Canada's Tahoe to focus on Peru mine expansions
Canadian miner Tahoe Resources, whose Escobal mine in Guatemala has been shut for eight months, is counting on an expansion at its Shahuindo gold mine to help drive gold output by the end of the year amidst burgeoning costs.
Tahoe, which has operations in Peru, Guatemala and Canada, remains on track to reach full production capacity at the 36,000t/d crushing and agglomeration plant at Shahuindo in Cajamarca region by year-end, CEO Ron Clayton said. The Vancouver-based company expects to spend US$80-100mn at Shahuindo in 2018.
The US$1.36bn La Arena II copper-gold project, meanwhile, will head to a prefeasibility study stage "at the appropriate time," Clayton said. A preliminary economic assessment for the project earlier this week set measured and indicated resources at 5.6Moz gold and 5.8Blb copper and inferred resources at 683,000oz gold and 349Mlb copper.
The 80,000t/d mine in La Libertad region would produce 149,000oz/y gold and 207Mlb/y copper at costs of US$600/oz gold and US$1.55/lb copper over a 21-year mine life.
Escobal mine, curtailed by social conflicts since June 2017, is pending a Guatemalan constitutional court ruling on its mining license, suspended in July. Tahoe, which last month cut 250 jobs at the mine, said it would take a month to resume operations once it recovers its license.
"2018 is a pivotal year for Tahoe, with many near-term catalysts," Clayton said on a conference call to discuss financial results. "We expect to resume steady operations at Escobal this year and complete our near-term expansion projects, positioning us to reach our target of 500,000oz/y of gold production. We're very optimistic about La Arena II."
Earnings
Tahoe saw its 2017 profit slide to US$81.8mn for 2017 from a US$118mn profit a year earlier as sales dropped to US$734mn from US$785mn, the company said in a statement.
All-in sustaining costs jumped to US$8.91/oz silver and US$973/oz gold in 2017 from US$8.06/oz and US$943/oz a year earlier, respectively. Capex was US$223mn in 2017, plus US$18.5mn in exploration.
Tahoe sold gold at US$1,266/oz in the fourth quarter compared with US$1,197/oz a year ago. The company didn't give silver prices. It paid off US$35mn in debt this week, and thus has no debt but access to US$200mn in Scotiabank and HSBC-led credit facilities.
Silver output plunged by more than half to 9.9Moz last year from 21.3Moz the previous year due to the Escobal shutdown, while gold rose to 445,900oz from 385,200oz as the La Arena mine beat guidance. Zinc and lead production totaled 5,568t and 4,085t, respectively
The company set 2018 gold production guidance at 400,000-475,000oz with AISC running at US$1,000-1,100/oz. La Arena is expected to produce 160,000-185,000oz and Shahuindo should contribute 80,000-110,000oz.Tahoe didn't disclose silver guidance for this year. Capex this year should range from US$215-265mn and US$15-25mn in exploration, according to Tahoe.
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