- Company achieves production and cost guidance for
third consecutive year
- Record silver and gold production in 2016 with lowest
ever total cash and all-in sustaining costs ("AISC") at
Escobal
- Record gold production in Q4 2016 offset by lower
metal prices and sales, impact of non-cash, non-recurring item and
increased expenses
- New three-year guidance includes gold production
growth to over 500 thousand ounces in 2019 with low AISC and
declining capital expenditures.
VANCOUVER, British Columbia,
March 9, 2017 /PRNewswire/
-- Tahoe Resources Inc. ("Tahoe" or the "Company")
(TSX: THO, NYSE: TAHO) today announced financial and operating
results for the fourth quarter and full-year 2016. Full-year 2016
results include strong operating performances from both the silver
and gold businesses, record cash flow per share and improved
balance sheet strength, with cash and cash equivalents of
$163.4 million at year end. Q4 2016
earnings declined from the prior quarter largely reflecting lower
revenue, the impact of a non-cash, non-recurring deferred tax
charge related to an increase in tax rates in Peru and increased expenses. Key performance
areas are reviewed below.
Q4 2016
Record gold production highlights strong operating results in
Q4 2016 – The Company achieved record quarterly gold production
of 119.9 thousand ounces in Q4 2016, with silver production
totaling 4.8 million ounces. Total cash costs and AISC averaged
$594 and $945, respectively, per gold ounce, and
$6.48 and $9.76, respectively per ounce of silver in
Q4 2016.
Q4 2016 earnings include non-cash, non-recurring tax
charge – Earnings in Q4 2016 were $0.3 million or $0.00 per share, while adjusted earnings for the
quarter were $18.4 million or
$0.06 per share. The $0.06 per share difference between earnings and
adjusted earnings was due to a $19.3
million or $0.06 per share
non-cash, non-recurring deferred tax expense related to an increase
in the statutory tax rate in Peru
to 29.5% as of January 1, 2017.
Q4 2016 adjusted earnings and cash flows impacted by weaker
realized metal prices and higher expenses –Cash flow provided
by operating activities before changes in working capital in Q4
2016 totaled $74.7 million or
$0.24 per share, a reduction of 40%
from the previous quarter ("Q3 2016") on a per-share basis. The
$18.4 million or $0.06 per share of adjusted earnings in Q4 2016
were $47.3 million or $0.15 per share lower than the prior quarter. Of
the after-tax $0.15 reduction in
adjusted earnings, approximately two-thirds or $0.10 per share relates to a $45.3 million or 19% decrease in revenue
resulting from lower metal prices and sales. Approximately 70% of
the reduction in revenue is due to lower prices, with the largest
impact being a $6.19 per ounce or 30%
decrease in the average realized silver price in Q4 2016 to
$14.45 per ounce. The average
realized price was 16% below the average spot price of $17.19 per ounce, reflecting negative pricing
adjustments on provisionally priced silver ounces and final
settlements. Contributing approximately 30% of the reduction in
revenue were lower gold and silver sales, reflecting timing
differences between production, final settlements and the shipment
of inventories. Higher depreciation, royalty, exploration and
general and administrative expenses accounted for the remainder of
the reduction from the prior quarter.(See Endote)
2016
Record silver production and per ounce costs – Total
silver production in 2016 was a record 21.3 million ounces, which
beat the Company's guidance for the year. Total cash costs and AISC
per ounce of silver produced, net of byproduct credits, were also a
record and included total cash costs of $5.84 and AISC of $8.06. Both total cash costs and AISC achieved
the Company's improved guidance that was announced in August 2016.
Strong growth in gold production – Record gold
production of 385.1 thousand ounces in 2016 achieved guidance and
more than doubled from 2015. The strong production growth reflected
the acquisition of Lake Shore Gold on April
1, 2016, the achievement of commercial production at the
Shahuindo mine in Peru (at 10,000
tonnes per day) on May 1, 2016 and a
full year of results at the La Arena mine in 2016, after it was
acquired with Shahuindo in April
2015. Total cash costs and AISC per ounce of gold produced
in 2016 of $620 and $943, respectively, were below their respective
target ranges for the year.
Record cash flow per share highlights strong 2016 financial
results – Cash flow provided by operating activities before
changes in working capital totaled a record $385.9 million or $1.33 per share in 2016, an increase of 22% from
2015 on a per-share basis. Adjusted earnings were $180.4 million or $0.62 per share versus $98.9 million or $0.48 per share the prior year. Strong growth in
cash flow and adjusted earnings in 2016 largely resulted from a 51%
increase in revenue, to a record $784.5
million, and lower per ounce operating costs at Escobal.
Earnings of $117.9 million or
$0.41 per share were lower than
adjusted earnings largely due to non-cash, non-recurring deferred
tax expense related to an increase in tax rates in Peru, a non-cash, non-recurring loss on
redemption of debentures and acquisition costs related to the Lake
Shore Gold transaction.
Industry-leading dividend – $69.4
million was paid to shareholders in dividends in 2016.
Positive results from 2016 exploration programs in
Peru and Canada – Exploration results in 2016
succeeded in identifying new near-pit, sandstone-hosted oxide zones
as well as three large mineralized district targets at Shahuindo
and extended mineralization at and around the Timmins West and Bell
Creek mines in Canada. The
exploration results highlight the potential to extend mine life and
grow production in both countries. (See press release entitled,
"Tahoe Resources Reports 2016 Exploration Results," dated
January 9, 2017.)
New guidance highlights strong near-term growth in low-cost
gold production – New three-year guidance includes growth
to over 500,000 ounces of gold production in 2019, with capital
requirements and AISC to peak in 2017 before declining over the
next two years. Both of the Company's two key growth projects,
expanding Shahuindo to 36,000 tonnes per day and the deepening of
the Bell Creek shaft, are on track for completion in mid-2018. With
their completion, annual sustaining capital expenditures are
expected to decline to between $100 and $125
million, with project capital being reduced to $10 million or less (assuming no new projects)
and AISC per ounce of gold improving to below $1,000.
Ron Clayton, President and CEO of
Tahoe, commented: "For the third consecutive year, our team met,
and in some cases exceeded, our annual production and cost
guidance. Escobal achieved record silver production, total cash
costs and AISC, and once again demonstrated why it is one of the
world's finest and most responsible silver producers. In our gold
business, our operating cost performance was outstanding, which is
very satisfying when you consider there are major capital projects
ongoing at two of our mines. In Q4 2016, our Canadian operations
had their best quarter since being acquired in April 2016. Financial results for the quarter
were impacted by declining metal prices and non-cash, non-recurring
items. I am pleased to say that we have seen an improvement in
metal prices since the beginning of 2017.
"Looking ahead, we recently received the construction permit for
the first crushing and agglomeration circuit at Shahuindo and,
through an optimization review, have confirmed that recovery rates
of at least 80% can be achieved at the mine through crushing and
agglomeration to a capacity of 36,000 tonnes per day. Through the
review, we have also identified opportunities to achieve slight
reductions in capital and operating cost. With our plans at
Shahuindo in place, we are in a position to release multi-year
guidance for capital expenditures, as well as production and costs.
Our new three-year guidance provides a clear road map for growing
to over a half million ounces of gold production in 2019 with low
capital requirements and operating costs. At that point, we will be
well positioned to generate substantial amounts of free cash flow
at anything close to current spot prices and to achieve our stated
goal of 550,000 ounces of gold production by 2020."
Performance Against 2016 Guidance
In 2016, the
Company achieved all of its full-year production, cost and
expenditure guidance. Performance exceeded target levels in such
areas as silver production as well as total cash costs and AISC per
ounce of gold produced.
