Humble rock hammer key to Escobal find

The rock hammer, that humble geological exploration tool, lies behind the discovery of one of the largest silver deposits in the world.

Tahoe Resource’s Escobal silver mine in southeast Guatemala, which the Reno company brought into production late last year and is expected to produce about 20 million ounces of silver over the next 20 years, sat overlooked for more than a decade after early exploration identified precious metals in the area.

In 2006, Brian Brodsky, vice president of exploration for Tahoe Resources, was working back then in central Guatemala for Glamis Gold. He spearheaded that firm’s efforts to expand its regional exploration program. Brodsky’s team found sample data taken in 1996 on the Escobal region, and a team of geologists revisited the site using coordinates and maps provided by the previous sampling data.

Poking around among rock outcroppings with their rock hammers, the geologists gathered fresh samples and found exposed gold veins on the surface. They filed mining claims with the Guatemalan government and in 2007 began initial exploration drilling where they thought the gold was buried.

Those efforts, however, ultimately proved futile, and the project nearly was abandoned.

“It turned into a whole lot of nothing,” Brodsky says. “It was not as attractive as we thought it would be.”

But once the geologists began poring over the silver content detailed in assay reports, their interest was piqued.

“We didn’t recognize silver on the surface,” Brodsky says. “These systems, a lot of them are zoned — on the top it’s high in gold, and that will grade into a silver zone, and that grades into a lead/zinc zone.”

Further drilling — at one time, as many as 10 rigs were in the field — began to define a massive high-grade silver deposit. Escobal contains veins of silver that are up to 165 feet wide and over 6,500 feet long. The mine has indicated mineral resources of 367.5 million ounces of silver and inferred resources of an additional 36.7 million ounces of silver, which ranks the mine among the top three primary silver producing mines in the world behind the BHP Billiton Cannington mine in Queensland, Australia and the Fresnillo mine in Zacatecas, Mexico. The latter has been in operation since 1554.

“It is a huge system,” Brodsky says, “and it had never been looked at before. It was really taking advantage of an underexplored area and recognizing the potential.

“In hindsight it’s hard to believe that it was passed over.”

Brodsky says initial data about Escobal most likely went ignored because gold mining companies during the late 1990s were focused on large open-pit operations such as those found in northeastern Nevada. The potential to develop a large gold mine at the Escobal site simply didn’t register.

Capital costs to develop the underground mining operation and processing facility were north of $325 million. The net present value of the Escobal mine is close to $4 billion. Escobal employs about 800 miners.

Production began in October of 2013, and Tahoe Resources shipped its first mineral product in November. The end result of mining efforts at Escobal is a powdered concentrate of lead sulfide that contains about 1,000 ounces of silver per ton. Zinc is also produced in similar fashion.

The product is sent to smelters throughout the world. The silver typically is used for electronics or for investment purposes, while the zinc and lead are used as alloys in industrial metals manufacturing.

“It is really sought after because it has so much silver in it,” Brodsky says.

In 2010 Tahoe Resources was founded to take over the project from Goldcorp — Brodsky says Goldcorp wasn’t eager to increase its exposure to silver or to navigate the permitting challenges in Guatemala. Kevin McArthur, former chief executive officer of Goldcorp, came out of retirement to start Tahoe Resources.

The timeline from when the team filed for license on the project and drilled its first exploration holes to initial production was just over six years, a nearly unheard-of fast pace in the mining industry.

“You can’t do that anywhere in any jurisdiction,” Brodsky says.

Brodsky calls discovery and development of the Escobal mine a once-in-a-lifetime opportunity, and he’s spent more than 35 years working as an exploration geologist.

“To find something that is pristine, has never been drilled, never been sampled is really remarkable,” he says. “But it wasn’t just me. It was me supervising a team of geologists locally that were more familiar and intimate with the rocks we were looking at, and it was a series of events the team put together to provide this success.”