Reality checkI just picked up shares at $C6.50. Have been in and out of this since the Lake Shore days. At a market cap of $2B investors have grossly overreacted, and have marked down Escobal to virtually nothing. There is little risk in taking on the stock for the value of Bell Creek and La Arena alone.
There are some considerations worth taking into account - first of all, the Guatemala judicial branch is not representative of the other two branches of government, meaning that the government itself has been blindsided and will work to sort things out. Secondly, the trouble is being spearheaded by outside interests, with the indigenous groups being used as pawns. That will become more obvious as time goes on. Thirdly, it is not just Escobal that is affected, and not just Tahoe, and not just the mining industry. Central America is host to a huge amount of investment, mining and otherwise, and the idea that a permitted operation can just be arbitrarily stopped in its tracks on a whim is a major deterrent to all capital investment in the region. You can be pretty well guaranteed that Guatemala is under a large amount of pressure from its neighbors (as well as its other mining and non-mining investors) to resolve the issue, because the entire economic stability of the region depends upon foreign investors' ability to rely upon consistency of law and due process. Consequently I cannot believe that Escobal suddenly has zero carrying value to Tahoe, and therefore believe that at this price I am getting an asset more or less for free.
The lawsuits are frivolous. There will always be ambulance chasers. The biggest lawsuit of this decade (Pasqua Lama, Barrick) was settled for $140M, and that just to make the annoyance go away. Even if Escobal resulted in a successful suit, the cost would be negligible in comparison with the enterprise value of Tahoe.
The perfect storm ... Escobal news, lawsuits all over the news, and a bad week for gold. Investors reaching a hideous pain threshold and bailing all over the place. This is a falling knife that I will risk trying to catch.