$ millions unless
otherwise indicated
|
2016
Guidance
|
2016
Performance
|
2016 Silver
Production (moz)
|
18 - 21
|
21.3
|
2016 Gold Production
(koz)
|
370 - 430
|
385.1
|
Total cash cost per
silver oz produced ($/oz)(2)(3)(4)(5)(6)
|
$5.50 -
$6.50
|
$5.84
|
AISC per silver oz
produced ($/oz)(2)(3)(4)(5)
|
$8.00 -
$9.00
|
$8.06
|
Total cash cost per
gold oz produced ($/oz)
|
$675 -
$725
|
$620
|
AISC per gold oz
produced ($/oz)
|
$950 -
$1000
|
$943
|
Sustaining capital
(incl. capitalized drilling)
|
$115 -
$135
|
$118
|
Project
capital
|
$80 - $105
|
$93
|
Exploration
expense
|
$15 - $20
|
$14.4
|
Corporate
G&A
|
$45 - $50
|
$47.5
|
(1)
|
See
"Forward-Looking Statements" and "Cautionary Note on
Non-GAAP Financial Measures" at the end of this press
release.
|
(2)
|
Assumes the following
metals prices: $1,300/oz gold; $1,984/tonne lead; $1,984/tonne
zinc.
|
(3)
|
Total cash costs and
AISC are presented net of by-product credits.
|
(4)
|
Assumes payable
by-product metal production: 10,154 oz gold; 8,870 tonnes lead;
11,844 tonnes zinc.
|
(5)
|
By-product credits
per ounce of silver: gold $0.63; lead $0.84; zinc $1.13; total
$2.60.
|
(6)
|
All per ounce costs
are based on silver ounces contained in concentrates (silver) and
gold ounces in doré (gold).
|
(7)
|
2016 Guidance figures
presented for the Escobal, La Arena and Shahuindo mines are based
on a full year of production, while figures for the Timmins Mines
include nine months of production based on the April 1, 2016 date
of acquisition.
|
(8)
|
Corporate G&A
includes non-cash, stock-based compensation.
|
(9)
|
Numbers may not add
due to rounding.
|
Expanded 2017 Guidance
Capital expenditures in
2017 are expected to increase from 2016, mainly reflecting peak
investment levels for the expansion of Shahuindo and the Bell Creek
shaft project. Higher total cash costs and AISC for gold
largely result from higher production from Shahuindo, where
expansion work will continue throughout 2017, with expenditures
related to further development of leach pads, waste dumps and other
infrastructure being included in sustaining rather than growth
capital and therefore AISC. Production at Shahuindo in 2017 is
expected to be weighted to the second half of the year, with the
commissioning of the first crushing and agglomeration circuit
expected during the third quarter. Production, total cash costs and
AISC for silver are similar to the guidance initially released for
2016 in January of last year.
2017
Guidance
|
|
Production (silver – moz;
gold – koz)
|
Cash
Costs ($/oz)
|
All-in
Sustaining
Costs ($/oz)
|
Project
Capital ($ millions)
|
Sustaining
Capital ($ millions)
|
Exploration ($ millions)
|
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Low
|
High
|
Escobal
(silver)
|
18
|
21
|
7.00
|
8.00
|
9.50
|
10.50
|
-
|
-
|
35
|
38
|
-
|
2
|
La Arena
(gold)
|
145
|
155
|
750
|
800
|
1,000
|
1,100
|
-
|
-
|
25
|
27
|
6
|
8
|
Shahuindo
(gold)
|
65
|
85
|
750
|
800
|
1,600
|
1,700
|
75
|
90
|
50
|
55
|
12
|
15
|
Timmins
(gold)
|
165
|
185
|
650
|
700
|
1,000
|
1,100
|
75
|
85
|
50
|
55
|
17
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
total
|
18
|
21
|
7.00
|
8.00
|
9.50
|
10.50
|
-
|
-
|
35
|
38
|
-
|
2
|
Gold
total
|
375
|
425
|
700
|
750
|
1,150
|
1,250
|
150
|
175
|
125
|
137
|
35
|
43
|
(1)
|
Gold production range
of 375 to 425 thousand ounces includes gold ounces produced in
concentrate from the Escobal mine.
|
Cost guidance for 2017 was calculated based on certain commodity
and currency assumptions. The table below includes a calculation of
the impact of an increase or decrease in these assumptions on total
cash costs and AISC:
|
|
|
|
|
2017
Guidance
|
|
Change
(+/-)
|
|
Impact
(+/-)
|
Commodity
assumptions
|
|
|
|
|
|
|
|
|
|
Silver
($/oz)
|
|
|
|
|
$17.50
|
|
$1.00/oz
|
|
N/A
|
Gold
($/oz)
|
|
|
|
|
$1,250
|
|
$100/oz
|
|
$0.05/oz
silver
|
Lead
($/lb)
|
|
|
|
|
$0.90
|
|
10%
|
|
$0.10/oz
silver
|
Zinc
($/lb)
|
|
|
|
|
$0.90
|
|
10%
|
|
$0.10/oz
silver
|
Diesel
(US$/gal)
|
|
|
|
|
$2.00
|
|
10%
|
|
$0.10/oz
silver
|
|
|
|
|
|
|
|
|
|
$7/oz gold
|
Currency
assumptions
|
|
|
|
|
|
|
|
|
|
CAD/USD
|
|
|
|
|
$1.25
|
|
1%
|
|
$3/oz gold
|
Guatemalan
quetzal/USD
|
|
|
|
|
7.65
|
|
1%
|
|
$0.02/oz
silver
|
Peruvian
sol/USD
|
|
|
|
|
3.4
|
|
1%
|
|
$2/oz gold
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Year Guidance
As outlined below, the Company is
on track to achieve over a half million ounces of annual gold
production in 2019. At that time, sustaining capital expenditures
are targeted at between $100 and $125
million per year, growth expenditures at $10 million or less (assuming no new projects are
undertaken) and AISC per ounce of gold produced at between
$900 and $1,000.
$ millions unless
otherwise indicated
|
2017
|
2018
|
2019
|
|
Silver production
(mozs)
|
18-21
|
18-21
|
18-21
|
|
Gold production
(kozs)
|
375-425
|
425-500
|
500-550
|
|
Total cash costs per
silver oz produced(2)(3)(8)
|
$7.00-$8.00
|
$7.50-$8.50
|
$7.50-$8.50
|
|
AISC per silver oz
produced(2)(3)(8)
|
$9.50-$10.50
|
$10.00-$11.00
|
$10.00-$11.00
|
|
Total cash costs per
gold oz produced
|
$700-$750
|
$650-$750
|
$650-$750
|
|
AISC per gold oz
produced
|
$1,150-$1,250
|
$1,050-$1,150
|
$900-$1,000
|
|
Sustaining
capital
|
$160-$175
|
$140-$160
|
$100-$125
|
|
Project
capital
|
$150-$175
|
$50-$70
|
$0-$10
|
|
Exploration
expenses
|
$35-$45
|
$30-$40
|
$30-$40
|
|
Corporate G&A
expenses
|
$45-$55
|
$45-$55
|
$45-$55
|
|
(1)
|
See "Cautionary
Statement on Forward-Looking Information" in the Company's
MD&A dated March 9, 2017 and "Non-GAAP Financial
Measures" in the press release dated January 5, 2017 available
at www.sedar.com.
|
(2)
|
Assumes the following
metals prices: $1,250/oz gold; $0.90/lb lead; $0.90/lb
zinc.
|
(3)
|
Assumes payable
by-product metal production for 2018 of 9,610 ozs gold; 14,011
thousand lbs lead; 19,900 thousand lbs zinc and for 2019 of 11,810
ozs gold; 17,280 thousand lbs lead; 23,900 thousand lbs
zinc.
|
(4)
|
All per ounce costs
are based on silver ounces contained in concentrates (silver) and
gold ounces in doré (gold) and are net of byproduct
credits.
|
(5)
|
Guidance does not
include inflation adjustments.
|
(6)
|
The following foreign
exchange rates were used: CAD/USD - $1.25; Peruvian Nuevo Sol –
3.40; Guatemalan Quetzal – 7.65.
|
(7)
|
Gold production
includes gold produced at Escobal.
|
(8)
|
Silver cost guidance
assumes a 1% statutory royalty and a 4.5% voluntary and private
royalty on all silver sales above $16.00/oz.
|
Mineral Reserves and Mineral Resources
Updated
mineral reserves and resources effective January 1, 2017 were issued today for all of the
Company's operating units in Guatemala, Peru and Canada. A summary of mineral reserves and
mineral resources is provided later in this press
release.
