Miami, FL – January 4, 2019 (EmergingGrowth.com NewsWire) — EmergingGrowth.com, a leading independent small cap media portal with an extensive history of providing unparalleled content for the Emerging Growth markets and companies, reports on Tahoe Resources, Inc. (NYSE: TAHO).
The chances of precious metal producer Tahoe Resources Inc. (NYSE: TAHO) getting revived went up after junior silver producer Pan American Silver Corporation (NASDAQ: PAAS) announced its acquiring of TAHO. The acquisition was viewed as positive for investors, but what does this mean moving forward?
The losses suffered by Tahoe Resources have widened in the third quarter this year compared to the same period last year as the companywas able to produce only 91.2 thousand ounces of gold, or 16.3 percent lower than that of the same quarter last year. This is attributed to the stacking at the highest levels of leach pad in La Arena, which caused delay in gold production. The Company, however is positive about meeting the high end of its total cash cost and the low end of its production guidance, which is 400–475 thousand ounces of gold for the entire year.
The fourth quarter has shown improvement as the mining company was able to achieve its second-biggest monthly production in 2018. Aside from this, its Shahuindo Expansion project and Bell Creek shaft project are progressing as expected. In the middle of October, the company received operating permit to produce at full capacity of 36,000 tons per day (tpd) for Shahuindo. And for Bell Creek, the company expects to commence hoisting ore in the coming weeks. This means that the projects are on track for completion, thus allowing the company not only to gain in Q4 but also to execute its plans for the upcoming year.
In November, Tahoe Resources and Pan American Silver struck a deal enabling the latter to acquire the TAHO for $1.067 billion in cash and stock. Once the acquisition is completed, Tahoe shareholders will represent 27 percent of the merged entity. The acquisition would allow the two, to create a premier mining firm with increased growth opportunities and higher operating margins. The merger will double the silver reserves for Pan American and improve the company’s cost of production. Pan America has a track record of operating mines for more than two and half decades already, so this is an advantage for Tahoe shareholders and will help ensure sustainability of operations.
Gold producer Agnico Eagle Mines Limited (NYSE: AEM) also witnessed a 16-percent drop in gold production having only 88,353 ounces in the third quarter, compared to last year’s figure of 105,345 for the same quarter. Similarly, production costs were higher than in the same period last year due to labor and underground costs, as well as weak tonnage. The scenario is nothing different for the nine-month period too. This has obviously hurt its bottom line.
Another gold producer and rival, Alamos Gold Inc. (NYSE:AGI), is also facing cost issues when it comes to mining and processing. While its operating revenues grew 12.9 percent in the third quarter, cost of sales for mining and processing jumped 34.1 percent.
On the other hand, Barrick Gold Corporation (NYSE:ABX), the world’s biggest gold mining company, reported gold production of 1.15 million ounces during the third quarter, which was more than that of the second quarter. On a year-over-year basis, the cost of sales was higher due to various reasons, such as lesser ounces of gold sold and increased direct mining costs due to higher fuel prices and planned maintenance. All-in sustaining costs grew two percent in the third quarter, compared to the same quarter in the previous year.
Tahoe Resources is facing some issues that are common to all others in the sector. But its integration with American Silver Corporation is the right step to address this issue as it is crucial for improved margins. Therefore, we feel the stock is a “buy” with a 6-12 month target of $5.50.
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