Shares of Vancouver-registered Tahoe Resources Inc. (TSX: THO) plummeted by more than 30% to hit a record low Thursday after the Supreme Court of Guatemala temporarily suspended the company's mining licence.
In a release issued Wednesday, company president and CEO Ron Clayton called the decision "extremely disappointing." Share prices had closed at $10.76 on the Toronto Stock Exchange the same day, to open Thursday morning at $6.75, down 37%. Shares rose to $7.20 by end of trading Thursday.
The court's provisional suspension was in response to a pending legal action brought forward by anti-mining organization CALAS, which argued that operations at Tahoe's Escobal mining project – owned and operated through a subsidiary – should cease until the matter is resolved.
CALAS has filed a lawsuit against Guatemala's Ministry of Energy and Mines, alleging it violated the rights of the local Xinca indigenous people by not properly consulting them prior to granting Tahoe's mining licence.
Run by Minera San Rafael, the Escobal mine is one of the largest silver mines in the world. In a news release, Tahoe stated it intends to immediately appeal the decision to the country's Constitutional Court, as well as ask the Supreme Court to reconsider its ruling.
The company anticipates an appeal ruling within two to four months. It has estimated that a three-month suspension would defer 5.1 million ounces of silver production and $4 million in royalties to future periods.
Tahoe added that it could no longer confirm its previously issued guidance for 2017, which included a projected production total of 18-21 million ounces of silver.
