VANCOUVER, Nov. 6, 2017 /PRNewswire/ -- Tahoe Resources
Inc. ("Tahoe" or the "Company") (TSX: THO, NYSE: TAHO) today
announced solid financial and operating results for the third
quarter and nine months ended September 30, 2017. The
Company's balance sheet remains strong, with cash and cash
equivalents of $182.1 million at
September 30, 2017 and very little debt.
Ron Clayton, President and CEO of
Tahoe, commented: "Despite challenges in Guatemala during the quarter, we are very
pleased with our team's performance, particularly at our gold
operations which produced 109 thousand ounces at a total cash cost
of $747 per ounce. The Company
remains focused on executing our strategy to advance near-term
development projects in Canada and
Peru. Although we reported a loss
for the quarter, the results were negatively impacted by
$14 million in costs ($0.04 per share) related to the suspension and
care and maintenance of Escobal and a $9
million non-recurring pre-tax expense ($0.03 per share) at La Arena as a result of
completing negotiations to fulfill historical commitments made to
the community. Except for these items, we would have reported
positive earnings for the quarter on the strength of our gold
operations alone. In Guatemala, we
are gratified that the Supreme Court reinstated the Escobal license
in September and are working diligently to resolve the Casillas
road block and to obtain renewal of our export credential so that
we can resume mining operations at Escobal. We believe the
resolution of these two issues will follow the Constitutional Court
decision on the appeals from the Supreme Court ruling."
Key Financial and
Operating Results
|
|
$ millions unless
otherwise indicated
|
|
Q3
2017
|
Q3 2016
|
Q3 YTD
2017
|
Q3 YTD
2016
|
Revenue
|
|
$
|
155.2
|
|
$
|
234.7
|
|
$
|
615.8
|
|
$
|
595.1
|
|
Earnings (loss) and
total comprehensive income (loss)
|
|
$
|
(8.4)
|
|
$
|
63.0
|
|
$
|
99.8
|
|
$
|
117.6
|
|
Earnings (loss) per
share
|
|
$
|
(0.03)
|
|
$
|
0.20
|
|
$
|
0.32
|
|
$
|
0.42
|
|
Adjusted earnings
(loss) (1)
|
|
$
|
(7.2)
|
|
$
|
65.7
|
|
$
|
101.7
|
|
$
|
162.0
|
|
Cash provided by
operating activities
|
|
$
|
60.0
|
|
$
|
99.7
|
|
$
|
272.7
|
|
$
|
196.0
|
|
Cash provided by
operating activities before changes in
working capital
|
|
$
|
37.0
|
|
$
|
126.0
|
|
$
|
269.3
|
|
$
|
311.3
|
|
|
|
|
|
|
|
Silver production
(moz)
|
|
—
|
|
5.0
|
|
9.8
|
|
16.5
|
|
Gold production
(koz)
|
|
109
|
|
98
|
|
340
|
|
265
|
|
Total cash cost per
silver oz produced ($/oz)(1)(2)
|
|
$
|
—
|
|
$
|
6.5
|
|
$
|
6.15
|
|
$
|
5.66
|
|
AISC per silver oz
produced ($/oz)(1)(2)
|
|
$
|
—
|
|
$
|
8.68
|
|
$
|
8.91
|
|
$
|
7.55
|
|
Total cash cost per
gold oz produced ($/oz)(1)(2)(3)
|
|
$
|
747
|
|
$
|
625
|
|
$
|
639
|
|
$
|
632
|
|
AISC per gold oz
produced ($/oz)(1)(2)
|
|
$
|
1,088
|
|
$
|
974
|
|
$
|
954
|
|
$
|
979
|
|
Sustaining capital
(incl. capitalized drilling)
|
|
$
|
25,133
|
|
$
|
26,315
|
|
$
|
71,100
|
|
$
|
63,159
|
|
Project
capital
|
|
$
|
28,600
|
|
$
|
30,110
|
|
$
|
96,793
|
|
$
|
87,741
|
|
Exploration
expense
|
|
$
|
4.5
|
|
$
|
4.7
|
|
$
|
14.6
|
|
$
|
7.5
|
|
Corporate
G&A(4)
|
|
$
|
11.7
|
|
$
|
7.5
|
|
$
|
34.7
|
|
$
|
38.0
|
|
Weighted average
shares outstanding (basic, in millions)
|
|
313.15
|
|
311.41
|
|
312.67
|
|
282.34
|
|
|
|
(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)
|
Total cash costs for
Q3 2017 included a $9.0 million non-recurring pre-tax expense at La
Arena as a result of completing negotiations to fulfill a
historical commitment that impacted total cash cost per gold ounce
produced by $82/oz for Q3 2017and $27/oz for Q3 YTD
2017.
|
(4)
|
Corporate G&A
includes non-cash, stock-based compensation.
|
Summary of Q3 2017:
Strong operating and financial results from gold segments
– Q3 2017 gold production totaled 108.7 thousand ounces, including
19.4 thousand ounces from Shahuindo. Production and costs in Q3
2017 reflected strong results at all of the Company's gold mines,
with total cash costs and AISC averaging $747 and $1,088 per
ounce, respectively, in Q3 2017.
Shahuindo expansion plan remains on track – Construction
of the initial 12,000 tpd crushing and agglomeration circuit at
Shahuindo is now nearly complete with commissioning initiated at
the end of September. The additional 24,000 tpd crushing and
agglomeration circuit remains on schedule and within guidance 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.
Bell Creek Shaft Project continues on plan – The sinking
hoist was commissioned and work began on the third and final pilot
raise. The project remains on schedule and within guidance for
commissioning in mid-year 2018, with a ramp up through the end of
the year.
Released improved 2017 gold production guidance at lower
costs – In September, the Company re-instated and
increased its guidance for gold production to 400,000 to 450,000
ounces for 2017 due in large part to the positive mine plan
reconciliation (higher grade and additional tonnes) experienced at
La Arena year to date. 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 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. The
Company remains in line to achieve our new guidance.
Conservative balance sheet management with $182m in cash – Despite the on-going
interruption of mining operations at Escobal, the Company's balance
sheet remains strong, with cash and cash equivalents of
$182.1 million at September 30, 2017. In addition, the Company has
access to $75 million of the
$300 million revolving credit
facility that matures on July 19,
2021. As previously reported, the credit agreement includes
terms that limit borrowing to a maximum of $75 million during the period of suspension of
the mining operations at Escobal as a result of the CALAS claim in
Guatemala. The revolving credit
facility remains undrawn.
