Tahoe gets 15% share flip on record quarterly cash flow

Latin-America-focused Tahoe Resources (TSX:THO) announced record quarterly cash flow yesterday from its three operations: the Escobal silver mine in Guatemala, and the La Arena and Shahuindo gold mines in northern Peru.

Investors reacted positively to the news, bidding up the stock 15.1%, or $1.62, to close at $12.35 today on the TSX.

The Vancouver-based precious metals miner produced 5.7 million ounces of silver from Escobal, the third largest silver mine in the world – a 17% increase from the previous quarter and the highest quarterly production at the mine since the first quarter of 2016. The costs to mine silver at Escobal were down, at $5.72 an ounce versus $6.48/oz last quarter (AISC), and below full-year cost target ranges.

Gold production totalled 119.1 ounces, just shy of Tahoe's record set in Q4 2016 of 119.9 million ounces. Tahoe also managed to lower its gold cash costs, from all-in-sustaining costs of $594 an ounce last quarter, to $574 per ounce in the first quarter.

Adjusted earnings in the first quarter amounted to $75.1 million, or $0.24 per share. Record cash flow and earnings largely resulted from a 33% increase in revenues compared to Q4 2016, to a record $251 million in Q1 2017. The increase in revenues reflected record gold sales of 115.9 thousand ounces, as well as increases in silver sales and the realized price for silver of 24% and 33%, respectively, from Q4 2016 levels.

"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," said Ron Clayton, Tahoe's president and CEO, in a statement.

Last year, Tahoe bought Canadian miner Lake Shore Gold for $540 million and added the firm's Timmins West and Bell Creek mines in Northern Ontario to its portfolio.

Q1 highlights:

  • Record cash flow provided by operating activities before changes in working capital of $132.9 million or $0.43 per share
  • Record earnings of $74.7 million ($0.24 per share) and adjusted earnings of $75.1 million ($0.24 per share)
  • Record revenues of $251.0 million reflects strong sales volumes and silver prices
  • Gold and silver production and costs compare favourably to 2017 guidance
  • Growth projects on track