REG-Taseko Mines Limited: Taseko Reports Strong Fourth Quarter Financial Performance
08/03/2024 07:30
Taseko Reports Strong Fourth Quarter Financial Performance and $190 Million of
Adjusted EBITDA for 2023
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, March 7, 2024 - Taseko Mines Limited (TSX: TKO) (NYSE
American: TGB) (LSE: TKO) ("Taseko" or the "Company") reports full year 2023
Adjusted EBITDA* of $190 million and Earnings from mining operations before
depletion and amortization* of $207 million. Revenues for 2023 were $525
million, 34% higher than the prior year as a result of improved copper
production and an increase in the Company's effective interest in the
Gibraltar Mine, from 75% to 87.5%, in March 2023. Net income for the year
was $83 million ($0.29 per share) and Adjusted net earnings* were $44 million
($0.15 per share).
In the fourth quarter, Adjusted EBITDA* was $69 million and Earnings from
mining operations before depletion and amortization* was $73 million. Net
income for the fourth quarter was $67 million ($0.23 per share) and Adjusted
net earnings* was $24 million ($0.08 per share).
Fourth quarter copper production from Gibraltar was 34 million pounds, and for
the full year 2023 production was 123 million pounds. Annual production was
above the Company's original guidance and also 26% higher than in 2022. Strong
production supported lower Total operating cash costs (C1)* of US$1.91 per
pound for the fourth quarter and US$2.37 per pound for the year. Molybdenum
production for the fourth quarter and year was 369 thousand pounds and 1.2
million pounds, respectively.
Stuart McDonald, President and CEO of Taseko, commented, "The Gibraltar Mine
finished a successful year with another strong production quarter. The lower
benches of the Gibraltar pit continued to deliver the quality ore we expected,
with copper grades averaging 0.27% for the period. This resulted in strong
earnings and $63 million of operating cash flow in the fourth quarter. For
the full year 2023, the average copper grade was 0.25%, which is in line with
Gibraltar's life of mine reserve grade, and led to significantly improved
copper production and financial performance compared to 2022.
"At our Florence Copper project we achieved a major milestone in the fourth
quarter, as the final Underground Injection Control permit became effective,
successfully concluding the EPA's lengthy permitting process. We also
announced two Florence project financings totalling US$100 million, from
Taurus Mining Royalty Fund and Societe Generale, which supplement the
previously announced financings from Mitsui and Bank of America.
We're now moving forward with construction of the commercial production
facility at Florence. Initial activities have focused on site preparations,
earthworks and civil work for the wellfield as well as hiring additional site
personnel for the construction and operations teams. Wellfield drilling
commenced in February and construction of the SX/EW plant and other surface
infrastructure will begin in the second quarter. First copper production
expected in fourth quarter 2025."
Mr. McDonald added, "Taseko is in a very unique position heading into 2024
with a fully permitted, low-cost project that will provide 80% growth to our
North American copper production profile in the coming years. Our Gibraltar
Mine is expected to continue to benefit from Gibraltar pit ore which will be
the main source of mill feed for the first half of this year, before the
transition to the Connector pit. In January, we had mill downtime in
concentrator #2 for a planned major component replacement, which was
successfully completed in the scheduled timeframe. In the second quarter,
concentrator #1 will be shut down for roughly three weeks for the in-pit
crusher relocation and other mill maintenance. Factoring in the additional
down time in 2024, we expect Gibraltar to produce approximately 115 million
pounds of copper for the year, with quarterly production less variable than in
recent years," concluded Mr. McDonald.
