TAHOE REVISES 2017 GUIDANCE TAHOE REVISES 2017 GUIDANCE FOR GOLD OPERATIONS AND PROVIDES UPDATED RESERVES AND RESOURCES AT TIMMINS WEST
VANCOUVER, British Columbia – September 21, 2017 – Tahoe Resources Inc. (“Tahoe” or the “Company”) (TSX: THO, NYSE: TAHO) announced today updated 2017 guidance for its gold operations. Due to ongoing interruption of operations at Escobal, multi-year guidance remains under review for all operations. Despite this interruption, the Company’s balance sheet remains strong with cash and cash equivalents of more than $185 million at the end of August 2017. The Company’s gold operations are performing well and represent an increasingly meaningful contribution to the overall financial performance of the Company. Expansion projects at Shahuindo and Bell Creek are expected to increase production to more than 500,000 ounces annually beginning in 2019.
Revised 2017 Gold Guidance by Mine
The Company has increased its guidance for gold production to 400,000 to 450,000 ounces for 2017. The increase in the Company’s revised gold production guidance for the remainder of 2017 is due in large part to the positive mine plan reconciliation experienced at La Arena year to date. The positive production reconciliation at La Arena has prompted the Company to initiate a drilling program in the fourth quarter to better define the mineralization below the Calaorco pit with the goal of extending the mine life.
Total cash costs and all-in sustaining costs per ounce of gold produced have been revised downward. 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 have 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.
Capital expenditure estimates for 2017 have also been revised downward. Project capital has been decreased by $50 million to an estimated $100 to $115 million, versus the initial 2017 guidance of $150 to $175 million. The reduction in project capital reflects the deferral in timing of certain ancillary capital projects at Shahuindo and Timmins, and prudent capital management by the Company. Both major projects – the Shahuindo Expansion and the Bell Creek Shaft Project – remain within their total project budgets of $80 million respectively.
Sustaining capital has been decreased to $100 to $135 million, a decrease of $25 million to the lower end of the initial guidance range. The decrease in sustaining capital is due to a shift in timing of spending on certain projects at Shahuindo, however this is not expected to delay production at the gold operations to more than 500,000 ounces in 2019.
In part due to the ongoing uncertainty at Escobal, discretionary exploration spending has been reduced by $20 million to an estimated $14 to $20 million for 2017, compared to the initial guidance of $35 to $43 million for the gold operations. The reduction is attributable to longer-term exploration projects. Current exploration efforts are focused on near-term projects with ability to positively impact medium-term production and contribute 2 to 4 million ounces of gold reserves and resources by 2020.
No changes are anticipated to the initial guidance on corporate general and administrative expenses of $45 to $55 million.
Capital Projects Update
Shahuindo Expansion
Construction of the initial 12,000 tpd crushing and agglomeration circuit is now 90% complete, with commissioning anticipated in the coming weeks. Engineering is substantially complete on the additional 24,000 tpd crushing and agglomeration plant and the Company is finalizing purchase orders for the equipment. The project remains on schedule and budget 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, in line with the pre-feasibility study.
Bell Creek Shaft Project
The Bell Creek Shaft Project continues on schedule and budget. Excavation of the first two pilot raises is complete and shaft benching to enlarge to the final dimension continues to progress as expected. Excavation of the third and final pilot raise was initiated at the bottom level of 1,040 meters. Shaft rehabilitation and furnishing continues to progress well and is complete down to a depth of 433 meters with new sets, guides and services installed. On the surface, demolition of the historical hoisting plant was completed in Q2, and foundation work for the new hoist and headframe is now complete. The new administration building is complete and occupied and construction of the new security building is in progress.
Timmins West Mineral Resource and Reserve Update
The Company is pleased to announce updated Mineral Resources and Mineral Reserves for Timmins West in Canada. At the Timmins West Mine, Measured and Indicated Mineral Resources total 1.02 million ounces of gold. The Company had significant growth in reserves attributable to the initial Mineral Reserve for the 144 Gap deposit. 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.
The Mineral Resource and Mineral Reserve estimates for the Timmins West Mine are supported by an updated technical report, National Instrument 43-101 Technical Report, Timmins West Mine, Timmins, Ontario, Canada, dated September 20, 2017 which is available on SEDAR at www.sedar.com.
Escobal Update
The Company’s efforts in Guatemala are focused on reaching a peaceful and expeditious conclusion to the road block at Casillas, which is approximately 16 kilometers away from the operations in San Rafael Las Flores. Upon resolution, the Company expects to resume production at Escobal within a week.
On September 10, 2017, the Company reported that the Guatemalan Supreme Court issued a decision that reinstated the Escobal mining license. As part of its decision, the Supreme Court ordered MEM to conduct a consultation under ILO Convention 169 with the Xinca indigenous communities within certain departments or states within 12 months. The Company is now seeking clarification from the Supreme Court on the specific geographical areas to be included in MEM’s consultation process. CALAS has appealed the Supreme Court’s ruling to the Constitutional Court partly on the grounds that it discriminates against the Xinca. The Company understands that the Xinca Parliament has not appealed the Supreme Court’s decision. The Constitutional Court is expected to rule on all appeals by the end of the year.
During the period in which the Company’s mining license was temporarily suspended, the Company’s annual export credential for the exportation of metals concentrate expired. The Company filed its request to renew the export credential with MEM in the ordinary course in June 2017. The renewal of the export credential became contingent on the Court’s reinstatement of the Escobal mining license. In addition to the clarification motion, therefore, the Company has petitioned the Supreme Court to order MEM to provide the routine administrative annual renewal of Escobal’s export credential.