MAC: Mines and Communities

Mexico: Canadian mining company "expelled" by landholder group

Published by MAC on 2012-11-25
Source: Bloomberg, Marketwire (2012-11-20)

On 17 November 2012, landholders from the local community of Ejido Benito Juarez voted to expel Toronto-listed MAG Silver Corp from its Cinco de Mayo project in Mexico.

They also pledged to establish a 100 year mining moratorium over the area.

Three days later, the company declared it had been ilegally "expelled" from the project, and would mount legal action to reverse  the landholders' action.

Previous post: More killings of anti-mining activists in Mexico

MAG Falls After Expulsion From Site

Lydia Mulvany

Bloomberg

20 November 2012

MAG Silver Corp. (MAG), which explores for precious metals in Mexico, fell the most in almost four years after saying it was expelled from a project in Chihuahua state.

The shares dropped 12 percent to C$9.96 in Toronto, the biggest decline since December 2008.

Members of a local assembly in Benito Juarez decided Nov. 17 to expel the Vancouver-based company from its Cinco de Mayo property and establish a 100-year mining moratorium at the site, MAG said today in a statement. MAG said it's taking legal action at state and federal levels to reverse the action.

"MAG is strongly of the view that the assembly meeting was called and conducted illegally as a result of the efforts of a concentrated group of radical activists opposed to mining in the region," the company said in the statement.

The Cinco de Mayo property, which covers 22,000 hectares (54,000 acres), contains gold and molybdenum, a metal used in steelmaking, according to MAG's website.

Mexican silver producer Fresnillo Plc (FRES) has a 16 percent stake in MAG, according to data compiled by Bloomberg.


MAG Silver to Challenge Illegal Eviction From Cinco de Mayo

Marketwire

20 November 2012

VANCOUVER, BRITISH COLUMBIA--MAG. On Monday afternoon, MAG issued a press release responding to reports from local media in Mexico that landholders from the local community of Ejido Benito Juarez (the "Ejido") voted during an assembly meeting on the evening of Saturday, November 17, to expel MAG from its Cinco de Mayo property and establish a 100 year mining moratorium over the area.

This press release is being issued to provide further detail surrounding the events of November 17 and the actions being taken by MAG to protect its interests.

MAG reiterates its strong view that the November 17 assembly meeting was illegally called and orchestrated by a small group of radical agrarian activists, known as El Barzón, who are opposed to mining and industrial agricultural development in the region.

MAG has been advised by several local sources that key signatures required to properly call the meeting were fraudulent. Significant concerns have also been expressed by local community members that the vote taken at the meeting was fraught with irregularities, including a significant number of votes being cast by unverified proxies and the exclusion from the meeting of voting members of the Ejido who are supportive of MAG's activities due to the economic benefit they bring to the region.

MAG also notes that the Ejido assembly has no ability at law to impose a ban on mining as mining is an activity that falls under Federal jurisdiction. While permission of the Ejido assembly is required to obtain surface access, MAG believes that the El Barzón group and its supporters do not represent the will of the majority of the 421 voting members of the Ejido or the 12,000 other citizens in the project area.

In fact, over the past two months, MAG has been working to have a properly constituted assembly of the Ejido called to vote on surface access permissions required for ongoing exploration at Cinco de Mayo. The illegal meeting of November 17 appears to be an attempt by a small group of radicals to thwart a free and open vote in a properly sanctioned assembly.

MAG is in the process of pursuing legal remedies at State and Federal levels to have the November 17 meeting declared null and void. MAG remains highly confident that the illegal resolutions will not be permitted to stand.

MAG will also concurrently ask government officials to oversee a new assembly meeting of the Ejido to ensure that the necessary procedural and governance rules are respected and the vote is properly conducted. MAG has every reason to believe that it has the support of a majority of the members of the Ejido and that the requisite authorizations will be obtained in due course at a properly constituted meeting.

As previously reported, MAG had been in the process of negotiating ordinary course surface access permissions from various stakeholders, including the Ejido in question, in connection with MAG's application for the necessary "Soil Use Change Permits" required to continue its exploration activities on the Cinco de Mayo project.

Given MAG's long-standing and productive working relationship with these stakeholders, MAG anticipated obtaining the requisite Ejido permission and to receive final permit approval sometime in the first quarter of 2013.

However, on October 22, 2012, a member of the Ejido group who was also a leader of El Barzón, and his wife, were murdered while driving on the highway outside of Ciudad Cuauhtémoc, Chihuahua.

Following these murders, vicious rumours were propagated by individuals sympathetic to El Barzón alleging that MAG was somehow involved in this heinous act.

On October 23, 2012, MAG posted a statement strenuously denying any such involvement. Until recently, it appeared that efforts to use this tragic incident as a basis to interfere with MAG's activities were losing momentum. Unfortunately, the events of November 17 appear to be a further step in a carefully orchestrated scheme to undermine MAG's legal rights and thwart the will of the community at large.

MAG intends to vigorously defend its rights through legal and diplomatic channels and to take steps to ensure that the illegal and misguided activities of a fringe group are not permitted to interfere with the will of the larger Ejido community.

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