Constitutional Court Upholds Suspension Of Tahoe’s Mining License… Shares Fall 20%

According to unconfirmed sources, Tahoe Resources has learned that the Guatemalan Constitutional Court issued a decision yesterday to uphold the lower court’s preliminary ruling to suspend its mining license at Tahoe’s Escobal Mine.  This new ruling caused Tahoe’s shares to sell off more than 20% during trading today. 

I first wrote about the trouble at Tahoe Resources Escobal Mine in my article, WORLD’S 2ND LARGEST SILVER MINE SHUT DOWN: Implications For Company & Market:

First, after the Guatemalan Supreme Court suspended operations at Escobal, Tahoe’s stock price took a real beating falling 33% that day.  In the past week, Tahoe’s stock price decline 40%:

A lot of investors were caught by surprise as Tahoe Resources has been making a lot of money from its mines, especially from its Escobal Silver Mine in Guatemala.  For example, in 2016 Tahoe Resources reported profits of $118 million on revenue of $784 million.  That is a stunning 15% margin of profit… and the majority of that profit was from the Escobal Mine.

Second, the rich profits from the Escobal Mine came at a cost.  And the cost was in the way of “serious human rights violations through its operations,” stated by several sources.  Unfortunately, many investors that follow the Mainstream financial media do not understand that the Escobal Mine has been, and continues to be, a subject of human rights abuse and violations from day one.

When the Guatemalan lower court first temporarily suspended the mining license at Tahoe’s Escobal Mine back in July, the shares of the company fell 40%.  After the ruling by the Guatemalan Constitutional Court to uphold the lower courts decision yesterday to suspend Tahoe’s Escobal mining license, the shares fell another 20% today:

When I first wrote about the suspension of Tahoe’s Escobal mining license, I received some push-back from those that were invested in the company.  While I can understand the frustration, I try to put out as much objective data as I can about the mining industry.  I wrote about Tahoe’s problems with its Escobal Mine back in 2014.

By doing more research recently, I found out that the company hired a U.S. security defense contractor, International Security Defense Management LLC, in 2011 to deal with the local protesters and community leaders.

This passage comes from the site, TAHOE ON TRAIL website:

The Escobal project depends on a militarized security strategy to suppress opposition and has led to violence and criminalization

•In 2011, Tahoe Resources hired a US security and defense contractor – International Security and Defense Management, LLC – that boasts experience with corporations working in war zones like Iraq and Afghanistan to develop a security plan that has treated peaceful protest and community leaders as if they were armed insurgents.

•In June 2012, Tahoe sued the Guatemalan government, stating that protests were hindering its operations and that the State was not doing enough to allow its activities to proceed.

•Between 2011 and 2013, some 90 people were slapped with unfounded criminal charges and made to endure legal processes causing them distress and hardship. Several spent months in jail before being cleared of all charges.
•A Guatemalan court dismissed Tahoe’s lawsuit against the state in February 2013.

•Nonetheless, on March 26, 2013, the Guatemalan government secretly commenced a pilot initiative in San Rafael Las Flores called the “Inter-Institutional Group on Mining Affairs” that frames opposition to mining as a threat to national security. Coronel Ricardo Bustamante, Technical Secretary for the National Security Commission, oversees the group whose office in San Rafael Las Flores was set up with support from Tahoe Resources. Tahoe Resources refers to it as a “High-Level Commission […] to address community issues and oversee security matters.” Guatemalan activists call it “counterinsurgency” and “a military intelligence operation.

•The Guatemalan government imposed a military siege in May 2013 in municipalities where people overwhelmingly voted against mining.

•The “inter-institutional project” continues; two military posts remain in the area.

So, the important question is…. Why does a mining company have to hire a private military type security company if it has the support of the local community??

I have to say, people who have come in defense of the Tahoe Resources Escobal Mine by claiming those that support the local population as LEFTISTS… really pisses me off.  And I will tell you why.

We in the Alternative Media continue to write and complain about the CONTROL OF THE CORRUPT ELITE.  This is one of the major talking points on most alternative blogger website.  Unfortunately, it seems that some precious metals analysts in the alternative media seem to forget that this principle also pertains to people dealing with the same corruption and abuse in other countries.

I gather the locals living next to the Escobal Mine in Guatemala do not deserve the same JUSTICE as we do in the Alternative Media in our fight against the corrupt elite.

According to the recent press release, the Guatalamen Constitutional Court will start hearings on August 28th and will be issuing a ruling about the Escobal Mine in the next two several months.  I have no idea what the ruling will be, because it seems like the Top Leaders in the Guatemalan government, who are supported by the same senior leaders in the corrupt west, want to see the mine open and running again.

Which means… this will be the same sort of fight between the CORPORATE INTERESTS and the SMALL GUY.

However, I would like to state once again; several large pension plans have dropped Tahoe Resources from their investment portfolios because they understand the problems and risk of owning the stock.   According to Tahoe On Trail Press Release:

February 9, 2017

(Ottawa/Reno/Guatemala) Tahoe Resources is one of fourteen companies featured as a dangerous investment in the fifth edition of ‘Dirty Profits’ launched today in Hamburg, Germany and edited by the organization Facing Finance.

The publication identifies two billion-dollar European pension funds that have divested from the company, the Netherlands’ Pensioenfonds (PGB) and Norway’s Norges Bank Investment Management. The group calls for binding regulations on financial institutions and the elimination of this and other harmful investments from their portfolios.

Problems cited include Tahoe Resources’ lack of respect for communities that have peacefully and democratically expressed their opposition to its Escobal mine in southeastern Guatemala, and a campaign of persecution through unfounded legal cases, violent incidents and militarization.

The Netherlands and Norwegian Pension plans divested from Tahoe Resources several years ago.  I would imagine they are glad that they did, not only for ethical reasons but also now that the stock has fallen 60%.

Investors who decided to BUY THE DIP last month when Tahoe’s stock fell 40% are now wondering if that was a good idea after it fell another 20% today.  I have no clue what kind of ruling the Guatemalan Constitutional Court will make during the hearings over the next few months.  However, I would not risk my money on a company that was dropped by two large countries’ pension plans due to what they found as unethical behavior at its Escobal Mine.

Lastly, on the future of Tahoe’s share price, here is a famous quote from Clint Eastwood, “DO YOU FEEL LUCKY.”

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19 Comments on "Constitutional Court Upholds Suspension Of Tahoe’s Mining License… Shares Fall 20%"

  1. Just read the book “Confessions of an economic hitman” by John Perkins (or listen to any of his youtube videos) to learn about how this deep web of US state dept sponsored “security contractors” & resource rights in 3rd world works.

    (General Smedley Butler was one of the first ones who openly talked about this, being an economic hitman for United Fruit Company in Guatemala & elsewhere in Central/Latin America, Carribean.)

    Now granted, John Perkins has a bend of socialist thinking in his thought process & associates all ills to Milton Friedman-Friedrich Hayek’s Chicago School of Economics. Regardless of whether one agrees with John Perkins about his tainted economic view of the world, there is a lot of truth to what he says about the fascist-corporatist merger of interests. He should know well. He had been deep in the trenches of this world for many decades.

  2. The locals have a good point. Never exchange your precious hard assets for fake, fiat and filth.

  3. Steve,

    You certainly called that one right. Based on my experience working in third world countries (sold hotels in various countries and built, owned and operated a hotel in Jamaica in the 1990s) either it will take forever, years not months, or they will get to the judge, if that is possible, with enough money and it will be over in 3-4 months. It will be just long enough to appear to make a statement and will have lots of new restrictions that really don’t affect operations.

    If anyone insists on investing in Tahoe, buy 6-9 month options. Should be cheap so if the judge is honest you won’t lose much money. If he is not, you should make a killing.

  4. OutLookingIn | August 25, 2017 at 2:04 pm |

    MORE TROUBLE for TAHOE

    The Tahoe Resources La Arena gold oxide heap leach mine, located in Peru has been blockaded by the workers. The dispute is over Tahoe’s decision to declare the mine manager, Mariano Yupanqui Rada redundant. Snr. Rada has developed close ties and a very good rapport with the local community who trust him. The workers union has come out in support of the blockade and have announced that if the situation is not rectified by the end of the month, then they walk out on general strike.

    This is another story of a very good company, with great potential being run into the ground by a completely out of touch C suite that is blinded by sheer greed and hubris. The current CEO is no stranger to controversy. The Vancouver junior mining stock market is well known to be a nest of snakes and scamsters, who only too happy to separate hapless investors from their cash.

  5. Virginia. In eastern Oregon | August 25, 2017 at 4:19 pm |

    Investing in resource stocks is a tough game. One reason I decided to go with a good, ethical mutual fund that does research. TGLDX finally made the golden cross today, 50DMA crssed above the 200DMA.
    Thanks, Steve.
    Praying for the folks in the Gulf states. Stay safe.

  6. BTC/TGLDX ratios from eastern Oregon chicks seems rather exeptional, don’t you think?

    Above 200 ma does make me horny, tell me about your tattoos.

  7. Dick Carmack | August 25, 2017 at 6:47 pm |

    Your resort to “off color” language will subtract points for you and you will gain nothing from those who are not offended. Do you want to reach as many people as possible? Of course you do. People are not offended by clean language, but many are by unnecessary vulgarity.

    • Your egotism is the bigger put-off. This isn’t a press release from Buckingham Palace. Strive to get over yourself. (That said, I’m something of a grammar cop when it comes to certain common errors.)

    • knowshitsurelock | August 26, 2017 at 4:38 am |

      If you’re in a public place where someone might see your bone, refrain from reading by clicking the red x at the top right corner of your window. Thank you, and enjoy if you’re already horny. So when did horny become “off color” Arev you a racisit!?! I hope this example made you horny, because it certainly made me horny writing it.

      I almost forgot, BUY HARD SILVER!

  8. Your continued harping on this matter is really continuing to discredit what in the past has seemed like credible work. First off the Constitutional Court will now hear this matter on Monday. Perhaps they will throw this out of court and the matter will be over. If not they will most likely allow the mine to re-open while the matter is dealt with in court.

    Dave Kranzler has reported on this matter in depth and discussed it with the President and their legal council. He’s buying the stock and call options in his fund. I recently placed a call to Taho on this matter and it was returned by the President he was generous with his time and did not beat around the bush on my questions concerning the critical matters that have been voiced. I own shares but by no means am a big shareholder I am a small shareholder. IMO Dave Kranzler has some of the best cred in the alt. media. While he doesn’t name names he has made several references to what he calls the Yellow Journalism hit job on the stock. This is for subscribers in his Mining Stock Journal. He came out with another report yesterday and still believes the company will be vindicated and this is the first step in getting production moving again SOON! Guess we see what happens

    Meanwhile the masses still block the road even though the mine is shut thus creating an obstacle for any commerce and traffic as well as make he case that this was going on BEFORE the mine closure and most likely is tied to a local protest against the major of the small town and co-opted by Calas. They still can’t produce any indigenous people in the area against the mine because none live(d) there. Face it they are only in it for extortion money, publicity and spreading fear and obfuscation. Are you their tool?

    For $20 you can subscribe to the MSJ by Dave for a month and read all his reports on this topic at least 3 of them. Plus have access to all his work over the past years. If you do will be interested to your POV after that.

    Taho continues to pay its workforce even though they haven’t worked in two months. Albeit now at a reduced rate. They continue to have strong support from local and regional business, their workers AND the local community.

    • Kansas Crude,

      Interesting reply. However, let me say this. I have known you for a while as Kansas Crude. So, I am going to play Devi’s advocate and agree with you for a minute.

      Let say I am completely in the wrong here about Tahoe’s Escobal Mine, FOS, if you know what I mean. So, you are saying that ALL the work I have done on gold and silver mining, falling ore grades, cost of production studies, precious metals fundamental data, energy and the Falling EROI… all of that is DISCREDITED BY YOU because I happen to believe differently than other analysts and Tahoe Management????

      Is that what you are trying to say??

      That being said, I don’t believe I am on the wrong side of the issue here as it pertains to Tahoe’s Escobal Mine. There is a BIG RAT NEST that either investors don’t know about or don’t care to know about.

      1) Do you believe the Norwegian and Netherlands dropping Tahoe’s investment from their multi-billion pension fund is because they they are what some call LEFTISTS or BLEEDING HEARTS listening to “Yellow Journalism?”

      2) Tahoe hiring a MILITARY TRAINED SECURITY COMPANY to protect the Escobal Mine doesn’t bring up any fricken RED FLAGS to you?????????

      3) Security Head Rotando who was wiretapped stating to his son that he ordered to “KILL SOME OF DEM SONS-A-BITCHES” doesn’t bother you at all. What if that was done to your family????

      4) There is a bigger issue going on than most who follow the MSM story of TAHOE and I am completely surprised that people who FRICKEN COMPLAIN about the ELITE can’t see that they are doing the exact SAME THING HERE they blame the ELITE …. FER PETE SAKES

      5) Check out this and you will find out there is a huge HAMMER coming down on TAHOE out of Canada: https://tahoeontrial.net/2017/06/15/lawsuit-against-tahoe-resources-cleared-for-trial-in-canada-tip-of-the-iceberg-with-regard-to-risks/

      Then Again… maybe I am completely FOS here.

      steve

    • @KC & SRS/host. I’ve been following this site for many years now and started subscribing to Dave’s MSJ about half a year ago. I respect the opinions and analyzes of both gentlemen very much, even if they seem to somewhat differ in their opinion about Tahoe. Dave’s argument is that there is not really a case for a case in the first place, and that any negative decision against Tahoe will just greatly hurt the local & regional economy (this may put pressure on the judges ruling, although this is a pure speculation of mine). However, Dave K. also acknowledges that the courts’ decisions are always a bit of a wildcard – we’ll just have to wait and see when the hammer falls… (pun intended). If anything, it would be a great idea for the SRS or Dave Kranzler to hold a recorded meeting at some point and discuss their view and outlooks on mining, energy, fiat money/debt, cryptos and the metals. I would be surprised if their general views on these topics were all that different, while specifics and details could give additional food for an interesting discussion.

  9. It’s been said everyone is entitled to their own opinion, but not their own facts.

    Thanks Steve for sticking to the facts regardless of your opinion.

  10. LICENSE RE-Instated…..Nuff Said

  11. From the website

    http://www.tahoeresources.com/

    GUATEMALAN SUPREME COURT REINSTATES ESCOBAL LICENSE
    Back to News
    VANCOUVER, British Columbia – September 10, 2017 – Tahoe Resources Inc. (TSX: THO, NYSE: TAHO) (“Tahoe” or the “Company”) reported today that the Guatemalan Supreme Court issued a decision that reinstates the Escobal mining license of Tahoe’s Guatemalan subsidiary, Minera San Rafael (“MSR”). This decision reverses the Supreme Court’s preliminary decision to suspend MSR’s license in connection with an action brought by the anti-mining organization, CALAS, against Guatemala’s Ministry of Energy and Mines (“MEM”). CALAS alleges that MEM violated the Xinca indigenous people’s right of consultation in advance of granting the Escobal mining license to MSR.
    As part of its decision, the Supreme Court ordered MEM to conduct a consultation under ILO Convention 169. Per the ruling, MEM has been ordered to consult with the Xinca indigenous communities within a certain geographic area and report results of the consultation to the satisfaction of the Court within 12 months. Tahoe is seeking clarification from the Supreme Court on the specific geographical departments to be included within the scope of MEM’s consultation. Although Tahoe believes that MEM complied with ILO Convention 169 before it issued the Escobal license, it will fully support MEM in any of its future indigenous engagement and will encourage MEM to involve independent ILO 169 experts to assist in this process.
    The Company expects that CALAS, the Xinca Parliament and other interested parties may appeal the Supreme Court’s ruling to the Constitutional Court. The following parties have standing and the ability to appeal the ruling: MSR, MSR’s employees and vendors, the Xinca Parliament, CALAS, and judicially designated municipalities. After the Supreme Court rules on MSR’s motion for clarification, MSR will have a right to appeal the matter to the Constitutional Court if it deems necessary. The Constitutional Court is expected to rule on all appeals by the end of the year.
    While the Supreme Court ruling allows Escobal operations to commence immediately, the illegal roadblock at Casillas is ongoing, preventing an immediate restart of operations at this time. The Company continues to work with the government, community leaders and international mediation experts to resolve the roadblock situation peacefully and expeditiously. Upon a resolution of the blockade, the Company expects to resume production at Escobal within a week.

  12. Steve by the way I don’t challenge your work on EROEI and the energy sector. Its great stuff one of the reasons I support your sight. I started using this handle 14 years ago when I started posting on The Oil Drum one of the first internet sights to flesh out Peak Oil. Your work on the Metals is always unique and insightful. My point was you went off on some shaky premises here and the resources you utilized were questionable IMO. I’m over it. KC

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