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Newmont Goldcorp, Mexican community reach crucial water deal

Peñasquito silver mine in Mexico. (Image courtesy of Hexagon Mining)

Newmont Goldcorp (NYSE: NEM) (TSX: NGT), the world’s No. 1 gold miner, has reached what it calls a “pivotal point” at its Peñasquito gold-silver operation in Mexico, after inking an agreement on water supply with one of the mine’s 25 nearby communities.

The 30-year agreement guarantees the San Juan de Cedros community, in Zacatecas, additional water wells and infrastructure that will supplement the 600,000 litre-per-day Reverse Osmosis drinking water plant and wells the mining giant built last year.

As part of the deal, the municipality will participate in the operation of the new water facilities to be built, as the public water system and the distribution networks will ultimately be owned by the municipality, Newmont Goldcorp said.

Production at Peñasquito has been impacted by two blockades from truckers and residents this year

Production at Peñasquito, as well as exports of lead and zinc concentrates from the mine were interrupted at least twice this year. The last blockade, lifted in October, hit the asset’s third-quarter production by about 11,000 gold ounces, 1.7 million silver ounces, 13.7 million pounds of lead and 22.8 million pounds of zinc.

With the company ramping up to normal operations – and ongoing government-sponsored talks between Newmont Goldcorp and truckers aimed at securing a long-term solution – the miner expects a full year of operations for 2020, with guidance set at 575,000 gold ounces.

The open-pit mine employs more than 6,500 people and supports another 20,000 indirect jobs in the region.

Newmont Goldcorp estimates that it has invested nearly $5 billion in Peñasquito since 2005.

About 70% of foreign-owned mining companies operating in Mexico, the world’s No.1 silver producer, are based in Canada.