Newmont Suspends Operations at Penasquito Mine After Underground Flooding; Silver and Gold Output Guidance Under Review
May 15, 2026 — Newmont Corporation announced late Thursday that it has temporarily suspended underground production at its Penasquito polymetallic operation in Zacatecas, Mexico, after an uncontrolled water inflow was detected in two lower-level stopes on the evening of May 13. The company confirmed that all personnel were evacuated safely and that no injuries occurred, but the incident has triggered an operational review that is expected to keep affected sections of the mine offline for at least four to six weeks.
Scale of the Disruption
Penasquito is one of the world's largest silver-producing mines and a significant gold producer. In 2025, the operation delivered approximately 18 million ounces of silver and 430,000 ounces of gold, alongside meaningful zinc and lead by-product credits. The affected lower-level stopes represent roughly 30 to 35 percent of the mine's current active underground ore extraction. Open-pit operations, which account for a portion of total material movement, have not been affected and will continue at normal rates.
In a brief statement, Newmont said it is deploying additional dewatering equipment and has engaged external geotechnical consultants to assess the source and extent of the inflow. The company noted that the affected zones had been operating in proximity to a known fault structure and that recent above-average rainfall in the Zacatecas region may have contributed to elevated groundwater pressure. A more detailed technical assessment is expected to be released within 10 business days.
Guidance Under Review
Newmont had entered 2026 guiding for consolidated silver output of approximately 72 million ounces and total gold production of 6.6 million ounces across its global portfolio. With Penasquito accounting for a disproportionate share of its silver volumes, the company stated that it is placing its full-year production guidance under review pending the completion of the geotechnical assessment. Analysts at two major investment banks moved quickly to trim their second-quarter silver output estimates for the company, with one noting that even a six-week suspension in the affected stopes could reduce consolidated silver production by two to three million ounces in the quarter.
The market reaction in silver spot prices was subdued on Friday morning, largely because the broader precious metals complex was already trading lower on improved risk sentiment. However, several analysts noted that the supply-side disruption at Penasquito adds a meaningful tail risk to the silver market at a time when above-ground refined inventories at LBMA-approved vaults have been trending lower. LBMA silver stocks fell to approximately 850 million ounces in the most recent weekly report, down from just over one billion ounces at the same point in 2024.
Mexico's Mining Sector: A Recurring Risk Factor
The Penasquito incident is the latest in a series of operational disruptions that have highlighted the geological and logistical challenges of deep underground mining in Mexico. The country remains the world's largest silver-producing nation, accounting for roughly 24 percent of global mined silver supply, but operators have faced a combination of structural risks including water management, ground stability in aging underground workings, and increasingly complex permitting requirements from state authorities in Zacatecas.
Newmont's Penasquito operation has a history of production interruptions. A prolonged blockade by a local trucking union in 2023 halted operations for several months before an agreement was reached. The current incident is geotechnical rather than labour-related, but it reinforces the operational risk premium that equity analysts and silver market participants have attached to Mexican supply in recent years.
Broader Supply Implications
Primary silver mines — those where silver is the principal revenue source — account for only about 28 percent of global mined silver supply. The majority of silver is produced as a by-product of gold, zinc, lead, and copper mining. Penasquito is a notable exception as a large-scale polymetallic operation where silver represents a substantial share of revenue. Any extended curtailment of its output would fall directly on primary supply, a category that has limited flexibility to ramp production elsewhere in the short term.
The World Silver Survey, published earlier this month, had already flagged tightening mine supply dynamics for 2026, projecting total mined output growth of less than one percent year-on-year on the back of declining grades at several major operations in Peru and Bolivia. A significant disruption at Penasquito would place downward pressure on that already modest growth projection and could tip the mine supply balance for the year.
Markets will be watching Newmont's technical update closely. If dewatering proves more complex than anticipated and the suspension extends beyond the initial four-to-six-week estimate, the supply-side case for silver would gain substantially more traction than Friday's muted spot price reaction currently implies.
Sarah Mitchell is Senior Markets Analyst at LiveMetalPrice.com. This article is for informational purposes only and does not constitute investment advice.