Timmins West Mineral Resource and Reserve update
– The Company announced an updated Mineral Resources and
Mineral Reserves for Timmins West in Canada. The Company had significant growth in
Mineral Reserves attributable to the initial Mineral Reserve for
the 144 Gap deposit, a part of the Timmins West mine. 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. Measured and Indicated Mineral
Resources total 1.02 million ounces of gold at the Timmins West
Mine.
Update on Escobal Mining License and Export Credential
– On July 5, 2017, the Company
was notified that the Supreme Court of Guatemala issued a temporary decision to
provisionally suspend the Escobal mining license of Minera San Rafael ("MSR") in response to an
action brought by CALAS, an anti-mining NGO, against the Ministry
of Energy and Mines ("MEM"). On September
10, 2017, the Guatemalan Supreme Court issued a definitive
decision that reinstated the Escobal mining license. The ruling
also ordered MEM to consult with the Xinka indigenous communities
within certain geographic areas within 12 months. The ruling allows
Escobal to restart operations immediately and to continue to
operate during the consultation process. Although Tahoe believes
that MEM complied with ILO Convention 169 before it issued the
Escobal license, it will fully support MEM in any of its future
indigenous engagement.
CALAS and other interested parties appealed the Supreme Court's
decision reinstating the Escobal mining license to the
Constitutional Court, the highest court in Guatemala, which heard the matter on
October 25, 2017. The Constitutional
Court is expected to rule on the appeals before the end of the
year.
In June 2017, the Company filed
its annual request to renew the export credential with MEM.
However, MEM did not renew the credential because its renewal had
become contingent on the Supreme Court's reinstatement of the
Escobal mining license. The credential therefore expired in
August 2017. After the Supreme Court
reinstated the mining license in September
2017, MEM publicly stated that the export credential could
now be legally renewed. However, contrary to such public
declaration, MEM has yet to renew the credential. The Company
believes that MEM is unlikely to renew the export credential prior
to the Constitutional Court ruling on the appeals.
Update on Guatemala Road Block – Since June 7, 2017, a group of protesters near the town
of Casillas has blocked the primary highway that connects
Guatemala City to San Rafael Las
Flores and the Escobal mine. Operations were reduced between June 8 and June 19 to conserve fuel and
were further curtailed on June 19,
2017.
While some of the protesters come from Casillas, which is
approximately 16 kilometers from the mine, many more are from
outside the municipality. The Company has reason to believe that
the blockade is politically motivated and is being substantially
funded by anti-mining groups. As the road block continues, some
protesters have become increasingly violent. Following the
September 10, 2017 court ruling that
reinstated the Escobal mining license, the Company attempted to
transport supplies to the mine site. Protesters blocked the passage
of vehicles and attacked the truck drivers and trucks. On a
separate occasion, a helicopter attempting to deliver fuel to the
mine was shot at. These violent episodes have put people's lives at
risk and violated the human rights of the Company's employees,
contractors and San Rafael Las Flores residents, particularly the
right to freedom of movement, the right to liberty and security of
person, and the right to work.
Tahoe deplores violence of any kind and continues to focus on
reaching a peaceful and expeditious conclusion to the roadblock at
Casillas. The Company is working with the government, community
leaders and international mediation experts to develop a dialogue
process aimed at resolving the matter. Once the roadblock is
lifted, the export credential is renewed and the Supreme Court
ruling is confirmed by the Constitutional Court, the Company
expects to be in a position to resume production at Escobal within
a week.
OPERATIONS REVIEW
Escobal
The Escobal Mine remained on standby during the third quarter
with a focus on care and maintenance. There was no ore production,
development, rehabilitation, paste fill or shotcreting operations
during this time. Escobal has maintained the readiness of the
equipment fleet for the orderly resumption of operations once the
mine restarts.
Gold Operations
La Arena
|
|
|
Q3
2017
|
|
Q3 2016
|
|
Q3 YTD
2017
|
|
Q3 YTD
2016
|
Gold Ounces
Recovered (000's)
|
48
|
|
|
49
|
|
|
148
|
|
|
146
|
|
Costs Per Ounce
Gold Produced(1)
|
|
|
|
|
|
|
|
Total cash costs per
ounce net of by-product credits
|
$
|
794
|
|
|
$
|
593
|
|
|
$
|
624
|
|
|
$
|
626
|
|
All-in sustaining
costs per ounce net of by-product credits
|
$
|
1,038
|
|
|
$
|
864
|
|
|
$
|
831
|
|
|
$
|
859
|
|
Capital
Expenditures
|
$
|
7,687
|
|
|
$
|
9,456
|
|
|
$
|
20,005
|
|
|
$
|
22,547
|
|
Sustaining
Capital
|
$
|
7,687
|
|
|
$
|
9,456
|
|
|
$
|
20,005
|
|
|
$
|
22,547
|
|
Non-Sustaining
Capital
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
(1)
|
Non-GAAP financial
measures are described in the "Cautionary Note on Non-GAAP
Financial Measures" section of this press release.
|
Mine Operations
Production from the Calaorco pit totaled 3.1 million and 9.7
million tonnes of ore at an average strip ratio of 2.0 and 2.0
during Q3 2017 and Q3 YTD 2017, respectively. A total of 3.1
million and 9.8 million tonnes at average gold grades of 0.48 gpt
and 0.49 gpt containing 48.4 thousand and 153.9 thousand gold
ounces were placed on the leach pads during Q3 2017 and Q3 YTD
2017, respectively. Total cash costs for Q3 2017 included a
$9.0 million non-recurring pre-tax
expense as a result of completing negotiations to fulfill a
historical commitment that impacted total cash costs by
$189/oz for Q3 2017 and $60/oz for Q3 YTD 2017.
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.
Process plant
The process plant performed well with an average of 12 hectares
under irrigation throughout Q3 2017. The La Arena plant recovered
47.6 thousand and 148.4 thousand ounces of gold during Q3 2017 and
Q3 YTD 2017. Gold recovery continues to be approximately 86%.
