Wage disputes

One result of high gold prices is higher expectations from workers. Demands for better wages and benefits have been on the rise and aren’t likely to subside.

Yesterday, Centerra Gold (TSX:CG) announced that unionized workers at its Kumtor mine are embarking on an illegal strike associated with demands that the company pay the mandatory employee contribution to the Kyrgyz Republic social fund. As a result, operations have been suspended. Further, Centerra has already said that anystoppages could have a significant impact on its ability to achieve the forecasted production.

Of 99 mining strikes which occurred from January 1, 2009 to December 1, 2011, most were at gold mines, and 70 percent were related to demands for higher wages, according to the 2012 Gold Price Report by PricewaterhouseCoopers (PwC).

These companies experienced an average production decline of 550 ounces per day, and the strikes often acted as a drag on their stock prices. The PwC report found that 53 percent of those companies saw their stock price decrease the day after a strike.

http://goldinvestingnews.com/22237/gold-mining-challenges.html

Note that since GBN.V subcontracts its mining and tunnelling to PROCON, and has a long term business agreement in place, there is no possibility of any union related wage dispute.

GBN.V has proven that its deposits are doted with robust grades through bulk sampling prior to processing, and that any losses to recovered grades are factored in. Deposit grades are understated to say the least, and remain so until they are processed and the resulting production shows better than the assumed grades of the deposit.

-F6