Ms. Alexandra Barrows reports
TAHOE REVISES 2017 GUIDANCE FOR GOLD OPERATIONS AND PROVIDES UPDATED RESERVES AND RESOURCES AT TIMMINS WEST
Tahoe Resources Inc. has updated its 2017 guidance for its gold operations. Due to the continuing interruption of operations at Escobal, multiyear 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 rest 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 $1,150 per ounce, driven by higher production and lower capital and exploration costs.
GUIDANCE
Production Cash costs All-in Project Sustaining Exploration
(gold, koz) ($/oz) sustaining capital capital ($ millions)
costs ($/oz) ($ millions) ($ 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
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(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-generally accepted accounting principle financial measures.
(2) The 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-million to $115-million, versus the initial 2017 guidance of $150-million 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-million 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 continuing uncertainty at Escobal, discretionary exploration spending has been reduced by $20-million to an estimated $14-million to $20-million for 2017, compared with the initial guidance of $35-million 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 two million to four 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-million to $55-million.
Capital projects update
Shahuindo expansion
Construction of the initial 12,000-tonne-per-day crushing and agglomeration circuit is now 90 per cent complete, with commissioning anticipated in the coming weeks. Engineering is substantially complete on the additional 24,000-tonne-per-day crushing and agglomeration plant, and the company is finalizing purchase orders for the equipment. The project remains on schedule and budget for commissioning by midyear 2018. The project is planned to reach the full 36,000-tonne-per-day production rate by the end of 2018, providing an expected 80-per-cent ultimate gold recovery, in line with the prefeasibility study.
Bell Creek shaft project
The Bell Creek shaft project continues on schedule and on 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 metres. Shaft rehabilitation and furnishing continue to progress well and are complete down to a depth of 433 metres with new sets, guides and services installed. On the surface, demolition of the historical hoisting plant was completed in second quarter, 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 grams per tonne to 738,000 ounces of gold at an average grade of 3.2 grams per tonne, effective May 15, 2017.
TIMMINS WEST MINERAL RESOURCES AND RESERVES
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 and 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 plus probable 7,152,000 3.21 737,800
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(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 the National Instrument 43-101 technical report, Timmins West
mine, Timmins, Ont., Canada, dated Sept. 20, 2017.
(3) Mineral resources are reported using a gold cut-off grade of
1.5 grams per tonne.
(4) Mineral reserves are reported using a gold cut-off grade of 2.0
g/t and a gold price of $1,250 per ounce.
(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, Ont., Canada, dated Sept. 20, 2017, which is available on SEDAR.
Escobal update
The company's efforts in Guatemala are focused on reaching a peaceful and expeditious conclusion to the roadblock at Casillas, which is approximately 16 kilometres away from the operations in San Rafael Las Flores. Upon resolution, the company expects to resume production at Escobal within a week.
On Sept. 11, 2017, the company reported that the Guatemalan Supreme Court issued a decision that reinstated the Escobal mining licence. 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 licence was temporarily suspended, the company's annual export credential for the exportation of metal 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 licence. 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 metal 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 New York Stock Excahgne. The company is listed on the Toronto Stock Exchange 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, a qualified person as defined by National Instrument 43-101.
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