Shahuindo
|
|
|
Q3
2017
|
|
Q3 2016
|
|
Q3 YTD
2017
|
|
Q3 YTD
2016
|
Gold Ounces
Recovered (000's)
|
19
|
|
|
10
|
|
|
60
|
|
|
35
|
|
Costs Per Ounce
Gold Produced(1)
|
|
|
|
|
|
|
|
Total cash costs per
ounce net of by-product credits
|
$
|
774
|
|
|
$
|
742
|
|
|
$
|
647
|
|
|
$
|
638
|
|
All-in sustaining
costs per ounce net of by-product credits
|
$
|
1,328
|
|
|
$
|
990
|
|
|
$
|
1,066
|
|
|
$
|
1,258
|
|
Capital
Expenditures(2)
|
$
|
19,314
|
|
|
$
|
19,355
|
|
|
$
|
44,345
|
|
|
$
|
52,397
|
|
Sustaining
Capital
|
$
|
7,622
|
|
|
$
|
2,050
|
|
|
$
|
14,834
|
|
|
$
|
8,649
|
|
Non-Sustaining
Capital
|
$
|
11,072
|
|
|
$
|
17,305
|
|
|
$
|
28,580
|
|
|
$
|
43,748
|
|
|
|
(1)
|
Non-GAAP financial
measures are described in the "Cautionary Note on Non-GAAP
Financial Measures" section of this press release.
|
(2)
|
Commercial production
at Shahuindo was declared on May 1, 2016. The figures presented for
Q3 YTD 2016 include pre-commercial production which reduced the
capital expenditures.
|
Mine Operations
Production from the Shahuindo pit totaled 1.8 million and 4.7
million tonnes of ore at an average strip ratio of 0.98 and 1.0
during Q3 2017 and Q3 YTD 2017, respectively. A total of 1.5
million and 3.8 million tonnes at average gold grades of 0.61 gpt
and 0.63 gpt containing 28.6 thousand and 76.2 thousand gold ounces
were placed on the leach pads during Q3 2017and Q3 YTD 2017,
respectively. Total cash costs net of by-product credits for Q3
2017 are higher than Q3 YTD 2017 due to grade variance and timing
of community costs in the quarter.
Process plant
The Shahuindo plant recovered 19.4 thousand and 60.4 thousand
ounces of gold during Q3 2017 and Q3 YTD 2017, respectively.
Primary leaching is focused on Pad 2A which is resulting in faster
than expected leach cycles attributable to optimized coarse/fine
ore blending. The average area under leach was 8.3 hectares during
Q3 2017. Overall gold recovery increased from 58% in January to 64%
at the end of Q3 2017, in line with the ramp up to an ultimate
recovery of 67% for run-of-mine material.
Capital projects
Construction of leach pad 2B began in the Q3 2017 as planned.
Pad 2B is scheduled to be placed into production in Q3 2018.
Permits for the operation of the first phase of the south waste
rock dump were received in the third quarter and the waste rock
dump is currently in use. The south waste rock dump has sufficient
capacity to accommodate waste rock mined from the Shahuindo pit
through the end of 2018.
Dry commissioning of the 12,000 tpd crushing and agglomeration
circuit was initiated late in Q3 as scheduled. A portion of
the final purchase orders for the additional 24,000 tpd circuit has
been deferred to early Q4 2017 due to modifications to the final
engineering design. The Company does not expect this to have an
impact on the commissioning of the full 36,000 tpd plant
anticipated in 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.
Timmins
Mines
|
|
|
Q3
2017
|
|
Q3 2016
|
|
Q3 YTD
2017
|
|
Q3 YTD
2016
|
Gold Ounces
Recovered (000's)
|
42
|
|
|
37
|
|
|
127
|
|
|
76
|
|
Costs Per Ounce
Gold Produced(1)
|
|
|
|
|
|
|
|
Total cash costs per
ounce net of by-product credits
|
$
|
681
|
|
|
$
|
635
|
|
|
$
|
653
|
|
|
$
|
640
|
|
All-in sustaining
costs per ounce net of by-product credits
|
$
|
1,034
|
|
|
$
|
1,112
|
|
|
$
|
1,046
|
|
|
$
|
1,131
|
|
Capital
Expenditures
|
$
|
25,047
|
|
|
$
|
21,013
|
|
|
$
|
80,814
|
|
|
$
|
56,767
|
|
Sustaining
Capital
|
$
|
9,824
|
|
|
$
|
14,944
|
|
|
$
|
36,260
|
|
|
32,199
|
|
Non-Sustaining
Capital
|
$
|
15,223
|
|
|
$
|
6,069
|
|
|
$
|
44,554
|
|
|
24,568
|
|
|
|
(1)
|
Non-GAAP financial
measures are described in the "Cautionary Note on 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 continues to advance
in support of the life-of-mine production schedule, with
approximately 2,850 metres and 8,200 metres of development
completed in Q3 2017 and Q3 YTD 2017, respectively. Infill and
definition drilling at the Bell Creek mine totaled 11,100 metres
and 38,800 metres in Q3 2017 and Q3 YTD 2017, respectively.
The Bell Creek mine delivered 92 thousand and 247 thousand
tonnes of ore to surface, mined from longitudinal longhole stopes
on multiple production sublevels during Q3 2017 and Q3 YTD 2017,
respectively.
Timmins West
Underground ramp and sublevel development continues to advance
in support of the life-of-mine production schedule, with
approximately 2,700 metres and 8,250 metres of development
completed in Q3 2017 and Q3 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 Q3 2017 and Q3 YTD 2017 to improve resource/reserve definition
totaled 23,800 metres and 92,300 metres, respectively.
The Timmins West mine delivered approximately 0.2 million and
0.8 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 Q3 2017
and Q3 YTD 2017, respectively.
Mill processing
Mill operations averaged 3,679 tpd and 3,704 tpd in Q3 2017 and
Q3 YTD 2017, respectively. The mill processed a total of 0.3
million and 1.0 million tonnes with an average gold feed grade of
3.98 gpt and 4.05 gpt recovering 41.7 thousand and 127.0 thousand
gold ounces in Q3 2017 and Q3 YTD 2017, respectively. Process
recovery for Q3 2017 and Q3 YTD 2017 averaged 96.3% and 96.5%,
respectively.
Construction of the Phase 5 tailings facility expansion
continued in Q3 2017.
Capital projects
The Bell Creek Shaft Project continued on schedule during Q3
2017. Excavation of the third and final pilot raise started in Q3
from the 1040 level. The enlargement of the second pilot raise had
reached 682m depth by the end of the period. The underground
sinking hoist was commissioned and the installation of the new
steel sets were completed approximately 450m below surface. Surface
construction continued in Q3 with the completion of the new
administration and security complex. The new hoist foundations were
completed and tenders for the installation of the hoistroom and
headframe were received.
Conference Call
Tahoe's senior management will host a conference call and
webcast to discuss the Q3 2017 results on Tuesday, November 7, 2017 at 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 Q3 2017 including the Company's
management discussion and analysis and other filings will be posted
on SEDAR (www.sedar.com) and EDGAR (www.sec.gov) and on the
Company's website.
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.
