No quick end seen to Nyrstar's Mexico mine suspension

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Wednesday, April 29, 2015

Nyrstar's suspended Campo Morado zinc mine in Mexico is unlikely to reopen soon due to continuing security problems, according to John Galassini, senior VP of mining.

The Belgium-based company halted operations at the mine in Guerrero state in February citing systematic intimidation of its workers. Mexican authorities are planning a swift response to this wave of cartel-related crime that has impacted mining.

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Guerrero has seen an upsurge in violence linked to drug cartels in recent months, including kidnappings of workers from Torex Gold's US$800mn Limon-Guajes gold project and Goldcorp's Los Filos mine. Three of four abducted Goldcorp workers were found dead.

"Continued security issues in the state of Guerrero prevent the resumption of operations at Campo Morado," Galassini told Nyrstar's Q1 earnings call.

"We're working with the government, the community and regulatory agencies to seek a resolution to the problems. Like many others we're finding this to be a very complex issue and that it's not likely to be resolved in the near term."

The mine will restart when site and community issues are resolved and when operations can be conducted in a secure environment, he added.

During the suspension, Nyrstar will be working on optimizing the geological block model and mine plan for Campo Morado, continuing with environmental work at its tailings and storage facilities and metallurgical testing.

Q1 RESULTS

Zinc production in Nyrstar's mining division fell 8% to 67,000t, compared to 73,000t in 1Q14, with Campo Morado's output falling to less than 500t from 7,000t, the company said in its earnings statement.

El Toqui in Chile produced 10,000t, up from 8,000t, with El Mochito in Honduras churning out 7,000t, up from 6,000t, and output at Contonga in Peru flat at 3,000t.

Total lead production was up 46% at 6,000t, with copper falling 48% to 1,700t, silver down 30% to 920,000oz and gold 77% lower at 3,600oz.

Ebitda increased 113% to 68mn euros, as revenues increased 25% to 791mn euros, due to 28% growth in the company's metals processing division.

No net income figure was provided.

Nyrstar also has mines in Canada, the US and Finland and metals processing facilities in Europe, the US and Australia.