Resource World Magazine

46 www.resourceworld.com A P R I L / M A Y 2 0 1 4 MINING Tahoe Resources Inc. [THO-TSX; TAHO- NYSE] provided a depressed resource sector with a positive story early in the New Year. In January, Tahoe announced that its Escobal Mine, in southeast Guatemala, had reached commercial production. Operations at the high-grade silver mine commenced in late September 2013 and since then, production has been ramping towards the 3,500 tonne per day. Resource rich Guatemala is a business friendly country with a stable tax regime under conservative leadership. The mine benefits from strong community support and modern accessible infrastructure. In the January news release, Tahoe President and CEO, Kevin McArthur, said, "Our Guatemalan team has done a terrific job in delivering this world-scale silver mine within four years of the company's initial public offering. While we continue to opti - mize the mill, tailings filtration and paste backfill operations, this has been a remark- able start-up for a precious metals flotation plant over a very short time period." The company reported that, "All major mine and mill components have been commissioned and are operating to specification." Tahoe has in place agreements with several smelt - ers interested in long-term contracts. Discovered in 2007, The Escobal deposit has excellent infrastructure and is approxi- mately 3 km from San Rafael las Flores, a town of approximately 3,000 people and approximately 70 km southeast of Guatemala City by paved road. Escobal is a high-grade silver deposit expected, over the first 10 years of operations in the PEA expansion scenarios, expected to produce ~20 million silver equivalent ounces per year. Tahoe reported on, March 13, that the company "anticipates producing between 18 and 21 million ounces of silver in con - centrates in 2014 at an all-in sustaining cost of less than $10.00 per ounce." Tahoe describes the Escobal deposit as "an intermediate sulfidation epither- mal vein system that is hosted in tertiary andesite and volcaniclastic sedimentary rocks. Silver-gold-lead-zinc mineraliza- tion occurs in quartz veins, stockwork and breccia zones that extend over very wide (+ 30 metre) zones defined over a 3,000 metre strike length and 1,600 metre vertical range." Tahoe's Preliminary Economic Assessment on the project, completed by M3 Engineering, outlines an indicated sil - ver resource of 367.5 million ounces and an inferred silver resource of 36.7 million ounces. Tahoe reported that the "PEA pres- ents a base case at 3,500 tonnes per day (tpd) and an expansion scenario to 4,500 tpd. Capital costs for the 3,500 tpd mine and milling operation amounted to $326.6 million." The 4,500 tpd scenario includes an additional capital cost of $46.2 million and presents an NPV of $2.94 billion at a silver price per ounce of $25.00, a 20-year mine life and an IRR of 68%." 2012 Resource Estimation Resource Tonnes Silver Gold Lead Zinc Classification (M) (g/t) (g/t) (%) (%) _____________________________________ Indicated 27.1 422 0.43 0.71 1.28 Inferred 4.6 254 0.59 0.34 0.66 Tahoe describes the project as having excellent exploration potential. In 2014, Tahoe plans to have a 4,500 tpd Feasibility Study completed in 3Q; the company will calculate a new resource and determine proven and probable reserves. As well Tahoe plans to optimize Escobal to full 3,500 tpd by the end of 1H, restructure/ payoff or combine the company's 75 mil - lion in debt or a combination thereof and develop a dividend policy. n Tahoe Resources' Escobal Mine In production and expected to produce 18-21 million silver ounces per in 2014 by Katherine Moore Undergound miner at Tahoe's Escobal Mine, in southeast Guatemala. Photo courtesy of Tahoe Resources Inc.

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