REG-Taseko Mines Limited: Final Results
23/02/2022 07:15
TASEKO REPORTS AN 85% INCREASE IN ADJUSTED EBITDA* FOR 2021
This release should be read with the Company's Financial Statements and Management Discussion & Analysis ("MD&A"), available at www.tasekomines.com and filed on www.sedar.com . Except where otherwise noted, all currency amounts are stated in Canadian dollars. Taseko's 75% owned Gibraltar Mine is located north of the City of Williams Lake in south-central British Columbia. Production and sales volumes stated in this release are on a 100% basis unless otherwise indicated.
VANCOUVER, BC, Feb. 22, 2022 - Taseko Mines Limited (TSX: TKO) (NYSE
American: TGB) (LSE: TKO) ("Taseko" or the "Company") reports Adjusted EBITDA*
of $201 million for the full-year 2021, an 85% increase over 2020. Revenues
for the year were $433 million and Adjusted net income* for the year was $45
million, or $0.16 per share. In the fourth quarter 2021, Taseko generated
Adjusted EBITDA* of $53 million, $103 million of Revenue and Adjusted net
income* of $13 million, or $0.05 per share.
Stuart McDonald, President and CEO of Taseko, stated, "Realized copper sales
of 105 million pounds for the year, buoyed by a strong average copper price of
over US$4.20 per pound, generated the best financial results in our Company's
history. This was accomplished despite the lagging copper sales in the fourth
quarter as a result of major disruption to transportation infrastructure in
southern BC from severe rainstorms in November, which limited our ability to
ship copper concentrate and realize sales."
"At Florence Copper, based on our ongoing dialogue with the US Environmental
Protection Agency, we continue to expect the draft Underground Injection
Control ("UIC") permit to be publicly issued very soon, and then a 45-day
public comment period will commence. The UIC is the final permit needed to
construct and operate the commercial production facility, which will be a
major new source of low-carbon copper supply for the US market. The detailed
engineering program for the commercial facility is complete and we're well
advanced with procurement of key, long-lead items, which will ensure a rapid
and smooth transition into construction."
Mr. McDonald added, "Operationally, Gibraltar production in the fourth quarter
was impacted by lower grades and recoveries due to severe winter weather as
well as oxidization and pyrite content in the upper benches of the Gibraltar
pit. Mill operations are being optimized for the new mineralization, and ore
quality will improve as mining progresses deeper into the Gibraltar pit this
year. For 2022, we expect copper production of 115 million pounds (+/- 5%),
with production weighted to the back half of the year and the first quarter
being the lowest production quarter, similar to 2021. Next year mining
operations will transition to higher grade zones, and copper production is
planned to trend back toward the life of mine average of 130 million pounds.
A new Gibraltar reserve update is expected to be completed in the second
quarter."
Mr. McDonald concluded, "Our balance sheet remains healthy with nearly $300
million of available liquidity, including cash on hand and the new US$50
million credit facility that was closed in October. In addition, we recently
took advantage of a strengthened copper price to extend our price protection
strategy - we now have more than 90% of our 2022 production secured at a
minimum price of US$4.00 per pound. With our strong financial position and
robust copper markets, its ideal timing to be advancing our Florence Copper
project to commercial production."
