Undervalued silver stocks: Tahoe Resources Inc. (THO, THOEF)

The sheer size of Tahoe’s Escobal deposit puts near the top of our list of the Top 200 gold and silver mining companies as ranked by gold and silver in the ground.

Tahoe Resources Inc. (PINK:THOEF, TSX:THO) is one of our top 100 favorite gold and silver mining stocks out of the 500 that we’ve profiled in our brand new book: The Top 500 Gold and Silver Mining Stocks. Here are four reasons why:

1) More than 300 million ounces in the ground. Tahoe Resources is focused on its Escobal silver project in Southeast Guatemala. Escobal hosts an indicated silver resource of 245.2 million ounces at 500 g/t average grade, and an inferred silver resource of 71.7 million ounces at 271 g/t average grade. The sheer size of the deposit puts Tahoe near the top of our list of the Top 200 gold and silver mining companies as ranked by gold and silver in the ground (check out our book for the full list).

2) Extremely low cash costs. According to Chris Marchese, contributor to The Morgan Report, Tahoe is looking at expanding its mill capacity so that it can produce between 26–28 million ounces of silver at a cost of $3–4 an ounce net of all the byproducts.

Another stock that we like – Great Panther Silver Ltd. (AMEX:GPL) – has generated lots of investor interest even with cash costs between $6.50 and $7.50 an ounce. All in all, Marchese is very bullish on Tahoe. “The only problem is it’s in Guatemala,” he says.

3) Production slated for Q1 2014. “The original capital estimate of $326.6 million (for the Escobal project) is on-budget, the project is fully financed, and we hold a significant cash reserve should we encounter unanticipated start-up issues,” Kevin McArthur, Tahoe’s President and CEO, said in the company’s earnings release last month. “We have seen impressive exploration results over the last year, indicating the potential for future mine expansion. … It is anticipated that the expansion plan would be financed with internal cash flow and completed within five years of mine start-up.”

All told, Tahoe’s current mine plan calls for 317 million silver ounces to be mined over 18 years. Look for the total number of ounces to expand after the company has positive cash flow.

4) Investor interest. Despite headwinds for gold and silver mining stocks, Tahoe’s shares are actually up for the year in 2012 (+3.22 percent at the time of this writing). Comparatively, the Global X Silver Miners ETF (NYSE:SIL) is flat since the start of the year and the Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) is down more than 9 percent. Since debuting on the Toronto Stock Exchange in June of 2010, Tahoe shares have climbed more than 170 percent. American investors can buy shares in Tahoe on the Pinksheets under ticker THOEF.

Like this post? Check out our book, The Top 500 Gold and Silver Mining Stocks, to uncover other undervalued gold and silver mining stocks.


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