REG-Taseko Mines Limited: Taseko Reports Second Quarter 2023 Financial Results
03/08/2023 07:15
TASEKO REPORTS IMPROVED COPPER PRODUCTION AND SECOND QUARTER 2023 FINANCIAL
RESULTS
This release should be read with the Company's Financial Statements and Management Discussion & Analysis ("MD&A"), available at www.tasekomines.comand filed on www.sedar.com. Except where otherwise noted, all currency amounts are stated in Canadian dollars. Taseko's 87.5% 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, Aug. 2, 2023 -- Taseko Mines Limited (TSX: TKO) (NYSE American:
TGB) (LSE: TKO) ("Taseko" or the "Company") reports second quarter 2023
Adjusted EBITDA* of $22 million, Earnings from mining operations before
depletion and amortization* of $28 million and Cash flows provided by
operations of $33 million. Adjusted net loss* was $4 million, or $0.02 per
share.
Gibraltar produced 28 million pounds of copper and 230 thousand pounds of
molybdenum in the second quarter. Copper production was 13% higher than the
prior quarter as a result of higher grade, throughput and recoveries. Sales
for the second quarter were 26 million pounds of copper (100% basis), slightly
lower than the prior quarter, and also lower than second quarter production
due to an increase of inventory in transit at the end of June.
Stuart McDonald, President and CEO of Taseko, commented "Mining operations are
now well established in the lower benches of the Gibraltar pit, which have
higher grades and larger, more consistent ore zones. Low mill availabilities
had an impact on production in April and May, but in June and July we
benefited from the softer ore in the Gibraltar pit and mill throughput
averaged well above nameplate capacity. Copper production in June and July
was 11 million pounds in each month. The Gibraltar pit will be the sole
source of ore for the remainder of 2023. With increased copper production
expected in the second half of the year we continue to track towards our
original production guidance of 115 million pounds of copper (+/-5%)."
"Total site costs* at Gibraltar dropped by $7 million over the previous
quarter due to lower diesel and other costs, although the impact of cost
reductions was partially offset by lower molybdenum prices which reduced the
by-product credit. Overall, unit operating costs dropped to US$2.66 per
pound of copper produced, 10% lower than the first quarter, and is expected to
decline further in the second half of the year as production increases.
Capital spending at Gibraltar was higher than normal in the quarter as work
continued on the in-pit crusher relocation project and we completed a major
component replacement on one of our mining shovels, at a cost of $10 million.
Work on the in-pit crusher will wind down in the third quarter and the
project will be completed in the second quarter of 2024 when the crusher is
relocated," added Mr. McDonald.
Mr. McDonald concluded, "At Florence Copper, the Environmental Protection
Agency ("EPA") is advancing its process for the Underground Injection Control
permit. Based on our latest dialogue with the EPA, we believe they are close
to making a final permit decision. In the meantime, we continue to advance
discussions with potential financing partners for the remainder of the project
financing package, which could include a copper royalty and/or a small project
loan. These transactions would complement the committed funding from Mitsui,
Bank of America, and our revolving credit facility."
Second Quarter Review
* Second quarter earnings from mining operations before depletion and
amortization* was $27.7 million, Adjusted EBITDA* was $22.2 million, and cash
flows from operations were $33.3 million;
* GAAP net income was $10.0 million ($0.03 per share) and Adjusted net loss*
was $4.4 million ($0.02 loss per share) after normalizing for unrealized
foreign exchange gains
* Gibraltar produced 28.2 million pounds of copper for the quarter, a 13%
improvement over the prior quarter as a result of improved grades, recoveries
and mill throughput;
* Copper head grades in the quarter were 0.24%, in line with expectations, as
mining progressed deeper in the Gibraltar pit;
* Gibraltar sold 26.1 million pounds of copper in the second quarter (100%
basis) with sales lagging production due to an increase of inventory in
transit at the end of June;
* Total site costs* in the second quarter were $105.4 million on a 100% basis,
$7.4 million lower than the previous quarter due to lower diesel, explosive
and contractor services costs;
* As a result of commodity price decreases in the quarter, the Company
wrote-down lower grade ore stockpile inventory to net realizable values
totalling $8.1 million (an impact of approximately $0.03 per share);
* On June 28, 2023, the Company entered into a second amendment to its silver
stream agreement with Osisko Gold Royalties Ltd. and received $13.6 million in
exchange for increasing the payable silver from 75% to 87.5% and increasing
the threshold delivery amount of silver for the additional mineral reserves
published in 2022;
* In June, the Company amended its revolving credit facility to increase the
amount of credit approval of the facility from US$50 million to US$80 million
with the addition of ING Capital LLC to the syndicate of lenders;
* The Company had a closing cash balance of $86 million at June 30, 2023; and
* The B.C. port labour strike in the first half of July 2023 did not have any
impact on Gibraltar production but did restrict the mine's ability to ship
concentrate after the quarter end. The backlog of Gibraltar concentrate
inventory is expected to be shipped in the second half of the year.
