VANCOUVER, British Columbia,
Sept. 21, 2017 /PRNewswire/
-- Tahoe Resources Inc. ("Tahoe" or the "Company")
(TSX: THO, NYSE: TAHO) announced today updated 2017 guidance for
its gold operations. Due to ongoing interruption of
operations at Escobal, multi-year guidance remains under review for
all operations. Despite this interruption, the Company's balance
sheet remains strong with cash and cash equivalents of more than
$185 million at the end of August
2017. The Company's gold operations are performing well and
represent an increasingly meaningful contribution to the overall
financial performance of the Company. Expansion projects at
Shahuindo and Bell Creek are
expected to increase production to more than 500,000 ounces
annually beginning in 2019.
Revised 2017 Gold Guidance by Mine
The Company has
increased its guidance for gold production to 400,000 to 450,000
ounces for 2017. The increase in the Company's revised gold
production guidance for the remainder of 2017 is due in large part
to the positive mine plan reconciliation experienced at La Arena
year to date. The positive production reconciliation at La
Arena has prompted the Company to initiate a drilling program in
the fourth quarter to better define the mineralization below the
Calaorco pit with the goal of extending the mine life.
Total cash costs and all-in sustaining costs per ounce of gold
produced have been revised downward. Total cash cost
estimates have been decreased by $50
per ounce to an estimated $650 to
$700 per ounce, reflecting the higher
anticipated production levels and better than anticipated cost
performance year to date. Likewise, all-in sustaining costs
have decreased by $100 per ounce to a
guidance range of $1,050 to $1,150
per ounce, driven by higher production and lower capital and
exploration costs.
|
Production (gold – koz)
|
Cash
Costs ($/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
|
La Arena
|
145
|
155
|
750
|
800
|
1,000
|
1,100
|
-
|
-
|
25
|
27
|
6
|
8
|
La Arena
– revised
|
170
|
190
|
650
|
700
|
950
|
1,000
|
-
|
-
|
25
|
35
|
2
|
4
|
Shahuindo
|
65
|
85
|
750
|
800
|
1,600
|
1,700
|
75
|
90
|
50
|
55
|
12
|
15
|
Shahuindo –
revised
|
65
|
80
|
750
|
800
|
1,450
|
1,550
|
40
|
45
|
25
|
45
|
4
|
6
|
Timmins
|
165
|
185
|
650
|
700
|
1,000
|
1,100
|
75
|
85
|
50
|
55
|
17
|
20
|
Timmins –
revised
|
165
|
180
|
650
|
700
|
1,000
|
1,100
|
60
|
70
|
50
|
55
|
8
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold total
|
375
|
425
|
700
|
750
|
1,150
|
1,250
|
150
|
175
|
125
|
137
|
35
|
43
|
Gold
total –
revised
|
400
|
450
|
650
|
700
|
1,050
|
1,150
|
100
|
115
|
100
|
135
|
14
|
20
|
(1)
|
Total cash costs on a
gold ounce produced basis and all-in-sustaning costs on a gold
ounce produced basis are considered to be non-GAAP financial
measures. See "Cautionary Statement on Forward-Looking
Information" and "Non-GAAP Financial Measures" at the
end of this release.
|
(2)
|
Gold production range
of 400,000 to 450,000 ounces does not include gold ounces produced
in concentrate from the Escobal mine.
|
(3)
|
Numbers may not
calculate due to rounding.
|
Capital expenditure estimates for 2017 have also been revised
downward. Project capital has been decreased by $50 million to an estimated $100 to $115
million, versus the initial 2017 guidance of $150 to $175 million. The reduction in
project capital reflects the deferral in timing of certain
ancillary capital projects at Shahuindo and Timmins, and prudent capital management by the
Company. Both major projects – the Shahuindo Expansion and
the Bell Creek Shaft Project – remain within their total project
budgets of $80 million
respectively.
Sustaining capital has been decreased to $100 to $135 million, a decrease of $25 million to the lower end of the initial
guidance range. The decrease in sustaining capital is due to
a shift in timing of spending on certain projects at Shahuindo,
however this is not expected to delay production at the gold
operations to more than 500,000 ounces in 2019.
In part due to the ongoing uncertainty at Escobal, discretionary
exploration spending has been reduced by $20
million to an estimated $14 to
$20 million for 2017, compared to the
initial guidance of $35 to $43
million for the gold operations. The reduction is
attributable to longer-term exploration projects. Current
exploration efforts are focused on near-term projects with ability
to positively impact medium-term production and contribute 2 to 4
million ounces of gold reserves and resources by 2020.
No changes are anticipated to the initial guidance on corporate
general and administrative expenses of $45
to $55 million.
