acres) within the Penasquito open mine pit, the documents state. Penasquito is Mexico’s largest gold mine and Goldcorp’s biggest mine by revenue.

The farmers are willing to rent the land to Goldcorp for closer to the $5 million-a-year price tag they say neighbouring communal farms have secured, rather than their 30-year lease for a lump sum of about 3 million pesos ($242,000), said Hugo Teniente, a lawyer for the farmers. A final value for a lease would be determined by an expert’s evaluation, he said.

“We don’t want to cause job losses,” Teniente said in a telephone interview from Zacatecas. “All we’re looking for is our rightful portion.”

A court agreed with 29 communal farmers, known as ejidatarios, who have said in the four-year lawsuit against the Vancouver-based miner that they weren’t given vital information about the value of the land, its use for an open pit mine or possible environmental damage before signing the lease. The company said its excavation isn’t damaging the environment and it has acted responsibly.

Goldcorp stock rose 5.2 per cent to C$28.14 ($27.23) at 10:01 a.m. in Toronto.

Seeking Settlement

Goldcorp hasn’t exhausted all legal options, according to Alfredo Phillips, the company’s corporate affairs director in Mexico, who said he couldn’t give further details as the judge asked the company not to discuss the lawsuit. Phillips said the company is seeking a “mutually beneficial settlement” with the stakeholders.

Penasquito has exhausted all legal appeals, according to Sol Angelica Ferreira Garnica, a court clerk at the District 1 Unitarian Agrarian Tribunal in Zacatecas. The tribunal will hand the land back to farmers once it establishes how much money they must return of the 3 million pesos they received for the lease, Ferreira said by telephone from Zacatecas.

Court Order

The agrarian district court found that farmers weren’t informed that the land would be used for an open mine pit and had no legal advisers present during the signing of the lease.

Phillips said the company has followed all steps of corporate responsibility and repeated that he couldn’t comment on specifics of the case.

The 23,000-acre gold mine is set to produce as much as 400,000 ounces of the precious metal this year after bringing in $1.6 billion in revenue last year, the most of any of Goldcorp’s mines, the company said in its 2012 annual report. The mine also produces silver, lead and zinc.

“This is a great mine that is already generating outstanding financial returns and whose strongest years lie ahead,” Goldcorp said in the report.

The mine is certified as a clean industry by Mexico’s environmental protection agency and the company has ensured that water quality and well supply haven’t been compromised, Phillips said. In addition, the company has built roads and a school and funds a youth program for communities near the mine, he said.

“The community is centrepiece to what we do,” Phillips said in a telephone interview from Mexico City.


Growing water shortages at the mine slowed total milling and processing capacity to 105,000 tons a day, from an expected 130,000 tons, the 2012 report says. Penasquito produced 60,100 ounces of gold in the first quarter, down from 112,900 ounces in the previous three months.

Gold, which has risen for 12 consecutive years, fell into a bear market April 12 after dropping more than 20 per cent from a record closing price of $1,891.90 an ounce in August 2011. The metal reached a two-year intraday low of $1,321.50 on April 16, a day after plunging the most in three decades.

Gold averaged $1,631.98 in the first quarter, 3.7 per cent less than a year earlier and 5.1 per cent lower than in the three months ended Dec. 31.



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