Taseko Mines Limited (TSX: TKO; NYSE American: TGB; LSE: TKO)
("Taseko" or the "Company") reports third quarter 2024 Adjusted
EBITDA* of $48 million and Earnings from mining operations before
depletion, amortization and non-recurring items* of $55 million.
Revenues for the third quarter were $156 million from the sale of
26 million pounds of copper and 348 thousand pounds of molybdenum.
A net loss of $0.2 million ($nil per share) was recorded for the
quarter and adjusted net income* was $8 million ($0.03 per share).
Gibraltar produced 27 million pounds of copper
and 421 thousand pounds of molybdenum in the third quarter. Copper
grades were 0.23%, consistent with the prior quarter. Tons milled
increased over the second quarter, however mill availability and
throughput was lower than planned due to unscheduled downtime and
the completion of the crusher move project and concurrent
maintenance in concentrator #1 in July. Copper recoveries increased
modestly to 79%. Molybdenum production was boosted by a 33%
increase in grades, related to ore from the new Connector pit.
Total operating costs (C1)* for the quarter were US$2.92 per pound
of copper produced.
Stuart McDonald, President and CEO of Taseko,
commented, “The development of the new Connector pit advanced on
plan in the third quarter, with the new pit providing approximately
half of the mill feed in the period. Due to the lower than planned
mill availability in the third quarter, we do not expect to recover
the production that was lost during the labour strike in June.
Looking ahead to 2025, we expect increased mill throughput and
improved ore quality as we move deeper into the Connector pit.
Copper production next year is expected to increase to the 120 to
130 million pound range, and molybdenum production is also expected
to increase. Lower-grade ore stockpiles will be used to supplement
mined ore in the first half of the year, so production will be
weighted to the second half of the year.”
Mr. McDonald continued, “Construction at
Florence Copper has continued to progress on schedule. We are now
in peak construction with nearly 300 contractors working at site.
The SX/EW plant activities have shifted from earth works and
concrete foundation pouring to now erecting structural steel and
installation of processing equipment and electrical services.
Development of the wellfield is advancing with four drill rigs now
operating and 40 wells completed at the end of October. Development
of the wellfield, which is a critical path item, remains on
schedule to be completed in the second quarter of next year.”
“We expect Florence Copper to become North
America’s lowest GHG-intensity primary copper producer, and we’re
optimistic that the project will qualify for the U.S. Department of
Energy’s (“DOE”) Qualifying Advanced Energy Project Credit (48C)
Program, which we applied for recently. We expect to hear whether
our application was successful in January. Our balance sheet
remains in a strong position, with $209 million of cash on hand and
total liquidity of approximately $317 million at the end of
September,” added Mr. McDonald.
“This is a very exciting time for Taseko as we begin to unlock
the value of our growth assets. The Florence Copper project
continues to be de-risked and is now just a year away from
producing first copper. We’re also preparing to take a big step
forward with our Yellowhead copper project, which will be entering
the environmental assessment process in the coming months. We also
plan on issuing an updated feasibility study for the project next
year, which will reinforce the significant value of what could be
British Columbia’s next major copper mine,” concluded Mr.
McDonald.
Third Quarter Review
- Earnings from
mining operations before depletion, amortization and non-recurring
items* was $54.5 million and Adjusted EBITDA* was $47.7
million;
- Third quarter
cash flow from operations was $65.0 million, and included $26.3
million for proceeds received on the insurance claim recorded in
the prior quarter;
- Net loss was
$0.2 million ($Nil per share) for the quarter and Adjusted net
income* was $8.2 million ($0.03 per share);
- Gibraltar
produced 27.1 million pounds of copper in the quarter. Average
copper head grades were 0.23% and copper recoveries were 79% for
the quarter;
- Although 7.6
million tons of ore was milled in the quarter, mill throughput was
impacted by nearly three weeks of downtime in Concentrator #1 at
the beginning of the quarter for the completion of the crusher
relocation project, concurrent mill maintenance, and the ramp back
up to full capacity;
- Gibraltar sold
26.3 million pounds of copper in the quarter at an average realized
copper price of US$4.23 per pound;
- Total operating
costs (C1)* for the quarter were US$2.92 per pound produced. Lower
off-property costs are mainly due to favorably lower treatment and
refining (“TCRC”) rates realized during the quarter as new offtake
agreements begin to take effect;
- Construction of
the Florence Copper commercial production facility continues to
advance on schedule. A total of 34 production wells out of a total
of 90 new wells had been completed as of September 30. Earthworks
and site preparation for the plant area and commercial wellfield is
estimated to be 75% complete and installation of structural steel,
tanks, and process equipment is underway;
- An application
has been made to the U.S. Department of Energy’s Qualifying
Advanced Energy Project Credit (48C) Program for a tax credit of up
to US$110 million, based on Florence Copper’s eligibility as a
critical materials project. The Company expects to hear if it has
been awarded the tax credit in mid-January 2025;
- On November 6,
the Company entered into an amendment for its revolving credit
facility, extending the maturity date to November 2027 from July
2026, and increasing the facility amount to US$110 million from
US$80 million. No amounts are drawn against the revolving credit
facility;
- The Company
issued 7.8 million shares under its At-the-Market (“ATM”) equity
offering in the quarter and received net proceeds of $23.1 million.
Subsequently, the Company issued an additional 4.3 million shares
under the ATM and received net proceeds of $14.2 million; and
- The Company had
a cash balance of $209 million as at September 30, 2024.
