REG-Taseko Mines Limited: Taseko: Fourth Quarter and Annual Earnings
24/02/2023 07:15
TASEKO REPORTS FOURTH QUARTER AND ANNUAL EARNINGS
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.
February 24, 2023, VANCOUVER, BC – Taseko Mines Limited (TSX: TKO; NYSE
American: TGB; LSE: TKO) ("Taseko" or the "Company") reports Adjusted EBITDA*
of $109 million and Earnings from mining operations before depletion* of $106
million for the full year 2022. Revenues for the year were $392 million and
Adjusted net income* was $1.7 million, or $0.01 per share. In the fourth
quarter 2022, Taseko generated Adjusted EBITDA* of $35 million, $38 million of
earnings from mining operations before depletion* and Adjusted net income* of
$7 million, or $0.02 per share.
Stuart McDonald, President and CEO of Taseko, commented, “The upward move in
copper and molybdenum prices during the fourth quarter helped drive stronger
financial performance in the period. Fourth quarter earnings from mining
operations before depletion were 103% higher than the third quarter and
Adjusted EBITDA was 3% higher. Annual earnings for 2022 were affected by
lower average copper prices (US$3.99/lb. compared to US$4.23/lb. in 2021) and
higher production costs related to fuel price increases and lower production.
Average head grade for the year was 20% below the life of mine reserve
average, and a site-wide power outage late in the year also contributed to the
lower annual copper production of 97 million pounds. Despite the mill
downtime in the fourth quarter, Gibraltar produced 27 million pounds of
copper. Recoveries in the fourth quarter improved to 83%, an 8% increase
over the prior quarter due to better quality ore.”
Mr. McDonald added, “The quarterly production profile in 2023 is expected to
be less variable than the last two years and we believe there is potential for
mill throughput to average above design capacity. An in-pit crusher move is
scheduled for the third quarter which will partially shut down ore processing
for approximately two weeks. We expect annual copper production to increase
to 115 million pounds (+/-5%) in 2023.”
“Yesterday we announced that we had signed a definitive agreement to acquire
an additional 12.5% of Gibraltar from Sojitz Corporation. We believe this is a
smart transaction and well structured so that Taseko maintains the financial
capacity to fund the construction of our Florence Copper project. Based on our
2023 guidance, this additional stake in Gibraltar will increase our
attributable production by 38% over 2022. The acquisition price consists of a
minimum amount of C$60 million payable over a five-year period and potential
contingent payments depending on Gibraltar mine revenues and copper prices
over the next five years. An initial C$10 million will be paid to Sojitz
upon closing and the remaining minimum amount will be paid in C$10 million
annual instalments over the next five years (see news release dated February
22, 2023 for details about the transaction).”
“We’ve recently announced several key financing initiatives for our
Florence copper project, and we expect to start construction in the coming
months, upon receipt of the final Underground Injection Control permit. Under
the terms of our strategic partnership agreement with Mitsui & Co. (USA), they
will make an initial investment of US$50 million for a 2.67% copper stream.
Mitsui also retains an option to invest an additional US$50 million (for a
total of US$100 million) to convert the copper stream into a 10% equity
interest in Florence Copper. We are very pleased to have completed this
transaction which validates the significant value of this project and also
highlights the marketing advantages of low impact mining, US produced
copper,” continued Mr. McDonald.
Mr. McDonald concluded, “We are very excited about the long-term
fundamentals of our North American copper business. Improved copper production
from Gibraltar and continued robust copper pricing is setting Taseko up for a
year of strong financial returns. The important permitting catalyst for our
Florence Copper project is on the near horizon, which we believe will unlock
significant value of that asset.”
