Mr. Ron Clayton reports
TAHOE REPORTS RECORD RESULTS IN FIRST QUARTER 2017
Tahoe Resources Inc. has released financial and operating results for the first quarter of 2017, including strong production and cost results from both silver and gold operations, record quarterly cash flow and earnings, and continued progress advancing key development projects. The company's balance sheet remained strong, with cash and cash equivalents of $175.4-million at March 31, 2017.
Highlights:
- Record cash flow provided by operating activities before changes in working capital of $132.9-million or 43 cents per share;
- Record earnings of $74.7-million (24 cents per share) and adjusted earnings of $75.1-million (24 cents per share);
- Record revenues of $251.0-million reflect strong sales volumes and silver prices;
- Gold and silver production and costs compare favourably with 2017 guidance;
- Growth projects on track.
Highlights of results for first quarter 2017 are provided herein.
Another excellent quarter at Escobal: Tahoe reported total silver production in first quarter 2017 of 5.7 million ounces driven by strong results at Escobal. First quarter 2017 silver production was 17 per cent higher than the previous quarter and the highest quarterly production since first quarter 2016 (5.7 million ounces). Total cash costs and all-in sustaining costs were $5.72 and $8.11 per ounce of silver produced, net of byproduct credits, respectively, better than the $6.48 and $9.76 per ounce recorded in fourth quarter 2016 and well below the full-year target ranges included in the company's 2017 guidance.
Strong results from all three gold operations: First quarter 2017 gold production totalled 119,100 ounces, compared with record production of 119,900 ounces in fourth quarter 2016. Production and costs in first quarter 2017 reflected strong results at all of the company's mines, as well as a one-time addition of 9,000 ounces related to a change at La Arena and Shahuindo to report production as ounces recovered versus ounces poured. The reporting change had no impact on gold sales. Total cash costs and AISC averaged $574 and $860 per ounce in first quarter 2017, which compared with $594 and $945, respectively, in the previous quarter. Excluding the impact of the change, total cash costs and AISC in first quarter 2017 were $623 and $933 per ounce, well below the target ranges included in full-year 2017 guidance.
Record earnings and cash flow per share driven by record revenue and low costs: First quarter 2017 cash flow provided by operating activities before changes in working capital was a record $132.9-million or 43 cents per share, and represented increases of 78 per cent and 79 per cent, respectively, from the previous quarter. Earnings and adjusted earnings in first quarter 2017 were a record $74.7-million and $75.1-million, respectively, and were both 24 cents on a per-share basis. The results compared with earnings of $300,000 or nil per share and adjusted earnings of $18.4-million or six cents per share in fourth quarter 2016. Record cash flow and earnings largely resulted from a 33-per-cent increase in revenues compared with fourth quarter 2016, to a record $251.0-million in first quarter 2017. The increase in revenues reflected record gold sales of 115,900 ounces, as well as increases in silver sales and the realized price for silver of 24 per cent and 33 per cent, respectively, from fourth quarter 2016 levels.
Growth plans remain on track: Capital expenditures in first quarter 2017 totalled $48.6-million, of which $33.1-million was for sustaining capital expenditures and $15.5-million was related to project capital. Exploration expenditures in first quarter 2017 totalled $4.2-million. Capital and exploration expenditures were lower in the first quarter than the expected average for the year due to the lag time between ordering, completions and the normal billing cycle, the schedule for receipt of permits and commencing work programs, and the impact of minor delays due to heavy rains at Shahuindo. Expenditure levels are expected to increase over the balance of 2017 as the company works toward completing expansion projects at Shahuindo and the Bell Creek mine in mid-2018 and undertakes exploration programs at a number of high-potential targets.
Industry-leading dividend: A total of $18.7-million was paid in dividends to shareholders in first quarter 2017, including $3.9-million in share-based dividends.
