VANCOUVER, British Columbia,
Aug. 8, 2017 /PRNewswire/
-- Tahoe Resources Inc. ("Tahoe" or the "Company")
(TSX: THO, NYSE: TAHO) today announced solid financial and
operating results for the second quarter and six months ended
June 30, 2017. Due to the temporary suspension of the
Escobal mining license, the Company has ceased dividend payments,
and has suspended company-wide multi-year guidance. The Company's
balance sheet remains strong, with cash and cash equivalents of
$190.6 million at June 30,
2017.
Key Financial and Operating Results
$ millions unless
otherwise indicated
|
|
Q2
2017
|
|
Q2 2016
|
|
Q2 YTD
2017
|
|
Q2 YTD
2016
|
Revenue
|
|
$
|
209.6
|
|
$
|
228.3
|
|
$
|
460.6
|
|
$
|
360.4
|
Earnings and total
comprehensive income
|
|
$
|
33.5
|
|
$
|
16.7
|
|
$
|
108.2
|
|
$
|
54.6
|
Earnings per
share
|
|
$
|
0.11
|
|
$
|
0.05
|
|
$
|
0.35
|
|
$
|
0.20
|
Adjusted earnings
(1)
|
|
$
|
33.8
|
|
$
|
57.9
|
|
$
|
108.9
|
|
$
|
93.4
|
Cash provided by
operating activities
|
|
$
|
115.5
|
|
$
|
53.9
|
|
$
|
212.7
|
|
$
|
96.3
|
Cash provided by
operating activities before changes in working capital
|
|
$
|
99.4
|
|
$
|
116.0
|
|
$
|
232.3
|
|
$
|
185.3
|
|
|
|
|
|
|
Silver production
(moz)
|
|
4.1
|
|
5.7
|
|
9.8
|
|
11.4
|
Gold production
(koz)
|
|
112
|
|
110
|
|
231
|
|
167
|
Total cash cost per
silver oz produced ($/oz)(1)(2)
|
|
$
|
6.73
|
|
$
|
6.07
|
|
$
|
6.15
|
|
$
|
5.29
|
AISC per silver oz
produced ($/oz)(1)(2)
|
|
$
|
10.01
|
|
$
|
8.16
|
|
$
|
8.91
|
|
$
|
7.06
|
Total cash cost per
gold oz produced ($/oz)(1)(2)
|
|
$
|
601
|
|
$
|
647
|
|
$
|
587
|
|
$
|
645
|
AISC per gold oz
produced ($/oz)(1)(2)
|
|
$
|
925
|
|
$
|
973
|
|
$
|
892
|
|
$
|
930
|
Sustaining capital
(incl. capitalized drilling)
|
|
$
|
32.3
|
|
$
|
31.5
|
|
$
|
65.3
|
|
$
|
40.8
|
Project
capital
|
|
$
|
31.3
|
|
$
|
33.5
|
|
$
|
46.8
|
|
$
|
34.6
|
Exploration
expense
|
|
$
|
5.9
|
|
$
|
2.3
|
|
$
|
10.1
|
|
$
|
2.7
|
Corporate
G&A(3)
|
|
$
|
11.4
|
|
$
|
22.6
|
|
$
|
23.1
|
|
$
|
30.5
|
Weighted average
shares outstanding (basic, in millions)
|
|
312.79
|
|
305.98
|
|
312.43
|
|
267.33
|
|
|
(1)
|
See "Cautionary Note
on Non-GAAP Financial Measures" at the end of this press
release.
|
(2)
|
Total cash costs and
AISC are presented net of by-product credits.
|
(3)
|
Corporate G&A
includes non-cash, stock-based compensation.
|
Ron Clayton, President and CEO of
Tahoe, commented: "While the turn of events in Guatemala over the last several weeks is
disappointing, our team is working very hard to resolve both the
Escobal license suspension and on-going road block in Casillas.
I am very pleased with our overall Q2 performance, with all
of our operations turning in good results. Silver production
was 4.1 million ounces for the quarter and when combined with Q1
results, puts us at almost 10 million ounces year-to-date.
Per ounce metrics remained strong at Escobal, even with the mill
curtailing production during a portion of June due to the road
blockages. We also continue to be pleased with the results
from all of our gold mines, with each operation's production and
costs coming in at, or better than, expected levels."
Summary of Q2 2017:
Another solid quarter at Escobal – Tahoe
reported total silver production in Q2 2017 of 4.1 million
ounces driven by robust results at Escobal despite a curtailment of
production in June due to the Casillas road blockages. Total
cash costs and all-in sustaining costs ("AISC") were $6.73 and $10.01
per ounce of silver produced, net of byproduct credits,
respectively.
Robust results from all three gold operations – Q2 2017
gold production totaled 112.4 thousand ounces, including 21
thousand ounces from Shahuindo. Production and costs in Q2
2017 reflected strong results at all of the Company's mines, with
total cash costs and AISC averaging $601 and $925 per
ounce in Q2 2017.
Earnings per share and cash flow driven by strong revenue and
low costs – Earnings and adjusted earnings in Q2 2017 were
$33.5 million and $33.8 million, respectively, and were both
$0.11 on a per share basis. Q2
2017 cash flow provided by operating activities was $115.5 million, up from the previous quarter.
Bell Creek Shaft and Shahuindo Expansion plans remain on
track – Capital expenditures in Q2 2017 totaled $63.4 million, of which $26.2 million was related to on-going growth
projects. The Company continues to focus on the expansion at
Shahuindo and the Bell Creek shaft project. Exploration
expenditures in Q2 2017 totaled $5.9
million and remain focused on those targets which can have
near term impact on Mineral Reserves or Resources.
Update on Escobal Mining License – On July 5, 2017, the Company learned that the
Supreme Court of Guatemala issued
a provisional decision in respect of an action brought by the
anti-mining organization, CALAS, against Guatemala's Ministry of Energy and Mines
("MEM"). The action alleges that MEM violated the Xinca
Indigenous people's right of consultation in advance of granting
the Escobal mining license to Tahoe's Guatemalan subsidiary,
Minera San Rafael. The
provisional decision follows a request by CALAS to temporarily
suspend the license to operate the Escobal mine until the action is
fully heard. The provisional decision suspends the Escobal
mining license of Minera San Rafael
while the action is being reviewed by the court. The Company
was not a party to the action commenced by CALAS but this decision
confers legal standing on the Company which continues take all
legal steps possible to have the ruling reversed and the license
reinstated.
The Company immediately appealed the decision to the
Constitutional Court. Based on its prior experience with
Guatemalan court proceedings and evaluation of similar cases before
the courts, the Company estimates the Constitutional Court could
rule on the appeal within the next three months. We are
seeking to have the license reinstated during this period.
The Company also filed a motion for reconsideration with the
Supreme Court, which the Court denied on July 28, 2017. Final resolution of the
definitive constitutional claim and appeal process could take
between 12 and 18 months.
Update on Guatemala Road Block – Beginning on
June 7, a group of protesters near
the town of Casillas blocked the primary road that connects
Guatemala City to the Escobal Mine
near San Rafael Las Flores. Protests, which have not
dissipated, appear to have initially been related to a variety of
issues, including some unfounded claims that mining at Escobal is
causing seismic activity approximately 20 kilometers away.
Operations were reduced between June 8
and June 19 and were further curtailed on June 19 to conserve fuel. The Company is
working with the government, community leaders and others to
resolve the situation peacefully and expeditiously. However, the
road blockage shows no signs of immediate resolution and we cannot
predict at this time when the road will be clear to enable the
transport of materials in and out of the mine. Once the
roadblock is resolved and the license is reinstated, the Company
expects to resume production within a week.
Cessation of dividend – The Company announced the
cessation of the dividend, beginning August
8, 2017, due to the ruling of the Guatemalan court to
provisionally suspend the Escobal mining license. The
dividend cessation is intended to protect the health of the
Company's balance sheet and ensure the Company has the financial
flexibility during the temporary suspension of Escobal
operations. The cessation of the dividend will conserve
approximately $65 million cash
annually at current dividend reinvestment program ("DRIP")
enrollment rates. The Board of Directors will continue to
reassess the Company's dividend policy from time to time. The
Company has also suspended the active operation of its DRIP
effective immediately. The Company may wish to reactivate the
DRIP, subject to regulatory approval, at a future date.