At Escobal, Proven and Probable silver reserves at January 1, 2017 total 268 million ounces at an
average grade of 351 grams per tonne ("gpt") as compared to 310
million ounces at an average grade of 332 gpt at January 1, 2016. The change reflects 2016
production of 21.2 million ounces and the removal of 21.7 million
ounces from the Mineral Reserves as a result of a lowering the
silver price used in calculating reserves to $20.00 per ounce from $22.50 in the previous estimate.
Proven and Probable Mineral Reserves for the La Arena oxide mine
now stand at 54.1 million tonnes at an average gold grade of 0.41
gpt containing 715 thousand ounces of gold as compared to
January 1, 2016 reserves of 80.3
million tonnes at an average gold grade of 0.36 g/t containing 919
thousand ounces of gold. The change in gold reserves
represents 2016 mining depletion of 244 thousand ounces of gold
plus an addition of 40 thousand ounces of gold that resulted from
upgrading inferred resources.
Proven and Probable Mineral Reserves for the Shahuindo oxide
mine total 110.3 million tonnes at an average gold grade of 0.52
gpt containing 1.9 million ounces of gold as compared to the
January 1, 2016 reserves of 111.9
million tonnes at an average gold grade of 0.53 gpt containing 1.9
million ounces of gold. The change in gold reserves represents 2016
mining depletion of 88 thousand ounces of gold plus the addition of
41 thousand ounces of gold that were previously categorized as
inferred resources.
At the Timmins West Mine, Indicated Mineral Resources increased
from 903 thousand ounces of gold at January
1, 2016 to 1.0 million ounces at January 1, 2017, primarily due to the conversion
of inferred resources at the 144 Gap deposit to indicated
resources. Probable Mineral Reserves at Timmins West declined
from 392 thousand ounces of gold at an average grade of 4.2 gpt at
January 1, 2016 to 233 thousand
ounces of gold at an average grade of 3.7 gpt at January 1, 2017 due to mining depletion of 120
thousand ounces of gold and the loss of 38 thousand ounces of gold
that resulted from resource model reinterpretation. The
Company expects a significant growth in reserves with the expected
the release of the initial mineral reserve for the 144 Gap
scheduled for the third quarter of 2017.
Proven and Probable Mineral Reserves for the Bell Creek mine at
January 1, 2017 total 245 thousand
ounces of gold at an average grade of 4.4 gpt as compared to 309
thousand ounces of gold at and average grade of 4.5 gpt at
January 1, 2016. The change in
gold reserves is attributable to 2016 production of 44 thousand
ounces of gold and the loss of 21 thousand ounces of gold due to
resource model reinterpretation.
In addition, the Company's 2016 exploration program identified
new zones and/or extensions to mineralization at Shahuindo, the
Timmins West mine and Bell Creek mine. Drilling programs are
planned for 2017 in support of establishing mineral resources at
these new areas of mineralization.
La Arena Phase II Sulfide Project moves to Preliminary
Economic Assessment ("PEA")
Based on positive results from
an internal scoping study, the Company has commissioned M3
Engineering & Technology to complete a NI 43-101 PEA on the La
Arena Phase II Sulfide Project, a large-tonnage copper-gold
porphyry deposit at the La Arena mine in Peru. The PEA is targeted for completion in Q3
2017. The Company plans to host and webcast an investor day for
analysts and fund managers on September 14,
2017 to coincide with the completion of the PEA.
Tahoe to Appeal Court Ruling
On January 26, 2017, the Court of
Appeal for British Columbia ruled
that a legal action filed by claimants from Guatemala against the Company in June 2014 can be heard in the British Columbia court system. The ruling
overturned an earlier decision by the Supreme Court of British Columbia declining jurisdiction on the
grounds that Guatemala was the
more appropriate forum to adjudicate the claims. While the ultimate
result of the action is not expected to have a material financial
impact on the Company, it believes that it could have negative
industry-wide implications. As such, Tahoe intends to seek leave to
appeal the decision to the Supreme Court of Canada.
Conference Call
Tahoe's senior management will host a
conference call and webcast to discuss the fourth quarter and
full-year 2016 results on Friday, March 10,
2017 10:00 a.m. ET
(7:00 a.m. PT). To join the call
please dial 1-800-319-4610 (toll free from Canada and the U.S.) or +1-604-638-5340 (from
outside Canada and the U.S.). The
webcast will be available on the Company's website at
www.tahoeresources.com, as will a recording of the call later in
the day.
Complete financial results as well as the Company's management
discussion and analysis and other filings will be filed on SEDAR
(www.sedar.com) and on the Company's website.
About Tahoe Resources Inc.
Tahoe's strategy is
to responsibly operate mines to world standards, to pay significant
shareholder dividends and to develop high quality precious metals
assets in the Americas. Tahoe is a member of the S&P/TSX
Composite and TSX Global Mining indices and the Russell 3000 on the
NYSE. The Company is listed on the TSX as THO and on the NYSE
as TAHO.
Qualified Person Statement
Technical information in
this press release has been approved by Charlie Muerhoff, Vice President Technical
Services, Tahoe Resources Inc., a Qualified Person as defined by NI
43-101.
Additional Operating and Financial Information
A
detailed review of operating and financial results for each of the
Company's mines for the fourth quarter and full-year 2016 is
provided in the management's discussion & analysis starting on
page 23.
For further information, please contact:
Tahoe Resources Inc.
Mark Utting, Vice President,
Investor Relations
investors@tahoeresources.com
Tel: 416-703-6298
Endnote: The after-tax impact of revenue and expenses is
estimated by applying the Q4 2016 effective tax rate of 36%.
SELECTED
CONSOLIDATED FINANCIAL RESULTS
|
2016(1)(2)
|
|
2015(1)
|
|
2014(1)
|
Metal
Sold
|
|
|
|
|
|
|
|
|
Silver (000's
ozs)
|
|
|
|
19,065
|
|
20,210
|
|
18,160
|
Gold (000's
ozs)(8)
|
|
|
|
358.2
|
|
183.7
|
|
8.4
|
Lead (000's
t)
|
|
|
|
9.0
|
|
9.8
|
|
9.1
|
Zinc (000's
t)
|
|
|
|
12.3
|
|
13.3
|
|
10.7
|
Realized
Price
|
|
|
|
|
|
|
|
|
Silver in concentrate
(per oz)
|
|
|
$
|
17.57
|
$
|
15.15
|
$
|
18.13
|
Gold in doré (per
oz)
|
|
|
$
|
1,245
|
$
|
1,126
|
$
|
-
|
Lead (per
t)
|
|
|
$
|
1,886
|
$
|
1,854
|
$
|
2,053
|
Zinc (per
t)
|
|
|
$
|
2,268
|
$
|
1,800
|
$
|
2,220
|
LBMA/LME
Price(3)
|
|
|
|
|
|
|
|
|
Silver (per
oz)
|
|
|
$
|
17.14
|
$
|
15.68
|
$
|
19.08
|
Gold (per
oz)
|
|
|
$
|
1,250
|
$
|
1,160
|
$
|
1,266
|
Lead (per
t)
|
|
|
$
|
1,872
|
$
|
1,784
|
$
|
2,096
|
Zinc (per
t)
|
|
|
$
|
2,095
|
$
|
1,928
|
$
|
2,164
|
Revenues
|
|
|
$
|
784,503
|
$
|
519,721
|
$
|
350,265
|
Earnings (loss)
from operations
|
|
|
$
|
242,268
|
$
|
(79,552)
|
$
|
123,272
|
Earnings (loss)
attributable to common shareholders(9)
|
|
|
$
|
117,876
|
$
|
(71,911)
|
$
|
90,790
|
Earnings (loss)
per common share
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.41
|
$
|
(0.35)
|
$
|
0.62
|
Diluted
|
|
|
$
|
0.41
|
$
|
(0.35)
|
$
|
0.61
|
Adjusted
earnings(4)
|
|
|
$
|
180,385
|
$
|
98,910
|
$
|
91,696
|
Adjusted earnings
per common share(4)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.62
|
$
|
0.48
|
$
|
0.62
|
Diluted
|
|
|
$
|
0.62
|
$
|
0.48
|
$
|
0.62
|
Dividends
paid
|
|
|
$
|
69,402
|
$
|
49,717
|
$
|
2,953
|
Cash flow provided
by operating activities before changes in working
capital
|
|
|
$
|
385,926
|
$
|
226,332
|
$
|
173,230
|
Cash flow provided
by operating activities
|
|
|
$
|
249,454
|
$
|
166,744
|
$
|
119,322
|
Cash and cash
equivalents
|
|
|
$
|
163,368
|
$
|
108,667
|
$
|
80,356
|
Total
assets
|
|
|
$
|
3,071,253
|
$
|
2,002,461
|
$
|
975,628
|
Total long-term
liabilities
|
|
|
$
|
348,663
|
$
|
187,550
|
$
|
5,693
|
Costs per silver
ounce produced
|
|
|
|
|
|
|
|
|
Total cash costs net
of by-product credits(4)(5)
|
|
|
$
|
5.84
|
$
|
6.16
|
$
|
6.37
|
All-in sustaining
costs per silver ounce net of by-product
credits(4)(7)
|
|
|
$
|
8.06
|
$
|
9.11
|
$
|
9.15
|
Costs per gold
ounce produced
|
|
|
|
|
|
|
|
|
Total cash costs net
of by-product credits(4)
|
|
|
$
|
620
|
$
|
551
|
$
|
-
|
All-in sustaining
costs per gold ounce net of by-product
credits(4)(6)
|
|
|
$
|
943
|
$
|
733
|
$
|
-
|
(1)
|
Comparative 2015
numbers exclude operational and financial information from the
Timmins mines. Comparative numbers for 2014 exclude operational and
financial information from the Timmins mines, La Arena and
Shahuindo.
