The Q2 numbers are in, and Tahoe Resources exceeded both production and cash flow expectations in the first half of 2016, according to analysts following the company. Based on those numbers—and with management changes also in place—the experts believe the company will continue to outperform.
For analyst Chris Thompson, writing in an Aug. 10 Raymond James research report on Tahoe Resources Inc. (TAHO:NYSE; THO:TSX), “2Q16 represented as key quarter for Tahoe Resources, as it closed the acquisition of Lake Shore Gold, declared commercial production at Shahuindo, and continued to deliver strong operating results (generating significant FCF [free cash flow]) at Escobal and La Arena.”
“Our investment thesis for THO remains firmly intact, satisfied by the company offering a unique combination of fully funded organic growth, ongoing FCF generation, a strong balance sheet, and a healthy dividend yield,” the analyst continued.
According to Tahoe’s Aug. 9 press release, which outlines the company’s H1/16 performance, the Escobal mine in Guatemala produced “metal concentrates” containing 5.7 Moz silver, 2,711 oz gold, 2,699 tonnes lead and 4,037 tonnes zinc during Q2/16.
This “exceeded our expectations of 5.3 Moz Ag or 5.7 Moz Ag Eq on higher grades while cash cost bettered our estimates of US$6.96/oz Ag or US$8.05/oz Ag Eq,” Geordie Mark of Haywood Securities wrote in an Aug. 11 research report.
“The company is underpinned by production from Escobal, which is a top tier asset in terms of its resource endowment and Ag grade, which together support the potential for healthy operating margins over a protracted period,” Mark wrote, adding that gold production at La Arena and Shahuindo in Peru and at Tahoe’s Canadian assets was in line with, or exceeded, Haywood’s expectations.
In his Aug. 10 research note, Dundee Capital Markets analyst Ron Stewart observed, “Strong Q2 production led to better than expected …read more