Technical Disclosure
The basis of the Timmins West Mine Mineral Resources and Mineral
Reserves is from National Instrument 43-101 Technical Report,
Timmins West Mine, Timmins, Ontario,
Canada, dated September 20,
2017 with an effective date of May
15, 2017. Mineral Resources include Measured Mineral
Resources of 361 thousand tonnes with an average gold grade of 4.95
gpt containing 57.5 thousand ounces of gold, Indicated Mineral
Resources of 7.5 million tonnes with an average gold grade of 3.99
gpt containing 966.5 thousand ounces of gold, and Inferred Mineral
Resources of 1.1 million tonnes with an average gold grade of 3.80
gpt containing 133.4 thousand ounces of gold. Mineral Resources are
reported using a gold cut-off grade of 1.5 gpt. Mineral Reserves
include Proven Mineral Reserves of 407 thousand tonnes with an
average gold grade of 3.61 gpt containing 47.2 thousand ounces of
gold, and Probable Mineral Reserves of 6.7 million tonnes with an
average gold grade of 3.18 gpt containing 690.6 thousand ounces of
gold. Mineral Reserves are reported using a gold cut-off grade of
2.0 gpt and a gold price of $1,250/oz. Mineral Reserves are included in
Mineral Resources.
For further information, please contact:
Tahoe Resources Inc.
Alexandra Barrows, Vice President
Investor Relations
investors@tahoeresources.com
Tel: 775-448-5812
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 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 other than provisionally
priced trade receivables, 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.
|
Q3
2017
|
|
Q3 2016
|
|
Q3 YTD
2017
|
|
Q3 YTD
2016
|
Earnings
(loss)
|
$
|
(8,380)
|
|
|
$
|
63,011
|
|
|
$
|
99,803
|
|
|
$
|
117,561
|
|
Unrealized foreign
exchange loss (gain)
|
1,155
|
|
|
2,318
|
|
|
1,886
|
|
|
1,823
|
|
Acquisition
costs(2)
|
—
|
|
|
64
|
|
|
—
|
|
|
11,085
|
|
Loss on
Debenture
|
—
|
|
|
—
|
|
|
—
|
|
|
32,304
|
|
Gain on derivative
instruments (currency swap)
|
—
|
|
|
264
|
|
|
—
|
|
|
(803)
|
|
Adjusted earnings
(loss)
|
$
|
(7,225)
|
|
|
$
|
65,657
|
|
|
$
|
101,689
|
|
|
$
|
161,970
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
(000's)
|
313,152
|
|
|
311,407
|
|
|
312,673
|
|
|
282,335
|
|
Diluted
(000's)
|
313,161
|
|
|
312,108
|
|
|
312,722
|
|
|
282,672
|
|
Adjusted earnings
(loss) per share
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.02)
|
|
|
$
|
0.21
|
|
|
$
|
0.33
|
|
|
$
|
0.57
|
|
Diluted
|
$
|
(0.02)
|
|
|
$
|
0.21
|
|
|
$
|
0.33
|
|
|
$
|
0.57
|
|
|
|
(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 alone, 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
|
|
|
Q3 2017
|
|
Q3 2016
|
|
Q3 YTD
2017
|
|
Q3 YTD
2016
|
Total operating costs
(cost of sales)(1)
|
$
|
—
|
|
|
$
|
47,709
|
|
|
$
|
95,854
|
|
|
$
|
147,974
|
|
Depreciation and
depletion
|
—
|
|
|
(12,244)
|
|
|
(29,052)
|
|
|
(40,301)
|
|
Change in product
inventory
|
—
|
|
|
1,930
|
|
|
6,329
|
|
|
1,419
|
|
Treatment and
refining charges
|
—
|
|
|
8,262
|
|
|
16,205
|
|
|
24,426
|
|
Total cash costs
before by-product credits
|
$
|
—
|
|
|
$
|
45,657
|
|
|
$
|
89,336
|
|
|
$
|
133,518
|
|
By-product
credits(2)
|
|
|
(13,336)
|
|
|
(29,740)
|
|
|
(40,803)
|
|
Total cash costs
net of by-product credits
|
$
|
—
|
|
|
$
|
32,321
|
|
|
$
|
59,596
|
|
|
$
|
92,715
|
|
Silver ounces sold in
concentrate (000's)
|
—
|
|
|
4,781
|
|
|
9,773
|
|
|
14,528
|
|
Silver ounces
produced in concentrate (000's)
|
—
|
|
|
4,976
|
|
|
9,692
|
|
|
16,387
|
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
—
|
|
|
$
|
9.98
|
|
|
$
|
9.81
|
|
|
$
|
10.19
|
|
Total cash costs
per ounce produced before by-product credits
|
$
|
—
|
|
|
$
|
9.18
|
|
|
$
|
9.22
|
|
|
$
|
8.15
|
|
Total cash costs
per ounce produced net of by-product credits
|
$
|
—
|
|
|
$
|
6.50
|
|
|
$
|
6.15
|
|
|
$
|
5.66
|
|
|
|
(1)
|
Total operating costs
(cost of sales) includes production costs, depreciation and
depletion and royalties. All costs for Silver are through Q2 2017
as no silver was produced in Q3 2017.
|
(2)
|
Gold, lead and zinc
by-product credits are calculated as follows:
|
|
|
|
Q3
2017
|
|
Q3 2016
|
|
Quantity
|
|
Unit
Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Quantity
|
|
Unit Price
|
|
Total
Credit
|
|
Credit per
ounce
|
Gold
Ounces
|
—
|
|
—
|
|
—
|
|
—
|
|
1,752
|
|
$1,545
|
|
$2,707
|
|
$0.54
|
Lead
Tonnes
|
—
|
|
—
|
|
—
|
|
—
|
|
1,917
|
|
$3,336
|
|
$6,395
|
|
$1.29
|
Zinc
Tonnes
|
—
|
|
—
|
|
—
|
|
—
|
|
2,656
|
|
$1,594
|
|
$4,234
|
|
$0.85
|
|
|
Q3 YTD
2017
|
|
Q3 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
|
|
5,857
|
|
$1,418
|
|
$8,303
|
|
$0.51
|
Lead
Tonnes
|
4,085
|
|
$2,369
|
|
$9,679
|
|
$1.00
|
|
6,705
|
|
$2,157
|
|
$14,464
|
|
$0.88
|
Zinc
Tonnes
|
5,568
|
|
$2,785
|
|
$15,508
|
|
$1.60
|
|
9,505
|
|
$1,898
|
|
$18,036
|
|
$1.10
|
|
|
(3)
|
Table has been
updated to reflect current period presentation with no impact to
the cash costs previously presented.
