Pan American Silver agreed to acquire the shares of Canadian Tahoe Resources, thus becoming the owner of the Mina San Rafael project in Guatemala.
With no details on the transaction amount, it was reported that the agreement between the two companies was approved on January 8, 2019 and is expected to be finalized on February 26.
The Pan American Silver mining company reported that it is interested in buying the shares of Canadian Tahoe Resources, the company owning Mina San Rafael in Guatemala.
Representatives of Minera San Rafael confirmed that interest exists by Pan American Silver, the world's second largest silver mining company with operations in Mexico, Peru, Bolivia and Argentina, in buying Tahoe Resources.
At last the Constitutional Court of Guatemala has spoken about the operation of Minera San Rafael, which has been paralyzed for more than a year, ordering a community consultation as a requirement to resume operations.
The project has been halted since mid-2017, when the environmental organization Calas filed an application for a declaration of fundamental rights against the mine, arguing that the Ministry of Energy and Mines had not carried out the community consultations before authorizing the operation licenses.
In Guatemala, the company Minera San Rafael, whose operations remain paralyzed pending a final decision by the Constitutional Court, announced the dismissal of another 200 employees.
The delay on the part of Constitutional Court of Guatemala continues to take its toll on the mining company, which has been unable to operate for more than 400 days.
According to a recent study, companies that carry out mining activities in the country, operate with a profit margin of 22% before paying taxes.
The report prepared by Central American Business Intelligence (CABI), details that companies in the mining industry operating in Guatemala can achieve extraction costs of up to 55%.
The Constitutional Court has confirmed the decision of the Supreme Court of Justice, which last June suspended the operating licenses of the Escobal mine, run by Minera San Rafael.
In its resolution, the Constitutional Court argued that"... when the Ministry of Energy and Mines (MEM) authorized the operations, it denied the existence of the Xinca group and did not consult them about the work they would do."
The sale of the mine is part of a marketing plan for some of the assets owned by the Canadian concessionaire Goldcorp.
In addition to the operations of the Marlin mine, Goldcorp has put on sale its gold and silver mine Los Filos in Mexico, and also is studying alternatives to offload the Alumbrera mine in Argentina.
David Garofalo, executive director of the company, told Elperiodico.com.gt that "...
The increase in sales of lead abroad has been attributed to the shipments that have begun from the Escobal mine, belonging to Canada's Tahoe Resources.
Lead exports increased by $141 million between January and May this year compared to the same period last year, according to the Central Bank of Guatemala.
Fernando Castellanos, Head of the Mining Department of the Ministry of Energy and Mines, told Prensalibre.com that "...
In the first quarter sales abroad of lead totaled $83 million, due to the operation of the San Rafael mine, which extracts silver, lead, zinc and gold.
In eighth place out of the top 25 export products of the country, foreign sales of lead in the first three months of 2014 were equivalent to $83 million, while in the same period in 2013 the figure was just $1.5 million , according to the Bank of Guatemala.
Thriving companies from the banking mining, sugar, rubber, call center, and palm oil sectors, have been the engines of the Guatemalan economy over the last 10 years.
An article in Elperiodico.com.gt reviews the characteristics of each of these sectors and the major players in each.
"At the beginning of this century, Guatemala had 34 banks that managed assets of about $5 billion.
In the first six months of 2012 FDI amounted to $770 million, mainly devoted to the activities of energy, mining and textile industries.
In the first quarter FDI reached $405.9 million and $364.6 million in the second, surpassing the $523.5 million in the first half of last year, according to data from the Bank of Guatemala (Banguat).
The sector which attracted the most investment is power, says Luis David, director of the agency Invest in Guatemala, followed by the mining industry. The Tahoe Resources company alone is to invest $500 million in the San Rafael mine. "The figures reflect the confidence of investors in the country", said Luis David.
Construction of the silver mine, el Escobal, by Tahoe Resources has brought banks, restaurants, a hotel and other businesses providing goods and services to the town of San Rafael Las Flores, Guatemala.
According to an article in Elperiodico.com.gt, "El Escobal, located in San Rafael Las Flores, Santa Rosa, is considered one of the largest silver deposits in Central America, with reserves of more than 300 million ounces, as well as containing lead, zinc and gold. The company Minera San Rafael, a subsidiary of Tahoe Resources, will operate the project for 4 years and expects to initiate the exploitation work in mid-2014. "
The mere announcement of the draft constitutional reform in Guatemala so that the State can participate as a partner in mining companies has brought down the shareholder value of Tahoe Resources by 22%.
An article in Elperiodico.com.gt reveals the uncertainty and the damage amonst investors and businesses caused by the announcement of reforms to the Constitution that would include authorization for the State to participate by holding up to 40% of the shares belonging to companies engaged in metal extraction.
The executive said he will push ahead with passing the bill to allow the state to have a 40% share in mining projects.
The measure was immediately rejected by the sector.
Mario Marroquin from Guatemala's mining chamber, urged the Government to immediately withdraw the proposal, warning that it would restrict investment in and development of the industry.
Mining companies in Guatemala are opposing the state being able to become their business partner, noting that it may be the prelude to nationalization or confiscation.
Article 125 of the bill to reform the current legal framework for the extractive industries in Guatemala, would enable the state to have participation in companies that exploit natural resources.