Tahoe loss widens on US$170mn Escobal impairment

Tahoe Resources recorded a US$170mn impairment on its suspended Escobal mine in Guatemala, in part due to a later restart.

Operations at the silver-lead-zinc mine (pictured) have been halted since June 2017 due to a license suspension and roadblock.

The constitutional court ruled in September that the energy and mines ministry (MEM) must complete a consultation with indigenous communities in accordance with the International Labour Organization's (ILO) convention 169 before the license is restored.

Vancouver-based Tahoe now expects the operation to restart production around end-2019, based on progress of the consultation to date and its experience of legal proceedings in Guatemala, CFO Elizabeth McGregor told the company's Q3 earnings call.

The miner previously cited a six-month timeframe, based on a previous ILO 169 consultation conducted by the MEM.

The impairment also relates to a lower long-term silver price forecast of US$18/oz and a higher discount rate of 9%, McGregor said.

CONSULTATION PROGRESS

Despite the later restart date, the four-stage consultation is advancing according to the constitutional court's required timeline, CEO Jim Voorhees told the call.

The first stage review is well advanced, with a proposed area of influence for the consultation awaiting MEM approval, which will allow the second stage pre-consultation to begin, Voorhees said.

RESULTS

Tahoe's Q3 gold production slipped to 91,000oz from 109,000oz in the same period last year, partly due to lower output at the La Arena mine in Peru, reflecting the timing of ore placement.

Improved production at La Arena is expected this quarter.

The company said it is ramping up to the expanded 36,000t/d throughput rate at its Shahuindo mine in Peru following receipt of the expansion permit on October 16. Higher output is expected in Q4.

Tahoe also has mines in Canada.

All-in sustaining costs rose to US$1,263/oz from US$1,088/oz.

The loss for the quarter was US$190mn, affected by the US$170mn Escobal impairment, compared to the US$8.4mn loss in 3Q17. Revenue was US$112mn, down from US$155mn.