Tahoe Resources provides new 2016 guidance, after Lake Shore acquisition
VANCOUVER, British Columbia – Tahoe Resources Inc. (TSX: THO, NYSE: TAHO) (“Tahoe” or the “Company”) today reported that, following the completion of its business combination (the “Transaction”) with Lake Shore Gold Corp. (“Lake Shore Gold”) on Friday, April 1, 2016, the Company has emerged as a new leader in the precious metals sector with a well-diversified, Americas-based operating platform, a strong balance sheet and an attractive growth profile. Tahoe’s asset base is anchored by the large-scale, high-grade Escobal silver mine in Guatemala and also includes low-cost, growing gold operations in Peru and the Timmins Gold Camp of Northern Ontario.
The Company also announced today combined 2016 guidance reflecting the completion of the Transaction. New 2016 guidance related to the Company’s gold operations includes total gold production of 370,000 to 430,000 ounces at total cash costs of $675 to $725 per ounce of gold, net of byproduct credits1, 2 and all-in sustaining costs (“AISC”) of $950 to $1,000 per ounce of gold, net of byproduct credits.1 Guidance related to the Company’s silver operations remains unchanged (see section entitled 2016 Guidance for more information).
Tahoe believes its financial strength is an important area of competitive advantage. Pro forma cash and equivalents of Tahoe and Lake Shore Gold at December 31, 2015 totaled $179.3 million.3 Excluding debt related to Lake Shore Gold’s convertible debentures, pro forma net cash at December 31, 2015 was $115.8 million. The Company’s strong financial position largely results from quality assets capable of generating solid free cash flow throughout the silver and gold price cycles. Pro forma cash flow from operating activities totaled $243.8 million in 2015 ($148.0 million net of sustaining capital). A strong balance sheet, solid free cash flow and favorable geology are key factors supporting the Company’s plans to aggressively pursue future production growth.
Kevin McArthur, Executive Chair and CEO of Tahoe, commented: “Tahoe Resources combines financial strength, free cash-flow, responsible operations and attractive growth projects and exploration targets. This is a powerful combination for a company focused on maximizing long-term shareholder value. Looking ahead, we have a number of key initiatives, such as growing gold production from approximately 350,0004 ounces in 2015 to over 550,000 ounces by 2020, increasing reserves and resources in order to add mine life in all three of our key areas of operation, and achieving low unit costs to support strong free cash flow generation in any conceivable metals price environment.
“Our new Lake Shore Gold Division is a critical component of our value creation plans. Specifically, our strategy includes growing gold production in Timmins by approximately 40%, to over 250,000 ounces per year by 2020. Achieving this target will involve re-commissioning and extending the shaft at the Bell Creek Mine to depth, which could more than double production at that operation, continuing to advance the Whitney Project, which could begin as an open pit and then transition to underground mining, and achieving commercial production at the 144 Gap Deposit, expected during 2017. We are also contemplating a further expansion of the Bell Creek Mill to 5,500 tonnes per day, with the crushing and grinding circuit already commissioned for this level of performance.
“Increasing mine life is another key component of our strategy for our new Canadian operations. We are targeting growth of 2.0 to 4.0 million ounces in gold reserves and resources by 2020. To achieve that growth we will work to add ounces at both the Timmins West and Bell Creek mines and to advance exploration drilling at Whitney and along the 144 Trend. With three gold deposits identified along the 144 Trend to date (Timmins Deposit, Thunder Creek and the 144 Gap Deposit), another discovery to be advanced and multiple additional targets, we believe that 144 has ‘tip of the iceberg’ potential and could become a major gold producer in the tradition of the large-scale, long-life historic producers in the Timmins Camp. Finally, we intend to look closely at the potential of longer-term projects such as Gold River, Fenn-Gib and Juby.”
With the completion of the Transaction, Tahoe today announced changes to the Company’s board of directors and management team. Alan Moon, formerly Chairman of the Board of Lake Shore Gold, has joined Tahoe’s Board of Directors. Mr. Moon was formerly President of TransAlta Energy Corporation and brings to Tahoe extensive board and industry experience. Tony Makuch joins Tahoe as Executive Vice President and President, Canadian Operations. Mr. Makuch was formerly President and CEO of Lake Shore Gold and has over 30 years of experience developing and operating precious and base metal mines in North America. Mark Utting joins Tahoe as Vice President, Investor Relations. Mr. Utting brings to Tahoe over 25 years of investor relations and corporate communications experience primarily in the mining and banking industries.
The Company also announced that, following completion of the Transaction, Ira Gostin, Tahoe’s Vice President, Investor Relations, is leaving the company to pursue other opportunities. The Board of Directors and management of Tahoe wish to thank Mr. Gostin for his significant contribution to the Company’s advancement over the last several years and wish him the very best in his future endeavours.