During the period of suspension of the DRIP, participants may
continue to have their existing reinvested common shares held in
the DRIP, or they may request a withdrawal by contacting
Computershare. Total dividends of $18.7 million were paid to shareholders during
the quarter, including $3.2 million
in non-cash share-based dividends. A dividend of $6.2 million was declared and paid ($5.4 million cash, $0.8
million shares) in July.
Suspension of 2017 and multi-year guidance – The
Company has suspended previously issued 2017 and multi-year
company-wide guidance given the uncertainty of timing of various
court decisions related to the Escobal license. Gold
production and total cash costs are expected to meet targets of
375,000 to 425,000 ounces of gold and total cash costs of
$700 to $750(1) at
operations in Canada and
Peru in 2017. We will issue
updated guidance when we have clarity on the status of the Escobal
license in Guatemala.
Amended and restated credit facility – On July 18, 2017 the Company entered into an Amended
and Restated Credit Agreement (the "Agreement") with a syndicate of
lenders to increase its revolving credit facility from $150 million to $300
million with a $50 million
accordion feature, and to extend the term to July 19, 2021. The Agreement includes terms
that limit borrowing to a maximum of $75
million during the period of suspension of the mining
license at Escobal as a result of the CALAS claim in Guatemala, as further described in the
Company's July 5, 2017 press release.
In the event the Company's mining license at Escobal remains
suspended as of April 1, 2018, an
Event of Default shall occur and the Company will consider
alternative financing arrangements to meet strategic needs.
Other terms and conditions are substantially similar to those in
the previous $150 million credit
facility, including the discretion to pay dividends under the
Company's existing dividend policy. The credit facility is
secured by the assets of the Company and its subsidiaries: Escobal
Resources Holding Limited, Minera San
Rafael, S.A., Tahoe Resources ULC, Lake Shore Gold Corp.,
Mexican Silver Mines Limited, La Arena S.A., Shahuindo SAC and
Shahuindo Exploraciones. Additionally, the credit facility
contains covenants that, among other things, limit the ability of
the Company and its subsidiaries to incur additional debt, merge,
consolidate, transfer, lease or otherwise dispose of all or
substantially all of its assets to any other person.
Class Action Lawsuits - On July 7,
2017, the Company learned that three purported class action
lawsuits were filed against Tahoe, and certain of its current and
former officers and directors under Section 10(b) and Section 20(a)
of the US Securities Exchange Act of 1934, as amended (the "US
Exchange Act"), and Rule 10b-5, thereunder. The lawsuits allege
that the Company made untrue statements of material facts or
omitted to state material facts or engaged in acts that operated as
a fraud upon the purchases of the Company's stock. The
lawsuits were filed following the issuance of a provisional
decision by the Guatemalan Supreme Court described
above. The lawsuits allege compensatory damages,
interest, fees and costs. The Company disputes the
allegations raised and will vigorously defend the lawsuits.
La Arena II and Investor Day
Due to the suspension of company-wide multi-year guidance and
ongoing review of capital and exploration programs, the La Arena II
PEA has been deferred and the investor day originally planned for
September 14, 2017 has been
canceled.
Mr. Clayton continued, "We are not able to reconfirm previously
issued Company-wide 2017 and multi-year guidance at this time;
however, we remain confident that our gold operations will meet
production and cost targets this year. We expect the gold
mines in Canada and Peru will continue to produce strong results
through the remainder of the year. Following the court decision in
Guatemala regarding the Escobal
license, the Board made the prudent decision to cease the
dividend. Additionally, we are reviewing the pace of both
capital and exploration expenditures, along with corporate G&A,
to identify opportunities to conserve cash. We are continuing
with the expansion plans at Shahuindo and Bell Creek. We are
close to completing the initial circuit of our crushing and
agglomeration plant at Shahuindo, scheduled for the second half of
this year. We also continue to advance work to expand
Shahuindo to 36,000 tonnes per day and Bell Creek mine to 80,000
ounces per year by late 2018."
Addition to Management Team
Alexandra Barrows will join the
Company as Vice President, Investor Relations, effective
September 5, 2017. She will be
responsible for the engagement of the investor community and key
stakeholders as well as the development of external communications
for the Company. Prior to joining Tahoe, Ms. Barrows was a
Senior Vice President at HSBC Securities in New York, focused on Metals & Mining
clients across the Americas. She spent 10 years at HSBC in
progressively senior roles covering clients within the mining and
resources sectors. Mr. Clayton commented, "We are very
excited to have Alexandra join our team in the fall. She
brings extensive experience in corporate and project finance and
capital markets within the mining sector."
(1) The
reconciliation which formed the basis for the range in the 2017
gold cash cost target is as follows:
|
|
Total cash
costs
|
Gold
|
Total cash costs
before by-product credits
|
$
|
290,000
|
By-product credits
|
$
|
—
|
Total cash costs net
of by-product credits
|
$
|
290,000
|
Gold ounces produced
in doré (000's)
|
$
|
400
|
Total cash costs
per ounce before by-product credits
|
$
|
725
|
Total cash costs
per ounce net of by-product credits
|
$
|
725
|
|
|
OPERATIONS
REVIEW
|
|
Escobal
|
|
|
Q2
2017
|
|
|
Q2 2016
|
|
|
Q2 YTD
2017
|
|
|
Q2 YTD
2016
|
Recovered
Metal(1)
|
|
|
|
|
|
|
|
Silver Ounces
(000's)
|
4,078
|
|
|
5,717
|
|
|
9,692
|
|
|
11,412
|
Gold
Ounces(000's)
|
1.9
|
|
|
2.7
|
|
|
4.3
|
|
|
6.0
|
Lead Tonnes
(000's)
|
2.0
|
|
|
2.7
|
|
|
4.2
|
|
|
5.4
|
Zinc Tonnes
(000's)
|
2.9
|
|
|
4.0
|
|
|
6.1
|
|
|
8.3
|
Costs Per Ounce
Silver Produced(2)
|
|
|
|
|
|
|
|
Total cash costs per
ounce net of by-product credits
|
$
|
6.73
|
|
|
$
|
6.07
|
|
|
$
|
6.15
|
|
|
$
|
5.29
|
All-in sustaining
costs per ounce net of by-product credits
|
$
|
10.01
|
|
|
$
|
8.16
|
|
|
$
|
8.91
|
|
|
$
|
7.06
|
Capital
Expenditures
|
$
|
9,147
|
|
|
$
|
7,295
|
|
|
$
|
19,062
|
|
|
$
|
12,588
|
Sustaining
Capital
|
$
|
9,147
|
|
|
$
|
6,680
|
|
|
$
|
19,062
|
|
|
$
|
10,827
|
Non-Sustaining
Capital
|
$
|
—
|
|
|
$
|
615
|
|
|
$
|
—
|
|
|
$
|
1,761
|
|
|
(1)
|
Silver and gold
contained in lead and zinc concentrates; lead contained in lead
concentrate; zinc contained in zinc concentrate.
|
(2)
|
Non-GAAP financial
measures are described in the "Non-GAAP financial measures" section
of this press release.
|
During Q2 2017, the majority of the production was mined from
primary and secondary transverse longhole stopes on multiple
production sublevels in the Escobal Central Zone. Production
continued in the East Zone with approximately 47 thousand tonnes of
ore delivered to surface during Q2 2017.
Underground ramp, sublevel and stope development continued to
advance in support of the life of mine production schedule, with
approximately 2,000 metres of development and 37,000 metres of
longhole production drilling completed in Q2 2017. Mine
operations were reduced between June 8 and
June 19 to conserve fuel and operations were further
curtailed on June 19 due to road
blockages.
