Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
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.
THO One-Year Chart
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 financial results as Tahoe’s core assets continue to perform well. We view Tahoe as a top tier intermediate precious metals company given its high quality and low cost operations, growth profile, strong balance sheet, sustainable dividend and disciplined M&A strategy.”
Reflecting on earnings that beat his firm’s estimates, Andrew Kaip of BMO Capital Markets expects Tahoe’s Q2 results to “set the stage for a good Q3/16.”
Kaip also noted, “Strong silver production was driven by higher-than-expected silver grades at Escobal (509 g/t) [and] the company now expects to achieve the top end of silver guidance of 18–21 Moz.”
Tahoe’s Q1/16 acquisition of Lake Shore Gold and its assets in Canada, including the Timmins mines, resulted in the addition of production from those assets in the second-quarter numbers, Cosmos Chiu of CIBC noted in an Aug. 10 research report.
Also commenting on the impact of the Lake Shore acquisition, Mark noted, “Integration of the Bell Creek and Timmins West gold mines into the company’s portfolio bolsters Tahoe’s production profile, whereby the Company’s strong balance sheet can be deployed to consolidate further its production base in east Canada. The collective production profile and margins, of the aforementioned assets, establish Tahoe as a growing mid-tier precious metals producer.”
Tahoe has also announced management changes, including the election of Ron Clayton as president and CEO, and Elizabeth McGregor as vice president and CFO. “The appointment of Mr. Clayton to the position of CEO should be viewed positively given his intimate knowledge of the company,” Chiu wrote.
Read what other experts are saying about:
Source: The Gold Report
http://www.theaureport.com/cs/user/print/na/17068
Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC. Tracy Salcedo provides services to Streetwise Reports as an independent contractor. She owns, or her family owns, shares of the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Tahoe Resources Inc. The companies mentioned in this article were not involved in any aspect of the article preparation. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.
Streetwise – The Gold Report is Copyright © 2016 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.
