The complaint for this class action alleges that Tahoe Resources did not meet the requirements to operate its Escobal mining property in southeast Guatemala, and that it hid this information from the general public, in violation of the Securities Exchange Act of 1934.
The class for this action is all persons and entities who acquired the publicly-traded securities of Tahoe between March 12, 2015 and July 5, 2017 and who were damaged at the corrective disclosures.
Tahoe Resources was incorporated in Canada with headquarters in Nevada. It discovers and operates mines in the Americas. It holds interests in the Escobal mining property in southeast Guatemala that contains significant amounts of mineral reserves.
On March 12, 2015, Tahoe filed a Form 40-F for fiscal year 2014. Attached to it was an information form on “Developments Regarding Indigenous Peoples” that set forth information about the company’s belief that there were no claims by indigenous people on the area of the Escobal mine. It claimed that, according to a recent census, the population in the area was 99.6% “Ladino” or of non-indigenous Hispanic origin, that the company had “engaged with indigenous communities that expressed an interest in the Escobal mine…” It said, “We used commercially reasonable efforts in our dealings to ensure all land-related agreements were entered into in accordance with applicable laws, but there is no guarantee that furtuer laws and actions will not have a material adverse effect on our operations at the Escobal mine…”
Annual filings for 2015 and 2016 included information forms with similar statements, noting that no indigenous peoples were currently living in the area of the mine.
However, the complaint claims that the statements were misleading because they did not disclose that the company had not met consultation obligations in regard to the permitting of the mine and that the mining license could therefore be suspended.
On May 24, 2017, just two months after the annual 2016 filing, the company revealed that “an anti-mining organization, CALAS,” had made a legal claim against Guatemala’s Ministry of Energy and Mines (MEM) for ignoring the Xinca people’s right of consultation before granting the company the Escobal mining license. The company said that the claim was “without merit.”
However, in July, a Guatemalan had suspended mining operations at the Escobal mine while the action was being reviewed. Again, the company claimed that “all consultation obligations relating to the permitting of the Escobal license were met.”
On this news, the company’s stock price fell by over 33%.