*Non-GAAP performance measure. See end of news release
HIGHLIGHTS
Operating Data (Gibraltar - 100% basis) Three months ended June 30, Six months ended June 30,
2023 2022 Change 2023 2022 Change
Tons mined (millions) 23.4 22.3 1.1 47.5 42.6 4.9
Tons milled (millions) 7.2 7.7 (0.5) 14.3 14.7 (0.4)
Production (million pounds Cu) 28.2 20.7 7.5 53.1 42.0 11.1
Sales (million pounds Cu) 26.1 21.7 4.4 52.7 49.1 3.6
Financial Data Three months ended June 30, Six months ended June 30,
(Cdn$ in thousands, except for per share amounts) 2023 2022 Change 2023 2022 Change
Revenues 111,924 82,944 28,980 227,443 201,277 26,166
Earnings from mining operations before depletion 27,664 7,221 20,443 68,803 49,994 18,809
and amortization *
Cash flows provided by operations 33,269 18,344 14,925 61,268 70,097 (8,829)
Adjusted EBITDA * 22,218 1,684 20,534 58,277 39,823 18,454
Net income (loss) (GAAP) 9,991 (5,274) 15,265 14,430 (179) 14,609
Per share – basic ("EPS") 0.03 (0.02) 0.05 0.05 - 0.05
Adjusted net income (loss) * (4,376) (16,098) 11,722 712 (9,936) 10,648
Per share – basic ("adjusted EPS") * (0.02) (0.06) 0.04 - (0.03) 0.03
*Non-GAAP performance measure. See end of news release
REVIEW OF OPERATIONS
Gibraltar mine
Operating data (100% basis) Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022
Tons mined (millions) 23.4 24.1 22.9 23.2 22.3
Tons milled (millions) 7.2 7.1 7.3 8.2 7.7
Strip ratio 1.5 1.9 1.1 1.5 2.8
Site operating cost per ton milled (Cdn$)* $13.17 $13.54 $13.88 $11.33 $11.13
Copper concentrate
Head grade (%) 0.24 0.22 0.22 0.22 0.17
Copper recovery (%) 81.9 80.7 83.4 77.1 77.3
Production (million pounds Cu) 28.2 24.9 26.7 28.3 20.7
Sales (million pounds Cu) 26.1 26.6 25.5 26.7 21.7
Inventory (million pounds Cu) 5.6 3.7 5.4 4.2 2.7
Molybdenum concentrate
Production (thousand pounds Mo) 230 234 359 324 199
Sales (thousand pounds Mo) 231 225 402 289 210
Per unit data (US$ per pound produced) *
Site operating costs * $2.43 $2.94 $2.79 $2.52 $3.25
By-product credits * (0.13) (0.37) (0.40) (0.15) (0.15)
Site operating costs, net of by-product credits * $2.30 $2.57 $2.39 $2.37 $3.10
Off-property costs 0.36 0.37 0.36 0.35 0.37
Total operating costs (C1) * $2.66 $2.94 $2.75 $2.72 $3.47
OPERATIONS ANALYSIS
Gibraltar produced 28.2 million pounds of copper for the second quarter, a 13%
increase over the first quarter due to higher mill throughput, ore grade and
recoveries. As mining progressed deeper into the Gibraltar pit, ore grade and
consistency improved which will continue for the remainder of the year. Mill
throughput was 7.2 million tons for the period and was lower than planned due
to mill downtime for additional maintenance.
