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Strong 2017 financial results for Tahoe

Published by , Assistant Editor
Global Mining Review,

Tahoe Resources Inc. has reported positive financial and operating results for the fourth quarter and twelve months ended 31 December 2017. According to Tahoe, the company’s balance sheet remains strong, with cash and cash equivalents of CAN$125.7 million at 31 December 2017 and very little debt.

Ron Clayton, President and CEO of Tahoe, commented: “Tahoe achieved record gold production of 445 900 oz in 2017, realising the high end of its annual gold production guidance range of 400 000 – 450 000 oz. The strong gold production for the year was driven primarily by La Arena. The outstanding performance from the gold business in 2017 underscores the increasingly meaningful contribution of the gold segment to the overall financial performance of the company.”

“Despite the challenges in Guatemala during the second half of 2017, I am very pleased to report earnings of CAN$81.8 million for the year, or CAN$0.26 per share. Looking forward, I expect 2018 will be a pivotal year for the company. We remain optimistic that based on legal precedent, the Guatemalan Constitutional Court will issue a favorable ruling reinstating the Escobal mining license. We are focused on a positive resolution at the Casillas roadblock, located 16 km from the mine, which, in conjunction with a favorable court ruling, will put us in position to resume operations at Escobal.”

“In the meantime, we are executing on our strategy to complete our two near-term development projects in Canada and Peru by late summer, which will position us to achieve our target of 500 000 oz of gold production in 2019.”

4Q17 Summary & Highlights:

Strong operating and financial results from gold segments

4Q17 gold production totaled 105 800 oz. Production and costs in 4Q17 reflected strong results at all of the company’s gold mines, with total cash costs and AISC of CAN$648 and CAN$1033/oz, respectively.

However, 4Q17 earnings were somewhat negatively impacted by the halting of mining activities at the Escobal mine in southeast Guatemala which resulted in no material revenue for the quarter from the mine and care and maintenance costs of CAN$11.1 million (CAN$0.04 per share) and a one-time pre-tax CAN$11 million cumulative adjustment (CAN$0.04 per share) during the quarter to true-up the depletion related to the purchase price on the acquisition of the Peruvian mines in 2015. Except for these items, reported earnings for the quarter would have been positive on the strength of the gold segment alone.

Shahuindo and Bell Creek projects remain on time and in-line with guidance

The Shahuindo crushing and agglomeration expansion in Peru and the Bell Creek shaft project in Canada both remained on track during the quarter and within their respective estimated total project spend of CAN$80 million each.

2017 Summary & Highlights:

Record gold production of 445 900 oz 

The company achieved record gold production of 445 900 oz in 2017, achieving the high end of the annual gold production guidance range of 400 000 – 450 000 oz, which was revised upward in September 2017. The strong gold production for the year was driven primarily by La Arena in Peru, which exceeded its guidance due to on-going positive mine plan reconciliation with both higher grade and additional ore tonnes mined.

Silver production reflects suspension at Escobal 

The company produced 9.9 million oz of silver during 2017 at total cash costs of $6.15 per silver ounce and all-in sustaining costs of CAN$8.91 per silver ounce. Silver production reflects the impact of the Escobal suspension, where no production has been recorded since July 2017.

Positive cash flow and earnings 

Cash flow provided by operating activities before changes in working capital totaled CAN$287 million for 2017, despite the ongoing suspension at Escobal in Guatemala. The company generated positive earnings of CAN$81.8 million, or CAN$0.26 per share, for 2017. Earnings reflected the impact of the suspension at the Escobal mine, where no material revenues have been recorded since July 2017, and CAN$24.9 million (CAN$0.08 per share) in care and maintenance costs have been incurred during the second half of the year.

Shahuindo expansion remains on track


Construction of leach Pad 2B continued in 4Q17 as planned and is scheduled to be placed into production in 3Q18. Commissioning of the 12 000 tpd crushing and agglomeration circuit was substantially completed in early February 2018 and the production ramp-up was initiated. Construction of the 24 000 tpd circuit has begun with commissioning of the full 36 000 tpd plant scheduled for mid-year 2018. Of the CAN$80 million guidance for the crushing and agglomeration circuit, approximately CAN$48.8 million has been spent through 31 December 2017. The project remains on schedule and within guidance.

Bell Creek shaft expansion in-line with guidance 

The Bell Creek shaft project remains on track for commissioning in mid-year and on track with its CAN$80 million budget. Excavation of the third and final pilot raise from the shaft bottom is complete and slashing of this raise to the final dimensions has begun. Pilot raises for the underground ore and waste bins are complete and slashing of the raises is underway. Surface construction is focused primarily on the hoist room and headframe. Mechanical installation of the hoists started in early February and the headframe civil work is progressing with a projected start of steel installation by the end of 1Q18. Of the CAN$80 million guidance for the Bell Creek shaft project, approximately CAN$51.6 million has been spent to 31 December 2017. According to the company, the project remains on schedule and within guidance.

Strong cash position with CAN$125.7 million at year-end

Despite the ongoing interruption of mining operations at Escobal, Tahoe ended the year with cash and cash equivalents of CAN$125.7 million.

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