Engineering & Mining Journal

AUG 2017

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REGIONAL NEWS - LATIN AMERICA 10 E&MJ • AUGUST 2017 www.e-mj.com Guatemalan Lower Court Issues Ruling on Escobal Mining License The Supreme Court of Guatemala has is- sued a provisional decision with respect to an action brought by the anti-mining organization, CALAS, against Guatema- la's Ministry of Energy and Mines (MEM), alleging that MEM violated the Xinca In- digenous people's right of consultation in advance of granting the Escobal mining license to Tahoe Resources' Guatemalan subsidiary, Minera San Rafael. The pro- visional decision suspends the Escob- al mining license of Minera San Rafael while the action is being reviewed by the court, even though no Xinca representa- tive or community is currently participat- ing in the CALAS lawsuit against MEM. Tahoe said it was not a party to the action commenced by CALAS and did not previously have standing to make submissions to the court in respect of the provisional application. Tahoe will now take all legal steps possible to have the ruling reversed and the license reinstated as soon as possible, including immediately appealing the decision to the Constitutional Court. The Guatemala Supreme Court is the initial trial court in Guatemala for consti- tutional actions filed against MEM. Ap - peals from these decisions are heard by Guatemala's Constitutional Court. Based on a prior ruling by the Constitutional Court involving consultation obligations with respect to a large natural resource project, Tahoe believes that its operating license should remain in effect while any additional consultation is completed. Ac- cordingly, it said it intends to both appeal the decision to the Constitutional Court and ask for the Supreme Court to recon- sider its provisional ruling. Tahoe believes all consultation obli- gations relating to the permitting of the Escobal license were met. The last official census shows the San Rafael community to be 98.6% non-indigenous and with no Xinca community presence. Despite the fact that the Escobal mine is not located in or impacting any indigenous commu- nities of Guatemala, the company under- stands that MEM held a consultation pro- cess that complied with the requirements set forth in ILO Convention 169. Tahoe estimates the Constitutional Court could rule on the appeal within two to four months. It will seek to have the license reinstated during this period. "We are extremely disappointed in the court's ruling, suspending the license, be- cause we believe that there are no indig- enous communities affected by Escobal's operations," said Ron Clayton, president and CEO of Tahoe Resources. "We are acutely aware that an adverse ruling could have a significant adverse impact on our shareholders, partners, employees, vendors and community populations, as tax and roy- alty payments, along with purchases of op- erating supplies will be suspended during any period that the mine is not operating." The company's preliminary second- quarter results include the production of more than 4 million ounces (oz) of silver, more than 110,000 oz of gold, revenue of greater than $200 million and an estimat- ed cash balance of more than $165 mil- lion. The company said there are no signif- icant inventories of concentrate on hand. Spence Mine Expansion Approved The Chilean environmental authority has approved the expansion of the Spence copper mine, which would amount to an investment of about $2.5 billion. The execution decision, however, will have to wait until August, according to El Mer- curio. The new expansion includes the construction of a concentrator plant to increase production and extend the life of the deposit about 20 years. The Commit- tee on Environmental Assessment (CEA) of Antofagasta decided unanimously to approve the BHP initiative. Environmen- tal approval of Spence's expansion could pave the way for its execution. Spence is part of BHP Billiton's Pam- pa Norte division in the Atacama Des- ert, which also includes Cerro Colorado. During 2016, Spence and Cerro Colorado produced 174,000 metric tons (mt) and 77,000 mt, respectively, of high-quality copper cathode, using oxide and sulphide ore treatment through leaching, solvent extraction and electrowinning processes. Spence is BHP's second largest mine in Chile after Escondida. Nyrstar Completes Coricancha Mine Sale Nyrstar NV has successfully completed the sale of its Coricancha mine in Peru to Great Panther Silver Ltd., a primary silver mining and exploration company listed on the Toronto Stock Exchange, for a to- tal cash consideration of $100,000-plus earn-out consideration of up to $10 mil - lion. Under the earn-out, Nyrstar will be paid 15% of the free cash-flow generated by the Coricancha mine during the five- year period after which the Coricancha mine is cumulative free cash-flow positive from closing of the transaction. As previously announced, the share purchase agreement for the transaction was entered into on December 20, 2016, and had a number of customary conditions precedent that needed to be satisfied be- fore the transaction could be completed. The mining license for the Escobal mine (above) has been suspended while the Supreme Court of Guatemala reviews a lawsuit brought forth by CALAS, an anti-mining organization.

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