MEXICO CITY – Canada’s Gammon Gold announced Friday the indefinite suspension of operations at its El Cubo mine in the central Mexican state of Guanajuato due to conflicts with the miners union.

The firm said in a statement that it has laid off 397 unionized employees and is in the process of filing criminal charges against seven union executives.

El Cubo is located 10 kilometers (6.2 miles) east of Guanajuato city and covers a 14,000-hectare (34,570-acre) area.

“Since acquiring the mine, management has believed that El Cubo is a modest-sized operation with the potential to be reasonably economic; however its economic viability has been wholly undermined by a legacy of unacceptably low union productivity,” Gammon said.

“This low productivity arises from an outdated collective agreement and an interfering union executive office that appears to have put its own interest ahead of the livelihood of its workers, their families and local communities,” the statement continued.

El Cubo will placed on care and maintenance until the Canadian company determines its next course of action, Gammon said.

The firm said that since 2008 it has invested in new equipment at El Cubo, introduced more efficient mining techniques, significantly improved safety at the mine, established a production bonus program for employees and “launched an aggressive and strategic exploration program.”

“Nonetheless,” Gammon said, “this investment has not delivered the anticipated productivity improvements due to the continued resistance of union workers to fully leverage these strategic initiatives.”

Gammon Gold, which posted $207 million in revenue from gold and silver mining operations in 2009, operates exclusively in Mexico; in addition to El Cubo, the company also operates a larger gold-silver complex, known as Ocampo, in the northern state of Chihuahua.

Gammon also is carrying out exploration work at the Guadalupe y Calvo gold-silver mine in Chihuahua and recently acquired the El Mezquite and Venus projects in the states of Zacatecas and Chihuahua, respectively. EFE