|
(2)
|
2016 numbers include
operational/financial information from the Timmins mines beginning
April 1, 2016, the date of acquisition of Lake Shore Gold and
operational/financial information from Shahuindo beginning May 1,
2016, the commencement of commercial production.
|
(3)
|
London Bullion Market
Association (LBMA)/London Metal Exchange (LME) average closing
prices for each quarter presented.
|
(4)
|
Refer to the
"Non-GAAP Financial Measures" section of the Company's
MD&A dated March 9, 2017.
|
(5)
|
Total cash costs net
of by-product credits per silver ounce produced for 2015 include
$7.2 million in royalty expense from 2014 sales that settled in
2015 at the increased royalty rate of 10%. This resulted in a per
ounce impact of $0.36 for 2015. This impact was offset during Q4
2015 due to a $16.2 million reversal of the increased 10% royalty
regime resulting in a positive impact of $0.80 per ounce for
2015.
|
(6)
|
AISC per gold ounce
produced for 2016 exclude $11.1 million in non-recurring
transaction costs related to the acquisition of Lake Shore
Gold.
|
(7)
|
AISC per silver ounce
produced for 2015 exclude $7.2 million in non-recurring transaction
costs related to the acquisition of Rio Alto.
|
(8)
|
Commercial production
at Shahuindo was declared on May 1, 2016. Revenues presented are
generated from the sale of gold ounces in doré beginning May 1,
2016. Pre-commercial production revenues at Shahuindo are
considered pre-operating revenues and are credited against
construction capital through April 30, 2016. Included in the 358.2
thousand gold ounces sold for 2016 are 44.3 thousand gold ounces
sold at Shahuindo which include four months of pre-commercial
production ounces sold (7.6 thousand ounces of gold in doré sold in
the period January through April 2016).
|
(9)
|
Earnings of $112.8
million for 2016 were impacted by the result of a change in enacted
tax rates in Peru for $19.3 million, a non-cash loss on the
redemption of debentures of $32.3 million and non-recurring
transaction costs of $11.1 million related to the acquisition of
Lake Shore Gold. Refer to the Company's adjusted earnings described
and calculated in the "Non-GAAP Financial Measures" section of the
Company's MD&A.
|
(10)
|
Numbers may not
calculate due to rounding.
|
SELECTED QUARTERLY
CONSOLIDATED FINANCIAL RESULTS
|
|
|
Q4
2016
|
|
Q3
2016
|
|
Q2
2016(8)
|
|
Q1
2016(1)
|
|
Q4
2015(1)
|
Metal
Sold
|
|
|
|
|
|
|
|
|
|
|
Silver (000's
ozs)
|
|
4,496
|
|
4,800
|
|
5,212
|
|
4,563
|
|
6,244
|
Gold (000's
ozs)
|
|
100.7
|
|
108.8
|
|
98.1
|
|
50.6
|
|
59.8
|
Lead (000's
t)
|
|
2.3
|
|
1.9
|
|
2.4
|
|
2.4
|
|
3.4
|
Zinc (000's
t)
|
|
2.8
|
|
2.7
|
|
3.5
|
|
3.3
|
|
4.5
|
Realized
Price
|
|
|
|
|
|
|
|
|
|
|
Silver in concentrate
(per oz)
|
$
|
14.45
|
$
|
20.64
|
$
|
18.95
|
$
|
15.92
|
$
|
14.10
|
Gold in doré (per
oz)
|
$
|
1,197
|
$
|
1,321
|
$
|
1,255
|
$
|
1,166
|
$
|
1,089
|
Lead (per
t)
|
$
|
2,036
|
$
|
2,204
|
$
|
1,779
|
$
|
1,590
|
$
|
1,804
|
Zinc (per
t)
|
$
|
2,872
|
$
|
2,513
|
$
|
2,237
|
$
|
1,875
|
$
|
1,549
|
LBMA/LME
Price(3)
|
|
|
|
|
|
|
|
|
|
|
Silver (per
oz)
|
$
|
17.19
|
$
|
19.61
|
$
|
16.78
|
$
|
14.85
|
$
|
14.77
|
Gold (per
oz)
|
$
|
1,220
|
$
|
1,335
|
$
|
1,259
|
$
|
1,181
|
$
|
1,105
|
Lead (per
t)
|
$
|
2,149
|
$
|
1,873
|
$
|
1,719
|
$
|
1,744
|
$
|
1,681
|
Zinc (per
t)
|
$
|
2,517
|
$
|
2,255
|
$
|
1,918
|
$
|
1,679
|
$
|
1,612
|
Revenues(8)
|
$
|
189,398
|
$
|
234,721
|
$
|
228,251
|
$
|
132,133
|
$
|
154,891
|
Earnings (loss)
from operations
|
$
|
31,466
|
$
|
99,425
|
$
|
65,022
|
$
|
46,355
|
$
|
(146,973)
|
Earnings
(loss)(9)
|
$
|
315
|
$
|
63,011
|
$
|
16,742
|
$
|
37,808
|
$
|
(107,717)
|
Earnings (loss)
per common share
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.00
|
$
|
0.20
|
$
|
0.05
|
$
|
0.17
|
$
|
(0.47)
|
Diluted
|
$
|
0.00
|
$
|
0.20
|
$
|
0.05
|
$
|
0.17
|
$
|
(0.47)
|
Adjusted
earnings(4)
|
$
|
18,415
|
$
|
65,657
|
$
|
57,873
|
$
|
35,489
|
$
|
51,005
|
Adjusted earnings
per Common Share(4)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.06
|
$
|
0.21
|
$
|
0.19
|
$
|
0.16
|
$
|
0.22
|
Diluted
|
$
|
0.06
|
$
|
0.21
|
$
|
0.19
|
$
|
0.16
|
$
|
0.22
|
Dividends
paid
|
$
|
18,672
|
$
|
18,654
|
$
|
18,419
|
$
|
13,657
|
$
|
13,640
|
Cash flow provided
by operating activities before changes in working
capital
|
$
|
74,669
|
$
|
125,987
|
$
|
115,951
|
$
|
69,319
|
$
|
96,786
|
Cash flow provided
by operating activities
|
$
|
107,021
|
$
|
78,679
|
$
|
37,678
|
$
|
25,293
|
$
|
54,161
|
Cash and cash
equivalents
|
$
|
163,368
|
$
|
142,426
|
$
|
151,707
|
$
|
90,790
|
$
|
108,667
|
Total
assets
|
$
|
3,071,253
|
$
|
3,033,218
|
$
|
2,981,740
|
$
|
2,005,860
|
$
|
2,002,461
|
Total non-current
liabilities
|
$
|
348,663
|
$
|
276,180
|
$
|
269,984
|
$
|
194,679
|
$
|
187,550
|
Costs per
silver/gold ounce produced
|
|
|
|
|
|
|
|
|
|
|
Total cash costs net
of by-product credits(4)(5)
|
$
|
6.48/
594
|
$
|
6.50/ 625
|
$
|
6.07/ 647
|
$
|
4.51/ 638
|
$
|
2.23/ 541
|
All-in sustaining
costs per ounce net of by-product
credits(4)(6)(7)
|
$
|
9.76/
945
|
$
|
8.68/ 974
|
$
|
8.16/ 973
|
$
|
5.97/ 825
|
$
|
4.85/ 774
|
(1)
|
Comparative Q1 2016
and prior quarter numbers exclude operational and financial
information from the Timmins mines.