Ron Clayton, president and chief executive officer of Tahoe, commented: "We are off to a great start in 2017, with record cash flow per share, as well as earnings and adjusted earnings in the first quarter largely driven by strong operating results at all of our mines. Total silver production was 5.7 million ounces for the quarter with per-ounce costs averaging well below our target ranges for the year. Turning to gold, we were very pleased with the results from all of our gold mines, with each operation's production and costs coming in at, or better than, expected levels. Equally important, at quarter-end, we remained well positioned to achieve our growth targets, including producing at least a 500,000 ounces of gold in 2019 at AISC averaging below $1,000 per ounce.
"Looking at the remainder of 2017, our full-year 2017 production and cost guidance for both silver and gold remains unchanged as production and per-ounce costs are expected to be more in line with target levels over the balance of the year. The pace of both capital and exploration expenditures has increased on schedule in the second quarter as we move towards completing the initial circuit of our crushing and agglomeration plant at Shahuindo in the second half of this year and advance work to expand Shahuindo to 36,000 tonnes per day and Bell Creek mine to 80,000 ounces per year by late 2018."
Performance against 2017 guidance
In first quarter 2017, the company performed well against all of its 2017 guidance. The attached guidance table provides Tahoe's 2017 guidance, as well as the related first quarter 2017 performance.
GUIDANCE
($ millions unless otherwise indicated)
2017 guidance Q1 performance
Silver production (Moz) 18-21 5.7
Gold production (koz) (2) 375-425 119.1
Total cash cost per silver oz produced ($/oz) (3, 4, 5, 6, 7) $7-$8 $5.72
AISC per silver oz produced ($/oz) (2, 3, 4, 5, 6, 7) $9.50-$10.50 $8.11
Total cash cost per gold oz produced ($/oz) (4, 7) $700-$750 $574
AISC per gold oz produced ($/oz) (4, 7) $1,150-$1,250 $860
Sustaining capital (incl. capitalized drilling) $160-$175 $33.1
Project capital $150-$175 $15.5
Exploration expense $35-$45 $4.2
Corporate G&A (8) $45-$55 $11.7
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(1) Note the forward-looking note at the end of this press release.
(2) The gold production range of 375,000 to 425,000 ounces includes gold
ounces produced in concentrate from the Escobal mine.
(3) Assumes the following metals prices: $1,250 per ounce gold; 90 cents
per pound lead; and 90 cents per pound zinc.
(4) Total cash costs and AISC are presented net of byproduct credits.
(5) Assumes payable byproduct metal production: 10,190 ounces gold;
16,332,000 pounds lead; 23,109,000 pounds zinc.
(6) Silver cost guidance assumes a 1-per-cent statutory royalty and a
4.5-per-cent voluntary and private royalty on all silver sales above
$16 per ounce.
(7) All per-ounce costs are based on silver ounces contained in
concentrates (silver) and gold ounces produced.
(8) Corporate general and administrative costs include non-cash,
stock-based compensation.
(9) Numbers may not add due to rounding.
Conference call
Tahoe's senior management will host a conference call and webcast to discuss the first quarter 2017 results on May 3, 2017, at
10 a.m. ET (7 a.m. PT). To join the call, please dial 1-800-319-4610 (toll-free from Canada and the United States) or 1-604-638-5340 (from outside Canada and the U.S.). The webcast will be available on the company's website, as will a recording of the call later in the day.
Complete financial results for first quarter 2017, including the company's management's discussion and analysis and other filings, will be filed on SEDAR and on the company's website. Hard copies may be requested, free of charge, by calling 416-703-6298 or by e-mailing investors@tahoeresources.com.
About Tahoe Resources Inc.
Tahoe's strategy is to responsibly operate mines to world standards, to pay significant shareholder dividends and to develop high-quality precious metals assets in the Americas.
Qualified person statement
Technical information in this press release has been approved by Charlie Muerhoff, vice-president, technical services, Tahoe Resources, a qualified person as defined by National Instrument 43-101.
Selected quarterly consolidated financial results
Selected quarterly consolidated financial information from continuing operations for the most recent five quarters is as set out in the financial results table.