Highlights
Operating Data
(Gibraltar - 100% basis) |
Three months ended September 30, |
Nine months ended September 30, |
|
2024 |
2023 |
Change |
2024 |
2023 |
Change |
Tons mined (millions) |
23.2 |
16.5 |
6.7 |
|
64.4 |
64.0 |
0.4 |
|
Tons milled (millions) |
7.6 |
8.0 |
(0.4 |
) |
21.0 |
22.4 |
(1.4 |
) |
Production (million pounds
Cu) |
27.1 |
35.4 |
(8.3 |
) |
77.0 |
88.5 |
(11.5 |
) |
Sales
(million pounds Cu) |
26.3 |
32.1 |
(5.8 |
) |
80.6 |
84.8 |
(4.2 |
) |
Financial
Data |
Three months ended September 30, |
Nine months ended September 30, |
(Cdn$
in thousands, except for per share amounts) |
2024 |
|
2023 |
Change |
2024 |
2023 |
Change |
Revenues |
155,617 |
|
143,835 |
11,782 |
|
440,294 |
371,278 |
69,016 |
|
Cash flows provided by
operations |
65,038 |
|
26,989 |
38,049 |
|
159,323 |
88,257 |
71,066 |
|
Net (loss) income (GAAP) |
(180 |
) |
871 |
(1,051 |
) |
7,763 |
44,650 |
(36,887 |
) |
Per share – basic (“EPS”) |
- |
|
- |
- |
|
0.03 |
0.15 |
(0.12 |
) |
Earnings from mining
operations beforedepletion, amortization and
non-recurringitems* |
54,516 |
|
65,445 |
(10,929 |
) |
184,241 |
134,248 |
49,993 |
|
Adjusted EBITDA* |
47,689 |
|
62,695 |
(15,006 |
) |
168,389 |
120,972 |
47,417 |
|
Adjusted net income* |
8,228 |
|
19,659 |
(11,431 |
) |
46,459 |
20,372 |
26,087 |
|
Per share – basic (“adjusted
EPS”)* |
0.03 |
|
0.07 |
(0.04 |
) |
0.16 |
0.07 |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
Effective as of March 25, 2024 the Company
increased its ownership in Gibraltar from 87.5% to 100%. As a
result, the financial results reported in this MD&A include
100% of Gibraltar income and expenses for the period March 25, 2024
to September 30, 2024 (87.5% for the period March 16, 2023 to March
24, 2024, and 75% prior to March 15, 2023). For more information on
the Company’s acquisition of Cariboo, please refer to the Financial
Statements – Note 3.
The Company finalized the accounting for the
acquisition of its initial 50% interest in Cariboo from Sojitz and
the related 12.5% interest in Gibraltar in the fourth quarter of
2023. In accordance with the accounting standards for business
combinations, the comparable financial statements as of September
30, 2023 and for the three and nine months then ended have been
revised to reflect the changes in finalizing the consideration paid
and the allocation of the purchase price to the assets and
liabilities acquired.
Review of Operations
Gibraltar mine
Operating data (100% basis) |
|
Q3 2024 |
|
|
Q2 2024 |
|
|
Q1 2024 |
|
|
Q4 2023 |
|
|
Q3 2023 |
|
Tons mined (millions) |
|
23.2 |
|
|
18.4 |
|
|
22.8 |
|
|
24.1 |
|
|
16.5 |
|
Tons milled (millions) |
|
7.6 |
|
|
5.7 |
|
|
7.7 |
|
|
7.6 |
|
|
8.0 |
|
Strip ratio |
|
1.2 |
|
|
1.6 |
|
|
1.7 |
|
|
1.5 |
|
|
0.4 |
|
Site operating cost per ton
milled (Cdn$)* |
$14.23 |
|
$13.93 |
|
$11.73 |
|
$9.72 |
|
$12.39 |
|
Copper
concentrate |
|
|
|
|
|
Head grade (%) |
|
0.23 |
|
|
0.23 |
|
|
0.24 |
|
|
0.27 |
|
|
0.26 |
|
Copper recovery (%) |
|
78.9 |
|
|
77.7 |
|
|
79.0 |
|
|
82.2 |
|
|
85.0 |
|
Production (million pounds
Cu) |
|
27.1 |
|
|
20.2 |
|
|
29.7 |
|
|
34.2 |
|
|
35.4 |
|
Sales (million pounds Cu) |
|
26.3 |
|
|
22.6 |
|
|
31.7 |
|
|
35.9 |
|
|
32.1 |
|
Inventory (million pounds
Cu) |
|
2.9 |
|
|
2.3 |
|
|
4.9 |
|
|
6.9 |
|
|
8.8 |
|
Molybdenum
concentrate |
|
|
|
|
|
Production (thousand pounds
Mo) |
|
421 |
|
|
185 |
|
|
247 |
|
|
369 |
|
|
369 |
|
Sales (thousand pounds
Mo) |
|
348 |
|
|
221 |
|
|
258 |
|
|
364 |
|
|
370 |
|
Per unit data (US$ per
pound produced)* |
|
|
|
|
|
Site operating costs* |
$2.91 |
|
$2.88 |
|
$2.21 |
|
$1.59 |
|
$2.10 |
|
By-product credits* |
|
(0.25 |
) |
|
(0.26 |
) |
|
(0.17 |
) |
|
(0.13 |
) |
|
(0.23 |
) |
Site operating costs, net of by-product credits* |
$2.66 |
|
$2.62 |
|
$2.04 |
|
$1.46 |
|
$1.87 |
|
Off-property costs |
|
0.26 |
|
|
0.37 |
|
|
0.42 |
|
|
0.45 |
|
|
0.33 |
|
Total
operating costs (C1)* |
$2.92 |
|
$2.99 |
|
$2.46 |
|
$1.91 |
|
$2.20 |
|
|
Operations Analysis
Third Quarter Review
Gibraltar produced 27 million pounds of copper
in the quarter. Copper production and mill throughput were impacted
by nearly three weeks of downtime in Concentrator #1 at the
beginning of the quarter to complete the crusher relocation
project, concurrent mill maintenance, and the ramp back up to full
capacity.
Copper head grades were 0.23% and more Connector
pit ore was fed to the mill. Copper recoveries in the third quarter
were 79%, in line with recent quarters, but lower than normal, as
the upper benches of the Connector pit contain transition ore with
higher oxide content. As mining progresses deeper in the Connector
pit, recoveries are expected to improve as oxide content
reduces.
