UPDATE 2-Mexico union sees quick end to Primero mine strike

* Strike over workers’ bonus payments at San Dimas mine

* National mine union official says strike could end soon

* Primero shares fall 3.2 pct in early trade on TSX
(Recasts with union quotes, changes dateline, pvs TORONTO)

MEXICO CITY, March 31 (Reuters) – Mill workers who laid
down tools at Primero Mining’s San Dimas gold-silver mine on
Wednesday over bonus payments expect a quick end to the strike,
Mexico’s National Mineworkers union said on Thursday.

Canada’s Primero (P.TO: Quote, Profile, Research), which last year acquired San Dimas
from mining giant Goldcorp (G.TO: Quote, Profile, Research), said depending on its
duration the strike could hurt its production forecast for the
year.

But the National Mineworkers Union, which has led
multi-year-long strikes at other mines in Mexico, said it hoped
to avoid a prolonged stoppage at Primero.

“I hope this could be resolved tomorrow, but I can’t give
an exact timeframe,” Javier Zuniga, an official at the national
union told Reuters after some 200 mill workers walked off the
job mid-day on Wednesday. “We don’t want a drawn-out strike.”

San Dimas is Primero’s only operating mine. It produced
about 100,500 gold equivalent ounces in 2010 and expects
between 110,000 and 120,000 of gold equivalent ounces in 2011.

The mill workers are demanding a bigger bonus as prices for
gold and silver soar to record highs, Zungia said.

Primero offered an eight percent increase in bonus
payments to parallel an eight percent wage rise, but the union
wants the company to up the bonus percentage, he said.

Gold (XAU=: Quote, Profile, Research) was set for a tenth straight quarterly gain on
Thursday, rising by nearly 1 percent on a weakening dollar to
bid at around $1,437.50 an ounce.

The union local that represents the mill workers is one of
three union sections at San Dimas, which are all part of the
National Mineworkers Union.

Primero said the other two union locals, which represent
underground mine workers, have accepted the company’s bonus
structure with terms similar to those proposed for the mill
workers.

Zuniga said there are around 400 underground mineworkers
that decided not to join the strike because they are on a
different contract.

Mining, development and exploration activities continue
without disruption, the company said.

Primero, formerly known as Mala Noche, said it is
continuing its efforts to resolve the dispute.

Shares of Primero were down 3.2 percent at C$3.63 on
Thursday morning on the Toronto Stock Exchange.

The National Mineworkers Union led a three-year-long strike
at Mexico’s largest copper mine, which finally ended after a
legal wrangling in courts ruled against the workers. Mine owner
Grupo Mexico (GMEXICOB.MX: Quote, Profile, Research) took back control of Cananea last
year with the backing of federal police.

Napoleon Gomez, the union’s head, is living in exile in
Canada to avoid arrest on corruption in Mexico. He says the
charges were fabricated because of his labor activism.
($1=$0.97 Canadian)
(Reporting by Mica Rosenberg in Mexico City and Euan Rocha in
Toronto; Editing by Marguerita Choy)

UPDATE 2-Mexico union sees quick end to Primero mine strike