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Thursday, June 17, 2010

Gammon Gold (NYSE:GRS) Fires Almost 400 in Mexico

Gammon Gold (NYSE:GRS) fired 397 low-producing union workers at its El Cubo mine in Mexico, while also filing criminal charges against seven union leaders.

Gammon has also suspended operations at the mine indefinitely until the consider which options it wants to take next.

Usual attempts from union members like those here to shake down the company, in this case - illegally, caused the decision to be made, as well as financial demands from these union workers that were described as “untenable.”

“Although the company continues to believe in the potential of this property, given its location in one of the most prolific mining districts in Mexico, the board and management have a fiduciary responsibility to invest in operations that provide a positive rate of return for its shareholders,” said Rene Marion, president and CEO of Gammon.

“The ongoing challenges caused by the relentless distractions of union labor disruptions and sub-optimal performance have rendered the El Cubo mine uneconomic and any further investments, including management's time and effort, are not justified.”

Shares of Gammon dropped almost 10 percent on the news, ending the session at $6.78 in New York, falling $0.74 cents on the day.

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