In Q2 2017 concentrate production totaled 4.3 thousand dry
metric tonnes ("dmt") of lead concentrate and 5.3 thousand dmt of
zinc concentrate containing 3.9 million payable ounces of silver
that were shipped to third party smelters. Concentrate
production for Q2 YTD 2017 totaled 9.4 thousand dmt of lead
concentrate and 11.3 thousand dmt zinc concentrate containing
approximately 9.1 million payable ounces of silver. There is
approximately 9 thousand tonnes of crushed ore held in the fine ore
bin and approximately 60 thousand tonnes in the surface ore
stockpile available to expedite the restart of the mill.
|
Gold
Operations
|
|
La Arena
|
|
|
Q2
2017
|
|
|
Q2 2016
|
|
|
Q2 YTD
2017
|
|
|
Q2 YTD
2016
|
Gold Ounces
Recovered (000's)
|
48
|
|
|
51
|
|
|
101
|
|
|
98
|
Costs Per Ounce
Gold Produced(1)
|
|
|
|
|
|
|
|
Total cash costs per
ounce net of by-product credits
|
$
|
579
|
|
|
$
|
649
|
|
|
$
|
544
|
|
|
$
|
645
|
All-in sustaining
costs per ounce net of by-product credits
|
$
|
789
|
|
|
$
|
880
|
|
|
$
|
733
|
|
|
$
|
859
|
Capital
Expenditures
|
$
|
6,414
|
|
|
$
|
7,899
|
|
|
$
|
12,319
|
|
|
$
|
13,091
|
Sustaining
Capital
|
$
|
6,414
|
|
|
$
|
7,899
|
|
|
$
|
12,319
|
|
|
$
|
13,091
|
Non-Sustaining
Capital
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(1)
|
Non-GAAP financial
measures are described in the "Non-GAAP Financial Measures"
section of this press release.
|
Mining operations continue to be focused in the Phase 4, Phase 5
and Phase 6 areas of the Calaorco pit. Ore is currently being
produced from Phase 4 and Phase 5, with Phase 6 under
development. Phase 3 of the Calaorco pit was depleted in Q1
2017.
The absorption, desorption and refining process plant performed
well with an average of 11.7 hectares under irrigation throughout
Q2 2017. The La Arena plant recovered 47.9 thousand and 100.8
thousand ounces of gold during Q2 2017 and Q2 YTD 2017,
respectively. Gold recovery continues to be approximately
86%.
|
Shahuindo
|
|
|
Q2
2017
|
|
|
Q2 2016
|
|
|
Q2 YTD
2017
|
|
|
Q2 YTD
2016
|
Gold Ounces
Recovered (000's)
|
21
|
|
|
17
|
|
|
41
|
|
|
25
|
Costs Per Ounce
Gold Produced(1)
|
|
|
|
|
|
|
|
Total cash costs per
ounce net of by-product credits
|
$
|
590
|
|
|
$
|
684
|
|
|
$
|
587
|
|
|
$
|
684
|
All-in sustaining
costs per ounce net of by-product credits
|
$
|
1,020
|
|
|
$
|
997
|
|
|
$
|
949
|
|
|
$
|
997
|
Capital
Expenditures(2)
|
$
|
16,712
|
|
|
$
|
14,087
|
|
|
$
|
25,031
|
|
|
$
|
29,778
|
Sustaining
Capital
|
$
|
4,870
|
|
|
$
|
1,476
|
|
|
$
|
7,523
|
|
|
$
|
1,476
|
Non-Sustaining
Capital
|
$
|
11,842
|
|
|
$
|
12,611
|
|
|
$
|
17,508
|
|
|
$
|
12,611
|
|
|
(1)
|
Non-GAAP financial
measures are described in the "Non-GAAP Financial Measures"
section of this press release.
|
(2)
|
Commercial production
at Shahuindo was declared on May 1, 2016. The figures presented for
Q2 YTD 2016 include pre-commercial production. The Company has not
calculated costs per ounce for pre-commercial production
operations.
|
Pit development and production
Production from the Shahuindo pit placed 27.6 thousand and 47.9
thousand gold ounces on the leach pads during Q2 2017and Q2 YTD
2017, respectively. Fine-grained siltstone ore continues
being blended with coarser-grained sandstone ores in order to
optimize leaching permeability. This is expected to continue
until the initial crushing and agglomeration circuit is
commissioned in Q3 2017.
Absorption, desorption and refining process
plant
The Shahuindo plant recovered 21.3 thousand and 40.7 thousand
ounces of gold during Q2 2017 and Q2 YTD 2017, respectively.
Secondary leaching at Pad 1 continues to contribute ounces to gold
production. Primary leaching is now focused on Pad 2A which
is resulting in fast leach cycles attributable to the optimization
of coarse/fine ore blending. The average area under leach was
9.0 hectares during Q2 2017. Overall gold recovery increased
to 63% at the end of Q2 2017, in line with the ramp up to an
ultimate recovery of 67% for run-of-mine material.
Capital projects
Detailed engineering of the foundation platform for Pad 2B was
completed in June 2017 and
construction will begin in the third quarter. Pad 2B is
scheduled to be placed into production in Q3 2018.
Phase 1 of the south waste rock dump is pending final approval
by the local mining authority. The south waste rock dump has
sufficient capacity to accommodate waste rock material mined from
the Shahuindo pit through the end of 2018.
Construction of the initial 12,000 tpd crushing and
agglomeration circuit continued in Q2. The project remains on
schedule for commissioning in Q3 2017. The Company
anticipates finalizing the purchase order for the additional 24,000
tpd crushing and agglomeration equipment in early Q3 2017 with
installation complete and commissioning underway by mid-year 2018.
The project is planned to reach the full 36,000 tpd
production rate by the end of 2018, providing an expected 80%
ultimate gold recovery, in line with the pre-feasibility study.
The project remains on schedule and budget.
|
Timmins
Mines
|
|
|
Q2
2017
|
|
|
Q2 2016
|
|
|
Q2 YTD
2017
|
|
|
Q2 YTD
2016(2)
|
Gold Ounces
Recovered (000's)
|
41
|
|
|
39
|
|
|
85
|
|
|
39
|
Costs Per Ounce
Gold Produced(1)
|
|
|
|
|
|
|
|
Total cash costs per
ounce net of by-product credits
|
$
|
633
|
|
|
$
|
634
|
|
|
$
|
639
|
|
|
$
|
634
|
All-in sustaining
costs per ounce net of by-product credits
|
$
|
1,032
|
|
|
$
|
1,087
|
|
|
$
|
1,052
|
|
|
$
|
1,087
|
Capital
Expenditures
|
$
|
31,357
|
|
|
$
|
35,754
|
|
|
$
|
55,772
|
|
|
$
|
35,754
|
Sustaining
Capital
|
$
|
11,850
|
|
|
$
|
15,493
|
|
|
$
|
26,436
|
|
|
15,493
|
Non-Sustaining
Capital
|
$
|
19,507
|
|
|
$
|
20,261
|
|
|
$
|
29,336
|
|
|
20,261
|
|
|
(1)
|
Non-GAAP financial
measures are described in the "Non-GAAP Financial Measures"
section of this press release.
|
(2)
|
Results prior to the
acquisition date of April 1, 2016 are excluded.
|
Bell Creek
Underground ramp and sublevel development at Bell Creek
continues to advance in support of the life-of-mine production
schedule, with 2,800 metres and 5,300 metres of development
completed in Q2 2017 and Q2 YTD 2017, respectively. Infill
and definition drilling at the Bell Creek mine totaled 14,000
metres and 28,000 metres in Q2 2017 and Q2 YTD 2017,
respectively.
The Bell Creek mine delivered 82 thousand and 153 thousand
tonnes of ore to surface, mined from longitudinal longhole stopes
on multiple production sublevels during Q2 2017 and Q2 YTD
2017.
Timmins West
Underground ramp and sublevel development continues to advance
in support of the life-of-mine production schedule, with 2,800
metres and 5,600 metres of development completed in Q2 2017 and Q2
YTD 2017. Progress continued to be made on the infrastructure
development at 144 Gap which included ramp, raise and lateral
development to access the resource. Underground infill and
definition drilling completed at the Timmins West mine in Q2 2017
and Q2 YTD 2017 to improve resource/reserve definition totaled
31,000 metres and 68,000 metres, respectively.
The Timmins West mine delivered approximately 0.3 million and
0.5 million tonnes of ore to surface, mined from longitudinal and
transverse longhole stopes on multiple production sublevels from
the Timmins West, Thunder Creek and 144 Gap deposits during Q2 2017
and Q2 YTD 2017, respectively.
Mill processing
Mill operations recovered 41.4 thousand and 85.3 thousand gold
ounces in Q2 2017 and Q2 YTD 2017, respectively. Process
recovery for Q2 2017 and Q2 YTD 2017 averaged 97%.
Construction of the Phase 5 tailings facility expansion at the
Bell Creek Mill continued in Q2 2017 and is expected to be complete
by the end of the year.
