TORONTO (miningweekly.com) – TSX-listed Mexico-focused Goldgroup Mining on Monday advised that it had read a news article dated June 26, published by the Sinaloa-based Noroeste newspaper, regarding a reported mandatory shutdown of its 50%-owned San José de Gracia (SJG) mining project by the State government.

Goldgroup said it believed the article to be reliable, but could not independently confirm the facts reported in the article.

According to the article, local government secretary general Gerardo Vargas Landeros stated the shutdown was the result of serious safety concerns resulting in the deaths of two employees at the project.

Landeros also reportedly stated that there were complaints filed regarding the poor working conditions of the tunnels, resulting in dangerous landslides. Landeros had reportedly notified legal representatives to request the parties involved to rectify all safety and regulatory issues before restarting any mining activities.

DynaResource de Mexico (DynaMex) owned 100% of the SJG project and Goldgroup had a joint venture agreement with US-based parent DynaResource, which meant that Goldgroup and DynaUSA each owned a 50% interest in DynaMex.

The SJG project was currently operated by DynaUSA. Goldgroup explained that, since 2013, it had taken several legal actions to resolve disputes with DynaUSA, as DynaUSA had “improperly attempted” to dilute Goldgroup’s ownership interest of the SJG project.

As a result of DynaUSA’s actions, Goldgroup said it had lost operational control of the mining operations. The fatalities arose after the company’s loss of operational control.

Goldgroup advised that it would use this opportunity to expedite all legal actions against DynaUSA to regain control of the mining operations at the SJG project, and to provide a safe working environment for the mine's workers.

Goldgroup had last week declared commercial production at its Cerro Prieto project, located in the Cucurpe mining district of Sonora state. The operation was expected to produce about 15 000 oz of gold in 2016.