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A summary of the pilot plant results is presented in the table below.
---------------------------------------------------------------------------- Lead Zinc Total Metal Concentrate Concentrate RecoveryMarch 2013 ------------------------------------------------------Pilot Plant March March MarchResults May 2013 May 2013 May 2013Compared to 2012 Pilot 2012 Pilot 2012 PilotMay 2012 PEA PEA Plant PEA Plant PEA Plant----------------------------------------------------------------------------Head Grade Silver g/t 383 462 383 462 Gold g/t 0.38 0.16 0.38 0.16 Lead % 0.62 0.56 0.62 0.56 Zinc % 1.10 0.92 1.10 0.92----------------------------------------------------------------------------Recovery Silver 82.5% 76.0% 4.3% 11.9% 86.8% 87.9% Gold 71.0% 45.7% 4.1% 15.8% 75.1% 61.5% Lead 82.5% 73.5% nil 13.3% 82.5% 86.8% Zinc nil 11.9% 82.6% 60.3% 82.6% 72.2%----------------------------------------------------------------------------Concentrate Silver % 2.56 5.95 0.09 0.51Grade Gold g/t 25 10.7 nil 1.7 Lead % 50 59.0 nil 3.67 Zinc % nil 4.05 50 52.5 ---------------------------------------------------------------- Iron % low 3.09 low 6.87----------------------------------------------------------------------------
The pilot plant test and concentrate analyses were conducted by Hazen Research, Inc. in Golden Colorado. Despite the significant positive results demonstrated by the pilot plant test, expectations of recoveries and concentrate quality have not changed from those projected in the PEA.
Guatemala Mining Royalties
On April 16, 2013, Tahoe and the Guatemalan government concluded the Escobal Royalty Agreement. This agreement, together with the Guatemalan mining law, commits the Company to pay a 5% net smelter return (NSR) royalty on the concentrates sold from the Escobal project's mine production, representing a 1% NSR increase on silver and a 2% NSR increase on base metals in concentrate as compared to the royalty described in the PEA. Of the royalty proceeds, 40 percent will go to the Municipality of San Rafael, 40 percent will go to the federal government, and the remaining 20 percent will be distributed to a variety of other communities in the region that may be affected by economic growth issues and other impacts caused by mine operations. This new royalty structure is seen as a very positive development for Guatemala and for the regions surrounding the Escobal project.
Credit Facility
The Company projects adequate funds to bring Escobal to commercial production in early 2014. However, in order to provide additional assurance in the case of unanticipated commissioning difficulties, a banking debt facility $50 million is being finalized. Closing is scheduled for the second quarter of 2013. Due diligence is near completion and the Board approved the terms of the facility on May 9, 2013. The proceeds are intended to provide additional working capital and to fund the 4,500 tpd expansion project, which was approved by the Board in May 2012.
