Fortuna Silver Announces Illegal Blockade at its San Jose Mine

Fortuna Silver Mines reported that a group of union workers, comprising 15% of the mine and plant workforce, has illegally blocked access to the San Jose Mine. Consequently, the mine's operations have been temporarily suspended.

The reason for the illegal blockade was a disagreement among this group of workers about the estimated amount of profit sharing the company is distributing among the workforce. The profit sharing amount is calculated transparently and payable in accordance with Mexican legislation. However, the blockaders demand that the company increase profit sharing participation beyond what is stipulated by law.

Furthermore, the company said it is currently engaged in open and constructive dialogue with the union leadership to resolve the issue and have the employees return to work, enabling the operations to resume as soon as possible.

On the other hand, Minera Cuzcatlán, the Mexican subsidiary of Fortuna Silver Mines, recently announced it will invest US$18 million to extend the useful life of its San José mine in Oaxaca. And the company also expressed that it is not interested in participating in the lithium industry.

"The projected US$18 million is for the development of the existing mine. We are always looking for resources to increase the useful life of the mine," said Luiz Camargo, Country Director, Compañía Minera Cuzcatlán.  Regarding the issue of permits, Camargo emphasized that none of the new works require an additional permit.

In addition, the director noted that 2023 may shape up to be a good year for mining as gold and silver prices have risen due to fears of economic recession and a weakening dollar. "The increase in gold and silver commodities will help us. They will allow the company to use this benefit mainly to mitigate the increase in inputs caused by inflation," said Camargo.

In recent months, the mining company has experienced problems with its San José mining complex since the Ministry of the Environment and Natural Resources (SEMARNAT) issued a resolution canceling the extension of the former's environmental permit (EIA). The ministry announced that a new analysis of the case will be carried out. SEMARNAT argued that the permit should be ruled invalid since it lacks the authority to grant an extension for more than half of the company's EIA extension request. What is more, SEMARNAT did not sufficiently analyze the company's regulatory compliance.

Nevertheless, Fortuna Silver Mines recently reported that a federal court has granted an injunction to Minera Cuzcatlán to continue operating its San Jose mine under the terms of the 12-year Environmental Impact Assessment (EIA) previously granted by SEMARNAT. The company assured that it is in full compliance with environmental regulations. Its authorization should therefore remain in force.