Copper head grades of 0.24% were higher than recent quarters and in line with
management expectations as mining proceeds further into higher grade ore
benches in the Gibraltar pit. Copper recoveries in the second quarter were
81.9% and improved with the increasing head grades.
A total of 23.4 million tons were mined in the second quarter in line with
mine plan. The ore stockpiles increased by 0.7 million tons in the second
quarter and 1.7 million tons of oxide ore from the Connector pit was placed on
the heap leach pads. This oxide ore will be processed in future years when
Gibraltar's solvent extraction and electrowinning ("SX/EW") plant is
restarted.
*Non-GAAP performance measure. See end of news release
OPERATIONS ANALYSIS - CONTINUED
Total site costs* at Gibraltar of $105.4 million were $7.4 million lower than
last quarter due to a number of factors including lower diesel fuel costs,
purchased electricity, natural gas, explosives and contractor services.
Sustaining capital expenditures in the quarter were $20.4 million and included
$10.4 million for a major component replacement on one of the shovels.
Gibraltar capital expenditures will decrease in the second half of the year as
preparatory work for the primary crusher move is completed and with less
equipment component replacements expected.
Molybdenum generated a by-product credit of US$0.13 per pound of copper
produced in the second quarter, which decreased significantly from the first
quarter. The molybdenum price decreased from the first quarter's average price
of US$32.79 per pound to an average of US$21.30 per pound. This decreased
molybdenum price also resulted in negative provisional price adjustments of
$1.3 million in the second quarter.
Off-property costs per pound produced* were US$0.36 and were in line with
recent quarters.
Total operating costs per pound produced (C1)* were US$2.66 for the second
quarter, compared to US$3.47 in the same period in 2022 with key variances
summarized in the bridge graph below:
Photo -
https://mma.prnewswire.com/media/2168355/Taseko_Mines_Limited_TASEKO_REPORTS_IMPROVED_COPPER_PRODUCTION_A.jpg
GIBRALTAR OUTLOOK
The Gibraltar pit will continue to be the sole source of mill feed for the
remainder of 2023 and head grade and ore quality are expected to be similar to
Q2 for the remainder of the year. Second quarter production was impacted by
low mill availabilities in April and May, but in June and July milling
operations benefited from the softer ore in the Gibraltar pit and mill
throughput averaged well above nameplate capacity of 85,000 tpd. Copper
production in June and July was 11 million pounds in each month. Management
continues to expect Gibraltar to produce 115 million pounds (+/- 5%) of copper
in 2023 on a 100% basis.
*Non-GAAP performance measure. See end of news release
GIBRALTAR OUTLOOK - CONTINUED
The in-pit crusher is now planned to be relocated in Q2 2024. This deferral of
the crusher move results in increased mill production in the current year, and
allows the timing of the crusher move to align with a maintenance shutdown
that is required for the Mill #1 SAG mill.
Strong metal prices combined with our copper hedge protection continues to
provide stable operating margins at the Gibraltar mine. Copper prices in the
second quarter averaged US$3.84 per pound, compared to the six month year to
date average of US$3.95 and the 2022 average of US$3.99 per pound. The Company
currently has copper price collar contracts in place that secure a minimum
copper price of US$3.75 per pound for 35 million pounds of copper until
December 31, 2023.
The Company's copper concentrate transportation was recently impacted by the
strike action of port workers in British Columbia. The work stoppages by the
port workers has delayed shipment of concentrate to customers. Now that the
strike has been resolved, efforts are underway to move stockpiled concentrate
at site to the port using rail and trucking. Given the backlog, concentrate
inventory levels at site may not reduce to normal levels until later this
year.
ACQUISITION OF ADDITIONAL 12.5% INTEREST IN GIBRALTAR
After March 15, 2023, the financial results of Taseko reflect its 87.5%
beneficial interest in the Gibraltar mine.
