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.
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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.
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Raymond James, Tahoe Resources Inc., Aug. 10, 2016:
The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.
Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.
Raymond James Ltd - the analyst and/or associate has viewed the material operations of THO.
Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to THO.
Haywood Securities, Tahoe Resources Inc., Aug. 11, 2016:
I, Geordie Mark, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer's shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.
Haywood Securities has reviewed lead projects of this company and a portion of the expenses for this travel have been reimbursed by the issuer.
Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities knows or has reason to know at the time of publication: n/a.
Dundee Capital Markets, Tahoe Resources Inc., Aug. 10, 2016:
Research Analyst Certification: Each Research Analyst involved in the preparation of this research report hereby certifies that:
(1) the views and recommendations expressed herein accurately reflect his/her personal views about any and all of the securities or issuers that are the subject matter of this research report; and (2) his/her compensation is not and will not be directly related to the specific recommendations or views expressed by the Research Analyst in this research report. The Research Analyst involved in the preparation of this research report does not have authority whatsoever (actual, implied or apparent) to act on behalf of any issuer mentioned in this research report.
BMO Capital Markets, Tahoe Resources Inc., Aug. 10, 2016:
I, Andrew Kaip, P.Geo., hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Additional BMO disclosures are available here.
CIBC, Tahoe Resources Inc., Aug. 10, 2016:
Analyst Certification: Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.
CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Tahoe Resources Inc. in the next 3 months.