2022 Annual Review
* Earnings from mining operations before depletion and amortization* was
$106.2 million, Adjusted EBITDA* was $109.0 million, and cash flows from
operations was $81.6 million;
* Adjusted net income* was $1.7 million ($0.01 per share) and GAAP Net loss
was $26.0 million ($0.09 per share) for the year;
* Total operating costs (C1)* for the year were US$2.98 per pound produced;
* The Gibraltar mine produced 97.0 million pounds of copper and 1.1 million
pounds of molybdenum in 2022. Copper recoveries were 79.5% and copper head
grades were 0.20%;
* Gibraltar sold 101.3 million pounds of copper for the year (100% basis)
which contributed to revenue for Taseko of $391.6 million, Taseko’s second
highest revenue year after 2022. Average realized copper prices before
hedging gains were US$3.96 per pound for year, compared to the LME average
price of US$3.99 per pound;
* The Company had a cash balance of $121 million and has approximately $190
million of available liquidity at December 31, 2022, including its undrawn
US$50 million revolving credit facility;
* In September 2022, the EPA concluded its 45-day public comment period for
the draft Underground Injection Control (“UIC”) permit for Florence
Copper. The project received overwhelming support from business organizations,
community leaders and state-wide organizations in written submissions and as
voiced at the public hearing; and
* Development costs incurred for Florence Copper were $101.3 million in the
year and included further payments for the major processing equipment being
delivered for the solvent extraction and electrowinning (“SX/EW”) plant,
other pre-construction activities and ongoing site costs.
Fourth Quarter Review
* In December 2022, the Company signed agreements with Mitsui & Co. (U.S.A.)
Inc. (“Mitsui”) to form a strategic partnership to develop Florence
Copper. Mitsui has committed to an initial investment of US$50 million which
is conditional on receipt of the final UIC permit, with proceeds to be used
for construction of the commercial production facility. The initial investment
will be in the form of a copper stream agreement on 2.67% of the copper
produced at Florence Copper. In addition, Mitsui has the option to invest an
additional US$50 million (for a total investment of US$100 million) for a 10%
equity interest in Florence Copper;
* Fourth quarter earnings from mining operations before depletion and
amortization* was $37.7 million, Adjusted EBITDA* was $35.2 million, and
Adjusted net income* was $7.1 million ($0.02 per share);
*Non-GAAP performance measure. See end of news release.
* Gibraltar produced 26.7 million pounds of copper for the quarter. Head
grades were 0.22% and were similar to the prior quarter. Lower mill
throughput and lower than expected grades due to mining dilution, impacted
production in the quarter;
* Average mill throughput in the fourth quarter was 79,000 tons per day, as
production in December was negatively impacted by unplanned mill downtime
arising from a sitewide power outage caused by an extreme cold weather event;
* Copper recoveries were 83.4% for the quarter in line with expectations and a
significant improvement over the prior quarters in 2022;
* Total site costs* in the fourth quarter was $5.6 million higher than the
average for the last nine months due to higher diesel costs and timing of
equipment repairs and maintenance;
* Gibraltar sold 25.5 million pounds of copper in the quarter (100% basis) at
an average realized copper price of US$3.66 per pound;
* GAAP net loss was $2.3 million ($0.02 loss per share) and reflected an
unrealized loss on derivatives of $20.1 million due to the recovery in copper
prices, and net of a foreign exchange gain of $4.6 million due to a
strengthening Canadian dollar;
* The Company has copper collar contracts in place to protect a minimum copper
price of US$3.75 per pound until the end of December 2023 for the majority of
the Company’s needs. The Company also has 24 million litres of fuel call
options in place to provide a ceiling cost for its share of diesel over the
same period;
* In December 2022, Gibraltar entered into an equipment loan refinancing with
the Company’s share of net proceeds being $25.7 million. The Company also
secured a commitment for US$25 million from Banc of America Leasing & Capital,
LLC to fund costs associated with the SX/EW plant for the Florence Copper
commercial production facility;
* In February 2023, the Company entered into an agreement to extend the
maturity date of the undrawn revolving credit facility by an additional year
to July 2026. In addition to the one-year extension, the lender has also
agreed to an accordion feature, which will allow the amount of the credit
facility to be increased by US$30 million, for a total of US$80 million,
subject to credit approval and other conditions; and
* The standstill agreement between the T?ilhqot’in Nation and Taseko was
most recently extended for a fourth one-year term in December 2022, with the
goal of providing time and opportunity for the T?ilhqot’in Nation and Taseko
to negotiate a final resolution. The dialogue process has made tangible
progress in the past 12 months but is not complete. In agreeing to extend the
standstill through 2023, the T?ilhqot’in Nation and Taseko acknowledge the
constructive nature of discussions to date, and the future opportunity to
conclude a long-term and mutually acceptable resolution of the conflict that
also makes an important contribution to the goals of reconciliation in Canada.