|
(2)
|
Comparative Q1 2015
and prior quarter numbers exclude operational and financial
information from the La Arena and Shahuindo mines.
|
(3)
|
London Bullion Market
Association (LBMA)/London Metal Exchange (LME) average closing
prices for each quarter presented.
|
(4)
|
Non-GAAP financial
measures are described in the "Non-GAAP Financial Measures"
section of the MD&A dated March 9, 2017.
|
(5)
|
Total cash costs net
of by-product credits per silver ounce produced for Q2 2015 include
$7.2 million in royalty expense from 2014 sales that settled in
2015 at the increased royalty rate of 10%. This resulted in a
negative per ounce impact of $1.60 per ounce. This impact was
offset during Q4 2015 as a result of a $16.2 million reversal of
the increased 10% royalty regime resulting in a positive impact of
$2.94 per ounce.
|
(6)
|
AISC per gold ounce
produced for Q1 2016, Q2 2016 and Q3 2016 exclude the impact of
$0.7 million, $10.3 million and $0.1 million, respectively, in
transaction costs related to the acquisition of Lake Shore
Gold.
|
(7)
|
AISC per gold ounce
produced for Q2 2015, Q3 2015 and Q4 2015 exclude the impact of
$5.7 million, $0.2 million, and $1.3 million, respectively, in
transaction costs related to the acquisition of Rio
Alto.
|
(8)
|
Commercial production
at Shahuindo was declared on May 1, 2016. Revenues presented are
generated from the sale of gold ounces in doré beginning May 1,
2016. Pre-commercial production revenues at Shahuindo are
considered pre-operating revenues and are credited against
construction capital through April 30, 2016. Included in the 98.1
thousand gold ounces sold during Q2 2016, are 22.1 thousand gold
ounces at Shahuindo which include one month of pre-commercial
production ounces produced and sold (5.3 thousand ounces of gold in
doré sold in the month of April 2016).
|
(9)
|
Earnings of $0.3
million for Q4 2016 are primarily the result of a change in enacted
tax rates in Peru, resulting in an impact of approximately $19.3
million in deferred income tax expense. Refer to the Company's
adjusted earnings described and calculated in the "Non-GAAP
Financial Measures" section of the MD&A dated March 9,
2016.
|
(10)
|
Numbers may not
calculate due to rounding.
|
SELECTED SEGMENT
OPERATIONAL RESULTS – 2016
|
|
2016/
2015
|
|
|
Escobal
|
La
Arena
|
Shahuindo(5)
|
Timmins
mines
|
Total
|
Revenues
|
|
|
$
|
355,812
|
$
|
244,397
|
$
|
47,174
|
$
|
137,120
|
$
|
784,503
|
|
|
$
|
323,916
|
$
|
195,805
|
$
|
-
|
$
|
-
|
$
|
519,721
|
Silver
produced (000's ozs)
|
|
|
|
21,189
|
|
24
|
|
54
|
|
-
|
|
21,267
|
|
|
|
20,402
|
|
20
|
|
-
|
|
-
|
|
20,422
|
Gold produced
(000's ozs)
|
|
|
|
10.7
|
|
204.4
|
|
48.5
|
|
121.6
|
|
385.1
|
|
|
|
11.7
|
|
174.1
|
|
-
|
|
-
|
|
185.8
|
Silver sold
(000's ozs)
|
|
|
|
18,996
|
|
22
|
|
47
|
|
-
|
|
19,065
|
|
|
|
20,190
|
|
20
|
|
-
|
|
-
|
|
20,210
|
Gold sold (000's
ozs)
|
|
|
|
7.7
|
|
198.6
|
|
44.3
|
|
107.6
|
|
358.2
|
|
|
|
9.8
|
|
173.9
|
|
-
|
|
-
|
|
183.7
|
Average realized
price(1) (per oz)
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
|
|
$
|
17.57
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
17.57
|
|
|
$
|
15.15
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
15.15
|
Gold
|
|
|
$
|
-
|
$
|
1,227
|
$
|
1,258
|
$
|
1,272
|
$
|
1,245
|
|
|
$
|
-
|
$
|
1,126
|
$
|
-
|
$
|
-
|
$
|
1,126
|
Costs per ounce
produced(2)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash
costs
|
|
|
$
|
5.84
|
$
|
596
|
$
|
775
|
$
|
615
|
$
|
5.84/620
|
|
|
$
|
6.16
|
$
|
551
|
$
|
-
|
$
|
-
|
$
|
6.16/551
|
All-in sustaining
costs
|
|
|
$
|
8.06
|
$
|
837
|
$
|
1,162
|
$
|
1,057
|
$
|
8.06/943
|
|
|
$
|
9.11
|
$
|
733
|
$
|
-
|
$
|
-
|
$
|
9.11/733
|
|
|
(1)
|
Comparative London
Bullion Market Association (LBMA)/London Metal Exchange (LME)
average closing prices per ounce of silver and gold were $17.14 and
$1,250 for 2016 and $15.68 and $1,160 for 2015, respectively. The
realized price is for silver sold in concentrate and the realized
price is for gold sold in doré.
|
(2)
|
Non-GAAP financial
measures are described in the "Non-GAAP Financial Measures" section
of the MD&A dated March 9, 2017.
|
(3)
|
Total cash cost per
silver ounce produced at the Escobal mine and total cash cost per
gold ounce produced at the La Arena, Shahuindo and Timmins mines,
net of by-product credits. For a reconciliation to cash costs
before by-product credits, refer to the "Non-GAAP Financial
Measures" section of the MD&A dated March 9,
2017.
|
(4)
|
Comparative 2015
numbers exclude operational and financial information from the
Timmins mines and Shahuindo and include operational and financial
information from La Arena beginning April 1, 2015, the date of
acquisition of Rio Alto.
|
(5)
|
Commercial production
at Shahuindo was declared on May 1, 2016. Revenues presented are
generated from the sale of gold ounces in doré beginning May 1,
2016. Pre-commercial production revenues at Shahuindo were
considered pre-operating revenues and 44.3 thousand gold ounces
sold at Shahuindo for 2016 as presented include four months of
pre-commercial production ounces produced and sold (13.4 thousand
gold ounces in doré produced and 7.6 thousand ounces of gold in
doré sold for the period of January through April 2016).
|
(6)
|
Numbers may not
calculate due to rounding.
