Tahoe Resources (THO-T) has taken advantage of buoyant precious metal prices to raise $352 million in a bought-deal financing with a syndicate of underwriters led by GMP Securities.
The private placement financing is just shy of 25 million common shares priced at $14.10 each. Goldcorp (G-T, GG-N) took down 10.3 million shares of the offering in order to maintain its 41.2% stake in Tahoe.
Tahoe will close the year with approximately $425 million in cash. It expects to have no further financing needs prior to putting the Escobal silver project into commercial production.
Tahoe’s 100% owned Escobal silver project in Guatemala contains an indicted silver resource of 245 million oz., with significant credits of gold, lead and zinc, based on 15.3 million tonnes grading 500 grams silver per tonne, 0.51 gram gold, 0.8% lead and 1.34% zinc. Inferred resources hold an additional 72 million oz. silver in 8.3 million tonnes grading 271 grams silver, 0.4 gram gold, 0.58% lead and 1.04% zinc.
A recently completed preliminary assessment shows robust economic potential for a proposed 3,500-tonne-per-day underground mine and milling operation. Based on an initial capital cost estimate of US$327 million, the Escobal project has an after-tax internal rate of return of 51%, with a payback of just 1.5 years.
A proposed 18-year mine life is expected to average 14.6 million oz. silver annually at a total cash cost of US$3.05 per oz. silver, net of gold and base metal credits.
Tahoe intends to start driving exploration declines into the East and Central zones of the deposit early in the New Year. Drilling from surface will continue to test the main Escobal vein system through wider and deeper extensional stepouts until underground drill stations are in place along the planned exploration decline later in the year.
A feasibility study is scheduled for completion in 2011. The company expects to bring the project to permitted status by the time a construction decision is ready by May 2012, if not sooner.
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