*Non-GAAP performance measure. See end of news release.
HIGHLIGHTS
Operating Data (Gibraltar - 100% basis) Three months ended Year ended
December 31, December 31,
2022 2021 Change 2022 2021 Change
Tons mined (millions) 22.9 23.3 (0.4) 88.7 105.4 (16.7)
Tons milled (millions) 7.3 7.4 (0.1) 30.3 29.2 1.1
Production (million pounds Cu) 26.7 28.8 (2.1) 97.0 112.3 (15.3)
Sales (million pounds Cu) 25.5 23.8 1.7 101.3 104.9 (3.6)
Financial Data Three months ended Year ended
December 31, December 31,
(Cdn$ in thousands, except for per share amounts) 2022 2021 Change 2022 2021 Change
Revenues 100,618 102,972 (2,354) 391,609 433,278 (41,669)
Earnings from mining operations before depletion and amortization (*) 37,653 61,916 (24,263) 106,217 230,392 (124,175)
Cash flows (used for) provided by operations (946) 37,231 (38,177) 81,266 174,769 (93,503)
Adjusted EBITDA (*) 35,181 52,988 (17,807) 109,035 200,733 (91,698)
Adjusted net income (*) 7,146 13,312 (6,166) 1,723 44,745 (43,022)
Per share - basic (“Adjusted EPS”) (*) 0.02 0.05 (0.03) 0.01 0.16 (0.15)
Net income (loss) (GAAP) (2,275) 11,762 (14,037) (25,971) 36,472 (62,443)
Per share - basic (“EPS”) (0.01) 0.04 (0.05) (0.09) 0.13 (0.22)
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar mine (75% Owned)
Operating data (100% basis) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 YE 2022 YE 2021
Tons mined (millions) 22.9 23.2 22.3 20.3 23.3 88.7 105.4
Tons milled (millions) 7.3 8.2 7.7 7.0 7.4 30.3 29.2
Strip ratio 1.1 1.5 2.8 2.6 2.2 1.8 2.5
Site operating cost per ton milled (Cdn$)* $13.88 $11.33 $11.13 $11.33 $9.94 $11.89 $9.21
Copper concentrate
Head grade (%) 0.22 0.22 0.17 0.19 0.24 0.20 0.23
Copper recovery (%) 83.4 77.1 77.3 80.2 80.4 79.5 82.4
Production (million pounds Cu) 26.7 28.3 20.7 21.4 28.8 97.0 112.3
Sales (million pounds Cu) 25.5 26.7 21.7 27.4 23.8 101.3 104.9
Inventory (million pounds Cu) 5.4 4.2 2.7 4.0 9.9 5.4 9.9
Molybdenum concentrate
Production (thousand pounds Mo) 359 324 199 236 450 1,118 1,954
Sales (thousand pounds Mo) 402 289 210 229 491 1,131 2,000
Per unit data (US$ per pound produced) (*)
Site operating costs (*) $2.79 $2.52 $3.25 $2.95 $2.02 $2.85 $1.91
By-product credits (*) (0.40) (0.15) (0.15) (0.18) (0.30) (0.23) (0.27)
Site operating costs, net of by-product credits (*) $2.39 $2.37 $3.10 $2.77 $1.72 $2.62 $1.64
Off-property costs 0.36 0.35 0.37 0.36 0.22 0.36 0.26
Total operating costs (C1) (*) $2.75 $2.72 $3.47 $3.13 $1.94 $2.98 $1.90
Full Year Results
Gibraltar produced 97.0 million pounds of copper for the year compared to
112.3 million pounds in 2021. Head grades for the year averaged 0.20% copper,
compared to 0.23% in 2021. The copper head grades were impacted by higher
than expected mining dilution. Copper recoveries for 2022 was 79.5%,
compared to 82.4% in 2021.
A total of 88.7 million tons were mined in the year compared to 105.4 million
tons mined in the prior year period. The strip ratio of 1.8 was lower than
the prior year as mining operations were focused in the Gibraltar pit in 2022
which has a lower strip ratio than the Pollyanna pit.