Capital projects
The Bell Creek Shaft Project continued on schedule during Q2
2017. Excavation of the second of three pilot raises was
completed and approximately 50% has been enlarged to the final
shaft dimension. The third of the three pilot raises is set
to commence in Q3 2017. Shaft rehabilitation also progressed
well during the quarter and is complete down to the 300m level with
new sets, guides and services installed. Surface construction
continued in Q2 with the new administration complex approximately
80% completed and the new security complex construction started.
Demolition of the historical hoisting plant was completed in
Q2 and excavation for the new foundations has commenced. The
project remains on schedule and budget.
Conference Call
Tahoe's senior management will host a conference call and
webcast to discuss the Q2 2017 results on Wednesday, August 9, 2017, 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
http://www.tahoeresources.com/investor-relations/, as will a
recording of the call later in the day.
Complete financial results for Q2 2017 including the Company's
management discussion and analysis and other filings will be filed
on SEDAR (www.sedar.com) and on the Company's website. Hard
copies may be requested, free of charge, by calling 775-448-5800 or
by emailing investors@tahoeresources.com.
About Tahoe Resources Inc.
Tahoe's strategy is to responsibly operate mines to world
standards 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.
For further information, please contact:
Tahoe Resources Inc.
investors@tahoeresources.com
Tel: 775-448-5800
CAUTIONARY NOTE ON NON-GAAP FINANCIAL MEASURES
The Company has included certain non-GAAP financial measures
throughout this document which include total cash costs, all-in
sustaining costs per silver and per gold ounce ("all-in sustaining
costs"), adjusted earnings, adjusted earnings per share, and cash
provided by operating activities before changes in working capital.
These measures are not defined under International Financial
Reporting Standards ("IFRS") and should not be considered in
isolation. The Company's Escobal mine primarily produces
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 from Escobal
and is therefore considered "by-product". The Company's La
Arena, Shahuindo and Timmins mines
primarily produce 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 from these
mines and is therefore considered "by-product". The Company
believes these measures may provide investors and analysts with
useful information about the Company's underlying earnings, cash
costs of operations, the impact of by-product 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. These non-GAAP financial measures may be
calculated differently by other companies depending on the
underlying accounting principles and policies applied.
The Company also reports total operating costs (cost of sales)
per ounce. The Company believes that this metric is important
in assessing the performance of each of the Company's sold metals
and as a meaningful GAAP-based comparison to other mining
companies. Total operating costs (cost of sales) per ounce
sold is calculated by dividing total the operating costs by gold
ounces sold. Total operating costs (cost of sales) includes
production costs, depreciation and depletion and royalties.
The reconciliation of total operating costs (cost of sales)
to total cash costs is included in the total cash cost and total
production cost tables below. Comparative periods have been updated
to reflect current period presentation. There is no impact to
current or prior period disclosed numbers due to the inclusion of
this metric.
Consolidated adjusted earnings and consolidated adjusted
earnings per share
The Company has adopted the reporting of consolidated adjusted
earnings ("adjusted earnings)" and consolidated adjusted earnings
per share ("adjusted earnings per share") as a non-GAAP measure of
a precious metals mining company's operating performance.
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 or consolidated earnings
per share and should be read in conjunction with such GAAP
measures. Adjusted earnings and adjusted earnings per share
are calculated as earnings excluding i) non-cash impairment losses
and reversals on mineral interests 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) loss on
extinguishment of the Lake Shore Debentures, vi) gains or losses on
sale of assets and vii) costs related to the acquisition of Lake
Shore Gold 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 and adjusted earnings
per share on a consolidated basis.
|
Q2
2017
|
|
|
Q2 2016
|
|
|
Q2 YTD
2017
|
|
|
Q2 YTD
2016(1)
|
Earnings
|
$
|
33,487
|
|
|
$
|
16,742
|
|
|
$
|
108,183
|
|
|
$
|
54,550
|
Unrealized foreign
exchange loss (gain)
|
359
|
|
|
(1,259)
|
|
|
731
|
|
|
(3,446)
|
Acquisition
costs(2)
|
—
|
|
|
10,339
|
|
|
—
|
|
|
11,021
|
Loss on
Debenture
|
—
|
|
|
32,304
|
|
|
—
|
|
|
32,304
|
Gain on derivative
instruments (currency swap)
|
—
|
|
|
(253)
|
|
|
—
|
|
|
(1,067)
|
Adjusted
earnings
|
$
|
33,846
|
|
|
$
|
57,873
|
|
|
$
|
108,914
|
|
|
$
|
93,362
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
(000's)
|
312,787
|
|
|
305,985
|
|
|
312,430
|
|
|
267,333
|
Diluted
(000's)
|
312,869
|
|
|
306,174
|
|
|
312,510
|
|
|
267,569
|
Adjusted earnings
per share
|
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
|
|
$
|
0.19
|
|
|
$
|
0.35
|
|
|
$
|
0.35
|
Diluted
|
$
|
0.11
|
|
|
$
|
0.19
|
|
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
(1)
|
Results of the
Timmins mines prior to the date of acquisition of Lake Shore Gold
on April 1, 2016 are excluded.
|
(2)
|
Costs related to the
acquisition of Lake Shore Gold on April 1, 2016.
|
Total cash costs before and net of by-product credits
The Company reports total cash 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 total cash costs (silver) and the generally
accepted standard of reporting total cash costs (gold) by precious
metal mining companies. The Institute is a nonprofit
international association with membership from across the silver
industry and 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
silver production by silver mining companies. The Company
believes that these generally accepted industry measures are
realistic indicators of operating performance and are useful in
performing year over year comparisons. However, these
non-GAAP measures should be considered together with other data
prepared in accordance with IFRS, and these measures, taken by
themselves, are not necessarily indicative of operating costs or
cash flow measures prepared in accordance with IFRS. Total
cash 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 total cash
costs associated with an ounce of silver or gold, the Company
deducts by-product credits from sales which are incidental to
producing silver and gold.
Total cash costs per ounce of produced silver net of by-product
credits incorporate all production costs, including adjustments to
inventory carrying values, adjusted for changes in estimates in
reclamation which are non-cash in nature, and include by-product
gold, lead and zinc credits, and treatment and refining charges
included within revenue.
In addition to conventional measures, the Company assesses this
per ounce measure in a manner that isolates the impacts of silver
production volumes, the by-product credits, and operating costs
fluctuations such that the non-controllable and controllable
variability is independently addressed. The Company uses
total cash costs per ounce of produced silver net of by-product
credits to monitor its operating performance internally, including
operating cash costs, as well as in its assessment of potential
development projects and acquisition targets. The Company
believes this measure provides investors and analysts with useful
information about the Company's underlying cash costs of operations
and the impact of by-product credits on the Company's cost
structure and is a relevant metric used to understand the Company's
operating profitability and ability to generate cash flow. When
deriving the production costs associated with an ounce of silver,
the Company includes by-product credits as the Company considers
that the cost to produce the silver is reduced as a result of the
by-product sales incidental to the silver production process,
thereby allowing the Company's management and other stakeholders to
assess the net costs of silver production.
|
Total cash costs
(silver)
|
|
Total cash
costs per ounce of produced silver, net of by-product
credits
|
|
|
Q2
2017(4)
|
|
|
Q2 2016
|
|
|
Q2 YTD
2017
|
|
|
Q2 YTD
2016(2)(4)
|
Total operating costs
(cost of sales)(1)
|
$
|
42,369
|
|
|
$
|
53,759
|
|
|
$
|
95,854
|
|
|
$
|
100,264
|
Depreciation and
depletion
|
(14,451)
|
|
|
(15,085)
|
|
|
(29,052)
|
|
|
(28,057)
|
Change in product
inventory
|
6,189
|
|
|
1,755
|
|
|
6,329
|
|
|
(511)
|
Treatment and
refining charges
|
6,934
|
|
|
8,780
|
|
|
16,205
|
|
|
16,165
|
Total cash costs
before by-product credits
|
$
|
41,041
|
|
|
$
|
49,209
|
|
|
$
|
89,336
|
|
|
$
|
87,861
|
By-product
credits(3)
|
(13,590)
|
|
|
(14,522)
|
|
|
(29,740)
|
|
|
(27,468)
|
Total cash costs
net of by-product credits
|
$
|
27,451
|
|
|
$
|
34,687
|
|
|
$
|
59,596
|
|
|
$
|
60,393
|
Silver ounces sold in
concentrate (000's)
|
4,247
|
|
|
5,184
|
|
|
9,773
|
|
|
9,745
|
Silver ounces
produced in concentrate (000's)
|
4,078
|
|
|
5,717
|
|
|
9,692
|
|
|
11,412
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
9.98
|
|
|
$
|
10.37
|
|
|
$
|
9.81
|
|
|
$
|
10.29
|
Total cash costs
per ounce produced before by-product credits
|
$
|
10.06
|
|
|
$
|
8.61
|
|
|
$
|
9.22
|
|
|
$
|
7.70
|
Total cash costs
per ounce produced net of by-product credits
|
$
|
6.73
|
|
|
$
|
6.07
|
|
|
$
|
6.15
|
|
|
$
|
5.29
|
|
|
(1)
|
Total operating costs
(cost of sales) includes production costs, depreciation and
depletion and royalties.
