For Tahoe Resources, Guatemala troubles underscore tense outlook
By Ernest Scheyder
Nov 6 (Reuters) - A years-long fight over the future of theworld's second largest silver mine between Tahoe Resources Inc and opponents of the project shows no signs of abating,creating uncertainty for the U.S. miner and its investors.
With environmental and indigenous opponents of Tahoe'sEscobal mine vowing it will never again produce silver, thetension is top of mind for Wall Street, and analysts expect thecompany to post its fifth consecutive quarterly loss on Tuesday.
Guatemala's Supreme Court suspended Tahoe's license tooperate Escobal last year, ruling for an anti-miningorganization that accused the country's Ministry of Energy andMines of failing to properly consult surrounding Xincaindigenous communities about the project. The ruling was a sharp blow to Reno, Nevada-based Tahoe,which had derived 45 percent of its revenue from Escobal in2016.
Shares of Tahoe have lost more than half their value sincework at the mine was suspended, and the company has lost nearly$100 million in cash to mothball its Guatemala operations.Judges ordered that an indigenous consultation must be completedbefore Escobal can be brought back online.
That has left Tahoe relying heavily on its Peru and Canadiangold operations.
But Tahoe's Peru operations have also been troubled. Theminer said in August it believed there was a sophisticatedattempt to illegally extract gold at its La Arenamine. Tahoe is set to post a quarterly loss of 7 cents per shareon Tuesday, according to IBES data from Refinitiv.
Over the past year, the firm has fired hundreds of workersin a series of rolling layoffs as the Guatemalan governmentseeks to comply with the court-ordered consultations.
"It's all very worrying since the (court's) decision coulddestroy the already weak legal certainty in Guatemala," saidJavier Zepeda, head of the country's industrial chamber CIG.
He added it remains unclear how soon the mine will be ableto re-open. The company's executives have said Escobal couldreopen in six months or less.
Investors are hopeful it will be quick.
"We're expecting the process to take six to nine months, butnot years," said Canaccord Genuity analyst Carey MacRury. "Fornow, they should have enough cash flow to protect their balancesheet."
(Reporting by Ernest Scheyder in Houston; Additional reportingby David Alire Garcia in Guatemala City; Editing by RosalbaO'Brien)
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