Total site costs* at Gibraltar of $301.8 million (which includes capitalized
stripping of $32.0 million) for Taseko’s 75% share were $40.0 million higher
than 2021, primarily due to higher diesel prices (55% higher than 2021) and
increased diesel volume consumed (21% higher than 2021) due to the longer
hauls and higher truck hours and with grinding media and other input costs
also increasing due to inflationary pressures.
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS – CONTINUED
Molybdenum production was 1.1 million pounds in the year compared to 2.0
million pounds in the prior year. Molybdenum prices strengthened in 2022 with
an average molybdenum price of US$18.73 per pound, an increase of 18% compared
to the 2021 average price of US$15.94 per pound. By-product credits per pound
of copper produced was US$0.23 in the year compared to US$0.27 in the prior
year. The higher molybdenum price and favorable provisional price
adjustments at year end were offset by lower molybdenum sales in 2022 compared
to the prior year.
Off-property costs per pound produced* were US$0.36 for the year, which is
US$0.10 higher than the prior year. In 2021 the Company benefited from lower
benchmark treatment and refining charges (“TCRC”) and realized lower TCRCs
for spot tenders due to tight copper market conditions last year. Also
contributing to the increased off-property costs per pound produced in 2022 is
the fact that sales of copper exceeded production by 4.3 million pounds.
Total operating costs per pound produced (C1)* were US$2.98 for the year,
compared to US$1.90 in the prior year as shown in the bridge graph below:
Fourth Quarter Results
Gibraltar produced 26.7 million pounds of copper for the quarter, a 6%
decrease over the third quarter. Copper production in December was impacted
by unplanned mill downtime, including a sitewide power outage late in the
month.
Although the power outage was only 24 hours in duration, the severe cold
temperatures of -35° Celsius (-31° Fahrenheit) immediately froze a number of
essential systems in the mills. This extreme weather delayed the restart of
milling operations for several days followed by a gradual return to full
capacity by the end of December. Mill throughput in October and November
averaged above design capacity at 88,000 tons per day, but mill throughput
averaged only 63,000 tons per day in December.
Head grades were in line with the prior quarter and management continues to
work on reducing the mining dilution being experienced in the Gibraltar pit.
Copper recoveries in the fourth quarter were 83%, an improvement over the
prior quarters in 2022 due to improving ore quality as mining advances deeper
into the Gibraltar pit.
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS – CONTINUED
A total of 22.9 million tons were mined in the fourth quarter. The strip
ratio of 1.1 was lower than prior quarter and included some initial stripping
activity in the Connector pit. The ore stockpiles increased by 3.8 million
tons in the fourth quarter.
Total site costs* at Gibraltar of $79.7 million (which includes capitalized
stripping of $3.9 million) for Taseko’s 75% share were $5.6 million higher
than the average of the first three quarters of 2022 due to higher diesel
costs, timing of repairs and maintenance and year-end wage related costs.
Site operating cost per ton milled* was $13.88 was higher than the previous
quarters in 2022 due to the higher site costs and lower mill throughput.
Molybdenum production was 359 thousand pounds in the fourth quarter. At an
average molybdenum price of US$21.39 per pound and the impact of favorable
provisional price adjustments of $3.9 million for Taseko’s 75% share,
molybdenum generated a by-product credit per pound of copper produced of
US$0.40 in the fourth quarter.
Off-property costs per pound produced* were US$0.36 for the fourth quarter
reflecting higher ocean freight costs (including bunker fuel) and increased
treatment and refining charges (TCRC) compared to the same quarter in the
prior year.
Total operating costs per pound produced (C1)* were US$2.75 for the quarter
and was in line with the previous quarter.
GIBRALTAR OUTLOOK
Gibraltar is expected to produce 115 million pounds of copper (+/-5%) in 2023
on a 100% basis. The Gibraltar pit will be the sole source of mill feed in
2023 and the quarterly production profile is expected to be less variable than
2022 due to improving quality and consistency of ore as mining progresses
deeper into the pit. Annual mill throughput is expected to exceed design
capacity in 2023 due to the softer ore in Gibraltar pit.
