Tahoe's Guatemala mine halt puts 2017 silver guidance in doubt
Canadian miner Tahoe Resources suspended its 2017 silver production guidance due to the halt of operations at its Guatemalan unit amidst protests.
Guatemala's supreme court suspended the operating license for the Escobal mine last month in the wake of legal actions by an NGO against the government's decision to grant the license. Villagers have also been staging roadblocks at the mine since June, claiming the operations are causing seismic activity.
"The situation in Guatemala is fluid and complex. Like many developing countries, the further you get away from populated areas, the less able they are to establish rule of law," CEO Ron Clayton said on a conference call to discuss financial results. "But I don't have a doubt the government will at some point choose to open the road."
Tahoe, which also has mines in Peru and Canada, earlier this year set 2017 silver production guidance at 18-21Moz with all-in sustaining costs of US$9.50-10.50/oz, with gold output from another three units estimated 375,000-525,000oz. Tahoe's gold mines - which include the La Arena and Shahuindo operations in Peru - are on track to meet gold guidance, Clayton said.
The company's second quarter silver production slid to 4.1Moz from 5.7Moz the previous year, while gold production was flat at 112,000oz, the Vancouver-based company said in a statement. All-in sustaining costs rose to US$10.01/oz silver from US$8.16/oz, while AISC gold costs fell to US$925oz from US$973/oz, it said.
Escobal produced 4.08Moz silver, 1,900oz gold, 2,900t zinc and 2,000t lead in the quarter, down from 5.7Moz silver, 2,700oz gold, 4,000t zinc and 2,700t lead in the same three months of last year. La Arena produced 48,000oz gold compared with 51,000oz a year ago, while Shahuindo boosted gold output to 21,000oz from 17,000oz.
Second quarter adjusted net income fell to US$33.8mn from US$58.9mn, as sales dropped to US$210mn from US$228mn, Tahoe said. Capex was US$63.6mn in the quarter, while exploration spending nearly tripled to US$5.9mn.
PROJECTS
The company said it has spent US$30.8mn to date on an US$80mn project to expand processing capacity at Shahuindo in Cajamarca region to 36,000t/d, which remains on track to go online by the end of 2018, the company said.
Construction is scheduled to start in Q3 on the foundation platform for the mine's 2B leaching pad, while commissioning for a 12,000t/d first stage crushing-agglomeration circuit will also get underway in the same quarter. Tahoe added that it plans to acquire the additional 24,000t/d equipment by mid-2018.
The company spent US$2.6mn on exploration work in Peru, including 12,000m of drilling at its La Arena mine in La Libertad and 7,000m at Shahuindo. However, Tahoe said it suspended studies for a copper sulfides project at La Arena and doubled its credit facility with a syndicate of banks to US$300mn, while extending repayment terms to July 2021.
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