Tahoe Resources reports strong first production year
VANCOUVER, British Columbia – March 11, 2015 – Tahoe Resources Inc. (TSX: THO, NYSE: TAHO) today reported financial and operational results for the fourth quarter and the year ending December 31, 2014, with the Company completing its first year of commercial production at the Escobal mine.
Highlights for Q4 2014 and the year ending December 31, 2014 are (all amounts in U.S. dollars unless otherwise stated):
- Silver produced in concentrate was 5.2 million ounces and 20.3 million ounces during the fourth quarter and year ended December 31, 2014, respectively.
- Revenue generated from concentrate sales was $65.4 million and $350.3 million for the fourth quarter and year ended December 31, 2014, respectively. Fourth quarter revenues were impacted by a large year-end inventory of concentrate which is being sold in the first quarter of 2015. Additionally, provisional pricing and sales adjustments negatively impacted revenue and resulted in a realized price of $14.99 per ounce of silver in the fourth quarter, compared to an average LBMA price of $16.50.
- Total cash cost per silver ounce produced net of byproduct credits for the fourth quarter and year ended December 31, 2014 was $6.26 and $6.37, respectively.
- All-in sustaining cost per silver ounce produced net of byproduct credits for the fourth quarter and year ended December 31, 2014 was $9.09 and $9.15, respectively. Net earnings attributable to common shareholders amounted to $9.8 million and $90.8 million for the fourth quarter and year ended December 31, 2014 or $0.07 and $0.62 basic earnings per share, respectively.
- After-tax realizable value of year-end concentrate inventories in excess of normal levels ranged between $12 and $15 million. This equates to a range $0.08 to $0.10 per share in unrealized earnings for the fourth quarter and year ended December 31, 2014.
- Net cash provided by operating activities was $17.8 million and $119.3 million for the fourth quarter and year ended December 31, 2014, respectively.
- Cash and cash equivalents at December 31, 2014 were $80.4 million.
- Mill throughput during the fourth quarter totaled 319,632 tonnes and averaged 3,474 tonnes per day (tpd) while totals for the year were 1.25 million tonnes and averaged 3,413 tpd.
- The Company reported its first Proven and Probable Mineral Reserve estimates with the publication of a NI 43-101 Feasibility Study released November 5, 2014.
- The Company drew and repaid $25 million of its debt facility during the year.
- The Board of Directors approved a monthly dividend of $0.02 per share commencing in December 2014.
These results reflect final year-end adjustments, and, to the extent they differ, supercede those provided in the February 17, 2015 press release which reported select preliminary unaudited financial information for 2014.
Mine and mill production are expected to increase from 3500 tpd in the first half of the year to 4500 tpd in the second half of 2015. Mine development and plant infrastructure projects to support the increase will result in higher capital spending in the first two quarters of the year. Statutory and voluntary royalty payments were made to local and regional municipalities and the central Guatemalan government in January 2015 for business settled in the second half of 2014. The Company plans to pay down the remaining $50 million of short-term debt in June and expects to continue paying the monthly dividend that commenced in December of last year. As a result of the timing of these expenditures, free cash flow and cash balance are expected to grow at a faster rate in the second half of the year compared to the first half.
Production and cost guidance are as follows:
Escobal operations began optimizing operating performance and costs in the last quarter of 2014 and will continue these initiatives in 2015. Exploration is turning to regional programs in the Escobal district during 2015.
Tahoe Resources and Rio Alto Mining to Combine
On February 9, 2015, Tahoe and Rio Alto announced that they have entered into an arrangement to combine their respective businesses to create a leading intermediate precious metals producer.
On February 26, 2015, in accordance with TSX rules, Tahoe obtained written approval from its shareholders with ownership, control or direction over more than 50 percent of the outstanding shares for the issuance of shares under the arrangement. The plan of arrangement is expected to close in early April 2015, subject to certain closing conditions, regulatory approvals and the approval of at least 66.67 percent of Rio Alto’s shareholders.
Tahoe’s senior management will host a conference call to discuss the 2014 results on Thursday, March 12, 2015, at 8:00 a.m. PDT. To join the call, please dial 1-800-319-4610 (toll free from Canada and the U.S.) or 604-638-5340 (from outside Canada and the U.S.). A recording of the call will be available later that day at www.tahoeresourcesinc.com/investors. Complete financial results, the Company’s management discussion and analysis, and other filings will be filed on SEDAR (www.sedar.com) and the Company’s website (www.tahoeresourcesinc.com).
About Tahoe Resources Inc.
Tahoe’s strategy is to responsibly operate the Escobal mine to world standards, to pay significant shareholder dividends and to develop high quality precious metals 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 NYSE. The Company is listed on the TSX as THO and on the NYSE as TAHO.
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Qualified Person Statement
This news release has been approved by Charles Muerhoff, Tahoe’s Vice President Technical Services and Qualified Person as defined by National Instrument 43-101.
The Company has included certain non-Generally Accepted Accounting Principles (GAAP) financial measures throughout this document. “Total Cash Cost” was divided by the number of silver ounces contained in concentrate to calculate per ounce figures. These measures are not defined under International Financial Reporting Standards (IFRS) and should not be considered in isolation. The Company’s primary business is silver production with other metals (gold, lead and zinc) produced simultaneously in the mining process. The value of these metals represents a low percentage of the Company’s revenue and is considered byproduct. When deriving the production costs associated with an ounce of silver, the Company deducts byproduct credits from gold, lead and zinc sales, which are incidental to producing silver. The Company believes these measures will provide investors and analysts with useful information about the Company’s underlying cash costs of operations, the impact of byproduct credits on the Company’s cost structure and its ability to generate cash flow, as well as a meaningful comparison to other mining companies. Accordingly, these measures are intended to provide additional information and should not be substituted for GAAP measures.
The Company reports total production costs and total cash costs on a silver ounces produced basis. The Company follows the recommendation of the Silver Institute, a nonprofit international association with membership from across the breadth of the silver industry. The Institute serves as the industry’s voice in increasing public understanding of the many uses and values of silver. The production cost standard is the generally accepted standard of reporting cash costs of production by precious metal mining companies.
The Company has also adopted the reporting of all-in sustaining costs per silver ounce produced as a non-GAAP measure of a silver mining company’s operating performance and the ability to generate cash flow from operations. This measure has no standardized meaning, and the Company has utilized an adapted version of the guidance released by the World Gold Council. The World Gold Council is not a regulatory industry organization and does not have the authority to develop accounting standards or disclosure requirements.
All-in sustaining costs include total production cash costs incurred at the Company’s mining operation, sustaining capital expenditures, corporate administrative expenses, exploration and evaluation costs, and reclamation and closure accretion. The Company believes that this non-GAAP measure represents the total costs of producing silver from its operation and provides additional information about the Company’s operational performance and ability to generate cash flows to support future capital investments and to sustain future production.