Stripping activities are underway in the new Connector pit. While the strip
ratio is expected to be in line with the LOM average, the allocation of costs
to capitalized stripping in 2023 will be higher than in 2022. The primary
crusher for mill 1 which overlays the Connector zone is scheduled to be moved
to its new location in the third quarter of this year.
Strong metal prices combined with our copper hedge protection continues to
provide tailwinds for robust financial performance and operating margins at
the Gibraltar mine over the coming year. Copper prices in 2022 averaged
US$3.99 per pound and have started the current year above these levels.
Molybdenum prices are currently US$35.70 per pound, 91% higher than the
average price in 2022.
The Company currently has copper price collar contracts in place that secure a
minimum copper price of US$3.75 per pound for 72 million pounds of copper
until December 31, 2023. The Company has also executed price caps for its
share of diesel purchases. Improving production combined with this copper
hedge and diesel price protection program should continue to provide the
foundation for stable financial performance and operating margins at the
Gibraltar mine in 2023.
*Non-GAAP performance measure. See end of news release.
FLORENCE COPPER
The Company is awaiting the issuance of the final Underground Injection
Control permit (“UIC”) from the U.S. Environmental Protection Agency
(“EPA”), which is the final permitting step required prior to construction
commencing on the commercial production facility. The EPA is currently
addressing comments that were received during the public comment period, which
was held in the fall of 2022. Public comments submitted to the EPA have
demonstrated strong support for the Florence Copper project among local
residents, business organizations, community leaders and state-wide
organizations.
In December 2022, the Company signed agreements with Mitsui to form a
strategic partnership to develop Florence Copper. Mitsui has committed to an
initial investment of US$50 million, with proceeds to be used for construction
of the commercial production facility. The initial investment will be in the
form of a copper stream agreement on 2.67% of the copper produced at Florence
Copper. In addition, Mitsui has the option to invest an additional US$50
million (for a total investment of US$100 million) for a 10% equity interest
in Florence Copper.
Detailed engineering and design for the commercial production facility is
substantially completed and procurement activities are well advanced. The
Company has purchased the major processing equipment associated with the SX/EW
plant and the equipment has now been delivered to the Florence site. The
Company is well positioned to transition into construction once the final UIC
permit is received. The Company incurred $101.3 million of capital
expenditures at the Florence project in 2022 funded from available cash.
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 preparing to advance 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.
LONG-TERM GROWTH STRATEGY – CONTINUED
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, in order to obtain 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 T?ilhqot’in Nation’s opposition to the project.
This dialogue has been supported by the parties’ agreement, beginning
December 2019, to a series of one-year standstills on certain outstanding
litigation and regulatory matters relating to Taseko’s tenures and the area
in the vicinity of Teztan Biny (Fish Lake). The standstill agreement was most
recently extended for a fourth one-year term in December 2022, with the goal
of providing time and opportunity for the T?ilhqot’in Nation and Taseko to
negotiate a final resolution.
The dialogue process has made tangible progress in the past 12 months but is
not complete. In agreeing to extend the standstill through 2023, the
T?ilhqot’in Nation and Taseko acknowledge the constructive nature of
discussions to date, and the future 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.
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.
The Company will host a telephone conference call and live webcast on Friday,
February 24, 2023 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.
To join the conference call without operator assistance, you may pre-register
at https://bit.ly/3HbbVpt to receive an instant automated call back just prior
to the start of the conference call. Otherwise, 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 using the entry code 613140#.
The conference call will be archived for later playback until March 9, 2023
and can be accessed by dialing 416-764-8677 in Toronto, 888-390-0541 toll free
in North America, or online at tasekomines.com/investors/events and using the
entry code 613140#.