The Company completed the acquisition of an additional 12.5% interest in the
Gibraltar mine from Sojitz on March 15, 2023. Gibraltar is operated through a
joint venture which is owned 75% by Taseko and 25% by Cariboo Copper
Corporation ("Cariboo"). Under the terms of the agreement, Taseko has acquired
Sojitz's 50% interest in Cariboo and now holds an effective 87.5% interest in
the Gibraltar mine. The other 50% of Cariboo is held equally by Dowa Metals &
Mining Co., Ltd. ("Dowa") and Furukawa Co. Ltd. ("Furukawa").
The acquisition price consists of a minimum amount of $60 million payable over
a five-year period and potential contingent payments depending on Gibraltar
mine copper revenues and copper prices over the next five years. An initial
$10 million has been paid to Sojitz on closing and the remaining minimum
amount will be paid in $10 million annual instalments over the next five
years. There is no interest payable on the minimum amounts and the amounts
payable to Sojitz are secured against shareholder loans owing from Cariboo to
Taseko.
The contingent payments are payable annually for five years only if the
average LME copper price exceeds US$3.50 per pound in a year. The payments
will be calculated by multiplying Gibraltar mine copper revenues by a price
factor, which is based on a sliding scale ranging from 0.38% at US$3.50 per
pound copper to a maximum of 2.13% at US$5.00 per pound copper or above. Total
contingent payments cannot exceed $57 million over the five-year period,
limiting the acquisition cost to a maximum of $117 million.
Taseko became a party to the existing Cariboo shareholders agreement with Dowa
and Furukawa. There was no change to the offtake contracts established in 2010
and Dowa and Furukawa will continue to receive 30% of Gibraltar's copper
concentrate offtake. There will be no impact to the operation of the Gibraltar
Joint Venture.
FLORENCE COPPER
The Company is awaiting the issuance of the final Underground Injection
Control ("UIC") permit from the U.S. Environmental Protection Agency ("EPA"),
which is the final permitting step required prior to construction commencing
on the commercial production facility. On June 12, 2023, the EPA issued the
Programmatic Agreement ("PA") for signature which is a key step required to
finalize the NHPA Section 106 process and precedes issuance of the final UIC
permit.
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 $27.4 million of capital expenditures
at the Florence project in the first half of 2023.
In March 2023, the Company announced the results of recent technical work and
updated economics for the Florence Copper project. The Company has filed a new
technical report entitled "NI 43-101 Technical Report Florence Copper Project,
Pinal County, Arizona" dated March 30, 2023 (the "Technical Report") on SEDAR.
The Technical Report was prepared in accordance with NI 43-101 and
incorporates updated capital and operating costs for the commercial production
facility and refinements made to the operating models, based on the Production
Test Facility ("PTF") results.
The technical work completed by Taseko in recent years has been extensive and
has de-risked the project significantly. The PTF operated successfully over an
18-month period and provided a valuable opportunity to test operational
controls and strategies which will be applied in future commercial operations.
In addition, a more sophisticated leaching model has been developed and
calibrated to the PTF wellfield performance. This detailed modeling data,
along with updated costing, has been used to update assumptions for the ramp
up and operation of the commercial wellfield and processing facility.
Florence Copper Project Highlights:
* Net present value of US$930 million (after-tax at an 8% 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
* Total estimated initial capital cost of US$232 million remaining
* Long-term copper price of US$3.75 per pound
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.
LONG-TERM GROWTH STRATEGY - CONTINUED
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.
New Prosperity Gold-Copper Project
In late 2019, the Tŝilhqot'in Nation, as represented by Tŝilhqot'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 Tŝilhqot'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 Teẑtan 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 Tŝilhqot'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
Tŝilhqot'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 lab testwork on flowsheet development to produce
niobium oxide from floatation concentrate at Aley to supply the growing market
for niobium-based batteries.
ANNUAL ENVIRONMENT, SOCIAL & GOVERNANCE REPORT
On May 25, 2023, the Company published its annual Environment, Social &
Governance ("ESG") Report, titled 360o of Value. The report focuses on the
2022 operational and sustainability performance of Taseko's foundational
asset, the Gibraltar copper mine in British Columbia, and reports on the
Company's enterprise-wide ESG impacts and benefits – including environmental
initiatives, social contributions, governance programs and greenhouse gas
emissions.
While profitable operations and return on investment are critical drivers for
Taseko's success, the Company also delivers value to its employees and
operating communities, business partners, Indigenous Nations and governments.