Capital Projects Update
Shahuindo Expansion
Construction of the
initial 12,000 tpd crushing and agglomeration circuit is now 90%
complete, with commissioning anticipated in the coming weeks.
Engineering is substantially complete on the additional 24,000 tpd
crushing and agglomeration plant and the Company is finalizing
purchase orders for the equipment. The project remains on
schedule and budget for commissioning 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.
Bell Creek Shaft Project
The Bell Creek Shaft
Project continues on schedule and budget. Excavation of the
first two pilot raises is complete and shaft benching to enlarge to
the final dimension continues to progress as expected.
Excavation of the third and final pilot raise was initiated at the
bottom level of 1,040 meters. Shaft rehabilitation and
furnishing continues to progress well and is complete down to a
depth of 433 meters with new sets, guides and services
installed. On the surface, demolition of the historical
hoisting plant was completed in Q2, and foundation work for the new
hoist and headframe is now complete. The new administration
building is complete and occupied and construction of the new
security building is in progress.
Timmins West Mineral Resource and Reserve Update
The
Company is pleased to announce updated Mineral Resources and
Mineral Reserves for Timmins West in Canada. At the Timmins
West Mine, Measured and Indicated Mineral Resources total 1.02
million ounces of gold. The Company had significant growth in
reserves attributable to the initial Mineral Reserve for the 144
Gap deposit. Proven and Probable Mineral Reserves at Timmins West
increased from 233,000 ounces of gold at an average grade of 3.7
gpt as reported January 1, 2017 to
738,000 ounces of gold at an average grade of 3.2 gpt effective
May 15, 2017.
|
Classification
|
Tonnes
|
Au Grade
(g/t)
|
Au
Ounces
|
Mineral
Resources
|
Measured
|
361,000
|
4.95
|
57,500
|
Indicated
|
7,539,000
|
3.99
|
966,500
|
Measured &
Indicated
|
7,900,000
|
4.03
|
1,024,000
|
Inferred
|
1,092,000
|
3.80
|
133,400
|
|
|
|
|
|
Mineral
Reserves
|
Proven
|
407,000
|
3.61
|
47,200
|
Probable
|
6,745,000
|
3.18
|
690,600
|
Proven &
Probable
|
7,152,000
|
3.21
|
737,800
|
(1)
|
The effective date of
the Mineral Resource and Mineral reserve estimates is May 15,
2017.
|
(2)
|
The basis of the
Mineral Resource and Mineral Reserve estimates is from National
Instrument 43-101 Technical Report, Timmins West Mine,
Timmins, Ontario, Canada, dated September 20, 2017.
|
(3)
|
Mineral Resources are
reported using a gold cut-off grade of 1.5 g/t.
|
(4)
|
Mineral Reserves are
reported using a gold cut-off grade of 2.0 g/t and a gold price of
$1,250/oz.
|
(5)
|
Mineral Reserves are
included in Mineral Resources.
|
The Mineral Resource and Mineral Reserve estimates for the
Timmins West Mine are supported by an updated technical report,
National Instrument 43-101 Technical Report, Timmins West Mine,
Timmins, Ontario, Canada,
dated September 20, 2017 which is
available on SEDAR at www.sedar.com.
Escobal Update
The Company's efforts in Guatemala are focused on reaching a peaceful
and expeditious conclusion to the road block at Casillas, which is
approximately 16 kilometers away from the operations in San Rafael
Las Flores. Upon resolution, the Company expects to resume
production at Escobal within a week.
On September 10, 2017, the Company
reported that the Guatemalan Supreme Court issued a decision that
reinstated the Escobal mining license. As part of its
decision, the Supreme Court ordered MEM to conduct a consultation
under ILO Convention 169 with the Xinca indigenous communities
within certain departments or states within 12 months. The Company
is now seeking clarification from the Supreme Court on the specific
geographical areas to be included in MEM's consultation
process. CALAS has appealed the Supreme Court's ruling to the
Constitutional Court partly on the grounds that it discriminates
against the Xinca. The Company understands that the Xinca
Parliament has not appealed the Supreme Court's decision. The
Constitutional Court is expected to rule on all appeals by the end
of the year.
During the period in which the Company's mining license was
temporarily suspended, the Company's annual export credential for
the exportation of metals concentrate expired. The Company
filed its request to renew the export credential with MEM in the
ordinary course in June 2017. The renewal of the export
credential became contingent on the Court's reinstatement of the
Escobal mining license. In addition to the clarification
motion, therefore, the Company has petitioned the Supreme Court to
order MEM to provide the routine administrative annual renewal of
Escobal's export credential.
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.
