* Guatemala plan applies to new projects, not existing mines
* Government to propose changes to Congress on July 9
* Canadian mining shares tumble
By Mike McDonald
GUATEMALA CITY, June 28 Guatemalan President
Otto Perez Molina is floating a proposal to change the
constitution to allow the government to take up to a 40 percent
stake in new mining projects in the country, a government
spokesman said on Thursday.
News of the plan hit Canadian mining companies working in
Guatemala, especially Tahoe Resources Inc .
The government spokesman, Francisco Cuevas, told Reuters the
changes would not apply to companies already operating in the
country, only to future mines.
"It is an executive proposal for non-renewable resources.
The government would become a partner in 40 percent of the
properties," Cuevas said. "This is a result of looking at mining
policies in Chile, Bolivia and other countries who have used a
The proposal has not been formally presented to Congress yet
and is being discussed with different stakeholders, including
businesses and the mining ministry.
Changes could be made to the plan before July 9, when it
will be formally presented to Congress for debate along with a
package of other constitutional reforms.
Guatemala's vice minister of mines, Jose Miguel de la Vega,
told Reuters the ministry was not involved in drafting the plan.
"It is part of the constitutional reforms, but there has
already been a counter proposal saying it would limit (mining
investment)," de la Vega said.
Shares of Canada's Tahoe Resources plunged after the initial
media reports of Guatemala's plans.
Tahoe Resources is 40 percent-owned by Canadian gold miner
Goldcorp Inc. Its chief executive, Kevin McArthur, is a
mining industry veteran and a former CEO of Goldcorp.
Vancouver-based Tahoe, which went public in 2010, acquired
its flagship Escobal silver asset at the time from Goldcorp for
roughly $500 million. The development-stage project is located
some 70 kilometers (40 miles) southeast of Guatemala City.
Tahoe issued a statement on Thursday saying it had spoken
with officials at Guatemala's mining ministry and was assured
the proposed reforms would not affect its Escobal project.
"The government has no intention of acquiring an interest in
the Escobal project or other mining projects in the country,"
the company said.
Tahoe said construction of the silver mine remains on track
and it expects to have the project fully permitted in the second
half of 2012.
Its shares were down more than 18 percent at C$13.16 in
Thursday afternoon trading on the Toronto Stock Exchange, having
recovered slightly after plunging more than 39 percent earlier
in the day. Tahoe's New York-listed shares fell nearly 20
percent to $12.70.
Goldcorp also owns the Marlin gold mine in Guatemala, which
produced 382,400 ounces of gold in 2011 and generated revenue of
over $900 million.
A spokesman for Goldcorp said the company had held
discussions with high-level Guatemalan officials today and was
informed that the proposed mining law changes would not impact
its Marlin mine operations.
Shares of Goldcorp dropped 4.2 pct to C$36.78 on the Toronto
Radius Gold, which is developing the Holly-Banderas
project in Guatemala, fell in early trading before snapping
At the beginning of the year, Guatemala revised its mining
royalty rules to raise the amount paid by base metals miners
from 1 percent of earnings to 3 percent. It raised precious
metals royalties from 1 percent to 4 percent.
Goldcorp said in January it would also pay an additional 1
percent voluntary royalty to mostly help the development of
local municipal bodies.