A total of 23.2 million tons were mined in the
third quarter, and the majority of ore and waste mining occurred in
the Connector pit during the period. A total of 1.7 million tons of
oxide ore from the upper benches of the Connector pit were also
added to the heap leach pads in the period for future copper
cathode production from Gibraltar’s currently idled SX/EW
plant.
Total site costs* at Gibraltar of $111.3 million (which includes
capitalized stripping of $3.6 million) was higher compared to the
previous quarter due to the Gibraltar mine being on care and
maintenance during the labour strike
in June. Total site costs* were generally in
line with the fourth quarter of 2023 and first quarter of 2024.
Higher repairs and maintenance costs were incurred in the quarter
due to a large maintenance project on one of the shovels.
During the three months ended September 30,
2024, the Company incurred costs of $4.1 million in relation to the
final phase of the in-pit crusher relocation project for
Concentrator #1 including demolition of the old station’s concrete
foundation. Under IFRS, these costs are expensed in the quarter
through the statement of income (loss).
Molybdenum production was 421 thousand pounds in
the third quarter. The 128% increase in quarter-over-quarter
production is primarily due to higher molybdenum grade in the
Connector pit ore. At an average molybdenum price of US$21.77 per
pound, molybdenum generated a by-product credit per pound of copper
produced of US$0.25 in the third quarter.
Off-property costs per pound produced* were
US$0.26 for the third quarter, which is lower than recent quarters
and reflects lower average TCRC rates realized on third quarter
shipments, some of which were tendered earlier in the year at
negative rates.
Total operating costs per pound produced (C1)*
was US$2.92 for the quarter, compared to US$2.20 in the prior year
quarter as shown in the bridge graph below with the difference
substantially attributed to the lower copper production in the
quarter:
https://www.globenewswire.com/NewsRoom/AttachmentNg/0d7f5203-7171-4c0b-a812-df2577edc1cf
Gibraltar Outlook
The major project and related mill maintenance
work was completed in the third quarter, and lower than planned
mill availability and throughput impacted copper production in the
period. As a result, management does not expect to recover the
copper production that was lost during the 18-day strike in June
and copper production for the year is now expected to be in the
range of 105 to 110 million pounds, compared to the original
guidance of 115 million pounds. Increased mill availability and
higher throughput is expected to be the primary driver of improved
copper production in the fourth quarter.
Mining activities have mostly transitioned to the Connector pit,
which will be the main source of mill feed in the fourth quarter
and going forward. Mining of the current phase of the Gibraltar pit
is expected to be finished in the first quarter of 2025. Additional
oxide ore from the Connector pit will also be added to the heap
leach pads this year. Refurbishment of Gibraltar’s SX/EW plant,
which has been idle since 2015, has begun and the plant is expected
to be restarted in mid-2025.
For 2025, copper head grade and tonnes milled
are expected to improve and total copper production is expected to
be in the range of 120 to 130 million pounds. Lower grade ore
stockpiles will be utilized to supplement mined ore in the first
half of 2025, which will result in copper production being weighted
to the second half of the year. Molybdenum production is forecast
to increase next year as molybdenum head grades are expected to be
notably higher in the Connector pit compared to the Gibraltar
pit.
The Company has tendered Gibraltar concentrate
to various customers for the remainder of 2024 and for significant
tonnages in 2025 and 2026. In 2023, TCRCs accounted for
approximately US$0.17 per pound of off-property costs. With these
recently awarded offtake contracts, the Company expects TCRCs to
reduce to nil on average in 2025 on the sale of its copper
concentrate.
The Company has a prudent hedging program in
place to protect a minimum copper price during the Florence
construction period. Currently, the Company has copper collar
contracts that secure a minimum copper price of US$3.75 per pound
for 21 million pounds of copper covering the fourth quarter of
2024, and copper collar contracts that secure a minimum copper
price of US$4.00 per pound for 108 million pounds of copper for
2025. The copper collar contracts also have ceiling prices between
US$5.00 and US$5.40 per pound (refer to the section “Hedging
Strategy” for details).
Florence Copper
The Company has all the key permits in place for
the commercial production facility at Florence Copper and
construction has commenced. First copper production is expected in
the fourth quarter of 2025.
The Company has a technical report entitled “NI
43-101 Technical Report Florence Copper Project, Pinal County,
Arizona” dated March 30, 2023 (the “2023 Technical Report”) on
SEDAR+. The 2023 Technical Report was prepared in accordance with
NI 43-101 and incorporated the results of testwork from the
Production Test Facility (“PTF”) as well as updated capital and
operating costs (Q3 2022 basis) for the commercial production
facility.
Project highlights based on the 2023 Technical
Report:
- Net present value of US$930 million
(at $US 3.75 copper price, 8% after-tax discount rate)
- Internal rate of return of 47%
(after-tax)
- Payback period of 2.6 years
- Operating costs (C1) of US$1.11 per
pound of copper
- Annual production capacity of 85
million pounds of LME grade A cathode copper
- 22 year mine life
- Total life of mine production of
1.5 billion pounds of copper
- Remaining initial capital cost of
US$232 million (Q3 2022 basis)
Construction of the Florence Copper commercial production
facility continues to advance on schedule. A total of 34 production
wells out of a total of 90 new wells had been completed as of
September 30, 2024. Earthworks and site preparation for the plant
area and commercial wellfield is estimated to be 75% complete and
installation of structural steel, tanks, and process equipment is
underway. Construction of process and surface water run off ponds
and the hiring of additional personnel for the construction and
operations teams continues.
The Company has a fixed-price contract with the
general contractor for construction of the SX/EW plant and
associated surface infrastructure.