|
(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
|
|
|
Q3
2017
|
|
La
Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total operating costs
(cost of sales)(1)
|
$
|
51,052
|
|
|
$
|
19,556
|
|
|
$
|
43,844
|
|
|
$
|
114,452
|
|
Depreciation and
depletion
|
(8,647)
|
|
|
(4,851)
|
|
|
(15,591)
|
|
|
(29,089)
|
|
Change in product
inventory
|
(4,725)
|
|
|
539
|
|
|
229
|
|
|
(3,957)
|
|
Smelting and refining
charges
|
244
|
|
|
123
|
|
|
46
|
|
|
413
|
|
Total cash costs
before by-product credits
|
37,924
|
|
|
15,367
|
|
|
28,528
|
|
|
81,819
|
|
Silver
credit(2)
|
(146)
|
|
|
(338)
|
|
|
(84)
|
|
|
(568)
|
|
Total cash costs
net of by-product credits
|
37,778
|
|
|
15,029
|
|
|
28,444
|
|
|
81,251
|
|
Gold ounces sold
(000's)
|
53.7
|
|
|
20.0
|
|
|
42.7
|
|
|
116.4
|
|
Gold ounces
produced(2) (000's)
|
47.6
|
|
|
19.4
|
|
|
41.7
|
|
|
108.7
|
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
950
|
|
|
$
|
978
|
|
|
$
|
1,026
|
|
|
$
|
983
|
|
Total cash costs
per ounce produced before by-product credits
|
$
|
797
|
|
|
$
|
792
|
|
|
$
|
683
|
|
|
$
|
753
|
|
Total cash costs
per ounce produced net of by-product
credits(3)
|
$
|
794
|
|
|
$
|
774
|
|
|
$
|
681
|
|
|
$
|
747
|
|
|
|
Q3 YTD
2017
|
|
La
Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total operating costs
(cost of sales)(1)
|
$
|
116,398
|
|
|
$
|
54,653
|
|
|
$
|
129,714
|
|
|
$
|
300,765
|
|
Depreciation and
depletion
|
(19,593)
|
|
|
(14,826)
|
|
|
(45,092)
|
|
|
(79,511)
|
|
Change in product
inventory
|
(4,598)
|
|
|
287
|
|
|
(1,565)
|
|
|
(5,876)
|
|
Smelting and refining
charges
|
811
|
|
|
309
|
|
|
139
|
|
|
1,259
|
|
Total cash costs
before by-product credits
|
93,018
|
|
|
40,423
|
|
|
83,196
|
|
|
216,637
|
|
Silver
credit(2)
|
(369)
|
|
|
(1,346)
|
|
|
(275)
|
|
|
(1,990)
|
|
Total cash costs
net of by-product credits
|
92,649
|
|
|
39,077
|
|
|
82,921
|
|
|
214,647
|
|
Gold ounces sold
(000's)
|
148.3
|
|
|
55.9
|
|
|
134.8
|
|
|
339.0
|
|
Gold ounces
produced(2) (000's)
|
148.4
|
|
|
60.4
|
|
|
127.0
|
|
|
335.8
|
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
785
|
|
|
$
|
978
|
|
|
$
|
962
|
|
|
$
|
887
|
|
Total cash costs
per ounce produced before by-product credits
|
$
|
627
|
|
|
$
|
669
|
|
|
$
|
655
|
|
|
$
|
645
|
|
Total cash costs
per ounce produced net of by-product
credits(3)
|
$
|
624
|
|
|
$
|
647
|
|
|
$
|
653
|
|
|
$
|
639
|
|
|
|
(1)
|
Total operating costs
(cost of sales) includes production costs, depreciation and
depletion and royalties.
|
(2)
|
Consolidated silver
by-product credits are calculated as follows:
|
|
|
|
Q3
2017
|
|
Q3 YTD
2017
|
|
Quantity
|
|
Unit
Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Quantity
|
|
Unit
Price
|
|
Total
Credit
|
|
Credit per
ounce
|
Silver Ounces
(000's)
|
33,943
|
|
$16.73
|
|
$568
|
|
$5.22
|
|
115,963
|
|
$17.16
|
|
$1,990
|
|
$5.93
|
|
|
(3)
|
Total cash costs per
gold ounce produced for Q3 2017 included a $9.0 million
non-recurring pre-tax expense at La Arena to fulfill long-term
commitments made to the community that impacted total cash costs
per ounce produced by $189/oz for Q3 2017 and $60/oz for Q3 YTD
2017 at La Arena and $82/oz for Q3 2017 and $27/oz for Q3 YTD 2017
in total.
|
(4)
|
Numbers in table may
not calculate due to rounding.
|
|
Q3
2016(1)(2)
|
|
La
Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total operating costs
(cost of sales)(3)
|
$
|
32,742
|
|
|
$
|
8,080
|
|
|
$
|
34,553
|
|
|
$
|
75,375
|
|
Depreciation and depletion
|
(5,472)
|
|
|
(2,485)
|
|
|
(7,708)
|
|
|
(15,665)
|
|
Change in product inventory
|
1,275
|
|
|
2,002
|
|
|
(2,982)
|
|
|
295
|
|
Smelting and refining charges
|
281
|
|
|
97
|
|
|
39
|
|
|
417
|
|
Total cash costs
before by-product credits
|
28,826
|
|
|
7,694
|
|
|
23,902
|
|
|
60,422
|
|
Silver credit(4)
|
(32)
|
|
|
(201)
|
|
|
(92)
|
|
|
(325)
|
|
Total cash costs
net of by-product credits
|
28,794
|
|
|
7,493
|
|
|
23,810
|
|
|
60,097
|
|
Gold ounces sold
(000's)
|
56.6
|
|
|
7.0
|
|
|
43.4
|
|
|
107.0
|
|
Gold ounces
produced(4) (000's)
|
48.5
|
|
|
10.1
|
|
|
37.5
|
|
|
96.1
|
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
579
|
|
|
$
|
1,148
|
|
|
$
|
796
|
|
|
$
|
704
|
|
Total cash costs
per ounce produced before by-product credits
|
$
|
594
|
|
|
$
|
762
|
|
|
$
|
638
|
|
|
$
|
629
|
|
Total cash costs
per ounce produced net of by-product credits
|
$
|
593
|
|
|
$
|
742
|
|
|
$
|
635
|
|
|
$
|
625
|
|
|
|
Q3 YTD
2016(1)(2)
|
|
La
Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total operating costs
(cost of sales)(3)
|
$
|
106,925
|
|
|
$
|
16,206
|
|
|
$
|
67,721
|
|
|
$
|
190,852
|
|
Depreciation and depletion
|
(18,047)
|
|
|
(4,468)
|
|
|
(19,425)
|
|
|
(41,940)
|
|
Change in product inventory
|
1,691
|
|
|
2,002
|
|
|
584
|
|
|
4,277
|
|
Smelting and refining charges
|
1,004
|
|
|
242
|
|
|
85
|
|
|
1,331
|
|
Total cash costs
before by-product credits
|
91,573
|
|
|
13,982
|
|
|
48,965
|
|
|
154,520
|
|
Silver credit(4)
|
(134)
|
|
|
(440)
|
|
|
(179)
|
|
|
(753)
|
|
Total cash costs
net of by-product credits
|
91,439
|
|
|
13,542
|
|
|
48,786
|
|
|
153,767
|
|
Gold ounces sold
(000's)
|
145.6
|
|
|
31.5
|
|
|
74.6
|
|
|
251.7
|
|
Gold ounces
produced(4) (000's)
|
146.0
|
|
|
21.2
|
|
|
76.2
|
|
|
243.4
|
|
Total operating
costs (cost of sales) per ounce sold
|
$
|
734
|
|
|
$
|
515
|
|
|
$
|
908
|
|
|
$
|
758
|
|
Total cash costs
per ounce produced before by-product credits
|
$
|
627
|
|
|
$
|
659
|
|
|
$
|
642
|
|
|
$
|
635
|
|
Total cash costs
per ounce produced net of by-product credits
|
$
|
626
|
|
|
$
|
638
|
|
|
$
|
640
|
|
|
$
|
632
|
|
|
|
(1)
|
Q3 YTD 2016
comparative figures exclude Q1 2016 data from the Timmins
mines.