|
(2)
|
Table has been
updated to reflect current period presentation with no impact to
the cash costs previously presented.
|
(3)
|
Gold, lead and zinc
by-product credits are calculated as follows:
|
|
|
|
|
Q2
2017
|
|
Q2 2016
|
|
|
Quantity
|
|
Unit
Price
|
|
Total
Credit
|
|
Credit
per
ounce
|
|
Quantity
|
|
Unit Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Gold
Ounces
|
1,619
|
|
$1,248
|
|
$2,021
|
|
$0.50
|
|
2,711
|
|
$996
|
|
$2,699
|
|
$0.47
|
|
Lead
Tonnes
|
2,026
|
|
$2,147
|
|
$4,350
|
|
$0.95
|
|
2,699
|
|
$1,584
|
|
$4,275
|
|
$0.75
|
|
Zinc
Tonnes
|
2,767
|
|
$2,609
|
|
$7,219
|
|
$1.48
|
|
4,037
|
|
$1,870
|
|
$7,548
|
|
$1.32
|
|
|
Q2 YTD
2017
|
|
Q2 YTD
2016
|
|
|
Quantity
|
|
Unit
Price
|
|
Total
Credit
|
|
Credit
per
ounce
|
|
Quantity
|
|
Unit Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Gold
Ounces
|
3,554
|
|
$1,281
|
|
$4,555
|
|
$0.47
|
|
6,009
|
|
$931
|
|
$5,597
|
|
$0.49
|
|
Lead
Tonnes
|
4,085
|
|
$2,369
|
|
$9,679
|
|
$1.00
|
|
5,436
|
|
$1,484
|
|
$8,069
|
|
$0.71
|
|
Zinc
Tonnes
|
5,568
|
|
$2,785
|
|
$15,508
|
|
$1.60
|
|
8,261
|
|
$1,671
|
|
$13,802
|
|
$1.21
|
|
|
(4)
|
Numbers in tables may
not calculate due to rounding.
|
|
|
|
Total cash costs
(gold)
|
|
Total cash
costs per ounce of produced gold, net of by-product
credits
|
|
|
Q2
2017(5)
|
|
La
Arena
|
|
|
Shahuindo
|
|
|
Timmins
mines
|
|
|
Total
|
Total operating costs
(cost of sales)(3)
|
$
|
33,772
|
|
|
$
|
17,702
|
|
|
$
|
41,448
|
|
|
$
|
92,922
|
Depreciation and
depletion
|
(4,979)
|
|
|
(3,871)
|
|
|
(14,333)
|
|
|
(23,183)
|
Change in product
inventory(1)
|
(1,247)
|
|
|
(805)
|
|
|
(890)
|
|
|
(2,942)
|
Smelting and refining
charges
|
250
|
|
|
97
|
|
|
35
|
|
|
382
|
Total cash costs
before by-product credits
|
27,796
|
|
|
13,123
|
|
|
26,260
|
|
|
67,179
|
Silver
credit(4)
|
(92)
|
|
|
(539)
|
|
|
(88)
|
|
|
(719)
|
Total cash costs
net of by-product credits
|
27,704
|
|
|
12,584
|
|
|
26,172
|
|
|
66,460
|
Gold ounces sold
(000's)
|
45.7
|
|
|
20.2
|
|
|
42.7
|
|
|
108.6
|
Gold ounces
produced(2) (000's)
|
47.9
|
|
|
21.3
|
|
|
41.4
|
|
|
110.6
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
739
|
|
|
$
|
876
|
|
|
$
|
970
|
|
|
$
|
856
|
Total cash costs
per ounce produced before by-product credits
|
$
|
581
|
|
|
$
|
615
|
|
|
$
|
635
|
|
|
$
|
607
|
Total cash costs
per ounce produced net of by- product credits
|
$
|
579
|
|
|
$
|
590
|
|
|
$
|
633
|
|
|
$
|
601
|
|
|
|
Q2 YTD
2017(5)
|
|
La
Arena
|
|
|
Shahuindo
|
|
|
Timmins
mines
|
|
|
Total
|
Total operating costs
(cost of sales)(3)
|
$
|
65,347
|
|
|
$
|
35,097
|
|
|
$
|
85,870
|
|
|
$
|
186,314
|
Depreciation and
depletion
|
(10,947)
|
|
|
(9,975)
|
|
|
(29,501)
|
|
|
(50,423)
|
Change in product
inventory(1)
|
127
|
|
|
(252)
|
|
|
(1,794)
|
|
|
(1,919)
|
Smelting and refining
charges
|
567
|
|
|
185
|
|
|
92
|
|
|
844
|
Total cash costs
before by-product credits
|
55,094
|
|
|
25,055
|
|
|
54,667
|
|
|
134,816
|
Silver
credit(4)
|
(223)
|
|
|
(1,008)
|
|
|
(191)
|
|
|
(1,422)
|
Total cash costs
net of by-product credits
|
54,871
|
|
|
24,047
|
|
|
54,476
|
|
|
133,394
|
Gold ounces sold
(000's)
|
94.6
|
|
|
35.9
|
|
|
92.1
|
|
|
222.6
|
Gold ounces
produced(2) (000's)
|
100.8
|
|
|
41.0
|
|
|
85.3
|
|
|
227.1
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
691
|
|
|
$
|
978
|
|
|
$
|
933
|
|
|
$
|
837
|
Total cash costs
per ounce produced before by-product credits
|
$
|
546
|
|
|
$
|
611
|
|
|
$
|
641
|
|
|
$
|
594
|
Total cash costs
per ounce produced net of by- product credits
|
$
|
544
|
|
|
$
|
587
|
|
|
$
|
639
|
|
|
$
|
587
|
|
|
(1)
|
Change in product
inventory at Shahuindo for Q1 2017 includes costs related to gold
produced in doré, but not sold as at March 31, 2017. Costs
associated with the build-up of stockpile during the commissioning
phase which remain work in process inventory at March 31, 2017 have
been excluded from the inventory movements in the
period.
|
(2)
|
Gold ounces produced
at La Arena and Shahuindo are gold ounces produced in
doré.
|
(3)
|
Total operating costs
(cost of sales) includes production costs, depreciation and
depletion and royalties.
|
(4)
|
Consolidated silver
by-product credits are calculated as follows:
|
|
|
|
|
Q2
2017
|
|
Q2 YTD
2017
|
|
|
Quantity
|
|
Unit
Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Quantity
|
|
Unit
Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Silver Ounces
(000's)
|
43
|
|
$16.72
|
|
$719
|
|
$6.50
|
|
90
|
|
$15.80
|
|
$1,422
|
|
$6.26
|
|
|
(5)
|
Numbers in table may
not calculate due to rounding.
