MiningWatch Canada

MiningWatch Canada

November 19, 2009 14:47 ET

Mexicans Celebrate End of New Gold Inc.'s Cerro de San Pedro Mine, Workers Attack Villagers

Criminal and civil proceedings to begin against company management in Mexico and Canada.

OTTAWA, ONTARIO, MONTREAL, QUEBEC and CERRO DE SAN PEDRO, MEXICO--(Marketwire - Nov. 19, 2009) - Mexican and Canadian organizations decried today's violence in which workers from New Gold's Cerro de San Pedro mine reportedly attacked three villagers whom they blamed for the mine's closure, Armando Mendoza, Gabriel Nuniz, and Jaime Tedesco.

"We understand that emotions are running high, but such violence cannot be tolerated, and we call on New Gold and its subsidiary Minera San Xavier to make this clear to their employees," said MiningWatch Canada spokesperson Jamie Kneen.

Yesterday, PROFEPA, the Mexican environmental enforcement agency, shut down New Gold Inc.'s (TSX:NGD) Cerro de San Pedro open-pit gold mine on the outskirts of the city of San Luis Potosi, Mexico. The agency was enforcing decisions rendered by the Ninth Circuit Administrative Court(1) and the Federal Tribunal of Fiscal and Administrative Justice.(2)

Patricio Patron Laviada of PROFEPA announced in Mexico City today that New Gold's mine has been operating illegally since its 2005 permit was thrown out by Mexican courts. He declared that recent statements of the company that it will appeal the decision are just strategies to retain investor confidence.(3)

"After weeks in which New Gold has ignored and publicly denied these decisions, we are thrilled PROFEPA has finally put an end to this mine," said Dr. Juan Carlos Ruiz Guadalajara, spokesman for the FAO (Frente Amplio Opositor), the coalition that brought New Gold to trial.

The case is without precedent, according to Kneen. "I can't think of a single example internationally of a Canadian mining operation that has been shut down by the authorities for operating illegally - but then I can't think of another company that has fought so hard for so long to operate without all its permits in place."

The company's Mexican subsidiary, Minera San Xavier, was informed of the Tribunal's ruling on October 14th. On November 10th the FAO filed a complaint with the British Columbia Securities Commission (BCSC) and the Toronto Stock Exchange accusing the company of withholding and misrepresenting information that "is of central importance to shareholders."

Mario Martinez of the FAO also notes that New Gold's land-use contract with the ejidatarios (communal landowners) of Cerro de San Pedro was thrown out by the Federal Agrarian Courts when it was discovered that a number of the signatories to the contract were fraudulent. Under Mexican law, to operate, a company needs all applicable permits and contracts to be in order.

Now that the mine has been shut down, lawyers for the FAO are preparing criminal charges and civil suits against New Gold and its Mexican subsidiary. The FAO is also launching what it calls a "Mega-remediation project" to restore this zone of unique environmental and historical importance for Mexicans.

(1) D.A. 65/2004-873: unanimous and without appeal

(2) Exp. 170/00-05-02-9/634/01-PL-05-04: one dissension; without appeal


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