|
(2)
|
Q3 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)
|
Silver by-product
credits are calculated as follows:
|
|
|
|
Q3 2016
|
|
Q3 YTD
2016
|
|
Quantity
|
|
Unit Price
|
|
Total
Credit
|
|
Credit per
ounce
|
|
Quantity
|
|
Unit Price
|
|
Total
Credit
|
|
Credit per
ounce
|
Silver
Ounces
|
$19,233
|
|
$16.90
|
|
$325
|
|
$3.38
|
|
$46,805
|
|
$16.09
|
|
$753
|
|
$3.09
|
|
|
(5)
|
Table has been
updated to reflect current period presentation with no impact to
the cash costs previously presented.
|
(6)
|
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
The following tables reconciling total all-in sustaining costs
per ounce of produced silver, net of by-product credits to the
consolidated financial statements should be read in conjunction
with the prior tables which reconcile total cash costs net of
by-product credits to total operating costs.
|
Q3
2017
|
|
Q3 2016
|
|
Q3 YTD
2017
|
|
Q3 YTD
2016
|
Total cash costs
net of by-product credits
|
$
|
—
|
|
|
$
|
32,321
|
|
|
$
|
59,596
|
|
|
$
|
92,715
|
|
Sustaining
capital(1)
|
—
|
|
|
5,909
|
|
|
19,062
|
|
|
16,736
|
|
Exploration
|
—
|
|
|
401
|
|
|
498
|
|
|
720
|
|
Reclamation cost
accretion
|
—
|
|
|
52
|
|
|
123
|
|
|
140
|
|
General and
administrative expenses
|
—
|
|
|
4,504
|
|
|
7,032
|
|
|
13,439
|
|
All-in sustaining
costs
|
$
|
—
|
|
|
$
|
43,187
|
|
|
$
|
86,311
|
|
|
$
|
123,750
|
|
Silver ounces
produced in concentrate (000's)
|
—
|
|
|
4,976
|
|
|
9,692
|
|
|
16,387
|
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
—
|
|
|
$
|
8.68
|
|
|
$
|
8.91
|
|
|
$
|
7.55
|
|
|
|
(1)
|
Sustaining capital
includes underground development and surface sustaining capital
expenditures.
|
(3)
|
Q3 YTD 2017 silver
numbers reflect actual through Q2 2017 as no silver was produced in
Q3 2017.
|
(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
|
|
|
Q3
2017(1)
|
|
La
Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total cash costs
net of by-product credits
|
$
|
37,778
|
|
|
$
|
15,029
|
|
|
$
|
28,444
|
|
|
$
|
81,251
|
|
Sustaining
capital
|
7,687
|
|
|
7,622
|
|
|
9,824
|
|
|
25,133
|
|
Exploration
|
294
|
|
|
926
|
|
|
2,035
|
|
|
3,255
|
|
Reclamation cost
accretion
|
336
|
|
|
220
|
|
|
38
|
|
|
594
|
|
General and
administrative expenses
|
3,288
|
|
|
1,985
|
|
|
2,765
|
|
|
8,038
|
|
All-in sustaining
costs
|
$
|
49,383
|
|
|
$
|
25,782
|
|
|
$
|
43,106
|
|
|
$
|
118,271
|
|
Gold ounces produced
(000's)
|
47.6
|
|
|
19.4
|
|
|
41.7
|
|
|
108.7
|
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
1,038
|
|
|
$
|
1,328
|
|
|
$
|
1,034
|
|
|
$
|
1,088
|
|
|
|
Q3 YTD
2017(1)
|
|
La
Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total cash costs
net of by-product credits
|
$
|
92,649
|
|
|
$
|
39,077
|
|
|
$
|
82,921
|
|
|
$
|
214,647
|
|
Sustaining
capital
|
20,006
|
|
|
14,834
|
|
|
36,260
|
|
|
71,100
|
|
Exploration
|
849
|
|
|
3,722
|
|
|
6,351
|
|
|
10,922
|
|
Reclamation cost
accretion
|
1,022
|
|
|
649
|
|
|
95
|
|
|
1,766
|
|
General and
administrative expenses
|
8,778
|
|
|
6,106
|
|
|
7,168
|
|
|
22,052
|
|
All-in sustaining
costs
|
$
|
123,304
|
|
|
$
|
64,388
|
|
|
$
|
132,795
|
|
|
$
|
320,487
|
|
Gold ounces produced
(000's)
|
148.4
|
|
|
60.4
|
|
|
127.0
|
|
|
335.8
|
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
831
|
|
|
$
|
1,066
|
|
|
$
|
1,046
|
|
|
$
|
954
|
|
|
(1)
Numbers in table may not calculate due to rounding.
