(Reuters) - Tahoe Resources Inc will work closely with Guatemalan officials and locals to resolve a dispute and resume operations at its flagship Escobal silver mine, one of the world’s largest, Chief Executive Jim Voorhees said on Monday.
Guatemala’s Constitutional Court last week upheld the suspension of licenses at Escobal mine.
The ruling was “disappointing” and “not the outcome we expected,” Voorhees told investors on a Monday conference call to discuss the dispute, but added: “We are focused on engaging in good faith.”
The country’s Supreme Court suspended the licenses in July last year after an anti-mining organization appealed against the country’s Ministry of Energy and Mines. The appeal alleged that the ministry did not consult with the Xinca indigenous people before awarding the Escobal mining license to Tahoe.
Reno, Nevada-based Tahoe has argued that the mine is a big contributor to the country’s economy. The ruling means Tahoe must return to the Xinca for consultations in order to try to regain its license to operate.
Similar disputes in the country have been settled in six months or less, Voorhees said, though a similar outcome in this case was not certain.
Tahoe shares were down 4.5 percent at $2.71 on Monday, after falling more than 40 percent since January due to the dispute. Last month the company posted a quarterly loss as it produced almost no silver. The company also spent more than $8 million just to keep basic functions at the Escobal mine open.
The row has grown increasingly acrimonious. Last month Tahoe said that 12 unarmed security contract workers were abducted and held for hours before being released, a charge local populations have denied.
Voorhees, who became CEO in June, said the company’s credit facilities have no ties to Escobal and that Tahoe’s gold mines in Peru and elsewhere are enough to support the company’s balance sheet for the time being.
“We remain financially sound,” Voorhees said.
Tahoe’s Peru operations have also been troubled. The miner said last month it believed there was an attempt to illegally extract gold at its La Arena mine. There have been several protests at the Peruvian mine too.
Reporting by Ernest Scheyder; Editing by Susan Thomas