Florence Copper Quarterly Capital Spend
|
Three months ended |
Nine months ended |
(US$ in
thousands) |
September 30, 2024 |
September 30, 2024 |
Site and PTF operations |
4,946 |
13,505 |
Commercial facility
construction costs |
42,405 |
97,253 |
Other
capital costs |
6,251 |
29,013 |
Total Florence project expenditures |
53,602 |
139,771 |
|
Based on the 2023 Technical report, the
estimated remaining construction costs for the commercial facility
were US$232 million (basis Q3 2022), and management expects that
total costs will be within 10% to 15% of that estimate. The project
remains on track for first copper production in late 2025.
Construction costs in the third quarter were
US$42.4 million, and US$97.3 million has been incurred for the nine
months ended September 30, 2024. Other capital costs of US$29.0
million include final payments for delivery of long-lead equipment
that was ordered in 2022, and the construction of an evaporation
pond to provide additional water management flexibility.
Construction of this evaporation pond was completed in the third
quarter.
The Company has closed several Florence project
level financings to fund initial commercial facility construction
costs. In July the Company received the third deposit of US$10
million from the US$50 million copper stream transaction with
Mitsui & Co. (U.S.A.) Inc. (“Mitsui”). The fourth deposit was
received in October and the remaining US$10 million is scheduled to
be received in January 2025.
In addition, the Company has applied to the U.S.
Department of Energy’s (“DOE”) Qualifying Advanced Energy Project
Credit (48C) Program. Florence Copper, which is set to become North
America’s lowest GHG-intensity primary copper producer, qualifies
as a critical materials project. After submitting a concept paper
in June, Florence Copper received encouragement to proceed with the
full application. The full application has now been filed seeking a
tax credit of up to US$110 million, and the Company expects to hear
whether the project receives the credit, or not, in mid-January
2025. The Department of the Treasury (“Treasury”) and the Internal
Revenue Service (“IRS”), in partnership with DOE, have
announced up to US$6 billion in a second round of tax credit
allocations for projects that expand clean energy manufacturing and
recycling and critical materials refining, processing and
recycling, and for projects that reduce greenhouse gas emissions at
industrial facilities. DOE’s Office of Manufacturing &
Energy Supply Chains manages the 48C program on behalf of IRS and
Treasury.
Remaining project construction costs are
expected to be funded with the Company’s available liquidity,
remaining instalment from Mitsui, and cashflow from its 100%
ownership interest in Gibraltar. The Company also has in place an
undrawn corporate revolving credit facility for US$110 million.
Long-term Growth Strategy
Taseko’s strategy has been to grow the Company
by acquiring and developing a pipeline of projects focused on
copper in North America. We continue to believe this will generate
long-term returns for shareholders. Our other development projects
are located in British Columbia, Canada.
Yellowhead Copper Project
Based on a NI 43-101 technical report published
in 2020, the Yellowhead Copper Project (“Yellowhead”) has an 817
million tonne mineral reserve and a 25-year mine life. During the
first 5 years of operation, the copper equivalent grade will
average 0.35% producing an average of 200 million pounds of copper
per year at an average C1* cost, net of by-product credit, of
US$1.67 per pound. The Yellowhead copper project contains valuable
precious metal by-products with 440,000 ounces of gold and 19
million ounces of silver production over the life of mine.
The 2020 technical report was prepared using
long-term copper price of US$3.10 per pound, a gold price of
US$1,350 per ounce, and silver price of US$18 per ounce. A new
technical report will be published in 2025 using updated long-term
metal price assumptions, updated project costing, and incorporating
the new Canadian tax credits available for copper mine
development.
The Company is preparing to enter the
environmental assessment process in early 2025, and has recently
opened a project office to support ongoing engagement with local
communities including First Nations. A site investigation field
program was completed in the third quarter, and the additional
baseline data and modeling will be used to support the
environmental assessment and permitting of the project.
New Prosperity Gold-Copper Project
In late 2019, the Tŝilhqot’in Nation, as
represented by Tŝilhqot’in National Government, and Taseko Mines
Limited entered into a confidential dialogue, with the involvement
of the Province of British Columbia, seeking a long-term resolution
of the conflict regarding Taseko’s proposed copper-gold mine
previously known as New Prosperity, acknowledging Taseko’s
commercial interests and the Tŝilhqot’in Nation’s opposition to the
project.
This dialogue has been supported by the parties’
agreement, beginning December 2019, to a series of standstill
agreements on certain outstanding litigation and regulatory matters
relating to Taseko’s tenures and the area in the vicinity of Teẑtan
Biny (Fish Lake).
The dialogue process has made meaningful
progress in recent months but is not complete. The Tŝilhqot’in
Nation and Taseko acknowledge the constructive nature of
discussions, and the opportunity to conclude a long-term and
mutually acceptable resolution of the conflict that also makes an
important contribution to the goals of reconciliation in
Canada.
In March 2024, Tŝilhqot’in and Taseko formally
reinstated the standstill agreement for a final term, with the goal
of finalizing a resolution before the end of this year.
Aley Niobium Project
Environmental monitoring and product marketing
initiatives on the Aley niobium project continue. The converter
pilot test is ongoing and is providing additional process data to
support the design of the commercial process facilities and will
provide final product samples for marketing purposes. The Company
has also initiated a scoping study to investigate the potential
production of niobium oxide at Aley to supply the growing market
for niobium-based batteries.
Conference Call and WebcastThe Company will host a
telephone conference call and live webcast on Thursday, November 7,
2024, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific) to discuss
these results. After opening remarks by management, there will be a
question-and-answer session open to analysts and
investors.Participants can join by conference call dial-in or
webcast:Conference Call Dial-In
- Participants can dial in to the conference call; however,
pre-registration is required
- To register, visit https://bit.ly/TasekoQ32024_Dial-in
- Once registered, an email will be sent, including dial-in
details and a unique access code required to join the live
call
- Please ensure you have registered at least 15 minutes prior to
the conference call start time
Webcast
- A live webcast of the conference
call can be accessed at https://bit.ly/TasekoQ32024
- The webcast will be archived for
later playback until February 5, 2025
at tasekomines.com/investors/events/
|
|
|
|
For further information on Taseko, please see
the Company's website at www.tasekomines.com or contact:
Brian Bergot, Vice President, Investor Relations
– 778-373-4554, toll free 1-800-667-2114
Stuart McDonaldPresident & CEO
No regulatory authority has approved or
disapproved of the information in this news release.
