Torex Gold Resources (TSX:TXG) traded down Monday after news broke late Friday about the abduction of local community members near Torex’s Morelos mine project, located in the Guerrero state of Mexico, where 43 student teachers were reportedly kidnapped and allegedly burned to ashes in Cocula in southern Guerrero last year.

At least 12 people were reported kidnapped in Cocula Friday, according to theAssociated Press. Initially there were conflicting reports concerning how many were taken and whether some of the victims worked for Media Luna, a subsidiary of Toronto’s Torex Gold Resources.

However, Bloomberg reported on Monday that Mexican security forces have freed 10 of the victims who had been abducted. Acting on information from Cocula residents, the Mexican army and federal police found 13 people spread out among three locations. At least two of the group allegedly helped carry out the kidnappings. One person was treated for gunshot wounds.

In a statement issued Friday, Torex Resources said only one of the 12 missing community members actually worked directly for the Media Luna gold project as a laborer, while three others work for contractors to the project. “Our thoughts are with the individuals and their families, and our site team is providing support through this difficult time for the community,” Torex said in the statement.


The kidnap victims were traveling in an SUV on the highway that links Alto Balsas to Cocula, said Juan Zuniga during a press conference Saturday in Chilpancingo, the capital of Guerrero, the Latin American Herald Tribune reported Monday. Zuniga, who said he represented the workers, told reporters the group was about 30 minutes from Cocula when they were abducted.

Torex has about 250 employees in the area and at least 1,000 more who are considered contract workers. The company is engaged in the exploration and development of its Morelos gold property in the Guerrero Gold Belt, located 180 kilometers southwest of Mexico City. The advanced stage exploration project Media Luna is one of two projects within the property under development.

In a note published Monday, Scotia Capital analyst Trevor Turnbull said, “We have underestimated the ongoing amount of violent crime in the communities closest to Torex’s mine development and operations.”

“The violence in the Guerrero state is well recognized; especially, following the kidnapping and alleged murder of 43 students last year,” he observed. “However, we naively believed Torex and the immediate work area would be a hard target that gangs and criminals would likely avoid.”

“We expected Torex’s high profile would act as a deterrent. We were wrong,” Turnbull admitted.

Nevertheless, he stressed, “We still believe there is only mining execution and timing risks mainly due to contractors facing increased absenteeism. Nonetheless, we think Torex’s share price will fail to outperform the group as concerns grow over security and its takeover premium potentially diminishes.”

Scotia Capital downgraded Torex’s rating to “Sector Perform”, along with lowering the one-year target from C$2.75 to C$1.75.

Also on Monday, BMO Capital Markets decreased their target price on shares of Torex from C$2.50 to $C2.00, said The Ticker Report.

Torex saw a drop of 6.52% during Monday’s trading session on the Toronto Stock Exchange. Shares closed the day at C$1.29 per share.

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