TORONTO (miningweekly.com) – Canadian silver miner Excellon Resources has agreed to cede 1 100 ha of exploration land to a local Mexican landowner known as the Ejido La Sierrita, who hailed a court ruling on the matter as a “historic legal triumph”.
Excellon in August 2012 sued the Ejido to terminate the surface rights agreement (SRA) signed in 2008 for lands west of its La Platosa mine and for assorted damages relating to an illegal blockade by the landowners and union members of the mine last year.
The Ejido, with the help of a nongovernmental organisation, also sued to terminate the SRA one week after being advised of Excellon's suit.
At a hearing of the Agrarian Court last week, the court advised that as both parties wished to terminate the SRA, Excellon would formally return the surface rights effective May 9, pending further resolutions regarding ten particular hectares.
"The pending outcome of the Agrarian Court hearing is as we intended and expected when we filed a suit for termination of the SRA in August 2012," Excellon president and CEO Brendan Cahill said.
Excellon said the decision to terminate the SRA was driven by the need to limit the risk exposure of the SRA on La Platosa production capabilities. This decision has since been solidified by current capital markets conditions and has become an element of Excellon's business strategy.
Last year, protests at the La Platosa mine, in the northern Mexican state of Durango, began on July 8 when landowners and union members blocked the entrance to the mine, which produced 1.3-million ounces of silver in 2011.
Excellon resumed mining in mid-October, about a month after the landowners lifted the blockade.
The company said it was now focused on optimising high-grade, low-cost production, increasing cash flow and expanding high-grade and near-term mineable resources at the La Platosa mine.
It added termination of the SRA would result in reduced expenditures of more than $600 000/y and immediate savings of about $600 000 during 2013.
Excellon added it intended to continue its suit against the Ejido for damages relating to the illegal blockade of the mine.
Excellon held about 41 000 ha of mineral and mining rights at La Platosa.
The court also set the date for an additional hearing on May 9, when Excellon is expected to formally turn over the rented land.
The miner’s stock declined by 4.29% to C$0.335 apiece on the TSX on Monday.