* Non-GAAP Performance
Measures
This document includes certain non-GAAP
performance measures that do not have a standardized meaning
prescribed by IFRS. These measures may differ from those used by,
and may not be comparable to such measures as reported by, other
issuers. The Company believes that these measures are commonly used
by certain investors, in conjunction with conventional IFRS
measures, to enhance their understanding of the Company’s
performance. These measures have been derived from the Company’s
financial statements and applied on a consistent basis. The
following tables below provide a reconciliation of these non-GAAP
measures to the most directly comparable IFRS measure.
Total operating costs and site operating costs,
net of by-product credits
Total costs of sales include all costs absorbed
into inventory, as well as transportation costs and insurance
recoverable. Site operating costs are calculated by removing net
changes in inventory, depletion and amortization, insurance
recoverable, and transportation costs from cost of sales. Site
operating costs, net of by-product credits is calculated by
subtracting by-product credits from the site operating costs. Site
operating costs, net of by-product credits per pound are calculated
by dividing the aggregate of the applicable costs by copper pounds
produced. Total operating costs per pound is the sum of site
operating costs, net of by-product credits and off-property costs
divided by the copper pounds produced. By-product credits are
calculated based on actual sales of molybdenum (net of treatment
costs) and silver during the period divided by the total pounds of
copper produced during the period. These measures are calculated on
a consistent basis for the periods presented.
(Cdn$ in thousands, unless otherwise indicated) |
2024Q3 |
2024Q2 |
2024Q11 |
2023Q41 |
2023Q31 |
Cost of sales |
124,833 |
|
108,637 |
|
122,528 |
|
93,914 |
|
94,383 |
|
Less: |
|
|
|
|
|
Depletion and amortization |
(20,466 |
) |
(13,721 |
) |
(15,024 |
) |
(13,326 |
) |
(15,993 |
) |
Net change in inventories of finished goods |
2,938 |
|
(10,462 |
) |
(20,392 |
) |
(1,678 |
) |
4,267 |
|
Net change in inventories of ore stockpiles |
9,089 |
|
1,758 |
|
2,719 |
|
(3,771 |
) |
12,172 |
|
Transportation costs |
(8,682 |
) |
(6,408 |
) |
(10,153 |
) |
(10,294 |
) |
(7,681 |
) |
Site operating costs |
107,712 |
|
79,804 |
|
79,678 |
|
64,845 |
|
87,148 |
|
Less by-product credits: |
|
|
|
|
|
Molybdenum, net of treatment costs |
(8,962 |
) |
(7,071 |
) |
(6,112 |
) |
(5,441 |
) |
(9,900 |
) |
Silver, excluding amortization of deferred revenue |
(241 |
) |
(144 |
) |
(137 |
) |
124 |
|
290 |
|
Site operating costs, net of by-product credits |
98,509 |
|
72,589 |
|
73,429 |
|
59,528 |
|
77,538 |
|
Total copper produced (thousand pounds) |
27,101 |
|
20,225 |
|
26,694 |
|
29,883 |
|
30,978 |
|
Total costs per pound produced |
3.63 |
|
3.59 |
|
2.75 |
|
1.99 |
|
2.50 |
|
Average exchange rate for the period (CAD/USD) |
1.36 |
|
1.37 |
|
1.35 |
|
1.36 |
|
1.34 |
|
Site operating costs, net of by-product
credits(US$ per pound) |
2.66 |
|
2.62 |
|
2.04 |
|
1.46 |
|
1.87 |
|
Site operating costs, net of by-product credits |
98,509 |
|
72,589 |
|
73,429 |
|
59,528 |
|
77,538 |
|
Add off-property costs: |
|
|
|
|
|
Treatment and refining costs |
816 |
|
3,941 |
|
4,816 |
|
7,885 |
|
6,123 |
|
Transportation costs |
8,682 |
|
6,408 |
|
10,153 |
|
10,294 |
|
7,681 |
|
Total operating costs |
108,008 |
|
82,938 |
|
88,398 |
|
77,707 |
|
91,342 |
|
Total operating costs (C1) (US$ per pound) |
2.92 |
|
2.99 |
|
2.46 |
|
1.91 |
|
2.20 |
|
1 Q3 and Q4 2023 includes the impact from the
March 15, 2023 acquisition of Cariboo from Sojitz, which increased
the Company’s Gibraltar ownership from 75% to 87.5%. Q1 2024
includes the impact from the March 25, 2024 acquisition of Cariboo
from Dowa and Furukawa, which increased the Company’s Gibraltar
ownership from 87.5% to 100%.
Total Site Costs
Total site costs are comprised of the site
operating costs charged to cost of sales as well as mining costs
capitalized to property, plant and equipment in the period. This
measure is intended to capture Taseko’s share of the total site
operating costs incurred in the quarter at Gibraltar calculated on
a consistent basis for the periods presented.
(Cdn$ in thousands, unless otherwise indicated) –87.5% basis
(except for Q1, Q2 and Q3 2024) |
2024Q3 |
2024Q2 |
2024Q11 |
2023Q41 |
2023Q31 |
Site operating costs |
107,712 |
79,804 |
79,678 |
64,845 |
87,148 |
Add: |
|
|
|
|
|
Capitalized stripping costs |
3,631 |
10,732 |
16,152 |
31,916 |
2,083 |
Total site costs – Taseko share |
111,343 |
90,536 |
95,830 |
96,761 |
89,231 |
Total site costs – 100% basis |
111,343 |
90,536 |
109,520 |
110,584 |
101,978 |
1 Q3 and Q4 2023 includes the impact from the
March 15, 2023 acquisition of Cariboo from Sojitz, which increased
the Company’s Gibraltar ownership from 75% to 87.5%. Q1 2024
includes the impact from the March 25, 2024 acquisition of Cariboo
from Dowa and Furukawa, which increased the Company’s Gibraltar
ownership from 87.5% to 100%.
