Tahoe Resources’ Escobal mining license reinstated by Guatemalan Supreme Court
Tahoe Resources (THO CN, BUY) announced that that the Guatemalan Supreme Court has reversed its previous decision and reinstated the mining license for the Escobal silver mine (~53% of group’s NAV), which was suspended on 5 July 2017. THO stated that the decision to lift the mining license can still be appealed to the Constitutional Court with the ruling expected by end of the year and also highlighted that an illegal roadblock remains in place, preventing immediate re-start of operations.
Once the roadblock is resolved, THO expects to resume operations within a week. While there are still uncertainties around the start of production, we see this as the first positive catalyst since the issue became known. We see this as an inflection point and expect the stock to start re-rating. Thus, we add the stock in materials most favored list.