2023 Annual Review
* Annual cash flow from operations was $151.1 million and net income was $82.7
million ($0.29 per share) for the year;
* Earnings from mining operations before depletion and amortization* was
$207.4 million, Adjusted EBITDA* was $190.1 million and Adjusted net income*
was $44.4 million ($0.15 per share);
* Total operating costs (C1)* for the year was US$2.37 per pound produced;
* The Gibraltar mine produced 122.6 million pounds of copper and 1.2 million
pounds of molybdenum in 2023. Copper recoveries averaged 82.6% and copper head
grades were 0.25%;
* Gibraltar sold 120.7 million pounds of copper for the year (100% basis)
which contributed to revenue for Taseko of $525.0 million, the highest annual
revenue Taseko has ever recorded. Average realized copper prices were US$3.84
per pound for the year;
* On March 15, 2023, Taseko acquired 50% of Cariboo Copper Corp. increasing
its effective interest from 75% to 87.5% in the Gibraltar mine; and
* In September, the U.S. Environmental Protection Agency ("EPA") issued the
Final Underground Injection Control ("UIC") permit for the Florence Copper
Project and the permit became effective on October 31, 2023. The Company now
has all key permits in place and is commencing construction of the commercial
production facility at Florence.
Fourth Quarter Review
* Fourth quarter cash flow from operations was $62.8 million and net income
was $67.4 million ($0.23 per share) for the quarter;
* Earnings from mining operations before depletion and amortization* was $73.1
million, Adjusted EBITDA* was $69.1 million, and Adjusted net income* was
$24.1 million ($0.08 per share);
* Gibraltar produced 34.2 million pounds of copper for the quarter. Average
head grades were 0.27% and copper recoveries were 82.2% for the quarter;
* Gibraltar sold 35.9 million pounds of copper in the quarter (100% basis) at
an average realized copper price of US$3.75 per pound;
* Total operating costs (C1)* for the quarter was US$1.91 per pound produced;
* Construction of the commercial production facility at Florence is advancing
with recent site activities focused on site preparations, earthworks and civil
work for the commercial wellfield. Wellfield drilling commenced in February
and construction of the SX/EW plant and associated surface infrastructure is
scheduled to get underway in the second quarter of 2024;
*Non-GAAP performance measure. See end of news release
Fourth Quarter Review - Continued
* During the quarter, the Company closed the first Florence project debt
facility with Bank of America for gross proceeds of US$25 million, secured
against the SX/EW plant and other equipment;
* The Company had a cash balance of $96.5 million and has approximately $176
million of available liquidity at December 31, 2023; and
* On February 2, 2024, the Company closed its US$50 million royalty with
Taurus Mining Royalty Fund L.P. ("Taurus") and the Company also received the
first US$10 million of the US$50 million Mitsui copper stream financing in
January 2024.
Highlights
Operating Data (Gibraltar - 100% basis) Three months ended Year ended
December 31, December 31,
2023 2022 Change 2023 2022 Change
Tons mined (millions) 24.1 22.9 1.2 88.1 88.7 (0.6)
Tons milled (millions) 7.6 7.3 0.3 30.0 30.3 (0.3)
Production (million pounds Cu) 34.2 26.7 7.5 122.6 97.0 25.6
Sales (million pounds Cu) 35.9 25.5 10.4 120.7 101.3 19.4
Financial Data Three months ended Year ended
December 31, December 31,
(Cdn$ in thousands, except for per share amounts) 2023 2022 Change 2023 2022 Change
Revenues 153,694 100,618 53,076 524,972 391,609 133,363
Cash flows provided by (used for) operations 62,835 (946) 63,781 151,092 81,266 69,826
Net income (loss) (GAAP) 67,425 (2,275) 69,700 82,726 (25,971) 108,697
Per share - basic ("EPS") 0.23 (0.01) 0.24 0.29 (0.09) 0.38
Earnings from mining operations before depletion 73,106 37,653 35,453 207,354 106,217 101,137
and amortization *
Adjusted EBITDA * 69,107 35,181 33,926 190,079 109,035 81,044
Adjusted net income * 24,060 7,146 16,914 44,431 1,723 42,708
Per share - basic ("Adjusted EPS") * 0.08 0.02 0.06 0.15 0.01 0.14
On March 15, 2023, the Company increased its effective interest in the
Gibraltar Mine from 75% to 87.5% through the acquisition of a 50% interest in
Cariboo Copper Corp. The financial results reported in this MD&A include the
Company's 87.5% proportionate share of Gibraltar Mine income and expenses for
the period March 15 to December 31, 2023 (prior to March 15, 2023 – 75%).