2021 Annual Review
* Earnings from mining operations before depletion and amortization* was
$230.4 million, Adjusted EBITDA* was $200.7 million, and cash flows from
operations was $174.8 million;
* Adjusted net income* was $44.7 million ($0.16 per share) and GAAP Net income
was $36.5 million ($0.13 per share) for the year;
* Total operating costs (C1)* for the year were US$1.90 per pound produced;
* The Gibraltar mine produced 112.3 million pounds of copper and 2.0 million
pounds of molybdenum in 2021. Copper recoveries were 82.4% and copper head
grades were 0.23%;
* Gibraltar sold 104.9 million pounds of copper for the year (100% basis)
which contributed to record revenue for Taseko of $433.3 million and an
increase of 26% over 2020. Average realized copper prices were US$4.31 per
pound for year, compared to the LME average price of US$4.23 per pound;
* The Company has approximately $300 million of available liquidity at
December 31, 2021, including a cash balance of $237 million and a new US$50
million revolving credit facility with National Bank of Canada which closed in
early October;
* Development costs incurred for Florence Copper were $57.9 million in the
year and included, detailed engineering and design of the commercial facility,
initial deposits for major processing equipment for the SX/EW plant and
ongoing site operating costs. These activities will allow the Florence project
team to efficiently advance into construction upon receipt of the Underground
Injection Control ("UIC") permit; and
* In December 2021, the Company completed its review of the draft UIC permit
and no significant issues were identified. The EPA continues to advance their
review process and the public comment period on the draft UIC permit is
expected to commence shortly after the draft UIC permit is publicly issued.
Fourth Quarter Review
* Fourth quarter earnings from mining operations before depletion and
amortization* was $61.9 million, Adjusted EBITDA* was $53.0 million, Adjusted
net income* was $13.3 million ($0.05 per share) and GAAP Net income was $11.8
million ($0.04 per share);
* Total operating costs (C1)* for the quarter were US$1.94 per pound produced;
* The Gibraltar mine produced 28.8 million pounds of copper and 450 thousand
pounds of molybdenum in the fourth quarter. Copper recoveries were 80.4% and
copper head grades were 0.24%;
*Non-GAAP performance measure. See end of news release
* Gibraltar sold 23.8 million pounds of copper in the quarter (100% basis).
Due to extreme flooding in southwest British Columbia in November which washed
out highways and rail infrastructure, transportation options were impacted
which resulted in a build-up of copper concentrate inventory to 9.9 million
pounds at year end. Concentrate inventory should return to more normal levels
by the end of the first quarter of 2022;
* Average realized copper prices were US$4.37 per pound in the quarter, which
contributed $103.0 million of revenue for Taseko;
* Cashflow from operations was $37.2 million which was impacted by $20.5
million in non-cash working capital attributed to the higher year-end
inventory. Capital expenditures of $35.2 million included Florence spend of
$14.8 million in the quarter;
* The Company has recently extended its copper price protection and now has
more than 90% of its attributable production secured for 2022 year at a
minimum copper price of US$4.00 per pound. Fourth quarter Adjusted net income
and Adjusted EBITDA were impacted by a $6.4 million realized derivative loss
($0.02 per share) related to copper put options that expired in the quarter;
and
* In November 2021, Gibraltar's unionized workforce ratified a new, long-term
collective bargaining agreement which will be in place until May 31, 2024.
HIGHLIGHTS
Operating Data (Gibraltar - 100% basis) Three months ended Year ended
December 31, December 31,
