Guatemala suspends Tahoe’s flagship Escobal mining licence

VANCOUVER (miningweekly.com) – Canadian miner Tahoe Resources says it will approach Guatemala’s Constitutional Court after the Guatemala Supreme Court provisionally suspended the mining licence on its Escobal operation, the third-largest silver mine in the world.

The court issued a temporary licence suspension after nongovernmental and anti-mining organisation Calas filed a claim in May against Guatemala’s Ministry of Energy and Mines. Calas alleged that Tahoe had violated the Xinca indigenous people’s right of consultation in advance of granting the Escobal mining licence to Tahoe’s Guatemalan subsidiary, Minera San Rafael.

The licence will remain suspended while the action is being reviewed in court.

Tahoe was not previously party to the action and did not have the standing to make submissions to the court regarding the provisional application. However, the decision has conferred legal standing on the company, which will now take all legal steps possible to have the ruling reversed and the licence reinstated as soon as possible, including immediately appealing the decision to the Constitutional Court, the company noted in a statement.

Tahoe intends to appeal the decision in the Constitutional Court and to ask for the Supreme Court to reconsider its provisional ruling. The Constitutional Court could rule on the appeal within two to four months, while the definitive constitutional claim and appeal process could take between 12 and 18 months. Tahoe said it was preparing for a three-month mine suspension.

The question remains whether Escobal must go through a new consultation period before the suspension is revoked. According to Tahoe, this could also mean that the court could allow operations to resume while a consultation process is conducted, as happened in similar cases in Guatemala. This could take up a year to complete.

The company will await a formal order suspending the licence for Escobal, after which it will place the mine on standby. The mine will be maintained in a manner such that full production can be expeditiously resumed on a reversal of the suspension, said Tahoe.

The company's preliminary second-quarter results include production of more than four-million ounces of silver, more than 110 000 oz of gold, revenue of more than $200-million, and an estimated cash balance of over $165-million.

Late last month, Guatemala police used teargas to clear a public road near the town of Casillas, in south-east Guatemala, of protesters blocking access to the controversial Escobal mine.

The TSX- and NYSE-listed miner said that the Guatemalan government had taken legal action to disperse protestors and open the primary road that connects Guatemala City to San Rafael las Flores, near the Escobal mine, after locals blocked access earlier in the week in protests relating to a variety of issues, including claims that mining at Escobal was causing seismic activity 16 km away, in Casillas.

The Vancouver-based miner, which stands to answer for its human rights record in Guatemala in the British Columbia court, said the police action followed days of illegal blockage and extensive dialogue between protesters, government and the company to resolve the blockade.