UPDATED: Ross Beaty gold mine in Mexico blockaded

Company disputes claim that resumption of mining caused spike in COVID-19

Los Filos gold mine in Mexico halts work due to blockade by locals. | Archives, Goldcorp

A gold mine in Mexico owned by Vancouver’s Equinox Gold Corp. (TSX:EQX) has been shut down in what the company calls an “illegal blockade.”

A collective representing local indigenous landowners in the area where Equinox’s Los Filos gold mine operates alleges Equinox has breached its social contract obligations, and that at least 21 workers have contracted COVID-19 since the mine resumed work – temporarily halted in April to address pandemic concerns.

The Ejido de Carrizalillo also alleges in a press release that the company has treated representatives of the ejido “with discrimination and racism,” although it provides no details or examples to support the allegations.

The company disputes both allegations of racism and that the cases of COVID-19 found through testing was the result of the resumption of mining, saying that those cases were identified through testing of workers before they went back to work.

In Mexico, an ejido is a collective that represents lands that are communally owned by indigenous people.

In the Ejido de Carrizalillo’s case, it says that it was originally encouraged by the company and its precursor, Leagold, which had signed an agreement on land use and social obligations.

The ejido signed a land use agreement with the company to operate the mine from 2019 to 2025. The ejido says the company had earned the local community’s trust, but now alleges bad faith and lack of transparency.

“However, all of the respect we were shown during the negotiation of the agreements faded away, and differences began to arise over breaches of the agreements and lack of transparency,” the collective says in a press release.

“Ultimately, after raising the corresponding complaints, the company began to treat us with discrimination and racism.”

"It was a surprise to us to have this blockade and a disappointment because we take our environmental and our health and safety and our social obligations very seriously," Rhylin Bailie,vice president of investor relations for Equinox, told Business in Vancouver. "And we certainly wouldn't tolerate any racism."

Asked it is was aware of any specific allegations of racism or discrimination, MiningWatch said in an email that the group making the allegations were basing them on the company's "dismissive" attitude.

"My understanding is that they are characterizing the company's dismissive response to their requests to address the contract breaches as generally discriminatory and racist in that white landowners would be treated quite differently," said Jamie Kneen, a MiningWatch spokesperson.

The Los Filos mine was previously owned by Vancouver’s Goldcorp, which was acquired by Newmont Corp. (TSX:NGT). The Los Filos mine was acquired in 2017 by Leagold, the company founded by Vancouver mining and movie magnate Frank Giustra.

At the beginning of this year, Equinox and Leagold merged, with Beaty becoming the newly merged company’s chairman.

The local ejido alleges Equinox failed to fulfill public health protocols to manage the spread of COVID-19. The mine, as well as all other mines in Mexico, was temporarily shut down in April, by government order, but resumed in June.

“Only a few days after the return to work there were over 21 positive cases of COVID,” the ejido states in its press release.

“Since then, the number of cases of infection has increased and, as a result, the company’s errors have also increased, including putting pressure on workers to come to work before receiving results of their COVID tests from the laboratory. Some workers have already died from COVID.”

In fact, those cases were identified in workers before they went back to work, not after, according to Bailie.They were identified by the company though its own testing of workers returning to work. In other words, those who tested positive would have likely contracted the virus before returning to work.

"Yes, there were cases of COVID, but that's because we tested people and they didn't know they had it," Bailie said.

"We decided to take the very proactive stance of testing every single member of the workforce before they came back to site, so that we knew we weren't going to be introducing the COVID virus to the community. All 1,950 employees were tested in advance of returning to work."

She added that everyone who tested positive was asymptomatic, and that workers are also tested before they leave the mine site to go back to their communities.

Equinox calls the blockade that shut the Los Filos mine down on September 3 “illegal.” Equinox's shares were down about 6% September 4, following the news of the blockade.

Bailie said that the union representing the mine's 1,950 workers, has not participated in the blockade.

"The governor and the president have both recently said, 'look, there's agreements in place, they need to be respected,'" Bailie said.

“The mine remains staffed with a reduced workforce to maintain appropriate safety, security and environmental systems," the company said in a press release. " Equinox Gold is in active discussions with the Carrizalillo community leaders to resolve the issues.

According to the Mexico News Daily, Mexican President López Obrador has said he is willing to personally intervene in the dispute "in order to seek a resolution."

nbennett@biv.com

@nbennett_biv