January 15, 2016 
 
Equity Research
Company Profile
Tahoe Resources Inc. is a multi-asset,
intermediate precious metals producer that
has a 100% interest in: 1) the Escobal mine
in Guatemala; 2) the La Arena heap-leach
gold mine in Peru; and 3) the Shahuindo
heap-leach development project, also in
Peru.
 
Tahoe Resources Inc.
(THO-T) C$11.36
2016 Guidance and Reserves Update
Event
Yesterday morning, Tahoe reported its 2015 production results, 2016
guidance, and an update on its year-end reserves.
Impact: SLIGHTLY NEGATIVE
2015 silver production of 20.4 Moz was slightly better than our 19.8 Moz
forecast, while gold production of 230 koz at La Arena was in line.
Management suggested that total cash costs when reported with its financial
results are expected to be at the low end of its guidance ranges of $6.35–
$8.25/oz Ag and $625–$650/oz Au. We forecast total cash costs of $7.35/oz
Ag and $559/oz Au.
2016 guidance: silver production expected at 18.0–21.0 Moz at total cash
costs of $7.50–$8.50/oz (AISC $10.00–$11.00/oz) and gold production at
200–250 koz at total cash costs of $700–$750/oz (AISC $950–$1,050/oz).
Production guidance is largely in line with our forecasts of 20 Moz Ag and
252 koz Au, while cost guidance is slightly higher.
Total capital spending of $140mm–$175mm is much higher than the $88mm
that we had expected, with the inclusion of $70mm–$85mm for the Phase
Two expansion at Shahuindo, which we were not expecting until 2017. This
marks an acceleration of the timeline that the company had suggested at the
time of the acquisition, in our view.
With the expansion spending being brought forward, we model the free cash
flow we had anticipated being pushed out and the company being essentially
cash-neutral this year. In 2017, we model the company generating ~$70mm
of free cash flow.
Reserves at Escobal declined to 311.5 Moz at 332 g/t Ag from 350.5 Moz at
347 g/t Ag because of depletion. A new estimate was completed at
Shahuindo, with reserves increasing to 1.9 Moz Au at 0.53 g/t Au from 1.0
Moz at 0.84 g/t Au, primarily driven by a lower cut-off grade of 0.18 g/t from
0.30–0.35 g/t earlier.
TD Investment Conclusion
We view Tahoe as a multi-asset, high-margin, intermediate precious metals
producer with a growth pipeline. In our view, the company is well-managed
and generates strong cash flow, which is being used to bring its Shahuindo
growth project into production in early-2016 while paying a strong dividend.
Gold and Precious Minerals - Large-Cap
Golds
Recommendation: BUY
Unchanged
Risk: HIGH
12-Month Target Price: C$15.00
Prior: C$17.00
12-Month Dividend (Est.): C$0.32
12-Month Total Return: 34.9%
Market Data (C$)
Current Price $11.36
52-Wk Range $9.66-$19.45
Mkt Cap (f.d.)($mm) $2,590.1
Current Dividend $0.32
Dividend Yield 2.8%
Avg. Daily Trading Vol. (3M-All Exch) 718686
Financial Data (C$)
Fiscal Y-E December
Shares O/S (f.d.)(mm) 228.0
Float Shares (mm) 217.5
Net Debt/Tot Cap --
Cash ($mm) $111.0
NAVPS (current)(f.d.) $7.13