The annual ESG report is an opportunity to showcase the important benefits
that the Company generates through its operations, investments and people:
* Well-paid jobs and career opportunities for employees;
* Healthy and safe workplaces that welcome a diversity of people and views;
* Support for vibrant communities and institutions;
* Protection and conservation of important environmental values, such as
wildlife, biodiversity, clean air and water;
* Meaningful partnerships with Indigenous people;
* Financial support for important government services and programs; and
* The production of copper and other metals that play such an important role
in supporting modern society and enhancing quality of life.
The full report can be viewed and downloaded at tasekomines.com/esg/overview
(https://c212.net/c/link/?t=0&l=en&o=3935033-1&h=2633997257&u=https%3A%2F%2Fwww.tasekomines.com%2Fesg%2Foverview&a=tasekomines.com%2Fesg%2Foverview).
The Company will host a telephone conference call and live webcast on
Thursday, August 3, 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://emportal.ink/46Kh6Zm 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 888-390-0546 toll free, 416-764-8688 in Canada, or
online at tasekomines.com/investors/events.
The conference call will be archived for later playback until August 17, 2023
and can be accessed by dialing 888-203-1112 toll free, 416-764-8677 in
Canada, or online at tasekomines.com/investors/events
(https://c212.net/c/link/?t=0&l=en&o=3935033-1&h=2695803924&u=https%3A%2F%2Fwww.tasekomines.com%2Finvestors%2Fevents&a=tasekomines.com%2Finvestors%2Fevents) and
using the entry code 191584#.
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 (except for Q1 and Q2 2023) 2023 Q2 1 2023 Q1 1 2022 Q4 2022 Q3 2022 Q2
Cost of sales 99,854 86,407 73,112 84,204 90,992
Less:
Depletion and amortization (15,594) (12,027) (10,147) (13,060) (15,269)
Net change in inventories of finished goods 3,356 (399) 1,462 2,042 (3,653)
Net change in inventories of ore stockpiles 2,724 5,561 18,050 3,050 (3,463)
Transportation costs (6,966) (5,104) (6,671) (6,316) (4,370)
Site operating costs 83,374 74,438 75,806 69,920 64,237
Oxide ore stockpile reclassification from capitalized stripping (3,183) 3,183 - - -
Less by-product credits:
Molybdenum, net of treatment costs (4,018) (9,208) (11,022) (4,122) (3,023)
Silver, excluding amortization of deferred revenue (103) (160) 263 25 36
Site operating costs, net of by-product credits 76,070 68,253 65,047 65,823 61,250
Total copper produced (thousand pounds) 24,640 19,491 20,020 21,238 15,497
Total costs per pound produced 3.09 3.50 3.25 3.10 3.95
Average exchange rate for the period (CAD/USD) 1.34 1.35 1.36 1.31 1.28
Site operating costs, net of by-product credits (US$ per pound) 2.30 2.59 2.39 2.37 3.10
Site operating costs, net of by-product credits 76,070 68,253 65,047 65,823 61,250
Add off-property costs:
Treatment and refining costs 4,986 4,142 3,104 3,302 2,948
Transportation costs 6,966 5,104 6,671 6,316 4,370
Total operating costs 88,022 77,499 74,822 75,441 68,568
Total operating costs (C1) (US$ per pound) 2.66 2.94 2.75 2.72 3.47
1 Q1 and Q2 2023 includes the impact from the March 15, 2023 acquisition of Cariboo from Sojitz, which increased the Company's Gibraltar mine ownership from 75% to 87.5%.
NON-GAAP PERFORMANCE MEASURES - CONTINUED
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 the Gibraltar mine calculated
on a consistent basis for the periods presented.
(Cdn$ in thousands, unless otherwise indicated) – 75% basis (except for Q1 and Q2 2023) 2023 Q2 1 2023 Q1 1 2022 Q4 2022 Q3 2022 Q2
Site operating costs 83,374 74,438 75,806 69,920 64,237
Add:
Capitalized stripping costs 8,832 12,721 3,866 1,121 11,887
Total site costs – Taseko share 92,206 87,159 79,672 71,041 76,124
Total site costs – 100% basis 105,378 112,799 106,230 94,721 101,500
1 Q1 and Q2 2023 includes the impact from the March 15, 2023 acquisition of Cariboo from Sojitz, which increased the Company's Gibraltar mine ownership from 75% to 87.5%.