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 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 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 YE
Cost of sales 73,112 84,204 90,992 89,066 337,374
Less:
Depletion and amortization (10,147) (13,060) (15,269) (13,506) (51,982)
Net change in inventories of finished goods 1,462 2,042 (3,653) (7,577) (7,726)
Net change in inventories of ore stockpiles 18,050 3,050 (3,463) (3,009) 14,628
Transportation costs (6,671) (6,316) (4,370) (5,115) (22,472)
Site operating costs 75,806 69,920 64,237 59,859 269,822
Less by-product credits:
Molybdenum, net of treatment costs (11,022) (4,122) (3,023) (3,831) (21,999)
Silver, excluding amortization of deferred revenue 263 25 36 202 526
Site operating costs, net of by-product credits 65,047 65,823 61,250 56,230 248,349
Total copper produced (thousand pounds) 20,020 21,238 15,497 16,024 72,778
Total costs per pound produced 3.25 3.10 3.95 3.51 3.41
Average exchange rate for the period (CAD/US$) 1.36 1.31 1.28 1.27 1.30
Site operating costs, net of by-product credits (US$ per pound) 2.39 2.37 3.10 2.77 2.62
Site operating costs, net of by-product credits 65,047 65,823 61,250 56,230 248,349
Add off-property costs:
Treatment and refining costs 3,104 3,302 2,948 2,133 11,486
Transportation costs 6,671 6,316 4,370 5,115 22,472
Total operating costs 74,822 75,441 68,568 63,478 282,307
Total operating costs (C1) (US$ per pound) 2.75 2.72 3.47 3.13 2.98
NON-GAAP PERFORMANCE MEASURES – CONTINUED
(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
Total Site Costs
Total site costs is 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 the Gibraltar mine calculated
on a consistent basis for the periods presented.
(Cdn$ in thousands, unless otherwise indicated) – 75% basis 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 YE
Site operating costs 75,806 69,920 64,237 59,859 269,822
Add:
Capitalized stripping costs 3,866 1,121 11,887 15,142 32,016
Total site costs 79,672 71,041 76,124 75,001 301,838
NON-GAAP PERFORMANCE MEASURES – CONTINUED
(Cdn$ in thousands, unless otherwise indicated) – 75% basis 2021 Q4 2021 Q3 2021 Q2 2021 Q1 2021 YE
Site operating costs 54,921 50,134 49,753 47,156 201,964
Add:
Capitalized stripping costs 12,737 10,882 14,794 21,452 59,865
Total site costs 67,658 61,016 64,547 68,608 261,829
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.
(Cdn$ in thousands, except per share amounts) 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 YE
Net income (loss) (2,275) (23,517) (5,274) 5,095 (25,971)
Unrealized foreign exchange (gain) loss (5,279) 28,083 11,621 (4,398) 30,027
Unrealized (gain) loss on derivatives 20,137 (72) (30,747) 7,486 (3,196)
Estimated tax effect of adjustments (5,437) 19 8,302 (2,021) 863
Adjusted net income (loss) 7,146 4,513 (16,098) 6,162 1,723
Adjusted EPS 0.02 0.02 (0.06) 0.02 0.01
(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) (3,657) (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
NON-GAAP PERFORMANCE MEASURES – CONTINUED
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 gains on settlement of long-term debt; and
* Amortization of share-based compensation expense.
(Cdn$ in thousands) 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 YE
Net income (loss) (2,275) (23,517) (5,274) 5,095 (25,971)
Add:
Depletion and amortization 10,147 13,060 15,269 13,506 51,982
Finance expense 10,135 12,481 12,236 12,155 47,007
Finance income (700) (650) (282) (166) (1,798)
Income tax expense 1,222 3,500 922 1,188 6,832
Unrealized foreign exchange (gain) loss (5,279) 28,083 11,621 (4,398) 30,027
Unrealized (gain) loss on derivatives 20,137 (72) (30,747) 7,486 (3,196)
Amortization of share-based compensation expense 1,794 1,146 (2,061) 3,273 4,152
Adjusted EBITDA 35,181 34,031 1,684 38,139 109,035
(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
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) 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 YE
Earnings (loss) from mining operations 27,506 5,510 (8,048) 29,267 54,235
Add:
Depletion and amortization 10,147 13,060 15,269 13,506 51,982
Earnings from mining operations before depletion and amortization 37,653 18,570 7,221 42,773 106,217
(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
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) 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 YE
Site operating costs (included in cost of sales) 75,806 69,920 64,237 59,859 269,822
Tons milled (thousands) (75% basis) 5,462 6,172 5,774 5,285 22,692
Site operating costs per ton milled $13.88 $11.33 $11.13 $11.33 $11.89
(Cdn$ 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
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.
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