Tahoe Resources (TSX:THO,NYSE:TAHO) will continue conversations with Guatemalan officials and locals in order to resolve a dispute and resume operations at its Escobal silver mine, the company announced on Monday (September 10).
Last week, Guatemala’s Constitutional Court upheld the suspension of licenses at Escobal. Jim Voorhees, Tahoe’s CEO, stated that the ruling was both “disappointing” and not the outcome expected.
Despite the ruling, Voorhees said, “we are pleased that a resolution has finally been reached after a prolonged period of inaction in the legal system. The final resolution provides a comprehensive path forward.”
“Upon the completion of the consultation process and the other requirements outlined in the resolution, we expect to be in a position to restart operations at Escobal,” he added.
Operations at the Escobal mine were halted back in July of last year when the country’s Supreme Court suspended the licenses after an anti-mining organization appealed against the country’s Ministry of Energy and Mines.
In the appeal, it stated that the ministry did not consult with the Xinca indigenous people before awarding the Escobal mining licence to Tahoe, but the Canadian precious metals miner retorted that the mine was a big contributor to the country’s economy.
The latest ruling means Tahoe must return to the Xinca for consultations in order to try to regain its license to operate.
Following the court’s decision, Tahoe’s shares dropped 4.5 percent, landing at US$2.71. To date, the company’s share price has fallen more than 40 percent since January due to the ongoing dispute.
Last month, the company reported a quarterly loss, as it produced almost no silver and spent more than US$8 million in order to keep basic functions going at Escobal.
However, despite the ongoing concerns at the company’s flagship silver mine, Voorhees noted that the company’s credit facilities have no ties to Escobal and that Tahoe’s gold mines in Peru and elsewhere are enough to support the company’s balance sheet for the time being.
“We remain financially sound,” Voorhees said.
Unfortunately, the company has experienced trouble at its Peru operations as well. Last month, the miner alleged that there was an attempt to illegally extract gold from its La Arena mine, which has also experienced several protests.
As of 3:15 p.m. EST on Tuesday (September 11), Tahoe was trading at C$3.58.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.
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