|
SELECTED SEGMENT
OPERATIONAL RESULTS – Q4 2016
|
|
Q4 2016/Q4
2015
|
|
|
Escobal
|
La
Arena
|
Shahuindo(5)
|
Timmins
mines(4)
|
Total
|
Revenues
|
|
|
$
|
70,527
|
$
|
62,555
|
$
|
16,084
|
$
|
40,232
|
$
|
189,398
|
|
|
$
|
93,450
|
$
|
61,441
|
$
|
-
|
$
|
-
|
$
|
154,891
|
Silver
produced (000's ozs)
|
|
|
|
4,802
|
|
5
|
|
20
|
|
-
|
|
4,827
|
|
|
|
5,515
|
|
7
|
|
-
|
|
-
|
|
5,522
|
Gold produced
(000's ozs)
|
|
|
|
2.4
|
|
58.4
|
|
13.8
|
|
45.3
|
|
119.9
|
|
|
|
3.4
|
|
56.4
|
|
-
|
|
-
|
|
59.8
|
Silver sold
(000's ozs)
|
|
|
|
4,468
|
|
7
|
|
21
|
|
-
|
|
4,496
|
|
|
|
6,236
|
|
8
|
|
-
|
|
-
|
|
6,244
|
Gold sold
(ozs)
|
|
|
|
1.8
|
|
53.0
|
|
12.9
|
|
33.0
|
|
100.7
|
|
|
|
3.4
|
|
56.4
|
|
-
|
|
-
|
|
59.8
|
Average realized
price(1) (per oz)
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver
|
|
|
$
|
14.45
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
14.45
|
|
|
$
|
14.10
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
14.10
|
Gold
|
|
|
$
|
-
|
$
|
1,180
|
$
|
1,224
|
$
|
1,216
|
$
|
1,197
|
|
|
$
|
-
|
$
|
1,089
|
$
|
-
|
$
|
-
|
$
|
1,089
|
Costs per ounce
produced(2)(3)(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash
costs
|
|
|
$
|
6.48
|
$
|
516
|
$
|
989
|
$
|
575
|
$
|
6.48/594
|
|
|
$
|
2.23
|
$
|
541
|
$
|
-
|
$
|
-
|
$
|
2.23/541
|
All-in sustaining
costs
|
|
|
$
|
9.76
|
$
|
786
|
$
|
1,513
|
$
|
976
|
$
|
9.76/945
|
|
|
$
|
4.85
|
$
|
774
|
$
|
-
|
$
|
-
|
$
|
4.85/774
|
(1)
|
Comparative London
Bullion Market Association (LBMA)/London Metal Exchange (LME)
average closing prices per ounce of silver and gold were $17.19 and
$1,220, respectively for Q4 2016 and $14.77 and $1,105,
respectively for Q4 2015. The realized price is for silver sold in
concentrate and the realized price is for gold sold in
doré.
|
(2)
|
Non-GAAP financial
measures are described in the "Non-GAAP Financial Measures" section
of the MD&A dated March 9, 2017.
|
(3)
|
Total cash cost per
silver ounce produced at the Escobal mine and total cash cost per
gold ounce produced at the La Arena, Shahuindo and Timmins mines,
net of by-product credits. For a reconciliation to cash costs
before by-product credits, refer to the "Non-GAAP Financial
Measures" section of the MD&A dated March 9,
2017.
|
(4)
|
Comparative Q4 2015
numbers exclude operational and financial information from the
Timmins mines.
|
(5)
|
Comparative Q4 2015
numbers exclude operational and financial information from
Shahuindo as commercial production was declared on May 1, 2016.
Pre-commercial production revenues at Shahuindo were considered
pre-operating revenues and were credited against construction
capital through April 30, 2016.
|
(6)
|
All-in sustaining
costs per ounce of silver net of by-product credits for Q4 2015
(Escobal) exclude the impact of $1.3 million in transaction costs
related to the acquisition of Rio Alto.
|
(7)
|
Numbers may not
calculate due to rounding.
|
MINERAL RESERVES
AND MINERAL RESOURCES UPDATE (AS AT JANUARY 1, 2017)
|
|
Escobal Mineral
Resources & Mineral Reserves at January 1, 2017
|
Measured &
Indicated Mineral Resources
|
Tonnes (M)
|
Silver (g/t)
|
Gold (g/t)
|
Lead (%)
|
Zinc (%)
|
Silver (koz)
|
Gold (koz)
|
Lead (ktonnes)
|
Zinc (ktonnes)
|
35.4
|
323
|
0.32
|
0.70
|
1.16
|
367,881
|
369
|
248
|
409
|
Inferred Mineral
Resources
|
Tonnes (M)
|
Silver (g/t)
|
Gold (g/t)
|
Lead (%)
|
Zinc (%)
|
Silver (koz)
|
Gold (koz)
|
Lead (ktonnes)
|
Zinc (ktonnes)
|
1.4
|
207
|
1.10
|
0.24
|
0.45
|
9,473
|
50
|
3
|
6
|
Proven &
Probable Mineral Reserves
|
Tonnes (M)
|
Silver (g/t)
|
Gold (g/t)
|
Lead (%)
|
Zinc (%)
|
Silver (koz)
|
Gold (koz)
|
Lead (ktonnes)
|
Zinc (ktonnes)
|
23.7
|
351
|
0.35
|
0.77
|
1.27
|
267,517
|
270
|
183
|
300
|
Footnotes
|
1.
|
The basis of the
Mineral Resource and Mineral Reserve estimates is from the NI
43-101 Technical Report Escobal Mine Guatemala NI 43-101
Feasibility Study, dated November 5, 2014. Mineral
Resources and Mineral Reserves at January 1, 2017 calculated by
subtracting mine depletion volumes through December 21, 2016 from
the Mineral Resources stated in the aforementioned technical
report.
|
2.
|
Mineral Resources are
reported using a silver-equivalent cut-off grade of 130 g/t using
metal prices of $22/oz silver, $1,325/oz gold, $1.00/lb lead and
$0.95/lb zinc.
|
3.
|
Mineral Reserves are
reported using a cut-off grade calculated from the net smelter
return value minus production costs using metal prices of $20/oz
silver, $1,300/oz gold, $1.00/lb lead and $1.25/lb zinc.
|
4.
|
Mineral Reserves are
inclusive of Mineral Resources.
|
La Arena Resources
& Reserves at January 1, 2017
|
Measured &
Indicated Mineral Resources
|
Material
Type
|
Tonnes (M)
|
Gold (g/t)
|
Copper (%)
|
Gold (koz)
|
Copper (Mlbs)
|
Oxide
|
63.8
|
0.39
|
-
|
805
|
-
|
Sulfide
|
274.0
|
0.24
|
0.33
|
2,124
|
2,014
|
Total
M&I
|
337.8
|
0.27
|
0.33
|
2,929
|
2,014
|
Inferred Mineral
Resources
|
Material
Type
|
Tonnes (M)
|
Gold (g/t)
|
Copper (%)
|
Gold (koz)
|
Copper (Mlbs)
|
Oxide
|
0.4
|
0.30
|
-
|
4
|
-
|
Sulfide
|
5.4
|
0.10
|
0.19
|
18
|
22
|
Total
Inferred
|
5.8
|
0.11
|
0.19
|
22
|
22
|
Proven &
Probable Mineral Reserves
|
Material
Type
|
Tonnes (M)
|
Gold (g/t)
|
Copper (%)
|
Gold (koz)
|
Copper (Mlbs)
|
Oxide
|
54.1
|
0.41
|
-
|
715
|
-
|
Sulfide
|
63.1
|
0.31
|
0.43
|
633
|
580
|
Total
M&I
|
117.2
|
0.36
|
0.43
|
1,348
|
580
|
Footnotes:
|
1.
|
The basis of the
Mineral Resource and Mineral Reserve estimates is from La Arena
Project, Peru Technical Report (NI 43-101), dated February 27,
2015. Mineral Resources and Mineral Reserves at January 1,
2017 calculated by applying the mine topographic surface at January
1, 2017 to an updated Mineral Resource estimate completed at July
1, 2016. Sulfide Mineral Resources remain unchanged from the
aforementioned technical report as there has been no depletion of
the sulfide Mineral Resources.
|
2.
|
Oxide Mineral
Resources are reported using a gold cut-off grade of 0.10 g/t
within a $1,400/oz gold pit shell.
|
3.
|
Oxide Mineral
Reserves are reported using gold cut-off grades of 0.15 g/t for
planned 2017 production and 0.10 g/t for production post-2017
within a pit designed from a $1,200/oz gold pit shell.
|
4.
|
Sulfide Mineral
Resources are reported using a copper cut-off grade of 0.12% within
a $3.50/lb copper and $1,400/oz gold pit shell. Sulfide
Mineral Reserves are reported using a copper cut-off grade of 0.18%
within a pit designed from a $3.00/lb copper and $1,200/oz gold pit
shell.
|
5.
|
Mineral Reserves are
inclusive of Mineral Resources.
