Tahoe shifts focus to integration, delivery following M&As

Vancouver-based Tahoe Resources has shifted focus to integration and delivery following two major M&As, according to CEO Kevin McArthur.

The region's fourth biggest silver miner completed a US$1.1bn merger with Peruvian gold miner Rio Alto Mines in 2015 and acquired Canadian gold producer Lake Shore Gold last month.

Coupled with its Escobal silver-lead-zinc mine in Guatemala, the deals have by and large met Tahoe's aims of geographic and multi-mine diversification, McArthur told the Q1 earnings call.

"We are now in the role of delivering on what we have acquired and what we are discovering, and using our balance sheet to develop growth," he said. "That's not to say we don't look [at potential acquisition targets]. We continue to do that work but it's much less a focus now. Our focus is now integration and delivery, and I think we have timed that right with the cycle of the market."

Tahoe expects gold production to rise to 550,000oz/y in 2020, including 300,000oz at its Peruvian La Arena and Shahuindo mines, where commercial production was reached on May 1. The remaining 250,000oz/y will come from Canada.

Production is expected at 370,000-450,000oz gold this year, along with 18-21Moz silver at Escobal.

EARNINGS RISE

Tahoe reported Q1 earnings of US$37.8mn, compared to earnings of US$31.9mn in the prior-year period, with revenue at US$132mn, up from US$85.3mn, due to the Rio Alto acquisition.

Escobal produced 5.7Moz silver in the quarter, up from 4.6Moz, with La Arena and Shahuindo generating 46,576oz and 7,590oz gold, respectively.

All-in sustaining costs net of by-product credits were US$5.97/oz silver, down from US$9.78/oz, and US$825/oz gold.