2021 2020 Change 2021 2020 Change
Tons mined (millions) 23.3 26.4 (3.1) 105.4 98.7 6.7
Tons milled (millions) 7.4 7.5 (0.1) 29.2 30.1 (0.9)
Production (million pounds Cu) 28.8 25.0 3.8 112.3 123.0 (10.7)
Sales (million pounds Cu) 23.8 25.0 (1.2) 104.9 124.0 (19.1)
Financial Data Three months ended Year ended
December 31, December 31,
(Cdn$ in thousands, except for per share amounts) 2021 2020 Change 2021 2020 Change
Revenues 102,972 87,398 15,574 433,278 343,267 90,011
Earnings from mining operations before depletion and amortization (*) 61,916 27,062 34,854 230,392 119,026 111,366
Cash flows provided by operations 37,231 20,424 16,807 174,769 106,195 68,574
Adjusted EBITDA (*) 52,988 20,478 32,510 200,733 108,229 92,504
Adjusted net income (loss) (*) 13,312 (7,473) 20,785 44,745 (26,539) 71,284
Per share - basic ("Adjusted EPS") (*) 0.05 (0.03) 0.08 0.16 (0.11) 0.27
Net income (loss) (GAAP) 11,762 5,694 6,068 36,472 (23,524) 59,996
Per share - basic ("EPS") 0.04 0.02 0.02 0.13 (0.09) 0.22
*Non-GAAP performance measure. See end of news release
REVIEW OF OPERATIONS
Gibraltar mine (75% Owned)
Operating data (100% basis) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 YE 2021 YE 2020
Tons mined (millions) 23.3 25.2 24.9 32.0 26.4 105.4 98.7
Tons milled (millions) 7.4 7.4 7.2 7.2 7.5 29.2 30.1
Strip ratio 2.2 1.3 2.3 6.0 1.9 2.5 2.0
Site operating cost per ton milled (Cdn$)* $9.94 $8.99 $9.16 $8.73 $11.67 $9.21 $9.59
Copper concentrate
Head grade (%) 0.24 0.28 0.22 0.19 0.20 0.23 0.24
Copper recovery (%) 80.4 84.2 83.3 81.5 83.3 82.4 84.3
Production (million pounds Cu) 28.8 34.5 26.8 22.2 25.0 112.3 123.0
Sales (million pounds Cu) 23.8 32.4 26.7 22.0 25.0 104.9 124.0
Inventory (million pounds Cu) 9.9 4.9 3.5 3.6 3.4 9.9 3.4
Molybdenum concentrate
Production (thousand pounds Mo) 450 571 402 530 549 1,954 2,269
Sales (thousand pounds Mo) 491 502 455 552 487 2,000 2,239
Per unit data (US$ per pound produced) (*)
Site operating costs (*) $2.02 $1.53 $2.02 $2.23 $2.67 $1.91 $1.75
By-product credits (*) (0.30) (0.25) (0.25) (0.27) (0.14) (0.27) (0.13)
Site operating costs, net of by-product credits (*) $1.72 $1.28 $1.77 $1.96 $2.53 $1.64 $1.62
Off-property costs 0.22 0.29 0.25 0.27 0.29 0.26 0.30
Total operating costs (C1) (*) $1.94 $1.57 $2.02 $2.23 $2.82 $1.90 $1.92
Full Year Results
Gibraltar produced 112.3 million pounds of copper in 2021 compared to 123.0
million in 2020. Copper grade for the year averaged 0.23% copper, compared to
0.24% in 2020. Copper recoveries for 2021 was 82.4%, compared to 84.3% in
2020.
A total of 105.4 million tons were mined in the year in line with the mine
plan and a 7% increase over the prior year period. The strip ratio increased
primarily as a result of the waste mining transitioning into the Pollyanna pit
in the first quarter of 2021 and lower mining rates in 2020 in response to the
onset of COVID-19. Pollyanna ore was the primary mill feed in 2021, and
waste stripping activities began in the Gibraltar pit in 2021 with first ore
being mined in the fourth quarter.
Total site spending (including capitalized stripping of $59.9 million on a 75%
basis) was 9% higher than the prior year due to higher mining rates in 2021.
Sustaining capital expenditures at Gibraltar (75% basis) were $27.9 million
for the year, compared to $20.3 million for the prior year due to greater
scheduled component replacements in 2021 for the mining fleet.
*Non-GAAP performance measure. See end of news release
REVIEW OF OPERATIONS - CONTINUED
Molybdenum production was 2.0 million pounds in the year compared to 2.3
million pounds in the prior year. Molybdenum prices also strengthened in 2021
with an average molybdenum price of US$15.94 per pound, an increase of 84%
compared to the 2020 average price of US$8.68 per pound. By-product credits
per pound of copper produced was US$0.27 in the year compared to US$0.13 in
the prior year.