|
Shahuindo
Resources & Reserves at January 1, 2017
|
Measured &
Indicated Mineral Resources
|
Material
Type
|
Tonnes (M)
|
Gold (g/t)
|
Silver (g/t)
|
Gold
(koz)
|
Silver
(koz)
|
Oxide
|
138.1
|
0.50
|
6.8
|
2,223
|
30,284
|
Sulfide
|
-
|
-
|
-
|
-
|
-
|
Total
M&I
|
138.1
|
0.50
|
6.8
|
2,223
|
30,284
|
Inferred Mineral
Resources
|
Material
Type
|
Tonnes (M)
|
Gold (g/t)
|
Silver (g/t)
|
Gold
(koz)
|
Silver
(koz)
|
Oxide
|
3.5
|
0.46
|
8.3
|
53
|
938
|
Sulfide
|
87.7
|
0.71
|
21.1
|
2,002
|
59,441
|
Total
Inferred
|
91.2
|
0.70
|
20.6
|
2,055
|
60,379
|
Proven &
Probable Mineral Reserves
|
Material
Type
|
Tonnes (M)
|
Gold (g/t)
|
Silver (g/t)
|
Gold
(koz)
|
Silver (koz)
|
Oxide
|
110.3
|
0.52
|
6.8
|
1,859
|
24,238
|
Sulfide
|
-
|
-
|
-
|
-
|
-
|
Total
M&I
|
110.3
|
0.52
|
6.8
|
1,859
|
24,238
|
Footnotes:
|
1.
|
The basis of the
Mineral Resource and Mineral Reserve estimates is from Technical
Report on the Shahuindo Mine, Cajabamba, Peru, dated January
25, 2016. Mineral Resources and Mineral Reserves at January
1, 2017 calculated by applying the mine topographic surface at
January 1, 2017 to an updated Mineral Resource estimate completed
at July 1, 2016. Sulfide Mineral Resources remain unchanged
from the aforementioned technical report as there has been no
depletion of the sulfide Mineral Resources.
|
2.
|
Oxide Mineral
Resources are reported using a gold cut-off grade of 0.15 g/t
within a $1,400/oz gold pit shell.
|
3.
|
Oxide Mineral
Reserves are reported using gold cut-off grades of 0.25 g/t for
planned 2017 and 2018 production and 0.18 g/t for production
post-2018 within a pit designed from a $1,200/oz gold pit
shell.
|
4.
|
Sulfide Mineral
Resources are reported using a gold cut-off grade of 0.5 g/t.
Shahuindo currently has no sulfide Mineral Reserves.
|
5.
|
Mineral Reserves are
inclusive of Mineral Resources.
|
Timmins West
Resources & Reserves at January 1, 2017
|
Indicated Mineral
Resources
|
Deposit
|
Tonnes (M)
|
Gold (g/t)
|
Gold
(koz)
|
Timmins
|
1.3
|
4.82
|
200
|
Thunder
Creek
|
1.3
|
3.76
|
163
|
144 Gap
|
5.3
|
3.89
|
661
|
Total
Indicated
|
7.9
|
4.02
|
1,023
|
Inferred Mineral
Resources
|
Deposit
|
Tonnes (M)
|
Gold (g/t)
|
Gold
(koz)
|
Timmins
|
0.5
|
4.71
|
83
|
Thunder
Creek
|
0.1
|
4.03
|
17
|
144 Gap
|
0.7
|
3.72
|
80
|
Total
Inferred
|
1.3
|
4.15
|
179
|
Probable Mineral
Reserves
|
Deposit
|
Tonnes (M)
|
Gold (g/t)
|
Gold
(koz)
|
Timmins
|
1.2
|
3.89
|
145
|
Thunder
Creek
|
0.8
|
3.42
|
88
|
144 Gap
|
-
|
-
|
-
|
Total Probable
Reserves
|
2.0
|
3.69
|
233
|
Footnotes:
|
1.
|
The basis of the
Mineral Resource and Mineral Reserve estimates is from
43-101 Technical Report, Updated Mineral Reserve Estimate
for Timmins West Mine and Initial Resource Estimate for the 144 Gap
Deposit, Timmins, Ontario, Canada, dated February 29,
2016. Mineral Resources and Mineral Reserves at January 1,
2017 calculated by subtracting June through October 2016 mine
depletion volumes and November through December 2016 forecasted
production from an updated Mineral Resource estimate effective June
1, 2016.
|
2.
|
Mineral Resources are
reported using a gold cut-off grade of 1.5 g/t.
|
3.
|
Mineral Reserves are
reported using a gold cut-off grade of 2.0 g/t and a gold price of
$1,250/oz.
|
4.
|
Mineral Reserves are
inclusive of Mineral Resources.
|
Bell Creek
Resources & Reserves at January 1, 2017
|
Measured &
Indicated Mineral Resources
|
Tonnes (M)
|
Gold (g/t)
|
Gold
(koz)
|
4.4
|
4.41
|
619
|
Inferred Mineral
Resources
|
Tonnes (M)
|
Gold (g/t)
|
Gold (koz)
|
4.2
|
4.38
|
587
|
Proven &
Probable Mineral Reserves
|
Tonnes (M)
|
Gold (g/t)
|
Gold (koz)
|
1.8
|
4.35
|
245
|
Footnotes:
|
1.
|
The basis of the
Mineral Resource and Mineral Reserve estimates is from NI
43-101 Technical Report, Updated Mineral Reserve Estimate
for Bell Creek Mine, Hoyle Township, Ontario, Canada, dated
March 27, 2015. Mineral Resources and Mineral Reserves at
January 1, 2017 calculated by subtracting June through October 2016
mine depletion volumes and November through December 2016
forecasted production from an updated Mineral Resource estimate
effective June 1, 2016.
|
2.
|
Mineral Resources are
reported using a gold cut-off grade of 2.2 g/t.
|
3.
|
Mineral Reserves are
reported using a gold cut-off grade of 2.2 g/t and a gold price of
$1,250/oz.
|
4.
|
Mineral Reserves are
inclusive of Mineral Resources.
|
CAUTIONARY NOTE ON NON-GAAP FINANCIAL MEASURES
The Company has included certain non-GAAP financial measures
throughout this document which include total cash costs, total
production costs, all-in sustaining costs per silver and per gold
ounce ("all-in sustaining costs"), adjusted earnings and adjusted
earnings per share. These measures are not defined under IFRS and
should not be considered in isolation. The Company's Escobal mine
produces primarily silver in concentrates with other metals (gold,
lead and zinc), produced simultaneously in the mining process, the
value of which represents a small percentage of the Company's
revenue and is therefore considered "byproduct". The Company's La
Arena, Shahuindo and Timmins mines
produce primarily gold with other metals (primarily silver),
produced simultaneously in the mining process, the value of which
represents a small percentage of the Company's revenue and is
therefore considered byproduct. The Company believes these measures
will provide investors and analysts with useful information about
the Company's underlying earnings, cash costs of operations, the
impact of byproduct credits on the Company's cost structure and its
ability to generate cash flow, as well as providing a meaningful
comparison to other mining companies. Accordingly, these measures
are intended to provide additional information and should not be
substituted for GAAP measures.
Consolidated adjusted earnings (loss) and consolidated adjusted
earnings (loss) per share
The Company has adopted the reporting of consolidated adjusted
earnings (loss) ("adjusted earnings (loss)") and consolidated
adjusted earnings (loss) per share ("adjusted earnings (loss) per
share") as a non-GAAP measure of a precious metals mining company's
operating performance and the ability to generate cash flow from
operations. This measure has no standardized meaning and the
Company's presentation of adjusted measures are not meant to be
substituted for GAAP measures of consolidated earnings (loss) or
consolidated earnings (loss) per share and should be read in
conjunction with such GAAP measures. Adjusted earnings (loss) and
adjusted earnings (loss) per share are calculated as earnings
(loss) excluding i) non-cash impairment losses and reversals on
mineral interest and other assets, ii) unrealized foreign exchange
gains or losses related to the revaluation of deferred income tax
assets and liabilities on non-monetary items, iii) unrealized
foreign exchange gains or losses related to other items, iv)
unrealized gains or losses on derivatives, v) non-recurring
provisions, vi) gains or losses on sale of assets and vii) any
other non-recurring adjustments and the related tax impact of these
adjustments calculated at the statutory effective rate for the same
jurisdiction as the adjustment. Non-recurring adjustments from
unusual events or circumstances are reviewed periodically based on
materiality and the nature of the event or circumstance. The
Company calculates adjusted earnings (loss) and adjusted earnings
(loss) per share on a consolidated basis.