Alexandra Barrows, Vice President
Investor Relations
investors@tahoeresources.com
Tel: +1.775.448.5812
CAUTIONARY NOTE ON NON-GAAP FINANCIAL MEASURES
Total cash costs
The Company has guided total cash
costs on a gold ounce produced basis for the La Arena, Shahuindo
and Timmins mines, and the gold
operating segment in total. The Company follows the generally
accepted standard of reporting total cash costs (gold) by precious
metal mining companies. The Company believes this generally
accepted industry measure is a realistic indicator of operating
performance and is useful in performing year over year
comparisons. However, this non-GAAP measure should be
considered together with other data prepared in accordance with
IFRS, and this measure, taken by itself, is not necessarily
indicative of operating costs or cash flow measures prepared in
accordance with IFRS. Total cash costs are divided by the
number of gold ounces produced to calculate per ounce figures. When
deriving the total cash costs associated with an ounce of gold, the
Company deducts by-product credits from sales which are incidental
to producing gold.
In addition to conventional measures, the Company assesses this
per ounce measure in a manner that isolates the impacts of gold
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 gold 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.
Calculations included in this press release are for
demonstration purposes and have been calculated using the mid-point
of each range.
Total cash
costs per ounce of produced gold
|
|
|
|
La
Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total operating
costs
|
$
|
121,500
|
|
|
$
|
54,200
|
|
|
$
|
118,200
|
|
|
$
|
293,950
|
|
Gold ounces
produced (000's)
|
180
|
|
|
70
|
|
|
175
|
|
|
425
|
|
Total cash costs
per ounce produced
|
$
|
675
|
|
|
$
|
775
|
|
|
$
|
675
|
|
|
$
|
692
|
|
All-in sustaining costs
The Company has also adopted
the reporting of all-in sustaining costs ("AISC") 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.
AISC 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 per ounce of gold produced
|
|
|
|
La
Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total cash
costs
|
$
|
121,500
|
|
|
$
|
54,250
|
|
|
$
|
118,200
|
|
|
$
|
293,950
|
|
Sustaining
capital
|
30,000
|
|
|
35,550
|
|
|
52,000
|
|
|
117,550
|
|
Exploration
|
3,000
|
|
|
5,000
|
|
|
4,000
|
|
|
12,000
|
|
Reclamation cost
accretion
|
1,000
|
|
|
220
|
|
|
2,500
|
|
|
3,700
|
|
General and
administrative expenses
|
20,000
|
|
|
10,000
|
|
|
7,100
|
|
|
37,100
|
|
All-in sustaining
costs
|
$
|
175,500
|
|
|
$
|
105,000
|
|
|
$
|
183,800
|
|
|
$
|
464,300
|
|
Gold ounces produced
(000's)
|
180
|
|
|
70
|
|
|
175
|
|
|
425
|
|
All-in sustaining
costs per ounce produced
|
$
|
975
|
|
|
$
|
1,500
|
|
|
$
|
1,050
|
|
|
$
|
1,100
|
|
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATION
This news release contains "forward-looking
statements" 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. Forward-looking statements include, but
are not limited to, the timing and amount of estimated future
production, costs of production, capital expenditures, exploration
expenses, free cash flow, currency exchange rate fluctuations,
requirements for additional capital; progress and timing for
completion of the Shahuindo expansion and Bell Creek shaft projects; estimates of Mineral
Resources and Mineral Reserves at Timmins West; the future price of
silver, gold, lead and zinc; government regulation of mining
operations; environmental risks; unanticipated reclamation
expenses; timing and possible outcome of pending litigation,
including any review or appeal of the definitive decision from the
Supreme Court of Guatemala which
reinstated the Company's mining license in respect of the Escobal
mine; the timing and results of the petition for the annual renewal
of Escobal's export credential; the time for appeals to be heard
and decided and the likelihood of the decision being overturned by
the Constitutional Court in Guatemala; the timing, results and
implications to the Company of the court-ordered consultation
process; the timing and likelihood of the road blockage being
peacefully cleared and resolved; title disputes or claims; and
limitations on insurance coverage. 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 are necessarily based upon a number
of factors and assumptions that, if untrue, could cause the actual
results, performances or achievements of the Company to be
materially different from future results, performances or
achievements expressed or implied by such statements. Such
statements and information are based on numerous assumptions
regarding present and future business strategies and the
environment in which Tahoe will operate in the future, including
the price of silver, gold, lead and zinc, anticipated costs,
sufficiency of capital resources and the possibility of considering
alternative financing arrangements to meet strategic needs,
availability of water for the Shahuindo expansion project and
ability to achieve goals. In respect of the forward-looking
statements concerning production estimates, costs of production,
capital expenditures, exploration expenses, free cash flow,
currency exchange rate fluctuations, requirements for additional
capital, progress and timing for completion of the Shahuindo
expansion and Bell Creek shaft
projects; estimates of Mineral Resources and Mineral Reserves at
Timmins West on the Company's operations, financial condition and
liquidity, Tahoe has provided them in reliance on certain
assumptions that they believe are reasonable at this time. Readers
are cautioned that the foregoing list is not exhaustive.
