TAHO says 2016 silver production totaled a record 21.3M oz., exceeding company guidance of 18M-21M oz., while gold production came in at more than 385K oz., in-line with guidance of 370K-430K oz.
But TAHO forecasts 2017 production of 18M-21M silver oz. and 375K-425K gold oz., and project capex of $150M-$175M, with relatively high all-in sustained costs of $9.50-$10.50 per silver oz. produced and $1,150-$1,250 per gold oz. produced.
Shares had surged nearly 10% yesterday after maintaining its current dividend.
RBC Capital upgrades gold miners Yamana Gold (AUY +1.7%), Tahoe Resources (TAHO +3.3%) and Alamos Gold (AGI +7.2%) to Outperform from Sector Perform (I, II, III) with respective price targets of $4.50, $19 and $8.50, as the firm sees gold entering a period of seasonal strength.
RBC expects AUY to outperform peers given leverage to gold and attractive valuation, forecasts strong free cash flow for TAHO driven by low-cost silver and gold production from mines in Guatemala, Peru and Canada, and sees AGI benefiting from drill-bit driven value creation at Mulatos and continued operational gains at Young-Davidson.
However, RBC downgrades Gold Fields (GFI +1%) to Sector Perform from Outperform, as a possible M&A overhang, near-term balance sheet pressure and cautious sentiment around South Deep lead it to believe investors will prefer lower-risk investment alternatives.
Analysis from Canaccord Genuity suggests the gold price may have bottomed, thus the firm upgrades Goldcorp (GG -2%), Centerra Gold (OTCPK:CAGDF +0.8%), Detour Gold (OTCPK:DRGDF -1.5%) and Fortuna Silver Mines (FSM -0.4%) to Buy from Hold.
With the recent pullback in commodity prices, "a window of opportunity appears to have presented itself, and we believe investors should consider increasing weights" in select precious metals stocks, the firm says.
Canaccord cites rising market volatility related to the upcoming U.S. election, the recent pullback in extreme non-commercial long gold positions on the Comex, declining selling pressure among hedge funds, and real interest rates remaining near zero whether or not the Fed raises rates in December.
The firm cites other names that could benefit, as underperforming portfolio managers look to increase their leverage to gold, including Kinross Gold (KGC -5.7%), Iamgold (IAG -2.2%) and B2Gold (BTG -3.9%) among senior producers, Endeavour Mining (OTCQX:EDVMF -1.6%) and Alamos Gold (AGI -3%) among mid- and small-cap producers, and Tahoe Resources (TAHO -1.1%) in the silver space.