Tahoe Resources Releases 2016 Figures

GuruFocus.com
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- By Alberto Abaterusso

Tahoe Resources Inc. (THO.TO) (TAHO) reported the results of the last quarter and the whole year of 2016 on Thursday.

For the last quarter of 2016, the precious metals producer, headquartered in Reno, Nevada, generated an EPS of 6 cents, adjusted to one-time charges, a 72.7% decrease from the same figure of 2015, and missed analysts' expectations on EPS by 9 cents. The analysts forecasted that the miner would generate EPS of 15 cents on average, ranging between a low estimate of 12 cents and a high estimate of 18 cents.


For the last quarter of 2016, revenue came in at $189.4 million, a 22.3% decrease on a year-over-year basis, and missed analysts' expectations on revenue by $40.1 million. Analysts' expectations on fourth-quarter 2016 revenue was $229.5 million on average and ranged between a low estimate of $213.2 million and a high estimate of $243.57 million.

The precious metals producer undertakes mining operations in the Americas. Tahoe extracts silver from the Escobal mine in Guatemala and gold from the La Arena and Shahuindo mines in Peru. They also have operations in the Canadian Timmins West and Bell Creek mines.

The company reported a record in the production for the fourth quarter of 2016. The miner produced 119,000 ounces of gold at all-in sustaining costs (AISC) of $945 per ounce and 4.8 million ounces of silver at AISC of $9.76 per ounce.

The company also achieved a record in the production of gold and silver for the whole year of 2016. The U.S. gold and silver mining company produced 385,100 ounces of gold and 21.3 million ounces of silver.

The production of gold in 2016 was alongside the company's guidance for 2016 while the production of silver exceeded the guidance. For 2016 the company expected to produce between 18 million and 21 million ounces of silver.

In 2016, Tahoe Resources achieved growth in precious metals production thanks to the full-year contribution of La Arena mine, the output from Shahuindo mine in Peru that reached commercial production on May 1 and the acquisition of Lake Shore Gold on April 1.

The company closed the full year of 2016 with adjusted earnings of $180.4 million (or 62 cents per share), an 82.4% increase on a year-over-year basis. In 2015, Tahoe Resources generated adjusted earnings of $98.9 million or 48 cents.

For 2017, the company expects to produce between 375,000 and 425,000 ounces of gold and between 18 million and 21 million ounces of silver.

In 2016, the company generated cash flow of approximately $249.5 million from operations, a 49.6% increase from the CFO of 2015 that was $166.74 million. After having considered $30.08 million used in 2016 as capex, the free cash flow was $219.42 million.

As of fourth-quarter 2016, the company has about $163.4 million in cash and equivalents and the long-term debt is $35 million.

The long-term debt to equity is 0.36 versus an industry average ratio of 38.38 while the total debt to equity is 2.10 versus an industry average ratio of 45.37, according to Reuters.com

The interest coverage ratio computed over the last 12 trailing months' time frame is 19.34 versus an industry average of 6.07. The company doesn't have any problems paying interest expenses on the outstanding debt.

Tahoe Resources is trading at $7.41 per share on the New York Stock Exchange, down 53 cents or minus 6.73% from the previous trading day, and it is trading its 12 trailing months' sales at 3.14 and at 0.89 times its book value.

The Enterprise Value to EBITDA ratio is 5.77.

Disclosure: I have no positions in Tahoe Resources.

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This article first appeared on GuruFocus.


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