*Non-GAAP performance measure. See end of news release
Review of Operations
Gibraltar mine
Operating data (100% basis) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 YE 2023 YE 2022
Tons mined (millions) 24.1 16.5 23.4 24.1 22.9 88.1 88.7
Tons milled (millions) 7.6 8.0 7.2 7.1 7.3 30.0 30.3
Strip ratio 1.5 0.4 1.5 1.9 1.1 1.3 1.8
Site operating cost per ton milled (Cdn$) * $9.72 $12.39 $13.17 $13.54 $13.88 $12.16 $11.89
Copper concentrate
Head grade (%) 0.27 0.26 0.24 0.22 0.22 0.25 0.20
Copper recovery (%) 82.2 85.0 81.9 80.7 83.4 82.6 79.5
Production (million pounds Cu) 34.2 35.4 28.2 24.9 26.7 122.6 97.0
Sales (million pounds Cu) 35.9 32.1 26.1 26.6 25.5 120.7 101.3
Inventory (million pounds Cu) 6.9 8.8 5.6 3.7 5.4 5.6 5.4
Molybdenum concentrate
Production (thousand pounds Mo) 369 369 230 234 359 1,202 1,118
Sales (thousand pounds Mo) 364 370 231 225 402 1,190 1,131
Per unit data (US$ per pound produced) *
Site operating costs * $1.59 $2.10 $2.43 $2.94 $2.79 $2.19 $2.85
By-product credits * (0.13) (0.23) (0.13) (0.37) (0.40) (0.20) (0.23)
Site operating costs, net of by-product credits * $1.46 $1.87 $2.30 $2.57 $2.39 $1.99 $2.62
Off-property costs 0.45 0.33 0.36 0.37 0.36 0.38 0.36
Total operating costs (C1) * $1.91 $2.20 $2.66 $2.94 $2.75 $2.37 $2.98
*Non-GAAP performance measure. See end of news release
Operations Analysis
Full Year Results
Gibraltar produced 122.6 million pounds of copper for the year compared to
97.0 million pounds in 2022. The higher production was attributable to
improved ore grades and recoveries as the lower benches of the Gibraltar pit
provided the expected higher grades and more consistent mineralized zones.
Copper grades for the year averaged 0.25% copper compared to 0.20% in 2022 and
copper recoveries for 2023 were 82.6% compared to 79.5% in 2022.
A total of 88.1 million tons were mined in the year compared to 88.7 million
tons mined in 2022. The strip ratio of 1.3 was lower than the prior year as
mining operations were focused in the Gibraltar pit in 2023 which has a lower
strip ratio. Ore stockpiles also increased by 9.1 million tons, including
oxide ore from the upper benches of the Connector pit.
Total site costs* at Gibraltar of $430.7 million (which includes capitalized
stripping of $55.6 million) was $28.3 million higher than 2022, primarily due
to higher repairs and maintenance costs and labour costs, partially offset by
lower diesel costs and lower grinding media costs.
Molybdenum production was 1.2 million pounds in the year compared to 1.1
million pounds in the prior year. Molybdenum prices strengthened in 2023 with
an average molybdenum price of US$24.19 per pound, an increase of 29% compared
to the 2022 average price of US$18.73 per pound.
Off-property costs per pound produced* were US$0.38 for the year, which is
US$0.02 higher than the prior year primarily due to an increase in treatment
and refining charges (TCRC) rates.
Total operating costs per pound produced (C1)* was US$2.37 for the year,
compared to US$2.98 in the prior year as shown in the bridge graph below:
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*Non-GAAP performance measure. See end of news release
Operations Analysis - Continued
Fourth Quarter Results
Gibraltar produced 34.2 million pounds of copper for the quarter which was
generally consistent with the prior quarter. Slightly lower throughput of
7.6 million tons was offset by higher grade compared to the prior quarter.
Copper grades in the fourth quarter were 0.27%, higher than recent quarters
and in line with management expectations as the lower benches of the Gibraltar
pit provided higher grades and more consistent mineralized zones.
