VANCOUVER (miningweekly.com) – TSX- and NYSE-quoted Canadian precious metals producer Tahoe Resources expects operations at its La Arena mine, in Peru, to return to normal within 48 hours, following a wildcat strike by about 65% of the mine's workforce that started on April 22.

The good news was enough to give the TSX-listed equity a more-than-8% bump on Thursday morning to C$6.89 a share, following a big slide in headline earnings as its flagship Escobal mine remained under care and maintenance for the three months ended March 31.

The company reported that discussions were completed independently with both groups and it was agreed by all parties that operations at La Arena should resume as soon as possible, as this is in the best interest of all stakeholders, the company said. According to Tahoe, a significant issue was union demands for guaranteed bonus payments as opposed to profit-based sharing defined by regulatory requirements. The Peru Ministry of Labour had declared the strike illegal.

Tahoe reported first-quarter results on Wednesday, producing 90 900 oz of gold, compared with the prior-year quarter production of 119 000 oz of gold.  

Tahoe further noted that ore mined at Timmins West, in Ontario, was 21%, or 76 000 t, below plan on account of paste fill delays associated with extreme cold and mechanical issues impacting on mining sequences, including tonnage and grade. However, the 2018 full-year gold production guidance remained unchanged at 400 000 oz to 475 000 oz.

During the first quarter, cash costs of $793/oz exceeded the company’s 2018 guidance range of $725/oz to $775/oz, owing to issues at Timmins and higher costs at Shahuindo, also in northern Peru. All-in sustaining costs rose to $1 158/oz in the period, which was also higher than the 2018 guidance range of $1 000/oz to $1 100/oz. However, the company reaffirmed its cost guidance, saying it expects higher volumes in the second half of the year, and the cost control measures at Bell Creek, also in Ontario, to result in sequential improvements.

Tahoe is currently busy with Timmins West optimisation activities to resolve extreme cold and mechanical issues. Enhanced flexibility in the stoping sequence and cost efficiency measures are being implemented.

The company advised that commissioning of the 12 000 t/d Shahuindo crushing and agglomeration circuit is nearly complete and commissioning of 24 000 t/d additional crushing and agglomeration circuit has been shifted into the fourth quarter. The ramp-up and commissioning of the full 36 000 t/d circuit should still be completed by the end of the year, the company advised.

At Bell Creek, the timeline for completion has also shifted to early in the fourth quarter, as opposed to initial expectations for completion by mid-year, owing to a slower-than-expected shaft sinking rate. Both projects are still expected to be within their respective budgets.

Meanwhile, Tahoe reported that the new Guatemala Constitutional Court President, Magistrate Dina Ochoa, has prioritised more timely resolution of unresolved cases, including at Escobal. Tahoe advised that it also continues to engage with protestors at the Casillas road block. The company had not provided a silver production guidance for 2018.