Breakwater, Centerra see end to strike actions (October 13, 2010)

Vancouver – Strike actions on opposite sides of the world have ended for Breakwater Resources (BWR-T) and Centerra Gold (CG-T).

Breakwater saw production at its Toqui polymetallic mine in Chile suspended on Oct. 5, while Centerra saw its flagship Kumtor gold mine in Kyrgyzstan shut on Oct 1.

For Breakwater, the strike started after the union and the company failed to reach a new contract agreement after the previous one ended Sept. 30.

The two sides reached an agreement on Oct. 11 for a three-year contract. Breakwater declined to disclose details of the agreement, but it did state that the new terms would add just over US$1.00 to the current annualized per tonne milled costs, based on annual production of 520,000 tonnes. 2010 cost estimates are between US$51 to US$56 per tonne milled.

The week-long closure was mitigated by a planned partial shut-down to install a primary ball mill. The work on the ball mill was able to proceed because it was being done by contract labour. The upgrade is expected to allow for a 15% increase in throughput.

In the second quarter of 2010 Toqui produced 6,589 tonnes of zinc, 193 tonnes of lead, 6,352 oz. gold and 34,107 oz. silver.

At the end of last year, proven and probable reserves at Toqui totalled 3.3 million tonnes grading 7% zinc, 0.3% lead, 9 grams silver per tonne and 2.8 grams gold per tonne.

The company is still in negotiations with the union at its Mochito zinc-lead mine in Honduras, where the previous contract also ran out Sept. 30. A company spokesperson said negotiations are progressing.

Centerra Gold, meanwhile, was subject to what it says was an illegal strike, since a collective agreement was in place that did not expire until the end of the year.

A new collective agreement was reached anyway, lasting until Dec.31, 2012. The union ratified it and resumed work on Oct. 10.

Centerra asserts that its production guidance for the Kumtor mine remains at 530,000 to 570,000 oz. gold with a cost estimate of US$430 to US$460 per oz. produced.

The Kumtor mine has, as of Dec.31 2009, 55.86 million reserve tonnes grading 3 grams gold for 5.47 million contained oz. gold.

Centerra saw its stock price climb $1.83 or 10.6% to $19.15 in two days after the company announced a settlement. The company’s stock has climbed fairly steadily from around $11 in July to its current 52-week high.

Breakwater saw its stock price climb 38¢ or 8.1% to $5.09 in two days following the strike settlement. The company completed a 1:10 share rollback in June and now has 70.4 million shares outstanding.

 

 

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