Operations

Illegal Blockade


Background and Chronology of Events of the Illegal Blockade at Cosalá Operations

  • 2004/2008 - Mine development starts at Nuestra Señora mine / concentrate production commences in 2008 after decades of dormancy
  • 2015/2016 - U.S. Silver and Gold (current executive management team) merges with Scorpio Mining and operations continue at Nuestra Señora mine with initial mine improvements and completion of Los Braceros Mill for US $40 million (US $10 million spent on building the El Cajon Mine in 2014/2015)
    • The trade union at this time is affiliated with a branch of the Confederation of Mexican Workers (Confederación de Trabajadores de México (“CTM”) that (translated) is called the National Union Of Workers In The Industry Of Construction, Manufacturing, Drilling, Excavation, Extraction, Crushing, Demolition, Structures and Material Handling. The head of this union is Vincente Calvario.
    • During this time, C. Yasser Beltran Kurioca establishes ties with criminal organizations in Oaxaca and, with support, he starts a managerial role with the local CTM union (“Oaxaca Group”).  He is implicated in a number of fraudulent schemes including embezzlement and using collective bargaining agreements to gain access to trucking and other non-labour contracts.
  • September 2016 / December 2017 - Construction of the San Rafael mine starts / San Rafael commercial production achieved with a capital investment of approximately US $20 million
  • February 2018 - The Oaxaca Group begins visiting the personnel of the San Rafael Mine and the Los Braceros processing plant.  They provide details regarding their intentions to forcefully carry out a similar scheme to those mentioned above at the Company’s Cosalá Operations.
  • August 2018 - The Oaxaca Group files a lawsuit against the existing union demanding the ownership of the collective labour agreement for the hourly staff at the Cosalá Operations 
    • At this time the Oaxaca Group is affiliated with a branch of the CTM (see above) that (translated) is called the National Union Of Construction, Transportation, Drilling, Manufacturing And Extraction Of Construction Materials, Similar And Related Material. The head of this union is C. Carlos Alberto Mejia Gil and Yasser Beltran Kurioca is named legal representative.
    • The lawsuit is dismissed for lack of standing (they are not a mining union but rather focused on transport and construction)
    • Visits to workers then continue while threats to escalate and pressure of violence is present
  • Q4 2018 and 2019 - The Oaxaca Group then affiliates with another branch of the CTM that is called (translated) the National Union of the Metallurgical Mining Industry.  The leadership of this union is Javier Villareal Gamez from the state of Sonora and Yasser Beltran Kurioca is given a position.
    • This new union files a similar lawsuit to that above demanding the ownership of the collective labour agreement from the existing union
    • Recruitment activities proceed and there appears to be less threatening activity during this time
    • After several months of hearings between the parties an election date is set for August 2019
  • August 2019 - Election occurs and the challenging union of Javier Villareal Gamez (with Yasser Beltran Kurioca) wins
  • Q4 2019 and January 2020 - Meetings are held between the winning union represented by Javier Villareal Gamez and the Company.  Yasser Beltran Kurioca is present and the only demands he makes are not legal under any labour mandate.  The explicit requirement he makes is that the Company deliver control of certain non-labour commercial contracts to his control including ore haulage and concentrate transportation. 
    • When this line of discussion is rejected by the Company and not actively pursued by the winning union leadership, the threat is made to the effect that  “if it is not given willingly, it will be by force, but those contracts will have to be given to me…”
  • It is important to note that until this time, and since then, no “labour related” demands or complaints regarding working conditions have been put to the Company.  The Company stood ready to negotiate in good faith on the expiry of the then existing collective bargaining agreement in March 2020 and had communicated this.
  • January 26, 2020 - A small group led by Yasser Beltran Kurioca forcefully takes possession of the mine and mill by blocking access 
    • The action is taken independent of the union that was to commence negotiations and is in no way legally supported.   The group then claims an affiliation with yet another union – the Mexican Union of Miners and Metal Workers (commonly known as Los Mineros) led by Napoleon Gomez Urrutia
    • The group includes 14 workers of the mine as well as several then-unknown 3rd parties 
    • Some of the employees previously terminated for poor performance are allowed to return at the request of the previous union
    • It was only at this time that false claims are made alleging poor attention to safety at the operations and low pay (when in fact the Company has been recognized for top safety performance among mines of its size and it pays significantly more than its local peers and at or above the overall prevailing market rate)  
  • January 27, 2020 - Charges are filed against those involved in the illegal blockade for aggravated dispossession including Yasser Beltran Kurioca and the 14 former employees mentioned above
  • February - June 2020
    • Company attempts to resolve with all levels of government to have illegal blockade removed and have rule of law restored.  As part of this effort the Company fully supports workers rights to association and works to secure a democratic election among the various union factions.
    • Local interested community members and Company workers attempt on multiple occasions to engage with decision makers to get illegal blockade resolved and shed light on its root cause. This includes an informal discussion with the President of Mexico while in a motorcade in Durango.
    • Overall efforts are significantly delayed by global pandemic and government shutdown
    • No negotiations or discussion of any kind ever take place with those that have coordinated the illegal blockade because of the ongoing reality of extortion
  • Summer 2020
    • Connection between those that have coordinated the illegal blockade and organized criminal elements becomes more apparent.  Additionally, the intended extortion scheme for the operations becomes evident. 
    • Acts of violence are carried out against competing unions and local employees (including kidnapping, assault, and robbery of members of a campaigning union that is not affiliated with Oaxaca Group)
    • Demonstrated atmosphere of intimidation systematically imposed upon workers and town.  It becomes clear that there can be no freedom of association or a democratic vote for Company workers under existing conditions.
  • August/September 2020
    • Company works with labour authorities to ensure a democratic election including moving the location of the vote to Mazatlán
    • Company raises concerns when it becomes clear that a democratic process is in obvious doubt, regardless of where the vote takes place, because of the situation in Cosalá
  • September 11, 2020 - Hearing held at Mexican labour ministry – vote date set, and conditions approved for a vote the following week – Company and other competing unions object to the vote proceeding based on concerns relating to freedom association. Several other irregularities raised by parties to the proceedings (including those allowed to participate in the vote and a failure to provide proper notice), but all summarily dismissed.
  • September 17, 2020 - Second labour vote carried out in Mazatlán – only one other challenging union participates with the others referenced above refusing to submit to the process.  The Los Mineros union (officially headed by Napoleon Gomez Urrutia but actively lead by the Oaxaca Groups’ Yasser Beltran Kurioca in coordination with local criminal elements) wins the vote with the 14 criminally charged former employees allowed to participate.
  • September 29, 2020 - Napo Gomez Urrutia union recognized in unprecedented fashion by labour authorities
  • October 2020 - Blockade remains in place.  Company takes local position that it cannot make further investments in Mexico to re-open the Cosalá Operations until the rule of law is enforced, and a democratic election can take place where workers can be assured freedom of association.

 

 

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