|
|
|
|
Q2
2016(1)(2)(6)(7)
|
|
La
Arena
|
|
|
Shahuindo
|
|
|
Timmins
mines
|
|
|
Total
|
Total operating costs
(cost of sales)(3)
|
$
|
43,166
|
|
|
$
|
8,126
|
|
|
$
|
33,169
|
|
|
$
|
84,461
|
Depreciation and depletion
|
(7,955)
|
|
|
(1,983)
|
|
|
(11,717)
|
|
|
(21,655)
|
Change in product inventory
|
(2,573)
|
|
|
1,559
|
|
|
3,436
|
|
|
2,422
|
Smelting and refining charges
|
285
|
|
|
73
|
|
|
45
|
|
|
403
|
Total cash costs
before by-product credits
|
32,923
|
|
|
7,775
|
|
|
24,933
|
|
|
65,631
|
Silver credit(4)
|
83
|
|
|
(167)
|
|
|
(86)
|
|
|
(170)
|
Total cash costs
net of by-product credits
|
33,006
|
|
|
7,608
|
|
|
24,847
|
|
|
65,461
|
Gold ounces sold
(000's)
|
45.7
|
|
|
20.2
|
|
|
42.7
|
|
|
108.6
|
Gold ounces
produced(4) (000's)
|
50.9
|
|
|
11.1
|
|
|
39.2
|
|
|
101.2
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
944
|
|
|
$
|
402
|
|
|
$
|
776
|
|
|
$
|
778
|
Total cash costs
per ounce produced before by-product credits
|
$
|
647
|
|
|
$
|
699
|
|
|
$
|
637
|
|
|
$
|
649
|
Total cash costs
per ounce produced net of by- product credits
|
$
|
649
|
|
|
$
|
684
|
|
|
$
|
634
|
|
|
$
|
647
|
|
|
|
Q2 YTD
2016(1)(2)(6)(7)
|
|
La
Arena
|
|
|
Shahuindo
|
|
|
Timmins
mines
|
|
|
Total
|
Total operating costs
(cost of sales)(3)
|
$
|
74,183
|
|
|
$
|
8,126
|
|
|
$
|
33,169
|
|
|
$
|
115,478
|
Depreciation and depletion
|
(12,575)
|
|
|
(1,983)
|
|
|
(11,717)
|
|
|
(26,275)
|
Change in product inventory
|
415
|
|
|
1,559
|
|
|
3,436
|
|
|
5,410
|
Smelting and refining charges
|
723
|
|
|
73
|
|
|
45
|
|
|
841
|
Total cash costs
before by-product credits
|
62,746
|
|
|
7,775
|
|
|
24,933
|
|
|
95,454
|
Silver credit(4)
|
102
|
|
|
(167)
|
|
|
(86)
|
|
|
(151)
|
Total cash costs
net of by-product credits
|
62,848
|
|
|
7,608
|
|
|
24,847
|
|
|
95,303
|
Gold ounces sold
(000's)
|
94.6
|
|
|
35.9
|
|
|
92.1
|
|
|
222.6
|
Gold ounces
produced(4) (000's)
|
97.5
|
|
|
11.1
|
|
|
39.2
|
|
|
147.8
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
784
|
|
|
$
|
226
|
|
|
$
|
360
|
|
|
$
|
519
|
Total cash costs
per ounce produced before by-product credits
|
$
|
644
|
|
|
$
|
699
|
|
|
$
|
637
|
|
|
$
|
646
|
Total cash costs
per ounce produced net of by- product credits
|
$
|
645
|
|
|
$
|
684
|
|
|
$
|
634
|
|
|
$
|
645
|
|
|
(1)
|
Q2 YTD 2016
comparative figures exclude Q1 2016 data from the Timmins
mines.
|
(2)
|
Q2 YTD 2016
comparative figures exclude data from the Shahuindo mine through
April 2016 as commercial production was declared May 1,
2016.
|
(3)
|
Total operating costs
(cost of sales) includes production costs, depreciation and
depletion, royalties and smelting and refining charges.
|
(4)
|
Gold ounces produced
at La Arena are gold ounces produced in doré.
|
(5)
|
Silver by-product
credits are calculated as follows:
|
|
|
|
|
Q2 2016
|
|
Q2 YTD
2016
|
|
|
Quantity
|
|
Unit Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Quantity
|
|
Unit Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Silver
Ounces
|
$23,026
|
|
$7.38
|
|
$170
|
|
$1.68
|
|
$34,040
|
|
$4.44
|
|
$151
|
|
$1.02
|
|
|
(6)
|
Table has been
updated to reflect current period presentation with no impact to
the cash costs previously presented.
|
(7)
|
Numbers in table may
not calculate due to rounding.
|
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
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 ("WGC"),
the market development organization for the gold industry.
The WGC 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 operations, sustaining capital expenditures,
corporate administrative expense, exploration and evaluations
costs, and reclamation and closure accretion. The Company
believes that this measure represents the total costs of producing
silver and gold from current operations, and provides the Company
and other stakeholders of the Company with additional information
of the Company's operational performance and ability to generate
cash flows. AISC, as a key performance measure, allows the
Company to assess its ability to support capital expenditures and
to sustain future production from the generation of operating cash
flows. This information provides management with the ability
to more actively manage capital programs and to make more prudent
capital investment decisions.
|
|
All-in sustaining
costs (silver)
|
|
Total all-in
sustaining costs per ounce of produced silver, net of by-product
credits
|
|
|
Q2
2017(2)
|
|
|
Q2 2016
|
|
|
Q2 YTD
2017
|
|
|
Q2 YTD
2016(2)
|
Total cash costs
net of by-product credits
|
$
|
27,451
|
|
|
$
|
34,687
|
|
|
$
|
59,596
|
|
|
$
|
60,393
|
Sustaining
capital(1)
|
9,147
|
|
|
6,679
|
|
|
19,062
|
|
|
10,827
|
Exploration
|
243
|
|
|
193
|
|
|
498
|
|
|
321
|
Reclamation cost
accretion
|
62
|
|
|
46
|
|
|
123
|
|
|
89
|
General and
administrative expenses
|
3,894
|
|
|
5,046
|
|
|
7,032
|
|
|
8,932
|
All-in sustaining
costs
|
$
|
40,797
|
|
|
$
|
46,651
|
|
|
$
|
86,311
|
|
|
$
|
80,562
|
Silver ounces
produced in concentrate (000's)
|
4,078
|
|
|
5,717
|
|
|
9,692
|
|
|
11,412
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
10.01
|
|
|
$
|
8.16
|
|
|
$
|
8.91
|
|
|
$
|
7.06
|
|
|
(1)
|
Sustaining capital
includes underground development and surface sustaining capital
expenditures.
|
(2)
|
Numbers in table may
not calculate due to rounding.
|
|
|
All-in sustaining
costs (gold)
|
|
Total all-in
sustaining costs per ounce of produced gold, net of by-product
credits
|
|
|
Q2
2017(1)
|
|
La
Arena
|
|
|
Shahuindo
|
|
|
Timmins
mines
|
|
|
Total
|
Total cash costs
net of by-product credits
|
$
|
27,704
|
|
|
$
|
12,584
|
|
|
$
|
26,172
|
|
|
$
|
66,460
|
Sustaining
capital
|
6,414
|
|
|
4,870
|
|
|
11,849
|
|
|
23,133
|
Exploration
|
481
|
|
|
1,795
|
|
|
2,290
|
|
|
4,566
|
Reclamation cost
accretion
|
336
|
|
|
220
|
|
|
34
|
|
|
590
|
General and
administrative expenses
|
2,841
|
|
|
2,302
|
|
|
2,372
|
|
|
7,515
|
All-in sustaining
costs
|
$
|
37,776
|
|
|
$
|
21,771
|
|
|
$
|
42,717
|
|
|
$
|
102,264
|
Gold ounces produced
(000's)
|
47.9
|
|
|
21.3
|
|
|
41.4
|
|
|
110.6
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
789
|
|
|
$
|
1,020
|
|
|
$
|
1,032
|
|
|
$
|
925
|
|
|
Q2 YTD
2017(1)
|
|
La
Arena
|
|
|
Shahuindo
|
|
|
Timmins
mines
|
|
|
Total
|
Total cash costs
net of by-product credits
|
$
|
54,871
|
|
|
$
|
24,047
|
|
|
$
|
54,476
|
|
|
$
|
133,394
|
Sustaining
capital
|
12,319
|
|
|
7,523
|
|
|
26,436
|
|
|
46,278
|
Exploration
|
555
|
|
|
2,796
|
|
|
4,317
|
|
|
7,668
|
Reclamation cost
accretion
|
687
|
|
|
430
|
|
|
58
|
|
|
1,175
|
General and
administrative expenses
|
5,490
|
|
|
4,121
|
|
|
4,403
|
|
|
14,014
|
All-in sustaining
costs
|
$
|
73,922
|
|
|
$
|
38,917
|
|
|
$
|
89,690
|
|
|
$
|
202,529
|
Gold ounces produced
(000's)
|
100.8
|
|
|
41.0
|
|
|
85.3
|
|
|
227.1
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
733
|
|
|
$
|
949
|
|
|
$
|
1,052
|
|
|
$
|
892
|
|
|
(1) Numbers in
table may not calculate due to rounding.
