McArthur, Tahoe Resources have eyes only for Escobal and silver

McArthur, Tahoe Resources have eyes only for Escobal and silver

Developing at least two world class silver mines in a single location may not be a pipe dream for Reno-based explorer Tahoe Resources.

Author: Dorothy Kosich
Posted:  Wednesday , 21 Sep 2011

COLORADO SPRINGS, CO –

Tahoe Resources CEO Kevin McArthur has never been big on hype, promotion, or making inflated promises of glorious riches to investors.

However, during a presentation at the Denver Gold Forum in Colorado Springs Tuesday, McArthur predicted Tahoe’s Escobal silver project in Guatemala will not only be a world-class silver mine, but will prove to be “a cash flow machine.”

“Escobal is one of the highest, widest silver deposits in the world,” McArthur told his audience of investment fund managers, mining analysts and mining executives. With an indicated resource of 330 million silver-equivalent ounces expected to increase to around 400 million ounces this year, Escobal is expected to average a yield of 20 million ounces per year with an 18-year mine life as a base case.

Unlike other junior explorers with a portfolio of exploration projects and properties, McArthur said Tahoe is a company that is dedicated to one project, Escobal. Tahoe’s exploration efforts are concentrated on a land position, which not only contains Escobal, but could also be home to two or three other mines.

McArthur noted that Tahoe already has $327 million in the bank to build a project with a $326 million capex and 74% of actual costs locked in. The company is considering building a larger mine and hopes to receive its full project permits by May 31, 2012.

“We’re going to build this mine faster than we projected,” he added.

One possible stumbling block is the leading candidate for Guatemala’s presidency, retired general Otto Perez Molina, who has called for the percentage of mining royalties paid to the state to be increased to between 7% and 10%.

McArthur said a 5% gross royalty is possible in Guatemala and that Tahoe expects some type of higher, sliding-scale royalty.

Nevertheless, McArthur said he has received strong government encouragement to build the mine. During his days as CEO of Glamis, then Goldcorp, McArthur encountered strong opposition from environmental and human rights NGOs concerning the Marlin Mine, also located in Guatemala.

McArthur said Escobal is located in southern Guatemala “where people welcome us.” He noted that the project is not located in an indigenous area.

 

http://www.mineweb.com/mineweb/view/mineweb/en/page66?oid=135860&sn=Detail&pid=102055

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