VANCOUVER, British Columbia – November 6, 2017 – Tahoe Resources Inc. (“Tahoe” or the “Company”) (TSX: THO, NYSE: TAHO) today announced solid financial and operating results for the third quarter and nine months ended September 30, 2017. The Company’s balance sheet remains strong, with cash and cash equivalents of $182.1 million at September 30, 2017 and very little debt.
Ron Clayton, President and CEO of Tahoe, commented: “Despite challenges in Guatemala during the quarter, we are very pleased with our team’s performance, particularly at our gold operations which produced 109 thousand ounces at a total cash cost of $747 per ounce. The Company remains focused on executing our strategy to advance near-term development projects in Canada and Peru. Although we reported a loss for the quarter, the results were negatively impacted by $14 million in costs ($0.04 per share) related to the suspension and care and maintenance of Escobal and a $9 million non-recurring pre-tax expense ($0.03 per share) at La Arena as a result of completing negotiations to fulfill historical commitments made to the community. Except for these items, we would have reported positive earnings for the quarter on the strength of our gold operations alone. In Guatemala, we are gratified that the Supreme Court reinstated the Escobal license in September and are working diligently to resolve the Casillas road block and to obtain renewal of our export credential so that we can resume mining operations at Escobal. We believe the resolution of these two issues will follow the Constitutional Court decision on the appeals from the Supreme Court ruling.”
Summary of Q3 2017:
Strong operating and financial results from gold segments – Q3 2017 gold production totaled 108.7 thousand ounces, including 19.4 thousand ounces from Shahuindo. Production and costs in Q3 2017 reflected strong results at all of the Company’s gold mines, with total cash costs and AISC averaging $747 and $1,088 per ounce, respectively, in Q3 2017.
Shahuindo expansion plan remains on track – Construction of the initial 12,000 tpd crushing and agglomeration circuit at Shahuindo is now nearly complete with commissioning initiated at the end of September. The additional 24,000 tpd crushing and agglomeration circuit remains on schedule and within guidance for commissioning by mid-year 2018. The project is planned to reach the full 36,000 tpd production rate by the end of 2018, providing an expected 80% ultimate gold recovery.
Bell Creek Shaft Project continues on plan – The sinking hoist was commissioned and work began on the third and final pilot raise. The project remains on schedule and within guidance for commissioning in mid-year 2018, with a ramp up through the end of the year.
Released improved 2017 gold production guidance at lower costs – In September, the Company re-instated and increased its guidance for gold production to 400,000 to 450,000 ounces for 2017 due in large part to the positive mine plan reconciliation (higher grade and additional tonnes) experienced at La Arena year to date. Total cash cost estimates have been decreased by $50 per ounce to an estimated $650 to $700 per ounce, reflecting the higher anticipated production levels and better than anticipated cost performance year to date. Likewise, all-in sustaining costs decreased by $100 per ounce to a guidance range of $1,050 to $1,150 per ounce, driven by higher production and lower capital and exploration costs. The Company remains in line to achieve our new guidance.
Conservative balance sheet management with $182m in cash – Despite the on-going interruption of mining operations at Escobal, the Company’s balance sheet remains strong, with cash and cash equivalents of $182.1 million at September 30, 2017. In addition, the Company has access to $75 million of the $300 million revolving credit facility that matures on July 19, 2021. As previously reported, the credit agreement includes terms that limit borrowing to a maximum of $75 million during the period of suspension of the mining operations at Escobal as a result of the CALAS claim in Guatemala. The revolving credit facility remains undrawn.
Timmins West Mineral Resource and Reserve update – The Company announced an updated Mineral Resources and Mineral Reserves for Timmins West in Canada. The Company had significant growth in Mineral Reserves attributable to the initial Mineral Reserve for the 144 Gap deposit, a part of the Timmins West mine. Proven and Probable Mineral Reserves at Timmins West increased from 233,000 ounces of gold at an average grade of 3.7 gpt as reported January 1, 2017 to 738,000 ounces of gold at an average grade of 3.2 gpt effective May 15, 2017. Measured and Indicated Mineral Resources total 1.02 million ounces of gold at the Timmins West Mine.
Update on Escobal Mining License and Export Credential – On July 5, 2017, the Company was notified that the Supreme Court of Guatemala issued a temporary decision to provisionally suspend the Escobal mining license of Minera San Rafael (“MSR”) in response to an action brought by CALAS, an anti-mining NGO, against the Ministry of Energy and Mines (“MEM”). On September 10, 2017, the Guatemalan Supreme Court issued a definitive decision that reinstated the Escobal mining license. The ruling also ordered MEM to consult with the Xinka indigenous communities within certain geographic areas within 12 months. The ruling allows Escobal to restart operations immediately and to continue to operate during the consultation process. Although Tahoe believes that MEM complied with ILO Convention 169 before it issued the Escobal license, it will fully support MEM in any of its future indigenous engagement.
CALAS and other interested parties appealed the Supreme Court’s decision reinstating the Escobal mining license to the Constitutional Court, the highest court in Guatemala, which heard the matter on October 25, 2017. The Constitutional Court is expected to rule on the appeals before the end of the year.
In June 2017, the Company filed its annual request to renew the export credential with MEM. However, MEM did not renew the credential because its renewal had become contingent on the Supreme Court’s reinstatement of the Escobal mining license. The credential therefore expired in August 2017. After the Supreme Court reinstated the mining license in September 2017, MEM publicly stated that the export credential could now be legally renewed. However, contrary to such public declaration, MEM has yet to renew the credential. The Company believes that MEM is unlikely to renew the export credential prior to the Constitutional Court ruling on the appeals.
Update on Guatemala Road Block – Since June 7, 2017, a group of protesters near the town of Casillas has blocked the primary highway that connects Guatemala City to San Rafael Las Flores and the Escobal mine. Operations were reduced between June 8 and June 19 to conserve fuel and were further curtailed on June 19, 2017.
While some of the protesters come from Casillas, which is approximately 16 kilometers from the mine, many more are from outside the municipality. The Company has reason to believe that the blockade is politically motivated and is being substantially funded by anti-mining groups. As the road block continues, some protesters have become increasingly violent. Following the September 10, 2017 court ruling that reinstated the Escobal mining license, the Company attempted to transport supplies to the mine site. Protesters blocked the passage of vehicles and attacked the truck drivers and trucks. On a separate occasion, a helicopter attempting to deliver fuel to the mine was shot at. These violent episodes have put people’s lives at risk and violated the human rights of the Company’s employees, contractors and San Rafael Las Flores residents, particularly the right to freedom of movement, the right to liberty and security of person, and the right to work.
Tahoe deplores violence of any kind and continues to focus on reaching a peaceful and expeditious conclusion to the roadblock at Casillas. The Company is working with the government, community leaders and international mediation experts to develop a dialogue process aimed at resolving the matter. Once the roadblock is lifted, the export credential is renewed and the Supreme Court ruling is confirmed by the Constitutional Court, the Company expects to be in a position to resume production at Escobal within a week.
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