Tahoe dismisses Guatemalan government concerns

Tahoe dismisses Guatemalan government concerns

  Jun 28, 2012 – 10:50 AM ET | Last Updated: Jun 28, 2012 2:11 PM ET

 

Tahoe Resources Inc. is dismissing concerns about a proposal from the Guatemalan government to buy stakes of up to 40% in mining companies operating in the country.

Tahoe shares plunged 40% on Thursday morning before being halted as the Guatemalan news spread among investors. But in the early afternoon, the company released a statement saying that it has spoken with officials and believes the government has no intention of acquiring a stake in the its Escobal silver project. Instead, the officials told Tahoe that they believe the proposal is intended to encourage early-stage exploration in Guatemala.

“The government of Guatemala has not made any approach to the company regarding this proposed reform, nor do we expect it to. Full permitting for the 100%-owned Escobal project is still anticipated in the second half of 2012,” chief executive Kevin McArthur said.

Additionally, Reuters reported that the government’s proposed law change would only apply to new projects.

The stock recovered some ground in the afternoon after the halt was lifted, but it was still down almost 20% on the day.

Tahoe acquired the promising Escobal deposit from Goldcorp Inc. in 2010. If the proposal from President Otto Perez Molina affects the company, it could be very big trouble for investors.

In addition to acquiring stakes of up to 40% in mining companies, Mr. Perez Molina reportedly wants to increase mining taxes.

Guatemala has been one of the most challenging countries for mining companies to operate in, as they have found themselves at odds with the indigenous population.

http://business.financialpost.com/2012/06/28/tahoe-shares-plummet-on-guatemalan-proposal/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: