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Tahoe Resources chairman on Escobal legal blow: 'At least we have a path now'

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Tahoe Resources chairman on Escobal legal blow: 'At least we have a path now'

After a stinging court loss, Tahoe Resources Inc.'s Executive Chairman Kevin McArthur said that in a best case scenario it would take about six months to have a mine permit reinstated for the company's Escobal silver mine.

McArthur spoke with S&P Global Market Intelligence following news that Guatemala's Constitutional Court reversed an earlier decision by the country's Supreme Court to restore Tahoe's Escobal mining permit. He described dismay over the outcome but also hope that there was light at the end of the tunnel for a restart of Escobal, a major silver mine where operations have been suspended amid a row over community consultation.

"Clearly we're very disappointed with the court ruling," McArthur said.

But McArthur cast the rejection in a positive light, saying it added procedural certainty to Tahoe's attempt to get Escobal running smoothly. "At least we have a path now," he said.

The Constitutional Court agreed with mine opponents that Escobal should have been required to undergo official consultations with indigenous people under the International Labour Organization's Convention 169. McArthur said that Guatemala's Ministry of Energy and Mines had previously decided that consultations were not required as, according to it, no indigenous community lived in an affected area. But the court disagreed and now, Tahoe has said, the ministry will have to conduct the consultations.

How long the process will take is uncertain. McArthur said there is no timeline but pointed to precedent as suggesting six months may be a minimum. A hydroelectric project had been ordered to do the ILO 169 process and it took about that long.

In that case, McArthur said, the hydroelectric company had been allowed to operate at the same time, but Tahoe won't be given the same leeway. While it's not clear how the process will unfold, McArthur said he was "very hopeful" about a successful outcome.

"This is the world's third largest silver mine and it's basically the foundation to our company," he said. "So hopeful is probably a weak word."

The consultation process is meant to give indigenous people an understanding of the project and to give them a way to plan for having a project in their area, McArthur said. "But there's not a veto," he added. "There's not a yes or no vote. It is largely consultation and a lot of that work has already been done during our permitting process."

Over the years, Tahoe has faced fierce opposition to Escobal. Recently, a dozen security workers were kidnapped for a brief time, and there have also been allegations that protesters were dispersed and injured by Escobal security personnel using rubber bullets in 2013.

McArthur has long blamed provocations on outsiders and he reiterated that position. "Our local community in and around the mine is very, very strongly in support of the mine," he said. "It's outside communities that have been causing some problems."