Tahoe declares commercial production at Escobal silver mine in Guatemala

Vancouver-based Tahoe Resources (TSX: THO, NYSE: TAHO) has declared commercial production at its Escobal silver mine in Guatemala.

The mine started operations in late September 2013 and Tahoe has been ramping up to the 3,500t/d target since then.

To date, the mill has produced 5,970t of silver-bearing concentrates with an estimated net value of approximately US$54.3mn, Tahoe said in a release.

The company aims to produce 18-21Moz of silver contained in metals concentrates during 2014. However, "given the ramp-up profile, the company cautions that in the first half of the year, silver production will be lower and associated operating costs will be higher than during the second half."

Metals prices used for net revenue calculations are US$20.00/oz silver, US$1,200/oz gold, US$0.95/lb lead and US$0.90/lb zinc.

For accounting purposes, Tahoe will start recognizing net income from production effective January 1, 2014.

Escobal aims to be the world's fifth largest silver producer and the second producing mine in Guatemala, after compatriot Goldcorp's(TSX: G, NYSE: GG) Marlin gold-silver operation.

Escobal has an indicated resource of 27.1Mt silver and an inferred resource of 4.6Mt, according to a 2012 estimate. Since then the company has drilled some 100 additional holes, which will result in a new resource estimate this year, Tahoe said previously.

SOCIAL ISSUES ADDRESSED

The start-up of activities in late September was about three months behind schedule, as the project was affected by "unanticipated social issues," which have been addressed, Tahoe said.

The project was affected by protests, some of which turned violent, and violence related to drug cartels which resulted in the government temporarily imposing a state of emergency covering a number of municipalities in the area in May.

Guatemala has been affected by anti-mining sentiment, and President Otto Pérez Molina proposed a two-year moratorium on new mining projects in July to allow time for more debate on the sector.

For more on mining in Guatemala, see BNamericas' Intelligence Series report