Adjusted net income (loss) and Adjusted EPS
Adjusted net income (loss) removes the effect of
the following transactions from net income as reported under
IFRS:
- Unrealized foreign currency
gains/losses;
- Unrealized gain/loss on
derivatives;
- Other operating costs;
- Call premium on settlement of
debt;
- Loss on settlement of long-term
debt, net of capitalized interest;
- Gain on Cariboo acquisition;
- Gain on acquisition of control of
Gibraltar;
- Realized gain on sale of
inventory;
- Inventory write-ups to net
realizable value that was sold or processed;
- Accretion and fair value adjustment
on Florence royalty obligation; and
- Finance and other non-recurring
costs for Cariboo acquisition.
Management believes these transactions do not
reflect the underlying operating performance of our core mining
business and are not necessarily indicative of future operating
results. Furthermore, unrealized gains/losses on derivative
instruments, changes in the fair value of financial instruments,
and unrealized foreign currency gains/losses are not necessarily
reflective of the underlying operating results for the reporting
periods presented.
Adjusted net income (loss) and Adjusted EPS
(Cdn$ in thousands, except per share amounts) |
2024Q3 |
2024Q2 |
2024Q1 |
2023Q4 |
Net (loss) income |
(180 |
) |
(10,953 |
) |
18,896 |
|
38,076 |
|
Unrealized foreign exchange (gain) loss |
(7,259 |
) |
5,408 |
|
13,688 |
|
(14,541 |
) |
Unrealized loss on derivatives |
1,821 |
|
10,033 |
|
3,519 |
|
1,636 |
|
Other operating costs |
4,098 |
|
10,435 |
|
- |
|
- |
|
Call premium on settlement of debt |
- |
|
9,571 |
|
- |
|
- |
|
Loss on settlement of long-term debt, net of
capitalizedinterest |
- |
|
2,904 |
|
- |
|
- |
|
Gain on Cariboo acquisition |
- |
|
- |
|
(47,426 |
) |
- |
|
Gain on acquisition of control of Gibraltar** |
- |
|
- |
|
(14,982 |
) |
- |
|
Realized gain on sale of inventory*** |
- |
|
3,768 |
|
13,354 |
|
- |
|
Inventory write-ups to net realizable value that was sold
orprocessed**** |
3,266 |
|
4,056 |
|
- |
|
- |
|
Accretion and fair value adjustment on Florence
royaltyobligation |
3,703 |
|
2,132 |
|
3,416 |
|
- |
|
Accretion and fair value adjustment on considerationpayable to
Cariboo |
9,423 |
|
8,399 |
|
1,555 |
|
(916 |
) |
Non-recurring other expenses for Cariboo acquisition |
- |
|
394 |
|
138 |
|
- |
|
Estimated tax effect of adjustments |
(6,644 |
) |
(15,644 |
) |
15,570 |
|
(195 |
) |
Adjusted net income |
8,228 |
|
30,503 |
|
7,728 |
|
24,060 |
|
Adjusted EPS |
0.03 |
|
0.10 |
|
0.03 |
|
0.08 |
|
(Cdn$ in thousands, except per share amounts) |
2023Q3 |
2023Q2 |
2023Q1 |
2022Q4 |
Net income (loss) |
871 |
|
9,991 |
|
33,788 |
|
(2,275 |
) |
Unrealized foreign exchange loss (gain) |
14,582 |
|
(10,966 |
) |
(950 |
) |
(5,279 |
) |
Unrealized loss (gain) on derivatives |
4,518 |
|
(6,470 |
) |
2,190 |
|
20,137 |
|
Gain on Cariboo acquisition |
- |
|
- |
|
(46,212 |
) |
- |
|
Accretion and fair value adjustment on considerationpayable to
Cariboo |
1,244 |
|
1,451 |
|
- |
|
- |
|
Non-recurring other expenses for Cariboo acquisition |
- |
|
263 |
|
- |
|
- |
|
Estimated tax effect of adjustments |
(1,556 |
) |
1,355 |
|
16,272 |
|
(5,437 |
) |
Adjusted net income (loss) |
19,659 |
|
(4,376 |
) |
5,088 |
|
7,146 |
|
Adjusted EPS |
0.07 |
|
(0.02 |
) |
0.02 |
|
0.02 |
|
** The $15.0 million gain on acquisition of
control of Gibraltar in Q1 2024 relates to the write-up of finished
copper concentrate inventory for Taseko’s 87.5% share to its fair
value at March 25, 2024.
*** Cost of sales for the nine months ended
September 30, 2024 included $17.1 million in write-ups to net
realizable value for concentrate inventory held at the date of
acquisition of control of Gibraltar (March 25, 2024) that were
subsequently sold. The realized portion of the gains recorded in
the first quarter for GAAP purposes was $13.4 million and for the
second quarter were $3.8 million and have been included in Adjusted
net income in the period they were sold.
**** Write-ups to net realizable value for
inventory held at the date of acquisition of control of Gibraltar
(March 25, 2024) totaled $9.2 million. The inventory write-ups in
the first quarter for GAAP purposes have been included in Adjusted
net income in the period they were sold or processed. Cost of sales
for the nine months ended September 30, 2024 included $7.3 million
in inventory write-ups that were subsequently sold or processed in
the second and third quarters.
Adjusted EBITDA
Adjusted EBITDA is presented as a supplemental
measure of the Company’s performance and ability to service debt.
Adjusted EBITDA is frequently used by securities analysts,
investors and other interested parties in the evaluation of
companies in the industry, many of which present Adjusted EBITDA
when reporting their results. Issuers of “high yield” securities
also present Adjusted EBITDA because investors, analysts and rating
agencies consider it useful in measuring the ability of those
issuers to meet debt service obligations.
Adjusted EBITDA represents net income before
interest, income taxes, and depreciation and also eliminates the
impact of a number of items that are not considered indicative of
ongoing operating performance. Certain items of expense are added
and certain items of income are deducted from net income that are
not likely to recur or are not indicative of the Company’s
underlying operating results for the reporting periods presented or
for future operating performance and consist of:
- Unrealized foreign exchange
gains/losses;
- Unrealized gain/loss on
derivatives;
- Amortization of share-based
compensation expense;
- Other operating costs;
- Call premium on settlement of
debt;
- Loss on settlement of long-term
debt;
- Gain on Cariboo acquisition;
- Gain on acquisition of control of
Gibraltar;
- Realized gain on sale of
inventory;
- Inventory write-ups to net
realizable value that was sold or processed; and
- Finance and other non-recurring
costs for Cariboo acquisition.
(Cdn$ in thousands) |
2024Q3 |
2024Q2 |
2024Q1 |
2023Q4 |
Net (loss) income |
(180 |
) |
(10,953 |
) |
18,896 |
|
38,076 |
|
Add: |
|
|
|
|
Depletion and amortization |
20,466 |
|
13,721 |
|
15,024 |
|
13,326 |
|
Finance expense |
25,685 |
|
21,271 |
|
19,849 |
|
12,804 |
|
Finance income |
(1,504 |
) |
(911 |
) |
(1,086 |
) |
(972 |
) |
Income tax (recovery) expense |
(200 |
) |
(3,247 |
) |
23,282 |
|
17,205 |
|
Unrealized foreign exchange (gain) loss |
(7,259 |
) |
5,408 |
|
13,688 |
|
(14,541 |
) |
Unrealized loss on derivatives |
1,821 |
|
10,033 |
|
3,519 |
|
1,636 |
|
Amortization of share-based compensation expense |
1,496 |
|
2,585 |
|
5,667 |
|
1,573 |
|
Other operating costs |
4,098 |
|
10,435 |
|
- |
|
- |
|
Call premium on settlement of debt |
- |
|
9,571 |
|
- |
|
- |
|
Loss on settlement of long-term debt |
- |
|
4,646 |
|
- |
|
- |
|
Gain on Cariboo acquisition |
- |
|
- |
|
(47,426 |
) |
- |
|
Gain on acquisition of control of Gibraltar** |
- |
|
- |
|
(14,982 |
) |
- |
|
Realized gain on sale of inventory*** |
- |
|
3,768 |
|
13,354 |
|
- |
|
Inventory write-ups to net realizable value that was sold or
processed**** |
3,266 |
|
4,056 |
|
- |
|
- |
|
Non-recurring other expenses for Cariboo acquisition |
- |
|
394 |
|
138 |
|
- |
|
Adjusted EBITDA |
47,689 |
|
70,777 |
|
49,923 |
|
69,107 |
|
** The $15.0 million gain on acquisition of
control of Gibraltar in Q1 2024 relates to the write-up of finished
copper concentrate inventory for Taseko’s 87.5% share to its fair
value at March 25, 2024.
*** Cost of sales for the nine months ended
September 30, 2024 included $17.1 million in write-ups to net
realizable value for concentrate inventory held at the date of
acquisition of control of Gibraltar (March 25, 2024) that were
subsequently sold. The realized portion of the gains recorded in
the first quarter for GAAP purposes was $13.4 million and for the
second quarter were $3.8 million and have been included in Adjusted
net income in the period they were sold.
**** Write-ups to net realizable value for
inventory held at the date of acquisition of control of Gibraltar
(March 25, 2024) totaled $9.2 million. The inventory write-ups in
the first quarter for GAAP purposes have been included in Adjusted
net income in the period they were sold or processed. Cost of sales
for the nine months ended September 30, 2024 included $7.3 million
in inventory write-ups that were subsequently sold or processed in
the second and third quarters.
(Cdn$ in thousands) |
2023Q3 |
2023Q2 |
2023Q1 |
2022Q4 |
Net income (loss) |
871 |
|
9,991 |
|
33,788 |
|
(2,275 |
) |
Add: |
|
|
|
|
Depletion and amortization |
15,993 |
|
15,594 |
|
12,027 |
|
10,147 |
|
Finance expense |
14,285 |
|
13,468 |
|
12,309 |
|
10,135 |
|
Finance income |
(322 |
) |
(757 |
) |
(921 |
) |
(700 |
) |
Income tax expense |
12,041 |
|
678 |
|
20,219 |
|
1,222 |
|
Unrealized foreign exchange loss (gain) |
14,582 |
|
(10,966 |
) |
(950 |
) |
(5,279 |
) |
Unrealized loss (gain) on derivatives |
4,518 |
|
(6,470 |
) |
2,190 |
|
20,137 |
|
Amortization of share-based compensation expense |
727 |
|
417 |
|
3,609 |
|
1,794 |
|
Gain on Cariboo acquisition |
- |
|
- |
|
(46,212 |
) |
- |
|
Non-recurring other expenses for Cariboo acquisition |
- |
|
263 |
|
- |
|
- |
|
Adjusted EBITDA |
62,695 |
|
22,218 |
|
36,059 |
|
35,181 |
|
Earnings from mining operations before
depletion, amortization and non-recurring items
Earnings from mining operations before
depletion, amortization and non-recurring items is earnings from
mining operations with depletion and amortization, and any items
that are not considered indicative of ongoing operating performance
added back. The Company discloses this measure, which has been
derived from our financial statements and applied on a consistent
basis, to assist in understanding the results of the Company’s
operations and financial position and it is meant to provide
further information about the financial results to investors.
|
Three months endedSeptember
30, |
Nine months endedSeptember
30, |
(Cdn$ in thousands) |
2024 |
2023 |
2024 |
2023 |
Earnings from mining operations |
26,686 |
49,452 |
96,053 |
90,634 |
Add: |
|
|
|
|
Depletion and amortization |
20,466 |
15,993 |
49,211 |
43,614 |
Realized gain on sale of inventory |
- |
- |
17,122 |
- |
Inventory write-ups to net realizable value that was sold or
processed |
3,266 |
- |
7,322 |
- |
Other operating costs |
4,098 |
- |
14,533 |
- |
Earnings from mining operations before
depletion,amortization and non-recurring
items |
54,516 |
65,445 |
184,241 |
134,248 |
|
During the nine months ended September 30, 2024,
the realized gain on sale of inventory and inventory write-ups to
net realizable value that was sold or processed, relates to
inventory held at the date of acquisition of control of Gibraltar
(March 25, 2024) that was written-up from book value to net
realizable value and subsequently sold or processed.