Off-property costs per pound produced* were US$0.26 for the year, which is
US$0.04 lower than the prior year, as the Company benefited by a 4% reduction
in the benchmark treatment and refining charges ("TCRC") in 2021 and realized
lower TCRCs for spot tenders that were delivered at some of the lowest levels
ever seen by the Gibraltar mine due to tight copper market conditions.
Total operating costs per pound produced (C1)* were US$1.90 for the year, a
slight decrease compared to the prior year. The decrease in the C1* costs was
primarily due to the higher by-product credits and lower off-property costs,
partially offset by the increase in site costs and the impact of decreased
copper production.
Fourth Quarter Results
Copper production in the fourth quarter was 28.8 million pounds and was
impacted by lower grades and recoveries from ore mined in the upper benches of
the Gibraltar pit. Increased oxidization and pyrite content in this ore has
resulted in lower recoveries which management believes is a short-term issue
that will be resolved. Ore quality is expected to improve as mining progresses
deeper into the Gibraltar pit. In December, heavy snowfall and temperatures as
low as minus 35 degrees Celsius also impacted mine equipment and mill
availabilities, resulting in decreased mill throughput and a need to draw ore
from lower grade stockpiles.
The Company realized 23.8 million pounds of copper sales in the fourth quarter
which was lower than copper production of 28.8 million pounds. Major
disruption to the highway and rail infrastructure in southwest British
Columbia from severe rainstorms and flooding in November prevented significant
production from being delivered to the port for shipping. Copper concentrate
inventories ended the year at 9.9 million pounds.
A total of 23.3 million tons were mined in the fourth quarter. The strip ratio
increased over the prior quarter due to mining activities transitioning into
the higher strip ratio Gibraltar pit. The mill feed in the fourth quarter came
primarily from Pollyanna but also included ore from the Gibraltar pit.
Total site spending (including capitalized stripping of $12.7 million on a 75%
basis) was 7% higher than the prior quarter and included retroactive payments
from the newly ratified collective bargaining agreement. Sustaining capital
expenditures at Gibraltar of $6.5 million on a 75% basis included component
replacements for the mining fleet, including scheduled work on the shovels.
Molybdenum production was 450 thousand pounds in the fourth quarter and at an
average molybdenum price of US$18.89 per pound, generated a notable by-product
credit per pound of copper produced of US$0.30 in the fourth quarter.
*Non-GAAP performance measure. See end of news release
REVIEW OF OPERATIONS - CONTINUED
Off-property costs per pound produced* were US$0.22 for the fourth quarter
which benefitted from lower copper pounds sold. The Company also realized
lower TCRC in the fourth quarter as two spot tenders were delivered at much
lower TCRC rates than the annual benchmark rate, which reflects the tight
physical market for copper concentrate from overseas smelters.
Total operating costs per pound produced (C1)* were US$1.94 for the quarter
and increased due to the decreased copper production and higher site costs in
the fourth quarter compared to the third quarter.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Nothing is more important to Taseko than the safety, health and well-being of
our workers and their families. Taseko places a high priority on the
continuous improvement of performance in the areas of employee health and
safety at the workplace and protection of the environment.
In April 2021, Taseko published its second Environmental, Social, and
Governance ("ESG") report, which includes an examination of the Company's
sustainability performance for 2020. The report is available on the Company's
website at www.tasekomines.com/esg.
In this report, Taseko has reported Scope 1 and 2 greenhouse gas emissions for
the Gibraltar mine which show that the mine ranks in the first quartile of all
copper mines globally. When commercial operations at Florence Copper
commences, the Company's combined greenhouse gas emissions intensity will drop
even lower, to an estimated 1.53 tonnes of CO2 per tonne of copper equivalent,
based on an independent analysis by Skarn Associates.
Gibraltar's 2021 ESG report will be published in the second quarter of 2022.
