Workers strike at Canadian-owned West African gold mine

Workers strike one year after striking over pay and working conditions
By Cameron French
||Last Updated: 06/07/2012

(Reuters) - Canadian miner Kinross Gold said on June 6 that workers at its Tasiast gold mine in Mauritania in West Africa have initiated an unlawful work stoppage, halting mining and processing activity at the operation.

Kinross spokesman Steve Mitchell said mining and processing workers failed to report to work on June 5. About 600 workers are involved, although not all are on the same shift, he said. Most are unionized.

"They have raised a number of issues, which are the subject of current discussions with employee representatives and hope to get the situation resolved and get people back to work as soon as possible," he said. Kinross is Canada's third-largest gold producer by output.

Workers struck briefly at Tasiast in May 2011 over pay and working conditions, but were back to work in less than a day.

Kinross was seen as vaulting into the gold industry's big leagues when it acquired the mine as part of its $7.1 billion takeover of Red Back Mining in 2010.

But the company said earlier this year it would take a $2.9 billion writedown on the acquisition and delay a planned expansion of Tasiast, due in part to soaring project costs.

The mine holds proven and probable reserve of about 7.5 million ounces and has another 13 million ounces of resources.

It produced 200,000 gold equivalent ounces in 2011, a figure the company has said should rise more than seven-fold once the multi-year expansion is completed, sometime after 2014.

Kinross's shares, which plunged 21 per cent in January when the company revealed the Tasiast delay and warned of the writedown, were up 1.1 per cent at $9.13 on the Toronto Stock Exchange on June 6.

Barry Allan, an analyst at Mackie Research Capital, said labour stoppages at remote mines such as Tasiast are not uncommon and unlikely to rattle shareholders in the short term.

"Clearly, if we establish a legacy of this, it's just going to put another cloud around Tasiast, but at this point there's no reason to suggest that," he said.

"I think the bigger nut for Kinross when it comes to Tasiast is will Tasiast ultimately live up to the high expectations that Kinross has put on it. Generally, the market has said 'we don't think so'."

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