On Monday, June 19, 2017, protesters blocked off access to Escobal silver mine, located in Guatemala. The mine is owned by Vancouver-based mining company Tahoe Resources (TSX:$THO), (NYSE:$TAHO). Due to the protest, shipments and supplies to and from the mine has been delayed. However, Tahoe Resources does not expect the block to really affect annual production or cost guidance of the mine.
In a statement regarding the company’s address to the protest, President and CEO of Tahoe Resources said, “Our operations are performing well and we anticipate that our performance at mid-year will be well within expectations relative to our guidance.”
Despite the company’s reassurance that production wouldn’t be affected, investors still reacted poorly to news of a protest. Tahoe Resources’ stock went down 1.54% in its Toronto exchange to Canadian$10.89 at 11:59AM. It also fell by 1.85% in its New York exchange to US$8.23 at 12:14 ET.
According to Tahoe Resources, the protest is a response to many things — one of it being claims that the Escobal mine is the cause of earthquake activity in Casillas, a town about 20 km from the mine where most of the protesters came from.
The protest also came a few months after the British Columbia Court of Appeal ruled in favour of Tahoe Resources — saying that operations at the Escobal mine could proceed — in a lawsuit by several Guatemalans. The lawsuit was based on concerns that security at the mine used unnecessary violence against protesters during another protest in 2013. In March, Tahoe Resources said it would appeal the ruling.
In addition to claims of being the cause of earthquakes and violent dealings from Escobal mine security, the protest followed a claim expressed last month by non-government organization CALAS. The claim was that the Guatemala’s Ministry of Energy Mines had violated the the rights of the Xinca indigenous people by giving Tahoe Resources’ subsidiary company, Minera San Rafael, the mining license for Escobal without consulting the Xinca people first.
Even with many protests and possibilities of legal issues, it doesn’t seem that Tahoe Resources will give up production at Escobal any time soon. Escobal is one of the world’s largest silver mines and was mainly responsible for Tahoe Resources’ impressive first quarter numbers in 2017. Silver production had increased by 17%, to 5.7 million ounces. The cost of an ounce of silver was $8.11 for the quarter. Last year, the mine produced record number of 21.2 million ounces of silver in concentrate.
For investors worried about the situation at Escobal, however, it should be noted that Tahoe Resources have been expanding as well. Just last year, the company bought Toronto-based mining company Lake Shore Gold for $540 million. The acquisition added the Timmins West as well as the Bell Creek mines to Tahoe’s already-impressive portfolio.
Featured Image: twitter