GIBRALTAR OUTLOOK
Gibraltar is expected to produce 115 million pounds (+/- 5%) of copper in 2022
on a 100% basis, with production weighted to the back half of the year and the
first quarter being the lowest production quarter, similar to 2021. The
expected sales of excess copper concentrate inventory carried over from 2021
will bolster earnings in the first quarter of 2022.
Strong metal prices and US dollar combined with our copper hedge protection
continues to provide tailwinds for a strong financial performance and
operating margins at the Gibraltar mine over the coming year. Copper prices in
2021 averaged US$4.23 per pound and are currently around US$4.50
and molybdenum prices are currently US$18.78 per pound, 18% higher than the
average price in 2021.
The copper price outlook for 2022 remains quite favorable with limited
exchange inventories and ongoing supply constraints failing to keep up to
demand. Many governments are focusing on increased infrastructure investment
to stimulate economic recovery after the pandemic, including green
initiatives, which will require new primary supplies of copper. Although some
analysts predict a balanced copper market by 2023 based on known projects
currently under development, most industry analysts are projecting ongoing
supply constraints and deficits, which should support higher copper prices in
the years to come.
*Non-GAAP performance measure. See end of news release
GIBRALTAR OUTLOOK - CONTINUED
The Company has a long track record of purchasing copper price options to
manage copper price volatility. This strategy provides security over the
Company's cash flow as it prepares for construction of Florence Copper while
providing significant upside should copper prices continue at these levels or
increase further. In particular, the Company has secured more than 90% of
attributable production with copper collars which protect a minimum copper
price of US$4.00 per pound for 2022.
FLORENCE COPPER
The commercial production facility at Florence Copper will be one of the
greenest sources of copper for US domestic consumption, with carbon emissions,
water and energy consumption all dramatically lower than a conventional
mine. It is a low-cost copper project with an annual production capacity of
85 million pounds of copper over a 21-year mine life. With the expected C1*
operating cost of US$1.10 per pound, Florence Copper will be in the lowest
quartile of the global copper cost curve and will have one of the smallest
environmental footprints of any copper mine in the world.
The Company has successfully operated a Production Test Facility ("PTF") since
2018 at Florence to demonstrate that the in-situ copper recovery ("ISCR")
process can produce high quality cathode while operating within permit
conditions.
The next phase of Florence Copper will be the construction and operation of
the commercial ISCR facility with an estimated capital cost of US$230 million
(including reclamation bonding and working capital) based on the Company's
published 2017 NI 43-101 technical report. At a conservative copper price of
US$3.00 per pound, Florence Copper is expected to generate an after-tax
internal rate of return of 37%, an after-tax net present value of US$680
million at a 7.5% discount rate, and an after-tax payback period of 2.5
years.
In December 2020, the Company received the Aquifer Protection Permit ("APP")
from the Arizona Department of Environmental Quality ("ADEQ"). During the APP
process, Florence Copper received strong support from local community members,
business owners and elected officials. The other required permit is the UIC
permit from the U.S. Environmental Protection Agency ("EPA"), which is the
final permitting step required prior to construction of the commercial ISCR
facility. On November 22, 2021, the EPA provided the Company with an initial
draft of the UIC permit. Taseko's project technical team completed its review
of the draft UIC permit in early December 2021 and no significant issues were
identified. Based on ongoing dialogue with the EPA, the Company continues to
expect the draft UIC permit to be publicly issued very soon, and then a 45-day
public comment period will commence.
Detailed engineering and design for the commercial production facility is
complete and procurement activities are well advanced with the Company making
initial deposits and awarding the key contract for the major processing
equipment associated with the SX/EW plant in 2021. The Company incurred $58
million of costs for Florence in 2021 including for the commercial facility
activities and also had outstanding purchase commitments of $38 million as at
December 31, 2021 to be incurred in 2022. Deploying this strategic capital
and awarding key contracts will assist with protecting the project execution
plan, mitigating inflation risk and the potential impact of supply chain
disruptions and ensure a smooth transition into construction once the final
UIC permit is received.
At current copper prices, the Company expects to be able to fund construction
of the commercial facility from its existing sources of liquidity and
cashflows from Gibraltar.
LONG-TERM GROWTH STRATEGY
Taseko's strategy has been to grow the Company by acquiring and developing a
pipeline of complementary projects focused on copper in stable mining
jurisdictions. We continue to believe this will generate long-term returns for
shareholders. Our other development projects are located in British
Columbia.
Yellowhead Copper Project
Yellowhead Mining Inc. ("Yellowhead") has an 817 million tonnes reserve and a
25-year mine life with a pre-tax net present value of $1.3 billion at an 8%
discount rate using a US$3.10 per pound copper price based on the Company's
2020 NI 43-101 technical report. Capital costs of the project are estimated at
$1.3 billion over a 2-year construction period. Over 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 of copper. The Yellowhead copper
project contains valuable precious metal by-products with 440,000 ounces of
gold and 19 million ounces of silver with a life of mine value of over $1
billion at current prices.
The Company is focusing its current efforts on advancing into the
environmental assessment process and is undertaking some additional
engineering work in conjunction with ongoing engagement with local communities
including First Nations. The Company is also collecting baseline data and
modeling which will be used to support the environmental assessment and
permitting of the project.
New Prosperity Gold-Copper Project
In late 2019, the T?ilhqot'in Nation, as represented by T?ilhqot'in National
Government, and Taseko entered into a confidential dialogue, with the
involvement of the Province of British Columbia, to try to obtain a long-term
resolution to the conflict regarding Taseko's proposed gold-copper mine
currently known as New Prosperity, acknowledging Taseko's commercial interests
and the T?ilhqot'in Nation's opposition to the project.
The dialogue was supported by the parties' agreement on December 7, 2019 to a
one-year standstill on certain outstanding litigation and regulatory matters
that relate to Taseko's tenures and the area in the vicinity of Te?tan Biny
(Fish Lake). The standstill was extended on December 4, 2020, to continue what
was a constructive dialogue that had been delayed by the COVID-19 pandemic.
The dialogue is not complete but it remains constructive, and the parties have
therefore agreed to extend the standstill for a further year so that they and
the Province of British Columbia can continue to pursue a long-term and
mutually acceptable resolution of the conflict.
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 will host a telephone conference call and live webcast on
Wednesday, February 23, 2022 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific,
4:00 p.m. GMT) to discuss these results. After opening remarks by
management, there will be a question and answer session open to analysts and
investors.
The conference call may be accessed by dialing 416-764-8688 in Canada,
888-390-0546 in the United States, 08006522435 in the United Kingdom, or
online at tasekomines.com/investors/events
(https://c212.net/c/link/?t=0&l=en&o=3451643-1&h=1188010998&u=https%3A%2F%2Fwww.tasekomines.com%2Finvestors%2Fevents&a=tasekomines.com%2Finvestors%2Fevents).
The conference call will be archived for later playback until March 9, 2022
and can be accessed by dialing 416-764-8677 Canada, 1-888-390-0541 in the
United States, or online at tasekomines.com/investors/events and using the
passcode 510013#.
Stuart McDonald
President & 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) – 75% basis 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 YE
Cost of sales 57,258 65,893 74,056 72,266 269,473
Less:
Depletion and amortization (16,202) (17,011) (17,536) (15,838) (66,587)
Net change in inventories of finished goods 13,497 762 (4,723) 2,259 11,795
Net change in inventories of ore stockpiles 4,804 6,291 2,259 (8,226) 5,128
Transportation costs (4,436) (5,801) (4,303) (3,305) (17,845)
Site operating costs 54,921 50,134 49,753 47,156 201,964
Less by-product credits:
Molybdenum, net of treatment costs (7,755) (8,574) (6,138) (5,604) (28,071)
Silver, excluding amortization of deferred revenue (330) 300 64 (238) (204)
Site operating costs, net of by-product credits 46,836 41,860 43,679 41,314 173,689
Total copper produced (thousand pounds) 21,590 25,891 20,082 16,684 84,247
Total costs per pound produced 2.17 1.62 2.18 2.48 2.06
Average exchange rate for the period (CAD/USD) 1.26 1.26 1.23 1.27 1.25
Site operating costs, net of by-product credits (US$ per pound) 1.72 1.28 1.77 1.96 1.64
Site operating costs, net of by-product credits 46,836 41,860 43,679 41,314 173,689
Add off-property costs:
Treatment and refining costs 1,480 3,643 1,879 2,414 9,416
Transportation costs 4,436 5,801 4,303 3,305 17,845
Total operating costs 52,752 51,304 49,861 47,033 200,950
Total operating costs (C1) (US$ per pound) 1.94 1.57 2.02 2.23 1.90
NON-GAAP PERFORMANCE MEASURES - CONTINUED
(Cdn$ in thousands, unless otherwise indicated) – 75% basis 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 YE
Cost of sales 79,083 75,969 81,181 83,309 319,542
Less:
Depletion and amortization (18,747) (23,894) (25,512) (27,148) (95,301)
Net change in inventories of finished goods 2,087 1,415 (5,753) 1,302 (949)
Net change in inventories of ore stockpiles 6,632 4,186 (50) 603 11,371
Transportation costs (3,768) (4,127) (5,834) (4,519) (18,248)
Site operating costs 65,287 53,549 44,032 53,547 216,425
Less by-product credits:
Molybdenum, net of treatment costs (3,649) (4,109) (4,252) (3,231) (15,241)
Silver, excluding amortization of deferred revenue 133 (54) (28) (354) (303)
Site operating costs, net of by-product credits 61,771 49,386 39,752 49,962 200,871
Total copper produced (thousand pounds) 18,725 21,658 27,576 24,318 92,277
Total costs per pound produced 3.30 2.28 1.44 2.05 2.18
Average exchange rate for the period (CAD/USD) 1.30 1.33 1.39 1.34 1.34
Site operating costs, net of by-product credits (US$ per pound) 2.53 1.71 1.04 1.53 1.62
Site operating costs, net of by-product credits 61,771 49,386 39,752 49,962 200,871
Add off-property costs:
Treatment and refining costs 3,284 4,254 5,676 4,956 18,170
Transportation costs 3,768 4,127 5,834 4,519 18,248
Total operating costs 68,823 57,767 51,262 59,437 237,289
Total operating costs (C1) (US$ per pound) 2.82 2.00 1.34 1.82 1.92
Adjusted net income (loss)
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; and
* Loss on settlement of long-term debt and call premium, including realized
foreign exchange gains.
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.
NON-GAAP PERFORMANCE MEASURES - CONTINUED
(Cdn$ in thousands, except per share amounts) 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 YE
Net income (loss) 11,762 22,485 13,442 (11,217) 36,472
Unrealized foreign exchange (gain) loss (1,817) 9,511 (3,764) 8,798 12,728
Realized foreign exchange gain on settlement of long- term debt - - - (13,000) (13,000)
Loss on settlement of long-term debt - - - 5,798 5,798
Call premium on settlement of long-term debt - - - 6,941 6,941
Unrealized (gain) loss on derivatives 4,612 (6,817) 370 802 (1,033)
Estimated tax effect of adjustments (1,245) 1,841 (100) (3,651) (3,161)
Adjusted net income (loss) 13,312 27,020 9,948 (5,535) 44,745
Adjusted EPS 0.05 0.10 0.04 (0.02) 0.16
(Cdn$ in thousands, except per share amounts) 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 YE
Net income (loss) 5,694 987 18,745 (48,950) (23,524)
Unrealized foreign exchange (gain) loss (13,595) (7,512) (12,985) 29,747 (4,345)
Unrealized (gain) loss on derivatives 586 1,056 3,528 (3,348) 1,822
Estimated tax effect of adjustments (158) (285) (953) 904 (492)
Adjusted net income (loss) (7,473) (5,754) 8,335 (21,647) (26,539)
Adjusted EPS (0.03) (0.02) 0.03 (0.09) (0.11)
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;
* Loss on settlement of long term debt (included in finance expenses) and call
premium;
* Realized foreign exchange gain on settlement of long-term debt; and
* Amortization of share-based compensation expense.