Tahoe's actual results, programs and financial position could
differ materially from those anticipated in such forward-looking
statements as a result of numerous factors, risks and
uncertainties, many of which are beyond the Company's
control. These include, but are not necessarily limited to
workings of the Guatemalan legal system, social unrest and
political or economic instability in Guatemala and the Company's ability to
efficiently resume operations once the suspension of the mining
license is lifted and roadblock is cleared, re-issuance of licenses
affecting the operation of the Company's mines, and relationships
with our partners, including employees, vendors and community
populations.
Certain important factors that could cause actual results,
performances or achievements to differ materially from those in the
forward-looking statements include, among others, silver, gold,
lead and zinc price volatility, discrepancies between actual and
estimated production, mineral reserves and mineral resources and
metallurgical recoveries, mining operational and development risks,
litigation risks, regulatory restrictions (including environmental
regulatory restrictions and liability), changes in national and
local government legislation, taxation, controls or regulations
and/or change in the administration of laws, policies and
practices, expropriation or nationalization of property and
political or economic developments in Guatemala, Peru, and Canada, and other jurisdictions in which the
Company does or may carry on business in the future, delays,
suspension and technical challenges associated with capital
projects, higher prices for fuel, steel, power, labor and other
consumables, currency fluctuations, the speculative nature of gold
exploration, the global economic climate, dilution, share price
volatility, competition, loss of key employees, additional funding
requirements and defective title to mineral claims or
property. Although Tahoe believes its expectations are based
upon reasonable assumptions and has attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events
or results not to be as anticipated, estimated or intended.
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 or projects;
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 Tahoe 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 such statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such 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 Tahoe,
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 Tahoe's operating environment. Tahoe
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 in
accordance with applicable securities laws.
CAUTIONARY NOTE TO INVESTORS IN THE
UNITED STATES REGARDING RESERVES AND RESOURCES
The
Mineral Resource and Mineral Reserve estimates contained in this
Press Release have been prepared in accordance with the
requirements of the securities laws in effect in Canada, which differ from the requirements of
United States securities laws and
use terms that are not recognized by the United States Securities
and Exchange Commission ("SEC"). Canadian reporting requirements
for disclosure of mineral properties are governed by NI 43-101. The
definitions used in NI 43-101 are incorporated by reference from
the CIM Definition Standards adopted by CIM Council on May 10, 2014 (the "CIM Definition Standards").
U.S. reporting requirements are governed by the SEC Industry Guide
7 ("Industry Guide 7") under the United States Securities Act of
1933, as amended. These reporting standards have similar goals in
terms of conveying an appropriate level of confidence in the
disclosures being reported, but embody difference approaches and
definitions.
For example, the terms "Mineral Reserve", "Proven Mineral
Reserve" and "Probable Mineral Reserve" are Canadian mining terms
as defined in in NI 43-101, and these definitions differ from the
definitions in Industry Guide 7. Under Industry Guide 7 standards,
a "final" or "bankable" feasibility study is required to report
reserves and the primary environmental analysis or report must be
filed with the appropriate governmental authority. Further, under
Industry Guide 7, mineralization may not be classified as "reserve"
unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time
the reserve determination is made.
While the terms "Mineral Resource", "Measured Mineral Resource",
"Indicated Mineral Resource" and "Inferred Mineral Resource" are
defined in and required to be disclosed by NI 43-101, these terms
are not defined terms under Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed
with the SEC. United States
readers are cautioned not to assume that any part or all of mineral
deposits in these categories will ever be converted into reserves.
In addition, "Inferred Mineral Resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. A significant amount of
exploration must be completed in order to determine whether an
Inferred Mineral Resource may be upgraded to a higher category.
Under Canadian regulations, estimates of Inferred Mineral Resources
may not form the basis of feasibility or pre-feasibility studies,
except in rare cases. United
States readers are cautioned not to assume that all or any
part of an Inferred Mineral Resource exists or is economically or
legally mineable. Disclosure of "contained ounces" in a resource is
permitted disclosure under Canadian regulations if such disclosure
includes the grade or quality and the quantity for each category of
Mineral Resource and Mineral Reserve; however, the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and
grade without reference to unit measures.
Accordingly, information contained in this Press Release
containing descriptions of the Tahoe's mineral deposits may not be
comparable to similar information made public by United States companies subject to the
reporting and disclosure requirements under the United States federal securities laws and
the rules and regulations thereunder.
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SOURCE Tahoe Resources Inc.