|
|
Q2
2016(1)(2)(3)
|
|
La Arena
|
|
|
Shahuindo
|
|
|
Timmins
mines
|
|
|
Total
|
Total cash costs net
of by-product credits
|
$
|
33,006
|
|
|
$
|
7,608
|
|
|
$
|
24,847
|
|
|
$
|
65,461
|
Sustaining
capital
|
7,822
|
|
|
1,476
|
|
|
15,493
|
|
|
24,791
|
Exploration
|
433
|
|
|
742
|
|
|
681
|
|
|
1,856
|
Reclamation cost
accretion
|
327
|
|
|
141
|
|
|
4
|
|
|
472
|
General and
administrative expenses
|
3,185
|
|
|
1,130
|
|
|
1,558
|
|
|
5,873
|
All-in sustaining
costs
|
$
|
44,773
|
|
|
$
|
11,097
|
|
|
$
|
42,583
|
|
|
$
|
98,453
|
Gold ounces produced
in doré (000's)
|
50.9
|
|
|
11.1
|
|
|
39.2
|
|
|
101.2
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
880
|
|
|
$
|
997
|
|
|
$
|
1,087
|
|
|
$
|
973
|
|
|
|
Q2 YTD
2016(1)(2)(3)
|
|
La Arena
|
|
|
Shahuindo
|
|
|
Timmins
mines
|
|
|
Total
|
Total cash costs net
of by-product credits
|
$
|
62,848
|
|
|
$
|
7,608
|
|
|
$
|
24,847
|
|
|
$
|
95,303
|
Sustaining
capital
|
12,990
|
|
|
1,476
|
|
|
15,493
|
|
|
29,959
|
Exploration
|
586
|
|
|
742
|
|
|
681
|
|
|
2,009
|
Reclamation cost
accretion
|
660
|
|
|
141
|
|
|
4
|
|
|
805
|
General and
administrative expenses
|
6,664
|
|
|
1,130
|
|
|
1,558
|
|
|
9,352
|
All-in sustaining
costs
|
$
|
83,748
|
|
|
$
|
11,097
|
|
|
$
|
42,583
|
|
|
$
|
137,428
|
Gold ounces produced
in doré (000's)
|
97.5
|
|
|
11.1
|
|
|
39.2
|
|
|
147.8
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
859
|
|
|
$
|
997
|
|
|
$
|
1,087
|
|
|
$
|
930
|
|
|
(1)
|
Q2 YTD 2016
comparative figures exclude Q1 2016 data from the Timmins
mines.
|
(2)
|
Q2 YTD 2016
comparative figures exclude data from the Shahuindo mine through
April 2016 as commercial production was declared May 1,
2016.
|
(3)
|
Numbers in table may
not calculate due to rounding.
|
Cash provided by operating activities before changes in
working capital
Cash provided by operating activities before changes in working
capital represents the cash flows generated by operating activities
after adjusting for interest expense, income tax expense and
financing fees as well as items not involving cash but before
changes in working capital. Net cash provided by operating
activities represents the cash flows generating by operating
activities after changes in working capital and income taxes paid.
Management believes that these measures provides useful
information to investors to evaluate the Company's ability to
generate cash flows from its mining operations.
The non-GAAP measures described above do not have standardized
meanings prescribed by IFRS. As such, there are likely to be
differences in the method of computation when compared to similar
measures presented by other reporting issuers.
|
Q2
2017
|
|
|
Q2 2016
|
|
|
Q2 YTD
2017
|
|
|
Q2 YTD
2016
|
Cash provided by
operating activities before changes in working
capital(1)
|
$
|
99,446
|
|
|
$
|
115,951
|
|
|
$
|
232,296
|
|
|
$
|
185,270
|
Net cash provided
by operating activities(1)
|
$
|
96,068
|
|
|
$
|
37,678
|
|
|
$
|
174,646
|
|
|
$
|
62,971
|
Basic weighted
average common shares outstanding
|
312,787
|
|
|
305,985
|
|
|
312,430
|
|
|
267,333
|
|
|
(1)
|
Refer to the
condensed interim consolidated statements of cash flows in the
Company's interim financial statements for a detailed
reconciliation from earnings and total comprehensive income to cash
provided by operating activities before changes in working capital
and net cash provided by operating activities.
|
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
This press release contains "forward-looking information" within
the meaning of Section 27A of the United States Securities Act of
1933, as amended, Section 21E of the United States Exchange Act of
1934, as amended, the United States Private Securities Litigation
Reform Act of 1995, or in releases made by the United States
Securities and Exchange Commission, all as may be amended from time
to time, and "forward-looking information" under the provisions of
applicable Canadian securities legislation, concerning the
business, operations and financial performance and condition of the
Company. All statements, other than statements of historical fact,
are forward-looking statements. Generally, these forward-looking
statements can be identified by the use of forward-looking
terminology such as "plans", "expects", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates",
"believes", or variations or comparable language of such words and
phrases or statements that certain actions, events or results
"may", "could", "would", "should", "might" or "will be taken",
"occur" or "be achieved" or the negative connotation thereof.
Forward-looking statements include, but are not limited to,
statements related to the following: the provisional decision from
the Supreme Court of Guatemala
which has the effect of suspending the Company's mining license in
respect of the Escobal mine; the time for appeals to be heard and
decided and the likelihood of such provisional decision being
overturned by the Constitutional Court in Guatemala; the timing and results of court
proceedings; the timing and likelihood of peacefully resolving the
road blockage of the Escobal mine; the continuation of the
expansion plans at Shahuindo and Bell Creek and the ongoing review
of all other capital and exploration expenditures; the potential
for reactivation of the DRIP in the future; the potential for an
event of default under the credit facility if the suspension of the
Escobal license is not lifted by April 1,
2018, and the Company's expected course of action if an
event of default occurs; production and cost targets for the
Company's gold operations of 375 thousand to 425 thousand ounces of
gold and total cash costs of $700 to
$750; the future price of silver, gold, lead and zinc; the
timing and amount of estimated future production, costs of
production, capital expenditures and requirements for additional
capital; currency exchange rate fluctuations; government regulation
of mining operations; environmental risks; unanticipated
reclamation expenses; title disputes or claims and limitations on
insurance coverage; capital expenditures, corporate general and
administration expenses, and exploration expenses; sustaining and
project capital expenditures; the expected working capital
requirements; the sufficiency of capital resources and the
consideration of 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 and royalty rates in Guatemala, Peru and Canada; the anticipated timing of updated
Mineral Resource and Mineral Reserve estimates; the timing for
completion of the underground dewatering project at Escobal; the
timing of completion of the Bell Creek shaft project and the
expansion of the Bell Creek mine to 80,000 ounces per year by late
2018; the completion of construction of the Phase 5 tailings
facility expansion at the Bell Creek Mill by the end of 2017; the
cost and timing of sustaining capital projects; the expectation of
meeting production targets; the timing of the receipt of permits at
Shahuindo; the steps being taken to optimize leaching permeability
at Shahuindo; the timing for construction of Pad 2B at Shahuindo
and the commencement of production at Pad 2B in Q3 2018; the timing
and cost of the design, procurement, and construction of the
crushing and agglomeration circuit at Shahuindo, including 36,000
tpd by the end of 2018 and the expected 80% recovery rate for
agglomerated ore, in line with the pre-feasibility study; and the
timing, costs, results and impacts of purported class action
lawsuits filed against the Company and certain of its officers and
directors.
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 availability and sufficiency of
power and water for operations; 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; the Company's ability to
peacefully resolve the protests and road blockages of the Escobal
mine; the timing and ability of the Company to have the provisional
suspension of the mining license to Minera
San Rafael for the Escobal mine overturned, rescinded or
modified to enable the Company to resume mining operations at the
Escobal mine; the Company's ability to obtain financing as and when
required and on reasonable terms; and the Company's ability to
continue to comply with the terms of the credit agreements with its
lenders. 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 and gold; opposition to development and mining
operations by one or more groups of indigenous people; actions that
impede or prevent the operations of the Company's mines; the
inability to develop and operate the Company's mines; social unrest
and political or economic instability and uncertainties in the
jurisdictions in which the Company operates; the timing and ability
to maintain and, where necessary, obtain necessary permits and
licenses; changes in national and local government legislation,
taxation and controls or regulations; environmental and other
governmental regulation compliance; the uncertainty in the
estimation of mineral resources and mineral reserves; fluctuations
in currency exchange rates; infrastructure risks, including access
to roads, water and power; and the timing and possible outcome of
pending or threatened litigation and the risk of unexpected
litigation.
