Tahoe Resources (TGB, Financial) is believed to be on the right path to deliver approximately 20 million ounces of silver for its starting year of production.
Tahoe share price has just tripled since the introduction of its IPO in an extremely tough market with poor metal pricing scenario. The mining major was primarily supported by a robust balance sheet, supreme quality of assets and initial baseless costs, allowing it to generate healthy free cash flows for paying off its remaining debt and significant dividends.
On a roll
Tahoe looks very well-positioned to deliver sustainable dividends and noteworthy shareholder value even in this extremely difficult market condition enabled by its robust balance sheet having significantly lower debt levels.
Tahoe board of directors endorsed $0.02 per share per month of dividend to be paid in December 2014 and targets on continuing to pay this dividend on a quarterly basis, going forward.
Improving the operational efficiency
Tahoe has reported an increase in the mill throughput, supported by strong company operations with the plant constantly running at or greater than the 3,500 per day design rate. The mining major is witnessing increased recoveries exceeding its expectations for lead and silver production and slightly weaker production for gold and zinc.
The mining behemoth is keen on attracting larger shareholders by offering higher dividends. This effort is successfully supported by the company’s recovering operations of mining the key metals.
In general, the silver deposit is performing according to the expectations regarding the grade perspective and is integrating exceedingly well. In addition, Tahoe has succeeded in reducing the operating costs by nearly 8% or $7.68 per ton during the third quarter as compared to the previous quarter.
Tahoe has matched its guidance for capital spending in the $40 million to $45 million range for the year. The tailing filter and backfill plant projects are scheduled to start operations in the beginning of next year.
The company has employed some key efforts to lower its operating costs for the quarter and is successful in achieving the forecasted capital guidance for the year. The new plant projects believed to be introduced in the early next year would definitely provide extra cash flows for further operations.
However, the Escobal deposit has failed to qualify for the higher grade tests still; Tahoe expects to discover several other key mining growth opportunities at least for completely leveraging the active mill. And Tahoe is currently focusing on the San Rafael Valley close to Escobal where the deposits are believed to satisfy the company requirements, moving ahead.
Although the Escobal deposits in Guatemala did not meet the company expectations still, Tahoe is believed to have many other exploration regions to be identified in Guatemala spread across a 2000 km land area nearby Escobal.
Conclusion
Overall, the investors are advised to cautiously invest in Tahoe Resources Inc. considering the acceptably low trailing P/E of 31.25, representing the stock is not overvalued. The earnings per share estimates are also seen to be continuously rising. The profit and operating margins of 25.06% and 35.16% respectively depicts satisfactorily increasing company profits. The total cash of $78.90 million is also greater than the total debt level at $49.69 million.
