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Tahoe Set to Expand Silver Mine Production at Escobal Project by 19 Million Ounces

Tahoe Resources Inc. (TSX:THO) is working on expanding its silver mining production capacity beyond 3,500 tonnes per day or 19 million ounces per year according to a progress report on its Escobal silver mine in Guatemala.

The President and CEO of Tahoe Resources, Kevin McArthur, said that the funding for the production expansion from 3,500 to 5,000 tonnes per day would be made by cash flow within the first five years of its production. The potential for future mine expansion was influenced by ‘’… impressive exploration results seen over the last year…’’ according to McArthur.

Though Tahoe Resources is not definitive on the amount by which silver production could grow at its Escobal mine, the silver mining company has said it would have a resource update and a new scoping study out in the second quarter of the year; the last scoping study was done in 2010. Silver grade is chief among factors that would help the company pin down the amount of its silver production at its Escobal mine. If Tahoe’s planned production goes up from 3,500 tonnes per day to 5,000, the silver output of the mining company might increase by about 8 million ounces to 27 million ounces of silver per year.

Tahoe Resources began the construction of its Escobal mine located 40Km southeast of Guatemala City towards the end of 2011. All necessary developmental work and spending for both above and below ground are on track according to the progress report released Friday. Plant commissioning is expected to hold towards the end of 2013 while commercial production is planned to start early 2014.

Tahoe started working on a budget with a $327 million capital cost forecast published in 2010 in a sector prone to cost escalation. However, by year end 2011, Tahoe had spent or committed to spend $141 million and it has $350 in cash and cash equivalents for its Escobal mine construction works according to the progress report.

Tahoe’s progress report for its above ground construction work at Escobal shows that foundation facilities were being prepared, electrical upgrades were almost completed and Tahoe said it has started to receive major mill components. Tahoe has advanced a decline of 750 metres underground which initially was ‘’slightly behind schedule because of soft ground conditions near the surface’’ according to the report.

Tahoe has projected a 51% internal rate of return on its Escobal mine and 80% to 90% recovery rate for base and precious metals. Also, Tahoe’s cash cost was estimated at $3 per ounce according to the 2010 scoping study released by the silver mining company.


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Tahoe Set to Expand Silver Mine Production at Escobal Project by 19 Million Ounces

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