Total cash costs and total production costs
The Company reports total cash costs and total production costs on
a silver ounce and a gold ounce produced basis for the Escobal mine
and the La Arena, Shahuindo and Timmins mines, respectively. The Company
follows the recommendation of the cost standard as endorsed by the
Silver Institute (the "Institute") for the reporting of cash costs
(silver) and the generally accepted standard of reporting cash
costs (gold) by precious metal mining companies. The Institute is a
nonprofit international association with membership from across the
silver industry. The Institute serves as the industry's voice in
increasing public understanding of the many uses and values of
silver. This remains the generally accepted standard for reporting
cash costs of production by precious metal mining companies. Total
cash costs and total production costs are divided by the number of
silver ounces contained in concentrate or gold ounces recovered
from the leach pads to calculate per ounce figures. When deriving
the production costs associated with an ounce of silver or gold,
the Company deducts byproduct credits from sales which are
incidental to producing silver and gold.
All-in sustaining costs
The Company has also adopted the reporting of all-in sustaining
costs as a non-GAAP measure of a precious metals mining company's
operating performance and the ability to generate cash flow from
operations. This measure has no standardized meaning and the
Company has utilized an adapted version of the guidance released by
the World Gold Council, the market development organization for the
gold industry. The World Gold Council is not a regulatory industry
organization and does not have the authority to develop accounting
standards or disclosure requirements.
All-in sustaining costs include total cash costs incurred at the
Company's mining operation, sustaining capital expenditures,
corporate administrative expense, exploration and evaluations
costs, and reclamation and closure accretion. The Company believes
that this non-GAAP measure represents the total costs of producing
silver and gold from its operation, and provides additional
information of the Company's operational performance and ability to
generate cash flows to support future capital investments and to
sustain future production.
These non-GAAP financial measures may be calculated differently
by other companies depending on the underlying accounting
principles and policies applied.
For additional information regarding these non-GAAP measures
(including reconciliations to IFRS measures and by-product credit
calculations, as applicable), see Tahoe's management's discussion
and analysis for the three and twelve months ended December 31, 2016 available at
www.tahoeresources.com and on SEDAR at www.sedar.com. For
information on how Lake Shore Gold has historically disclosed these
non-GAAP measures (including reconciliations to IFRS measures, as
applicable), see Lake Shore Gold's management's discussion and
analysis for the year ended December 31,
2015, also available on SEDAR.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking information" within
the meaning of applicable Canadian securities legislation, and
"forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995
(collectively referred to as "forward-looking statements"). All
statements, other than statements of historical fact, are
forward-looking statements. The words "believe", "expect",
"anticipate", "contemplate", "target", "plan", "intend",
"continue", "budget", "estimate", "may", "will", "schedule" and
similar expressions or statements identify forward-looking
statements. Forward-looking statements include, but are not limited
to, statements related to the following: the 2017, 2018 and 2019
operations outlook and production guidance, including estimates
related to gold and silver Mineral Reserves and Mineral Resources
(including growing Mineral Reserves and/or Mineral Resources in
Canada by two to four million
ounces by 2020), production (including growing gold production to
over half a million ounces in 2019 and to over 550,000 in 2020
through expansion of the Shahuindo mine to a capacity of 36,000 tpd
by mid-2018 and through completion of the BC Shaft Project by
mid-2018), total cash cost per ounce, all-in sustaining cost per
ounce, capital expenditures, corporate general and administration
expenses and exploration expenses; the expected working capital
requirements, the sufficiency of capital resources and the
possibility of considering alternative financing arrangements to
meet strategic needs; the expected depreciation and depletion
rates; exploration and review of prospective mineral acquisitions;
changes in Guatemalan, Peruvian and Canadian mining laws and
regulations; changes to the tax dividend rates in Guatemala, Peru and Canada; the timing and results of court
proceedings; the anticipated timing of updated Mineral Resource and
Mineral Reserve estimates; the anticipated timing of completion of
the PEA for the La Arena Sulfides and Fenn-Gib projects; the timing
of completion of the BC Shaft Project; the cost and timing of
sustaining capital projects; the expectation of meeting production
targets; the timing of the receipt of permits at Shahuindo; the
availability and sufficiency of power and water for operations; the
timing and cost of the design, procurement, and construction of the
crushing and agglomeration circuit at Shahuindo, including the
expected timeline for achieving 80% recovery for agglomerated ore;
the timing for completion of the MSE pond and South dump at
Shahuindo; the expectation that changes to the crushing and
agglomeration circuit will result in slightly lower capital and
operating costs at Shahuindo; and the expected commissioning of the
dirty water pump station at Escobal in Q2 2017.
Forward-looking statements are based on the reasonable
assumptions, estimates, analyses and opinions of management made in
light of its experience and its perception of trends, current
conditions and expected developments, as well as other factors that
management believes to be relevant and reasonable in the
circumstances at the date that such statements are made, but which
may prove to be incorrect. Management believes that the assumptions
and expectations reflected in such forward-looking statements are
reasonable. Assumptions have been made regarding, among other
things: the Company's performance and ability to implement
operational improvements at the Escobal, La Arena, Shahuindo and
Timmins mines; the Company's
ability to carry on exploration and development activities,
including land acquisition and construction; the timely receipt of
permits and other approvals; the successful outcomes of
consultations with First Nations; the price of silver, gold and
other metals; prices for key mining supplies, including labor costs
and consumables, remaining consistent with the Company's current
expectations; production meeting expectations and being consistent
with estimates; plant, equipment and processes operating as
anticipated; there being no material variations in the current tax
and regulatory environment; the Company's ability to operate in a
safe, efficient and effective manner; the exchange rates among the
Canadian dollar, Guatemalan quetzal, Peruvian sol and the USD
remaining consistent with current levels; and the Company's ability
to obtain financing as and when required and on reasonable terms.
Readers are cautioned that the foregoing list is not exhaustive of
all factors and assumptions which may have been used.
Forward-looking statements are subject to known and unknown
risks, uncertainties and other factors that may cause actual
results to be materially different from those expressed or implied
by such forward-looking statements. Such risks, uncertainties and
other factors include but are not limited to: the fluctuation of
the price of silver, gold and other metals; changes in national and
local government legislation, taxation and controls or regulations;
social unrest, and political or economic instability in the
jurisdictions in which the Company operates; the availability of
additional funding as and when required; the speculative nature of
mineral exploration and development; the timing and ability to
maintain and, where necessary, obtain necessary permits and
licenses; the uncertainty in the estimation of Mineral Resources
and Mineral Reserves; the uncertainty in geologic, hydrological,
metallurgical and geotechnical studies and opinions; infrastructure
risks, including access to water and power; drought and other
environmental conditions outside the Company's control; the impact
of inflation; changes in the administration of governmental
regulation, policies and practices; environmental risks and
hazards; insurance and uninsured risks; land title risks; risks
associated with illegal mining activities by unauthorized
individuals on the Company's mining or exploration properties;
risks associated with competition; risks associated with currency
fluctuations; contractor, labor and employment risks; dependence on
key management personnel and executives; the timing and possible
outcome of pending or threatened litigation; the risk of
unanticipated litigation; risks associated with cyber security;
risks associated with the repatriation of earnings; risks
associated with negative operating cash flow; risks associated with
the Company's hedging policies; risks associated with dilution; and
risks associated with effecting service of process and enforcing
judgments. For a further discussion of risks relevant to the
Company, see the Company's AIF under the heading "Description of
Our Business – Risk Factors", available on SEDAR at
www.sedar.com.
Although management has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended.
There is no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such forward-looking
statements. Accordingly, readers should not place undue reliance on
forward-looking statements. The Company does not undertake to
update any forward-looking statements, except as, and to the extent
required by, applicable securities laws. For a more detailed
discussion of risks and uncertainties affecting the Company, see
the most recent AIF and other regulatory filings with the Canadian
Securities Administrators, which are available on SEDAR under the
Company's issuer profile at www.sedar.com.
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visit:http://www.prnewswire.com/news-releases/tahoe-achieves-record-production-and-cash-flow-per-share-in-2016-300421714.html
SOURCE Tahoe Resources Inc.