NON-GAAP PERFORMANCE MEASURES - CONTINUED
(Cdn$ in thousands) 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 YE
Net income (loss) 11,762 22,485 13,442 (11,217) 36,472
Add:
Depletion and amortization 16,202 17,011 17,536 15,838 66,587
Finance expense (includes loss on settlement of long- term debt and call premium) 12,072 11,875 11,649 23,958 59,554
Finance income (218) (201) (184) (75) (678)
Income tax (recovery) expense 9,300 22,310 7,033 (4,302) 34,341
Unrealized foreign exchange (gain) loss (1,817) 9,511 (3,764) 8,798 12,728
Realized foreign exchange gain on settlement of long- term debt - - - (13,000) (13,000)
Unrealized (gain) loss on derivatives 4,612 (6,817) 370 802 (1,033)
Amortization of share-based compensation expense 1,075 117 1,650 2,920 5,762
Adjusted EBITDA 52,988 76,291 47,732 23,722 200,733
(Cdn$ in thousands) 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 YE
Net income (loss) 5,694 987 18,745 (48,950) (23,524)
Add:
Depletion and amortization 18,747 23,894 25,512 27,148 95,301
Finance expense 10,575 11,203 10,461 10,771 43,010
Finance income (47) (4) (48) (150) (249)
Income tax (recovery) expense (2,724) (580) 4,326 (10,118) (9,096)
Unrealized foreign exchange (gain) loss (13,595) (7,512) (12,985) 29,747 (4,345)
Unrealized (gain) loss on derivatives 586 1,056 3,528 (3,348) 1,822
Amortization of share-based compensation expense 1,242 2,501 1,321 246 5,310
Adjusted EBITDA 20,478 31,545 50,860 5,346 108,229
NON-GAAP PERFORMANCE MEASURES - CONTINUED
Earnings from mining operations before depletion and amortization
Earnings from mining operations before depletion and amortization is earnings
from mining operations with depletion and amortization added back. 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
results of the Company's operations and financial position and it is meant to
provide further information about the financial results to investors.
(Cdn$ in thousands) 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 YE
Earnings from mining operations 45,714 66,670 36,946 14,475 163,805
Add:
Depletion and amortization 16,202 17,011 17,536 15,838 66,587
Earnings from mining operations before depletion and amortization 61,916 83,681 54,482 30,313 230,392
(Cdn$ in thousands) 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 YE
Earnings (loss) from mining operations 8,315 11,811 24,824 (21,225) 23,725
Add:
Depletion and amortization 18,747 23,894 25,512 27,148 95,301
Earnings from mining operations before depletion and amortization 27,062 35,705 50,336 5,923 119,026
Site operating costs per ton milled
(Cdn$ in thousands, except per ton milled amounts) 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 YE
Site operating costs (included in cost of sales) 54,921 50,134 49,753 47,156 201,964
Tons milled (thousands) (75% basis) 5,523 5,576 5,429 5,402 21,930
Site operating costs per ton milled $9.94 $8.99 $9.16 $8.73 $9.21
(Cdn$ in thousands, except per ton milled amounts) 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 YE
Site operating costs (included in cost of sales) 65,287 53,549 44,032 53,547 216,415
Tons milled (thousands) (75% basis) 5,594 5,595 5,748 5,622 22,559
Site operating costs per ton milled $11.67 $9.57 $7.66 $9.52 $9.59
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.sedar.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.
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
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