FINANCIAL RESULTS
Q1 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016
(5) (1)
Metal sold
Silver (000s oz) 5,561 4,496 4,800 5,212 4,563
Gold (000s oz) 115.9 100.7 108.8 98.1 50.6
Lead (000s t) 2.2 2.3 1.9 2.4 2.4
Zinc (000s t) 2.8 2.8 2.7 3.5 3.3
Realized price
Silver in concentrate (per oz) $19.22 $14.45 $20.64 $18.95 $15.92
Gold in dore (per oz) 1,201 1,197 1,321 1,255 1,166
Lead (per t) 2,588 2,036 2,204 1,779 1,590
Zinc (per t) 2,960 2,872 2,513 2,237 1,875
LBMA/LME price (2)
Silver (per oz) 17.42 17.19 19.61 16.78 14.85
Gold (per oz) 1,219 1,220 1,335 1,259 1,181
Lead (per t) 2,278 2,149 1,873 1,719 1,744
Zinc (per t) 2,780 2,517 2,255 1,918 1,679
Revenues (5) 251,046 189,398 234,721 228,251 132,133
Total operating costs 146,878 141,552 123,084 138,220 77,522
Earnings from operations 90,332 31,466 99,425 65,022 46,355
Earnings (6) 74,697 315 63,011 16,742 37,808
Earnings per common share
Basic 0.24 0.00 0.20 0.05 0.17
Diluted 0.24 0.00 0.20 0.05 0.17
Adjusted earnings (3) 75,069 18,415 65,657 57,873 35,489
Adjusted earnings per common share (3)
Basic 0.24 0.06 0.21 0.19 0.16
Diluted 0.24 0.06 0.21 0.19 0.16
Dividends paid 18,695 18,672 18,654 18,419 13,657
Cash flow provided by operating activities
before changes in working capital 132,851 74,669 125,987 115,951 69,319
Net cash flow provided by operating activities 78,575 107,021 78,679 37,678 25,293
Cash and cash equivalents 175,397 163,368 142,426 151,707 90,790
Total assets 3,092,942 3,071,253 3,033,218 2,981,740 2,005,860
Total non-current liabilities 340,202 348,663 276,180 269,984 194,679
Costs per silver/gold ounce produced
Total cash costs net of byproduct credits (3) 5.72/574 6.48/594 6.50/625 6.07/647 4.51/638
All-in sustaining costs per ounce net of
byproduct credits (3) (4) 8.11/860 9.76/945 8.68/974 8.16/973 5.97/825
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(1) Comparative first quarter 2016 and prior-quarter numbers exclude operational and financial
information from the Timmins mines.
(2) London Bullion Market Association (LBMA)/London Metal Exchange (LME) average closing prices
for each quarter presented.
(3) Non-generally accepted accounting principle financial measures are described in the non-GAAP
financial measures section of management's discussion and analysis.
(4) All-in sustaining costs net of byproduct credits per gold ounce produced for first quarter
2016, second quarter 2016 and third quarter 2016 exclude the impact of $700,000, $10.3-million and
$100,000, respectively, in transaction costs related to the acquisition of Lake Shore Gold.
(5) Commercial production at Shahuindo was declared on May 1, 2016. Revenues presented are
generated from the sale of gold ounces in dore beginning May 1, 2016. Precommercial
production revenues at Shahuindo are considered preoperating revenues and are credited against
construction capital through April 30, 2016. Included in the 98,100 gold ounces sold during second
quarter 2016 are 22,100 gold ounces at Shahuindo, which include one month of precommercial
production ounces produced and sold (5,300 ounces of gold in dore sold in the month of April,
2016).
(6) Earnings of $300,000 for fourth quarter 2016 were negatively impacted by the change in
enacted tax rates in Peru, resulting in a charge of approximately $19.3-million to deferred income
tax expense. Refer to the company's adjusted earnings described and calculated in the non-GAAP
financial measures section of the MD&A.
(7) Numbers may not calculate due to rounding.
We seek Safe Harbor.
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