Copper recoveries in the fourth quarter were 82.2% and were impacted by
performance in concentrator #2 prior to a major component replacement that was
completed in January.
Total site costs* at Gibraltar of $110.6 million (which includes capitalized
stripping of $31.9 million) was $8.6 million higher than the prior quarter due
to higher labor cost, grinding media cost and timing of repairs and
maintenance. Site operating cost per ton milled* was $9.72 and was lower than
the previous quarters in 2023 mainly due to higher capitalized stripping
costs.
Molybdenum production was 369 thousand pounds in the fourth quarter. At an
average molybdenum price of US$18.64 per pound and the impact of negative
price adjustments of $1.8 million for Taseko's 87.5% share, molybdenum
generated a by-product credit per pound of copper produced of US$0.13 in the
fourth quarter.
Off-property costs per pound produced* were US$0.45 for the fourth quarter
reflecting higher sales, higher ocean freight costs (including bunker fuel)
and increased TCRCs compared to the same quarter in the prior year.
Total operating costs per pound produced (C1)* was US$1.91 for the quarter and
was lower than the previous quarter due to increased waste stripping costs
being capitalized from the Connector pit.
Gibraltar Outlook
The Gibraltar pit will continue to be the main source of mill feed for the
first half of 2024 before mining of ore transitions into the Connector pit in
the second half of the year. Stripping activity will continue to be focused
in the Connector pit, and further oxide ore from this pit is expected to be
added to the leach pads in 2024. Restart of the SX/EW facility at the
Gibraltar mine is expected in 2026.
Concentrator #2 had additional downtime in January 2024 for a planned major
component replacement, and concentrator #1 is scheduled to be down for three
weeks in June for the in-pit crusher relocation and other mill maintenance.
After taking into account the reduced mill availability from these two
scheduled down times, total copper production at Gibraltar for 2024 is
expected to be approximately 115 million pounds.
The estimated remaining capital cost of the crusher relocation project is $10
million, and no other significant capital projects are planned for Gibraltar
in 2024.
The Company continues to purchase options to provide copper price and fuel
price protection. Currently, the Company has copper put contracts in place
that secure a minimum copper price of US$3.25 per pound for 42 million pounds
of copper and diesel call options for 12.5 million litres of diesel, covering
the first half of 2024.
*Non-GAAP performance measure. See end of news release
Florence Copper
On September 14, 2023, the Company received the final UIC permit from the EPA,
and the UIC permit became effective on October 31, 2023. The Company now has
all the key permits in place for the commercial production facility and is
commencing construction.
Site activities to-date have focused on site preparations, earthworks and
civil work for the commercial wellfield and the hiring of additional
management and site personnel positions for the construction and operations
teams. The initial drilling contracts have been awarded and finalized, and
drilling of the commercial facility wellfield commenced in February.
The Company recently executed a fixed-price contract with the general
contractor for construction of the SX/EW plant and associated surface
infrastructure which is scheduled to commence in the second quarter of 2024.
All the major plant components are on site and the early work on detailed
engineering and procurement of long-lead items has significantly de-risked the
construction schedule. First copper production is expected in the fourth
quarter of 2025.
The Company has advanced Florence project level financing to fund
construction. In the fourth quarter, the Company closed a US$25 million
equipment loan with Bank of America. In January 2024, the Company received the
initial US$10 million deposit from the US$50 million streaming transaction
with Mitsui. The remaining amounts will be paid on a quarterly basis in US$10
million instalments. On February 2, 2024, the Company closed a US$50 million
royalty with Taurus, which was funded in one lump-sum payment at that time.
Additionally, in October 2023, the Florence project received a credit
committee approved commitment from Societe Generale for a US$50 million
project debt facility with an additional US$25 million uncommitted accordion
feature.
In March 2023, the Company announced the results of recent technical work and
updated economics for the Florence Copper project. The Company has a 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 (with a basis as of Q3 2022) for the
commercial production facility and refinements made to the operating models,
based on the Production Test Facility ("PTF") results.
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.