For a more detailed discussion of these and other risks relevant
to the Company, see the Company's Management's Discussion and
Analysis for the second quarter of 2017 filed on SEDAR and with the
SEC on August 8, 2017 and our other
public filings available on SEDAR at www.sedar.com, on EDGAR at
www.sec.gov or on the Company's website at
www.tahoeresources.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 can be 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. Forward-looking statements are made as
of the date hereof and, accordingly, are subject to change after
such date. Except as otherwise indicated by the Company, these
statements do not reflect the potential impact of any non-recurring
or other special items or of any disposition, monetization, merger,
acquisition, other business combination or other transaction that
may be announced or that may occur after the date hereof.
Forward-looking statements are provided for the purpose of
providing information about management's current expectations and
plans and allowing investors and others to get a better
understanding of the Company's operating environment. The Company
does not intend or undertake to publicly update any forward-looking
statements that are included in this document, whether as a result
of new information, future events or otherwise, except as, and to
the extent required by, applicable securities laws.
|
SELECTED QUARTERLY
CONSOLIDATED FINANCIAL RESULTS
|
|
Selected quarterly
and YTD consolidated financial information from continuing
operations is as follows:
|
|
|
|
Q2
2017
|
|
|
Q2
2016(1)
|
|
|
Q2
YTD
2017
|
|
|
Q2 YTD
2016(1)
|
Metal
Sold
|
|
|
|
|
|
|
|
|
Silver (000's
ozs)
|
|
4,289
|
|
|
5,212
|
|
|
9,855
|
|
|
9,780
|
Gold (000's
ozs)(5)
|
|
110.3
|
|
|
106.5
|
|
|
231.4
|
|
|
157.1
|
Lead (000's
t)
|
|
2.0
|
|
|
2.4
|
|
|
4.2
|
|
|
4.8
|
Zinc (000's
t)
|
|
2.8
|
|
|
3.5
|
|
|
6.1
|
|
|
6.8
|
Realized
Price
|
|
|
|
|
|
|
|
|
Silver in concentrate
(per oz)
|
$
|
15.72
|
|
$
|
18.95
|
|
$
|
17.7
|
|
$
|
17.53
|
Gold in doré (per
oz)
|
$
|
1,248
|
|
$
|
1,255
|
|
$
|
1,281
|
|
$
|
1,228
|
Lead (per
t)
|
$
|
2,138
|
|
$
|
1,779
|
|
$
|
2,359
|
|
$
|
1,685
|
Zinc (per
t)
|
$
|
2,601
|
|
$
|
2,237
|
|
$
|
2,778
|
|
$
|
2,057
|
LBMA/LME
Price(2)
|
|
|
|
|
|
|
|
|
Silver (per
oz)
|
$
|
17.21
|
|
$
|
16.78
|
|
$
|
17.32
|
|
$
|
15.82
|
Gold (per
oz)
|
$
|
12.57
|
|
$
|
1,259
|
|
$
|
1,238
|
|
$
|
1,221
|
Lead (per
t)
|
$
|
2,161
|
|
$
|
1,719
|
|
$
|
2,221
|
|
$
|
1,731
|
Zinc (per
t)
|
$
|
2,596
|
|
$
|
1,918
|
|
$
|
2,690
|
|
$
|
1,799
|
Revenues
|
$
|
209,576
|
|
$
|
228,251
|
|
$
|
460,622
|
|
$
|
360,384
|
Total operating
costs
|
$
|
135,291
|
|
$
|
138,220
|
|
$
|
282,168
|
|
$
|
215,742
|
Earnings from
operations
|
$
|
74,285
|
|
$
|
65,022
|
|
$
|
178,454
|
|
$
|
111,377
|
Earnings
|
$
|
33,487
|
|
$
|
16,742
|
|
$
|
108,183
|
|
$
|
54,550
|
Earnings per
common share
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
|
$
|
0.05
|
|
$
|
0.35
|
|
$
|
0.20
|
Diluted
|
$
|
0.11
|
|
$
|
0.05
|
|
$
|
0.35
|
|
$
|
0.20
|
Adjusted
earnings
|
$
|
33,846
|
|
$
|
57,873
|
|
$
|
108,915
|
|
$
|
93,362
|
Adjusted earnings
per common share
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.11
|
|
$
|
0.19
|
|
$
|
0.35
|
|
$
|
0.35
|
Diluted
|
$
|
0.11
|
|
$
|
0.19
|
|
$
|
0.35
|
|
$
|
0.35
|
Weighted average
shares outstanding - Basic
|
|
312,787
|
|
|
305,985
|
|
|
312,430
|
|
|
267,333
|
Weighted average
shares outstanding - Diluted
|
|
312,869
|
|
|
306,174
|
|
|
312,510
|
|
|
267,569
|
Dividends
paid
|
$
|
18.74
|
|
$
|
18,419
|
|
$
|
37.435
|
|
$
|
32,076
|
Cash flow provided
by operating activities
|
$
|
96,068
|
|
$
|
37,678
|
|
$
|
174,646
|
|
$
|
62,971
|
Cash flow provided
by operating activities before changes in working
capital
|
$
|
99,446
|
|
$
|
115,951
|
|
$
|
232,296
|
|
$
|
185,270
|
Cash and cash
equivalents
|
$
|
190,636
|
|
$
|
151,707
|
|
$
|
190,636
|
|
$
|
151,707
|
Total
assets
|
$
|
3,129,228
|
|
$
|
2,981,740
|
|
$
|
3,129,228
|
|
$
|
2,981,740
|
Total long-term
liabilities
|
$
|
316,510
|
|
$
|
269,984
|
|
$
|
316,510
|
|
$
|
269,984
|
Costs per silver
ounce produced
|
|
|
|
|
|
|
|
|
Total cash costs net
of by-product credits(3)
|
$
|
6.73
|
|
$
|
6.07
|
|
$
|
6.15
|
|
$
|
5.29
|
All-in sustaining
costs per silver ounce net of by-product
credits(3)
|
$
|
10.01
|
|
$
|
8.16
|
|
$
|
8.91
|
|
$
|
7.06
|
Costs per gold
ounce produced
|
|
|
|
|
|
|
|
|
Total cash costs net
of by-product credits(3)
|
$
|
601
|
|
$
|
647
|
|
$
|
587
|
|
$
|
645
|
All-in sustaining
costs per gold ounce net of by-product
credits(3)(4)
|
$
|
925
|
|
$
|
973
|
|
$
|
892
|
|
$
|
930
|
|
|
(1)
|
Q2 YTD 2016 numbers
include operational and financial information from the Timmins
mines beginning April 1, 2016, the date of acquisition and
operational and financial information from Shahuindo beginning May
1, 2016, the commencement of commercial production.
|
(2)
|
London Bullion Market
Association (LBMA)/London Metal Exchange (LME) average closing
prices for each quarter presented.
|
(3)
|
Refer to the
"Non-GAAP Financial Measures" section of this press
release.
|
(4)
|
All-in sustaining
costs net of by-product credits per gold ounce produced exclude the
impact of $10.3 million and $11.0 million in non-recurring
transaction costs related to the acquisition of Lake Shore Gold
during Q2 2016 and Q2 YTD 2016, respectively.
|
(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 are
considered pre-operating revenues and are credited against
construction capital through April 30, 2016. Included in the 106.5
thousand and 157.1 thousand gold ounces sold for Q2 2016 and Q2 YTD
2016 are 22.1 thousand and 24.4 thousand gold ounces sold at
Shahuindo which include one and four months of pre-commercial
production ounces sold (5.3 thousand and 7.6 thousand ounces of
gold in doré sold in the month of April 2016 and the period January
through April 2016, respectively).
|
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content:http://www.prnewswire.com/news-releases/tahoe-reports-solid-second-quarter-2017-results-ceases-dividend-and-suspends-company-wide-guidance-due-to-uncertainty-in-guatemala-300501688.html
SOURCE Tahoe Resources Inc.