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 gain/loss;
* Unrealized gain/loss on derivatives; and
* Finance and other non-recurring costs.
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) 2023 Q2 2023 Q1 2022 Q4 2022 Q3
Net income (loss) 9,991 4,439 (2,275) (23,517)
Unrealized foreign exchange (gain) loss (10,966) (950) (5,279) 28,083
Unrealized (gain) loss on derivatives (6,470) 2,190 20,137 (72)
Finance and other non-recurring costs 1,714 - - -
Estimated tax effect of adjustments 1,355 (591) (5,437) 19
Adjusted net income (loss) (4,376) 5,088 7,146 4,513
Adjusted EPS (0.02) 0.02 0.02 0.02
(Cdn$ in thousands, except per share amounts) 2022 Q2 2022 Q1 2021 Q4 2021 Q3
Net income (loss) (5,274) 5,095 11,762 22,485
Unrealized foreign exchange (gain) loss 11,621 (4,398) (1,817) 9,511
Unrealized (gain) loss on derivatives (30,747) 7,486 4,612 (6,817)
Estimated tax effect of adjustments 8,302 (2,021) (1,245) 1,841
Adjusted net income (loss) (16,098) 6,162 13,312 27,020
Adjusted EPS (0.06) 0.02 0.05 0.10
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 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; and
* Non-recurring other expenses
(Cdn$ in thousands) 2023 Q2 2023 Q1 2022 Q4 2022 Q3
Net income (loss) 9,991 4,439 (2,275) (23,517)
Add:
Depletion and amortization 15,594 12,027 10,147 13,060
Finance expense 13,468 12,309 10,135 12,481
Finance income (757) (921) (700) (650)
Income tax expense 678 3,356 1,222 3,500
Unrealized foreign exchange (gain) loss (10,966) (950) (5,279) 28,083
Unrealized (gain) loss on derivatives (6,470) 2,190 20,137 (72)
Amortization of share-based compensation expense (recovery) 417 3,609 1,794 1,146
Non-recurring other expenses 263 - - -
Adjusted EBITDA 22,218 36,059 35,181 34,031
(Cdn$ in thousands) 2022 Q2 2022 Q1 2021 Q4 2021 Q3
Net income (loss) (5,274) 5,095 11,762 22,485
Add:
Depletion and amortization 15,269 13,506 16,202 17,011
Finance expense 12,236 12,155 12,072 11,875
Finance income (282) (166) (218) (201)
Income tax expense 922 1,188 9,300 22,310
Unrealized foreign exchange (gain) loss 11,621 (4,398) (1,817) 9,511
Unrealized (gain) loss on derivatives (30,747) 7,486 4,612 (6,817)
Amortization of share-based compensation expense (2,061) 3,273 1,075 117
Adjusted EBITDA 1,684 38,139 52,988 76,291
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.
Three months ended Six months ended
June 30, June 30,
(Cdn$ in thousands) 2023 2022 2023 2022
Earnings (loss) from mining operations 12,070 (8,048) 41,182 21,219
Add:
Depletion and amortization 15,594 15,269 27,621 28,775
Earnings from mining operations before depletion and amortization 27,664 7,221 68,803 49,994
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) 2023 Q2 1 2023 Q1 1 2022 Q4 2022 Q3 2022 Q2
Site operating costs (included in cost of sales) – Taseko share 83,374 74,438 75,806 69,920 64,237
Site operating costs (included in cost of sales) – 100% basis 95,285 95,838 101,075 93,226 85,650
Tons milled (thousands) 7,234 7,093 7,282 8,229 7,698
Site operating costs per ton milled $13.17 $13.54 $13.88 $11.33 $11.13
1 Q1 and Q2 2023 includes the impact from the March 15, 2023 acquisition of Cariboo from Sojitz, which increased the Company's Gibraltar mine ownership from 75% to 87.5%.
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; Stuart McDonald,
President & CEO
SOURCE: Taseko Mines Limited
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