Tahoe Resources has announced a new 43-101 compliant resource estimate and an independent preliminary economic assessment (PEA) for its 100%-owned Escobal underground silver project in southeastern Guatemala. The PEA describes increased production scenarios from the currently planned 3,500 mt/d, first to 4,500 mt/d and then 5,500 mt/d.

The new Escobal resource estimate increases the project’s indicated silver resources by 50% to 367.5 million oz at an average grade of 422 g/mt, with 91% of all resources now in the indicated category. Inferred silver resources total 36.7 million oz at an average grade of 254 g/mt. Significant amounts of gold, lead, and zinc are included in both resource categories.

Capital expenditure to start production at a 3,500-mt/d operation in 2014 remains at $326.6 million. Expansion to 4,500 mt/d by 2017 would require an estimated additional $46 million, and expansion to 5,500 mt/d by 2020 would require a further $33 million.

Tahoe President and CEO Kevin McArthur said, “Escobal is quickly becoming one of the top silver projects in the world. With estimated production of over 20 million oz/y of silver for over 10 years and estimated total cash costs of less than $5.00/silver oz, Tahoe will be a leader in silver when we begin production, expected early in 2014. We estimate that we have sufficient cash to fully finance the project, which is currently on-budget and on-track to meet our proposed mill commission in the second half of 2013.”

The Escobal project is based on underground mining, utilizing low-cost development and production methods; a processing plant employing crushing, grinding, and differential flotation to produce lead and zinc concentrates; and a dry-stack tailings facility.

The mine is being developed via two primary declines for the transportation of personnel, equipment, and materials, as well as for transport of the mined resources to the surface for processing. Additional primary development will include two ventilation shafts and drifts connecting the primary declines. The primary declines will also serve as platforms for exploration and definition drilling.

Mineral processing will use differential flotation to produce lead and zinc concentrates for sale to third-party smelters. Test work completed to date on the sulphide resources demonstrates recoveries of 87% for silver, 75% for gold, 83% for lead, and 83% for zinc, with the majority of the precious metals reporting to the lead concentrate. Based on current test results, the lead concentrates are expected to contain very high levels of silver, between 15,000 g/mt and 30,000 g/mt, with very little in the way of penalty elements. Concentrates will be bagged and delivered to port in sea containers.

Development of the underground mine began in May 2011. A total of 1,475 m of underground development had been excavated as of March 31, 2012. Development of the processing plant and surface support facilities/infrastructure began following government approval of the project environmental impact statement in October 2011.