Guatemala seeks 40% stake of all mining companies
Published by MAC on 2012-07-03Source: Mining.com, Business Financial Post
Guatemala seeks 40% stake of all mining companies
By Cecilia Jamasmie
Mining.com
28 June 2012
Guatemala has jumped on the wagon that has been running through most of Latin America this year by proposing an increase of control over its natural resources.
President Otto Perez Molina is pushing the Constitutional reform that will make possible for the government to acquire up to 40% of the mining and exploration companies operating in the country.
The intended reform to 55 articles of the Constitution includes a proposal to change the current mining law, in place for the last 15 years. The document aims to "increase the country's revenue and achieve equitable distribution of national income," said Erick Archile, Minister of Energy and Mines, as quoted by local paper Prensa Libre.
Some of the most important changes include the redistribution of royalties, the creation of a mining council and a mining fund, and improved regulation for mine closures.
In its Morning Coffee report Stockhouse.com writes that, Canaccord Wealth Management finds that the new legislation is positive as it formalizes the existing royalty structure established through negotiation between industry and government.
Currently, gold and silver miners are voluntarily paying royalties of 4%, base metal miners pay 3%, and miners of industrial minerals pay 1%. The document presented by Perez Molina doesn't address whether those rates will change.
"When a country like Guatemala introduces new royalties, the associated headlines are rarely well received by the market," wrote Canaccord.
"The amendments also demonstrate progress within the Ministry of Mines, which he [a Bay Street analyst] believes could pave the way to final permitting of new projects,'' it said.
Former military leader Otto Perez Molina was elected in November last year. He is the first former army member to become president in Guatemala, Central America's largest economy, since the country restored democracy in 1986.
In the last eight months, Otto Perez has been focused on looking for ways to reduce severe poverty rates affecting more than half the population.
Tahoe shares plummet on Guatemalan proposal
By Peter Koven
Business Financial Post
28 June 2012
Shares of Tahoe were down 40% this morning.
Shares of emerging silver company Tahoe Resources Inc. plunged 40% on Thursday morning following reports that Guatemala is seeking to buy stakes of up to 40% in mining companies operating in the country.
Tahoe is developing the very promising Escobal silver deposit in Guatemala, which it acquired from Goldcorp Inc. in 2010. If the proposal from President Otto Perez Molina becomes law, it could have a devastating effect on the company.
In addition to acquiring stakes in mining companies, Mr. Perez Molina reportedly wants to increase mining taxes.
Guatemala has been one of the most challenging countries for mining companies to operate in, as they have found themselves at odds with the indigenous population.
Tahoe shares were halted repeatedly on Thursday morning as the Guatemalan news spread among investors.
Tahoe dismisses Guatemalan government concerns
By Peter Koven
Business Financial Post
29 June 2012
Tahoe Resources Inc. is dismissing concerns about a proposal from the Guatemalan government to buy stakes of up to 40% in mining companies operating in the country.
Tahoe shares plunged 40% on Thursday morning before being halted as the Guatemalan news spread among investors. But in the early afternoon, the company released a statement saying that it has spoken with officials and believes the government has no intention of acquiring a stake in the its Escobal silver project. Instead, the officials told Tahoe that they believe the proposal is intended to encourage early-stage exploration in Guatemala.
"The government of Guatemala has not made any approach to the company regarding this proposed reform, nor do we expect it to. Full permitting for the 100%-owned Escobal project is still anticipated in the second half of 2012," chief executive Kevin McArthur said.
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Additionally, Reuters reported that the government's proposed law change would only apply to new projects.
The stock recovered some ground in the afternoon after the halt was lifted, but it was still down almost 20% on the day.
Tahoe acquired the promising Escobal deposit from Goldcorp Inc. in 2010. If the proposal from President Otto Perez Molina affects the company, it could be very big trouble for investors.
In addition to acquiring stakes of up to 40% in mining companies, Mr. Perez Molina reportedly wants to increase mining taxes.
Guatemala has been one of the most challenging countries for mining companies to operate in, as they have found themselves at odds with the indigenous population.