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Guyana Goldfields (TSX: GUY) stock dropped almost 8% on Wednesday, after it announced a wildcat work stoppage on Tuesday at its 100%-owned Aurora mine in Guyana, South America.
A portion of the workforce employed by the company’s wholly owned subsidiary, AGM Inc. blocked delivery of ore to the mill. Aurora is the company’s only gold mine in operation.
This labour dispute is only the latest of the company’s recent management shakeups.
Guyana said on Wednesday that as a safety precaution, it has temporarily suspended operations until a resolution is reached and is in the process of evacuating all non-essential personnel from site, including the striking workers.
In March, the company shocked the market by announcing that the amount of gold in proven and probable reserves at Aurora had declined by almost 1.7 million ounces, compared to estimates a year ago
“The company believes the stoppage was the result of a misunderstanding concerning the management and relationship between AGM and certain open pit mining contractors,” Guyana’s press release reads. AGM has been examining options to improve mining performance in order to ensure Aurora’s long-term future.”
Guyana started underground development in November 2018 at Aurora in northwestern Guyana, in a territory in dispute with Venezuela.
The mid-tier gold producer has been under pressure due to the performance of its flagship and only operating mine following a resources review.
In March, the company shocked the market by announcing that the amount of gold in proven and probable reserves at Aurora had declined by almost 1.7 million ounces, compared to estimates a year ago.
“The past year saw the Company deal with a number of challenges resulting from our lower than forecast planned mining rates and grades at Aurora. In response, the company has acted on a number of fronts, starting with a refreshed Board of Directors, including the appointment of a new, non-executive Chairman, and a strengthened management team,” Scott Caldwell, President & CEO stated at the time.
The company attributed the unexpected “evaporation” of gold reserves to the adoption of “a new and more appropriate mine model,” which eliminated a previous “ineffective dual reporting” structure.
A bitter battle for control of the company between the miner and dissent shareholders led by founder and ousted chairman, Patrick Sheridan, was settled in April, costing the company’s head his job. The search for a new CEO continues while Caldwell remains as acting CEO.
The miner said it is working with its employees and is making arrangements to have the strikers meet with representatives of the Ministry of Labour to mediate the dispute.
Work on the underground exploration decline remains unaffected, it said.