|
|
|
Q3 2016
|
|
La Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total cash costs net
of by-product credits
|
$
|
28,794
|
|
|
$
|
7,493
|
|
|
$
|
23,810
|
|
|
$
|
60,097
|
|
Sustaining
capital
|
9,321
|
|
|
2,050
|
|
|
14,944
|
|
|
26,315
|
|
Exploration
|
510
|
|
|
1,415
|
|
|
1,863
|
|
|
3,788
|
|
Reclamation cost
accretion
|
297
|
|
|
165
|
|
|
25
|
|
|
487
|
|
General and
administrative expenses
|
2,987
|
|
|
(1,127)
|
|
|
1,063
|
|
|
2,923
|
|
All-in sustaining
costs
|
$
|
41,909
|
|
|
$
|
9,996
|
|
|
$
|
41,705
|
|
|
$
|
93,610
|
|
Gold ounces produced
in doré (000's)
|
48.5
|
|
|
10.1
|
|
|
37.5
|
|
|
96.1
|
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
864
|
|
|
$
|
990
|
|
|
$
|
1,112
|
|
|
$
|
974
|
|
|
|
Q3 YTD
2016
|
|
La Arena
|
|
Shahuindo
|
|
Timmins
mines
|
|
Total
|
Total cash costs net
of by-product credits
|
$
|
91,439
|
|
|
$
|
13,542
|
|
|
$
|
48,786
|
|
|
$
|
153,767
|
|
Sustaining
capital
|
22,311
|
|
|
8,649
|
|
|
32,199
|
|
|
63,159
|
|
Exploration
|
1,096
|
|
|
2,565
|
|
|
2,545
|
|
|
6,206
|
|
Reclamation cost
accretion
|
957
|
|
|
642
|
|
|
48
|
|
|
1,647
|
|
General and
administrative expenses
|
9,571
|
|
|
1,300
|
|
|
2,624
|
|
|
13,495
|
|
All-in sustaining
costs
|
$
|
125,374
|
|
|
$
|
26,698
|
|
|
$
|
86,202
|
|
|
$
|
238,274
|
|
Gold ounces produced
in doré (000's)
|
146.0
|
|
|
21.2
|
|
|
76.2
|
|
|
243.4
|
|
All-in sustaining
costs per ounce produced net of by-product credits
|
$
|
859
|
|
|
$
|
1,258
|
|
|
$
|
1,131
|
|
|
$
|
979
|
|
(1)
|
Q3 YTD 2016
comparative figures exclude Q1 2016 data from the Timmins
mines.
|
(2)
|
Q3 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.
|
The reconciliation
which formed the basis for the range in the 2017 gold cash cost and
all-in sustaining cost targets is as follows:
|
|
Total cash
costs
|
Gold
|
Total cash costs
before by-product credits
|
$
|
293,950
|
By-product credits
|
$
|
—
|
Total cash costs net
of by-product credits
|
$
|
293,950
|
Gold ounces produced
(000's)
|
$
|
425
|
Total cash costs
per ounce before by-product credits
|
$
|
692
|
Total cash costs
per ounce net of by-product credits
|
$
|
692
|
|
All-in sustaining
costs
|
Gold
|
Total cash costs net
of by-product credits
|
$
|
293,950
|
Sustaining
capital
|
$
|
117,550
|
Exploration
|
$
|
12,000
|
Reclamation cost
accretion
|
$
|
3,700
|
General and
administrative expenses
|
$
|
37,100
|
All-in sustaining
costs
|
$
|
464,300
|
Gold ounces produced
(000's)
|
$
|
425
|
All-in sustaining
costs per ounce produced
|
$
|
1,100
|
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 provide 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.
|
Q3
2017
|
|
Q3 2016
|
|
Q3 YTD
2017
|
|
Q3 YTD
2016
|
Cash provided by
operating activities before changes in working
capital(1)
|
$
|
37,039
|
|
|
$
|
125,987
|
|
|
$
|
269,335
|
|
|
$
|
311,257
|
|
Net cash provided
by operating activities(1)
|
$
|
48,675
|
|
|
$
|
78,679
|
|
|
$
|
223,321
|
|
|
$
|
141,650
|
|
Basic weighted
average common shares outstanding
|
313,152
|
|
|
311,407
|
|
|
312,673
|
|
|
282,335
|
|
|
(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"
"forward-looking information" within the meaning of Section 27A of
the United States Securities Act of 1933, as amended, Section 21E
of the US Exchange Act, 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", "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: in regards to the appeals to
the Guatemalan Constitutional Court of the decision by the Supreme
Court of Guatemala ordering the
Guatemalan Ministry of Energy and Mining ("MEM") to conduct
consultation with indigenous populations in certain designated
locations in and around the Escobal Mine, reinstating the Company's
mining license in respect of the Escobal mine, the timeline for
such appeals to be heard and decided and the likelihood of an
adverse decision by the Constitutional Court; the timing and
results of other court proceedings; the timing and likelihood of
peacefully resolving the road blockage affecting the Escobal mine;
timing and possible outcome of pending litigation; the continuation
of the expansion plans at Shahuindo and Bell Creek and the on-going
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 mining license is not lifted in such a way as to
resume mining operations 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 in 2017 of 400,000 to 450,000 ounces of
gold, total cash costs of $650 to
$700 per ounce and all-in sustaining costs of $1,050 to $1,150 per ounce; the timing and amount
of estimated future production, costs of production, capital
expenditures and requirements for additional capital; the
expectation of meeting production targets; growing gold production
to over a half million ounces in 2019; the timing and cost of the
design, procurement, construction and commissioning of the 12,000
tpd crushing and agglomeration circuit at Shahuindo, as well as the
expansion of the Shahuindo mine to a production capacity of 36,000
tpd with commissioning by mid-year 2018 and achieving the full
36,000 tpd production rate by the end of 2018, providing an
expected 80% recovery rate for agglomerated ore in line with the
pre-feasibility study; 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 the second half of
2018; the expectation of the capacity of the south waste rock dump
at Shahuindo; the timing of completion of the Bell Creek Shaft
Project to double the Bell Creek mine production to 80,000 ounces
of gold per year by late 2018; the completion of construction of
the Phase 5 tailings facility expansion at the Bell Creek Mill
ready for operation in accordance with the life of mine plan; care
and maintenance plans at Escobal; providing further updates to
guidance when additional information regarding the Escobal license
is available; 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; the
anticipated timing of updated Mineral Resource and Mineral Reserve
estimates; the timing for completion of the underground dewatering
project at Escobal; the cost and timing of sustaining capital
projects; 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 availability and
sufficiency of power and water for operations; the timely receipt
of permits and other approvals; the successful outcomes of
consultations with indigenous populations; 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 resume
operations once the suspension of the mining license to
Minera San Rafael for the Escobal
Mine is lifted and all licenses, permits and credentials affecting
the operation of the Company's mines, including the Escobal Mine,
are renewed or re-issued and all roadblocks are cleared, and
relationships with our partners, including employees, vendors and
community populations are maintained or effectively managed; 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 risks relevant to the
Company, see Risk Factors summarized above and discussed in more
detail in our 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.
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 Company'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.
