Tahoe Resources (TAHO, Financial) has a strong portfolio of producing and development assets, including the production segment comprising of superlative, impressive-grade Escobal silver mine, superior-quality, low risk La Arena gold mine and 2015 forecast production in 18 to 21 Mozs range of Ag and nearly 200 to 220 kozs of Au at enhanced consensus operating margins.
Strong assets will power growth
The overall production of the mill at Escobal was nearly 335,174 tonnes with a grade of nearly 500 grams per tonne and in line with guidance for the year, averaging slightly over 3,700 tonnes per day and on the path towards achieving approximately 4,500 tonnes per day for later in year.
The superior production at the Escobal mine has added to the overall production success of Tahoe for the quarter and for the complete year. The increased total production for the miner is believed to solidify its position in the fiercely competitive mining market and deliver improved top line growth as well as notable shareholder returns.
Moving in the right direction
Tahoe has also set the objectives for the complete fiscal year 2015 including, operating of the mines to world standards, develop Shahuindo phase 1 and start the operations, deliver 18 to 21 moz silver at TCC below $8.25 per ounce, deliver 200 to 220 koz gold at TCC below $650 per ounce, payoff the term debts, start revolver service, continually and significantly paying dividends, target the tip of the iceberg and organic growth opportunities, regularly expanding the free cash flow generation.
The continued execution upon the key targets set by Tahoe for the complete fiscal year 2015 is estimated to further solidify the already robust mine portfolio of the company and generate superior shareholder value.
Also, the construction segment includes greatly scalable, Shahuindo gold project with the initial gold production estimated by early 2016 and having reduced capital expenditure requirements of nearly $70 million.
The pre-feasibility segment comprises of La Arena sulphide project and M&I resource including 2.0Blbs of Cu and 2.1Mozs Au. The exploration projects comprises of Guatemala having 20,000 hectares in an innovative silver district and Peru comprising of 55,800 hectares in a highly prospective region. In addition, the company’s production surpassed budget at approximately 3.44 million tonnes at nearly 0.61 grams per tonne of mined grade with a strip ratio of 1.35:1. Also, gold recovery rate was recorded at 85.79% and Tahoe delivered 56,354 payable ounces of gold, mined and sold during the quarter.
The successful prospective productions by the key La Arena sulphide, Peru and Guatemala projects at the reduced capital expenditures is believed to drive enhanced shareholder value and thus improved profitability for the company.
Moreover, Tahoe’s purchasing community has successfully been able to link reduced prices to several of its key suppliers.
The expanding operating margins of Tahoe at the key Peru and Guatemala operations coupled with the major cost reductions achieved through significant operations optimizations is estimated to solidify the company’s balance sheet with much lower debt levels compared to the superior cash flows.
Tahoe concluded the quarter with $85.9 million in cash and cash equivalents and Escobal operations delivered $25.8 million in cash for the quarter. Also, the company achieved $0.22 earnings per share at the start of the year and returned $8.9 million to shareholders by its monthly dividend program, which is now at $0.02 per share.
Conclusion
Overall, the investors are advised to invest in the Tahoe Resources Inc. looking at the satisfactory company valuations with the trailing P/E and forward P/E ratios of 20.91 and 18.40 respectively, depicting that the stock is rightly valued. The PEG ratio of 4.79 indicates nominal company growth at reduced costs. The profit margin of 28.31% signifies healthy company profits. Importantly, Tahoe has a robust balance sheet with significant total cash position at $85.95 million against smaller total debt of $49.92 million only, encouraging the miner to invest into the future growth investments.