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. During the first 5 years of
operation, the copper equivalent grade will average 0.35% producing an average
of 200 million pounds of copper per year at an average C1* cost, net of
by-product credit, of US$1.67 per pound of copper produced. 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 Mines Limited entered into a confidential dialogue,
with the involvement of the Province of British Columbia, seeking a long-term
resolution of the conflict regarding Taseko's proposed copper-gold mine
previously known as New Prosperity, acknowledging Taseko's commercial
interests and the Tŝilhqot'in Nation's opposition to the project.
This dialogue has been supported by the parties' agreement, beginning December
2019, to a series of standstill agreements on certain outstanding litigation
and regulatory matters relating to Taseko's tenures and the area in the
vicinity of Teztan Biny (Fish Lake).
The dialogue process has made meaningful progress in recent months but is not
complete. The Tŝilhqot'in Nation and Taseko acknowledge the constructive
nature of discussions, and the opportunity to conclude a long-term and
mutually acceptable resolution of the conflict that also makes an important
contribution to the goals of reconciliation in Canada.
In March 2024, Tŝilhqot'in and Taseko formally reinstated the standstill
agreement for a final term, with the goal of finalizing a resolution before
the end of this year.
Aley Niobium Project
Environmental monitoring and product marketing initiatives on the Aley niobium
project continue. The converter pilot test is ongoing and is providing
additional process data to support the design of the commercial process
facilities and will provide final product samples for marketing purposes. The
Company has also initiated a scoping study to investigate the potential
production of niobium oxide at Aley to supply the growing market for
niobium-based batteries.
Environmental, Social and Governance ("ESG")
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.
The full report is available on the Company's website at
https://tasekomines.com/sustainability/overview/.
Taseko's 2023 ESG report will be published in the second quarter of 2024.
Market Review
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Prices (USD per pound for Commodities)
(Source Data: Bank of Canada, Platts Metals, and London Metals Exchange)
Copper prices are currently around US$3.90 per pound, compared to US$3.84 per
pound at December 31, 2023. Short-term volatility in copper prices is
expected to continue in the near term due to macroeconomic uncertainty,
geopolitical events and recessionary risks from higher interest rates which is
causing a slowdown in industrial demand.
Electrification of transportation and the focus on government investment in
construction and infrastructure including initiatives focused on the renewable
energy, electrification and meeting net zero targets by 2050, are inherently
copper intensive and supports higher copper prices in the longer term.
According to S&P Global's copper market outlook report published in July
2022, titled 'The Future of Copper: Will the looming supply gap short-circuit
the energy transition?', global demand for copper is projected to double from
approximately 25 million metric tons today to roughly 50 million metric tons
by 2035, a record high that will be sustained and continue to grow to 53
million metric tons by 2050, in order to achieve net-zero targets. All of
these factors continue to provide unprecedented catalysts for higher copper
prices in the future as new mine supply lags growth in copper demand.
Approximately 4% of the Company's revenue is made up of molybdenum sales.
During the fourth quarter of 2023, the average molybdenum price was
US$18.64 per pound. Molybdenum prices are currently around US$20 per pound.
Molybdenum demand and prices have been driven by supply challenges at large
South American copper mines that produce molybdenum as a by-product. Continued
strong demand from the energy sector has boosted demand for alloyed steel
products, as well as growing demand from the renewables and military sectors.
The Company's sales agreements specify molybdenum pricing based on the
published Platts Metals reports.
Approximately 80% of the Gibraltar mine's costs are Canadian dollar
denominated and therefore, fluctuations in the Canadian/US dollar exchange
rate can have a significant effect on the Company's financial results.
The Company will host a telephone conference call and live webcast on Friday, March 8, 2024 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) 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/41ycQtM 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 March 15, 2024 and can be accessed by dialing 888-390-0541 toll free, 416-764-8677 in Canada, or online at tasekomines.com/investors/events/ (https://c212.net/c/link/?t=0&l=en&o=4110524-1&h=2414520640&u=https%3A%2F%2Ftasekomines.com%2Finvestors%2Fevents%2F&a=tasekomines.com%2Finvestors%2Fevents%2F)and using the entry code 758609#.