Site operating costs per ton milled
The Company discloses this measure, which has
been derived from our financial statements and applied on a
consistent basis, to provide assistance in understanding the
Company’s site operations on a tons milled basis.
(Cdn$ in thousands, except per ton milled amounts) |
2024Q3 |
2024Q2 |
2024Q11 |
2023Q41 |
2023Q31 |
Site operating costs (included in cost
ofsales) – Taseko share |
|
107,712 |
|
79,804 |
|
79,678 |
|
64,845 |
|
87,148 |
Site operating costs – 100% basis |
|
107,712 |
|
79,804 |
|
90,040 |
|
74,109 |
|
99,598 |
Tons milled (thousands) |
|
7,572 |
|
5,728 |
|
7,677 |
|
7,626 |
|
8,041 |
Site operating costs per ton milled |
$14.23 |
$13.93 |
$11.73 |
$9.72 |
$12.39 |
1 Q3 and Q4 2023 includes the impact from the
March 15, 2023 acquisition of Cariboo from Sojitz, which increased
the Company’s Gibraltar ownership from 75% to 87.5%. Q1 2024
includes the impact from the March 25, 2024 acquisition of Cariboo
from Dowa and Furukawa, which increased the Company’s Gibraltar
ownership from 87.5% to 100%.
Caution Regarding Forward-Looking
Information
This document contains “forward-looking
statements” that were based on Taseko’s expectations, estimates and
projections as of the dates as of which those statements were made.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as “outlook”,
“anticipate”, “project”, “target”, “believe”, “estimate”, “expect”,
“intend”, “should” and similar expressions.
Forward-looking statements are subject to known
and unknown risks, uncertainties and other factors that may cause
the Company’s actual results, level of activity, performance or
achievements to be materially different from those expressed or
implied by such forward-looking statements. These included but are
not limited to:
- uncertainties about the effect of
COVID-19 and the response of local, provincial, federal and
international governments to the threat of COVID-19 on our
operations (including our suppliers, customers, supply chain,
employees and contractors) and economic conditions generally and in
particular with respect to the demand for copper and other metals
we produce;
- uncertainties and costs related to
the Company’s exploration and development activities, such as those
associated with continuity of mineralization or determining whether
mineral resources or reserves exist on a property;
- uncertainties related to the
accuracy of our estimates of mineral reserves, mineral resources,
production rates and timing of production, future production and
future cash and total costs of production and milling;
- uncertainties related to
feasibility studies that provide estimates of expected or
anticipated costs, expenditures and economic returns from a mining
project;
- uncertainties related to the
ability to obtain necessary licenses permits for development
projects and project delays due to third party opposition;
- uncertainties related to unexpected
judicial or regulatory proceedings;
- changes in, and the effects of, the
laws, regulations and government policies affecting our exploration
and development activities and mining operations, particularly
laws, regulations and policies;
- changes in general economic
conditions, the financial markets and in the demand and market
price for copper, gold and other minerals and commodities, such as
diesel fuel, steel, concrete, electricity and other forms of
energy, mining equipment, and fluctuations in exchange rates,
particularly with respect to the value of the U.S. dollar and
Canadian dollar, and the continued availability of capital and
financing;
- the effects of forward selling
instruments to protect against fluctuations in copper prices and
exchange rate movements and the risks of counterparty defaults, and
mark to market risk;
- the risk of inadequate insurance or
inability to obtain insurance to cover mining risks;
- the risk of loss of key employees;
the risk of changes in accounting policies and methods we use to
report our financial condition, including uncertainties associated
with critical accounting assumptions and estimates;
- environmental issues and
liabilities associated with mining including processing and stock
piling ore; and
- labour strikes, work stoppages, or
other interruptions to, or difficulties in, the employment of
labour in markets in which we operate mines, or environmental
hazards, industrial accidents or other events or occurrences,
including third party interference that interrupt the production of
minerals in our mines.
For further information on Taseko, investors
should review the Company’s annual Form 40-F filing with the United
States Securities and Exchange Commission www.sec.gov and home
jurisdiction filings that are available at www.sedarplus.com.
Cautionary Statement on Forward-Looking
Information
This discussion includes certain statements that
may be deemed "forward-looking statements". All statements in this
discussion, other than statements of historical facts, that address
future production, reserve potential, exploration drilling,
exploitation activities, and events or developments that the
Company expects are forward-looking statements. Although we believe
the expectations expressed in such forward-looking statements are
based on reasonable assumptions, such statements are not guarantees
of future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, continued availability of capital and
financing and general economic, market or business conditions.
Investors are cautioned that any such statements are not guarantees
of future performance and actual results or developments may differ
materially from those projected in the forward-looking statements.
All of the forward-looking statements made in this MD&A are
qualified by these cautionary statements. We disclaim any intention
or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except to the extent required by applicable law. Further
information concerning risks and uncertainties associated with
these forward-looking statements and our business may be found in
our most recent Form 40-F/Annual Information Form on file with the
SEC and Canadian provincial securities regulatory authorities.
Taseko Mines (LSE:TKO)
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