This Bloomberg article is sort of summarizing what I amsaying, but not really In the parameter perspectives I am rambling on about.
‘Tahoe Goes Into Damage Control After Guatemala Mine Suspension
By Danielle Bochove, July 13, 2017
https://www.bloomberg.com/news/articles/2017-07-13/tahoe-to-weigh-spending-and-dividend-cut-as-guatemala-halt-bites "Tahoe Resources Inc., whose flagship Guatemalan mine has been suspended"
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"Chief Executive Officer Ron Clayton said Thursday in a telephone interview"
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"production guidance was in jeopardy after the Guatemalan Supreme Court
(the lower court) suspended the operating license of the Escobal silver mine"
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"The timing for the suspension was unfortunate with the company in the midst
of a heavy capital spending year as the company looks to expand its Shahuindo
mine in Peru and its Bell Creek Complex in Timmins, (Canada)."
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"Escobal was probably generating about 60 percent of our free cash flow"
me- so I guess that means THO price should be about 40% of what it should be
which was always keeping pace with KL's price at $16 now. So 40% of that is
$6.40 cents which is about right.
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"Clayton’s preference is to try to protect growth projects over the dividend"
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"The biggest risk for the company right now is that the dispute drags on"
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"It’s very difficult to predict the behavior of the courts in Guatemala"
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"That said, Tahoe’s balance sheet is strong and its lenders have been
extremely supportive”
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“the company may look to extend a $35 million facility in Peru, Clayton
doesn’t anticipate needing to draw on the company’s revolver this year”
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“From a liquidity debt perspective we’re in pretty good shape, Clayton said”
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“The suspension of the Escobal mine was tied to an action by an anti-
mining group that alleges Guatemala’s Ministry of Mines violated the
indigenous Xinca people’s right of consultation when they granted the
license to Tahoe’s subsidiary”
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“In its July 5 statement, Tahoe estimated even a three-month suspension
would defer 5.1 million ounces of silver output and would mean $4 million
in royalties and $5 million in taxes wouldn’t be paid”
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“But the dispute has the potential to drag on for much longer. In a best-case
scenario, the Supreme Court or Constitutional Court would overturn the
suspension any time between now and the next few months and allow the
mine to operate while the court hears the case”
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Regardless, it will likely
take 12 to 18 months for the court to issue a final ruling
on the allegations, Clayton said”
me- why not dismiss the CALAS allegations
within 3 months? -And ruling as to what? Dismissing the allegations and the mine reopens, but back to
constant road blocking? If not dismissed is it to start the consultations with the
indigenous Xinca group, and how long would that take. Or just summarily
cancelling THO’s license and the mine is destroyed or left empty?
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“In the meantime, the company has declared force majeure (uncontrollable
Circumstances to fulfilling its contracts) with its concentrate customers (bill
collectors)”
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“(as pertaining to establishing THO’s silver mine) Affected indigenous communities
must be consulted before projects begin, according to Guatemala’s Ministry of
Energy and Mining’s
website”
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“Tahoe maintains that consultation did take place and that there isn’t a
significant indigenous population in the area”
me- what does significant mean?
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“A (i) forever suspension or (ii) revocation of the licenses is not supported by what
we’ve seen in the case law,” Clayton said”
me- Clayton is not the Guatemala courts
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“Appeals to the suspension have been filed by (i) the company, (ii) some of its
suppliers and (iii) workers, and (iv) an industry chamber”
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“while Guatemala President Jimmy Morales has called for legal certainty to
protect the rights of companies investing in the country”
me- what does legal certainty mean? That the vetting process by any significant
indigenous group was done or needs to be done? And if THO’s wins out, however
that is achieved, ie dismissed or after new consultations with an indigenous group,
perhaps
? perhaps taking 6 more months on top of the already 12 or more months ? will road blocks be stopped finally?
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“We think we’ve seen a fairly strong groundswell of support here that is applying
some political pressure,” Clayton said”
me- not been successful so far
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“He added that the company may exert further pressure if the dispute is prolonged,
as it becomes more difficult to (i) avoid layoffs and (ii) continue paying suppliers”
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“Management will need to find a balance between (i) maintaining social license
(? lax legal and political Process ?) and (ii) putting political pressure on the country
to get it to “behave properly””
me- what does that mean? Guatemala President Jimmy Morales declares an
executive order, gets its gov’t to pass economic emergency laws or rescind
following the UN’s C169 indigenous rights resolutions for the world?
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“(as an example) As we go down the road, I’m not sure that I’m going to pay every
(? Legal and Gov’t ?) bill that comes in the door quickly”
Me- why would the Guatemala court system pay attention to that?