SELECTED QUARTERLY CONSOLIDATED FINANCIAL RESULTS
Selected quarterly and YTD consolidated financial information
from continuing operations is as follows:
|
|
Q3
2017
|
|
Q3
2016(1)
|
|
Q3
YTD
2017
|
|
Q3 YTD
2016(1)
|
Metal
Sold
|
|
|
|
|
|
|
|
|
Silver (000's
ozs)
|
|
489
|
|
|
4,800
|
|
|
10,345
|
|
|
14,573
|
|
Gold (000's
ozs)(2)
|
|
116.3
|
|
|
108.791
|
|
|
0.3424
|
|
|
257.483
|
|
Lead (000's
t)
|
|
—
|
|
|
1.9
|
|
|
4.1
|
|
|
6.7
|
|
Zinc (000's
t)
|
|
—
|
|
|
2.7
|
|
|
5.6
|
|
|
9.5
|
|
Realized
Price
|
|
|
|
|
|
|
|
|
Silver in concentrate
(per oz)
|
$
|
18.12
|
|
$
|
20.64
|
|
$
|
17.71
|
|
$
|
18.54
|
|
Gold in doré (per
oz)
|
$
|
1,266
|
|
$
|
1,321
|
|
$
|
1,239
|
|
$
|
1,264
|
|
Lead (per
t)
|
$
|
—
|
|
$
|
2,204
|
|
$
|
2,379
|
|
$
|
1,829
|
|
Zinc (per
t)
|
$
|
—
|
|
$
|
2,513
|
|
$
|
2,864
|
|
$
|
2,160
|
|
LBMA/LME
Price(3)
|
|
|
|
|
|
|
|
|
Silver (per
oz)
|
$
|
16.84
|
|
$
|
19.61
|
|
$
|
17.16
|
|
$
|
17.12
|
|
Gold (per
oz)
|
$
|
1,278
|
|
$
|
1,335
|
|
$
|
1,251
|
|
$
|
1,260
|
|
Lead (per
t)
|
$
|
2,334
|
|
$
|
1,873
|
|
$
|
2,259
|
|
$
|
1,780
|
|
Zinc (per
t)
|
$
|
2,963
|
|
$
|
2,255
|
|
$
|
2,783
|
|
$
|
1,955
|
|
Revenues
|
$
|
155,201
|
|
$
|
234,721
|
|
$
|
615,823
|
|
$
|
595,105
|
|
Total operating
costs
|
$
|
136,422
|
|
$
|
135,296
|
|
$
|
418,590
|
|
$
|
384,303
|
|
Earnings from
operations
|
$
|
18,779
|
|
$
|
99,425
|
|
$
|
197,233
|
|
$
|
210,802
|
|
Earnings
(loss)
|
$
|
(8,380)
|
|
$
|
63,011
|
|
$
|
99,803
|
|
$
|
117,561
|
|
Earnings (loss)
per common share
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.03)
|
|
$
|
0.20
|
|
$
|
0.32
|
|
$
|
0.42
|
|
Diluted
|
$
|
(0.03)
|
|
$
|
0.20
|
|
$
|
0.32
|
|
$
|
0.42
|
|
Adjusted earnings
(loss)(4)
|
$
|
(7,225)
|
|
$
|
65,657
|
|
$
|
101,689
|
|
$
|
161,970
|
|
Adjusted earnings
(loss) per common share(4)
|
|
|
|
|
|
|
|
|
Basic(4)
|
$
|
(0.02)
|
|
$
|
0.21
|
|
$
|
0.33
|
|
$
|
0.57
|
|
Diluted(4)
|
$
|
(0.02)
|
|
$
|
0.21
|
|
$
|
0.33
|
|
$
|
0.57
|
|
Weighted average
shares outstanding - Basic
|
|
313,152
|
|
|
311,407
|
|
|
312,673
|
|
|
282,335
|
|
Weighted average
shares outstanding - Diluted
|
|
313,161
|
|
|
312,108
|
|
|
312,722
|
|
|
282,672
|
|
Dividends
paid
|
$
|
6.252
|
|
$
|
18,654
|
|
$
|
43.686
|
|
$
|
50,730
|
|
Cash flow provided
by operating activities
|
$
|
48,675
|
|
$
|
78,679
|
|
$
|
223,321
|
|
$
|
141,650
|
|
Cash flow provided
by operating activities before changes in working
capital(4)
|
$
|
37,039
|
|
$
|
125,987
|
|
$
|
269,335
|
|
$
|
311,257
|
|
Cash and cash
equivalents
|
$
|
182,072
|
|
$
|
142,426
|
|
$
|
182,072
|
|
$
|
142,426
|
|
Total
assets
|
$
|
3,127,529
|
|
$
|
3,033,218
|
|
$
|
3,127,529
|
|
$
|
3,033,218
|
|
Total long-term
liabilities
|
$
|
315,979
|
|
$
|
276,180
|
|
$
|
315,979
|
|
$
|
276,180
|
|
Costs per silver
ounce produced
|
|
|
|
|
|
|
|
|
Total cash costs net
of by-product credits(4)
|
$
|
—
|
|
$
|
6.5
|
|
$
|
6.15
|
|
$
|
5.66
|
|
All-in sustaining
costs per silver ounce net of by-product
credits(4)
|
$
|
—
|
|
$
|
8.68
|
|
$
|
8.91
|
|
$
|
7.55
|
|
Costs per gold
ounce produced
|
|
|
|
|
|
|
|
|
Total cash costs net
of by-product credits(4)
|
$
|
747
|
|
$
|
625
|
|
$
|
639
|
|
$
|
632
|
|
All-in sustaining
costs per gold ounce net of by-product
credits(4)(5)
|
$
|
1,088
|
|
$
|
974
|
|
$
|
954
|
|
$
|
979
|
|
|
|
(1)
|
Q3 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)
|
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 257.5
thousand gold ounces sold for Q3 YTD 2016 31.5 thousand gold ounces
sold at Shahuindo which include four months of pre-commercial
production ounces sold (7.6 thousand ounces of gold in doré sold in
the period January through April 2016, respectively).
|
(3)
|
London Bullion Market
Association (LBMA)/London Metal Exchange (LME) average closing
prices for each quarter presented.
|
(4)
|
Refer to the
"Non-GAAP Financial Measures" section of this
MD&A.
|
(5)
|
All-in sustaining
costs net of by-product credits per gold ounce produced exclude the
impact of $11.0 million in non-recurring transaction costs related
to the acquisition of Lake Shore Gold during Q3 YTD
2016.
|
View original
content:http://www.prnewswire.com/news-releases/tahoe-reports-strong-mine-operating-earnings-from-gold-segments-for-third-quarter-2017-300550453.html
SOURCE Tahoe Resources Inc.