BMO Capital Markets: Tahoe Resources is rated Outperform with a C$25 target price
According to BMO Capital Markets:
Stock Rating: Outperform
May 1, 2013
Protestors Keep the Heat on at Escobal
This morning, THO provided an account of recent events in the vicinity of the company’s Escobal project, located in southern Guatemala, in response to several news articles released earlier this week. On Saturday, Escobal security was required to use non-lethal force to disperse hostile protestors at the mine gate. On Monday, protestors blocking the highway several kilometres away from the mine site turned violent, with one police officer killed. The company reported that protests have escalated since THO was awarded the exploitation permit on April 3.
Mixed. The re-emergence of protests highlights the above-average sovereign risk profile of THO. Mitigating these risks, it appears that protesting at Escobal continues to be motivated by external sources rather than the community surrounding the mine. THO remains focused on moving Escobal into commissioning in H2/13 with recent protests having little impact on this timeline. BMO Research expects THO to provide more details on development progress at Escobal next week at the AGM (Wednesday, May 8).
BMO Research forecasts production of 1.2Moz silver-equivalent at co-product cash costs of US$10.41/oz (based on BMO metal price forecasts). 2014E forecasts are for 9.2Moz of silver-equivalent production at co-product cash costs of US$9.82/oz.
THO trades at 1.2x the 10% nominal NPV of US$13.76/share at spot prices, in line with junior producer peers.
Tahoe Resources is rated Outperform(S) with a C$25 target price. The target price reflects 1.8x the 10% nominal NPV estimate based on spot metal prices.