TORONTO (miningweekly.com) – Silver producer Tahoe Resources, which declared commercial production at its flagship Escobal silver/lead/zinc mine, in south-eastern Guatemala, in January, lamented a potential 5% rise in the country’s royalty rate after Congress passed legislation on Friday aimed at increasing statutory royalties in the mining law.
TSX- and NYSE-listed Tahoe said on Monday the royalty increase was the only proposed change to the Guatemala mining law and was part of an effort to raise revenue and balance the 2015 budget.
President Otto Perez Molina still had to sign the “eleventh-hour deal” in order for the legislation to become law.
Tahoe reported that if enacted, the proposed legislation would require Escobal to pay a 9% royalty directly to the federal government and a 1% royalty to the local municipalities for a total royalty payment of 10%.
The company pointed out that the proposal did not contemplate existing agreements with local and regional municipalities and replaced all current voluntary royalty agreements.
“It is unfortunate that Congress wants to raise royalties on precious metals at a time when the industry is struggling and facing the lowest metals prices in four years. In addition to voluntary royalty payments, the Escobal mine has been supporting a number of national, regional and local community programmes that we would expect the higher royalty payments to fund in the future,” Tahoe CEO Kevin McArthur said.
The company pointed out that it was actively engaged in discussions with the government, business interests and community leaders about the ramifications of the proposed legislation.
Tahoe Resources’ TSX-listed stock on Monday closed 7.45% lower at C$16.43 apiece.