Stuart McDonald
President & CEO
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.
Non-GAAP Performance Measures (Continued)
(Cdn$ in thousands, unless otherwise indicated) – 87.5% basis 2023 Q4 1 2023 Q3 1 2023 Q2 1 2023 Q1 1 2023 YE
Cost of sales 93,914 94,383 99,854 86,407 374,558
Less:
Depletion and amortization (13,326) (15,993) (15,594) (12,027) (56,940)
Net change in inventories of finished goods (1,678) 4,267 3,356 (399) 5,546
Net change in inventories of ore stockpiles (3,771) 12,172 2,724 5,561 16,686
Transportation costs (10,294) (7,681) (6,966) (5,104) (30,045)
Site operating costs 64,845 87,148 83,374 74,438 309,805
Oxide ore stockpile reclassification from capitalized stripping - - (3,183) 3,183 -
Less by-product credits:
Molybdenum, net of treatment costs (5,441) (9,900) (4,018) (9,208) (28,567)
Silver, excluding amortization of deferred revenue 124 290 (103) (160) 151
Site operating costs, net of by-product credits 59,528 77,538 76,070 68,253 281,389
Total copper produced (thousand pounds) 29,883 30,978 24,640 19,491 104,992
Total costs per pound produced 1.99 2.50 3.09 3.50 2.68
Average exchange rate for the period (CAD/USD) 1.36 1.34 1.34 1.35 1.35
Site operating costs, net of by-product credits (US$ per pound) 1.46 1.87 2.30 2.59 1.99
Site operating costs, net of by-product credits 59,528 77,538 76,070 68,253 281,389
Add off-property costs:
Treatment and refining costs 7,885 6,123 4,986 4,142 23,136
Transportation costs 10,294 7,681 6,966 5,104 30,045
Total operating costs 77,707 91,342 88,022 77,499 334,570
Total operating costs (C1) (US$ per pound) 1.91 2.20 2.66 2.94 2.37
1 Q1, Q2, Q3 and Q4 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)
(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
Oxide ore stockpile reclassification from capitalized stripping - - -
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/USD) 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)
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) – 87.5% basis (except for Q1 2023) 2023 Q4 2023 Q3 2023 Q2 2023 Q1 1 2023 YE 1
Site operating costs 64,845 87,148 83,374 74,438 309,805
Add:
Capitalized stripping costs 31,916 2,083 8,832 12,721 55,552
Total site costs – Taseko share 96,761 89,231 92,206 87,159 365,357
Total site costs – 100% basis 110,584 101,978 105,378 112,799 430,739
1 Q1 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%.
(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 – Taseko share 79,672 71,041 76,124 75,001 301,838
Total site costs – 100% basis 106,230 94,721 101,499 100,001 402,451
Adjusted net income (loss) and Adjusted EPS
Adjusted net income (loss) removes the effect of the following transactions
from net income as reported under IFRS:
* Unrealized foreign currency gains/losses;
* Unrealized gain/loss on derivatives;
* Gain on Cariboo acquisition; 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.
Adjusted EPS is the Adjusted net income attributable to common shareholders of
the Company divided by the weighted average number of common shares
outstanding during the period.
Non-GAAP Performance Measures (Continued)
Adjusted net income (loss) and Adjusted EPS (Continued)
(Cdn$ in thousands, except per share amounts) 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 YE
Net income 67,425 871 9,991 4,439 82,726
Unrealized foreign exchange (gain) loss (14,541) 14,582 (10,966) (950) (11,875)
Unrealized loss (gain) on derivatives 1,636 4,518 (6,470) 2,190 1,874
Gain on Cariboo acquisition (46,212) - - - (46,212)
Finance and other non-recurring costs (916) 1,244 1,714 - 2,042
Estimated tax effect of adjustments 16,668 (1,556) 1,355 (591) 15,876
Adjusted net income (loss) 24,060 19,659 (4,376) 5,088 44,431
Adjusted EPS 0.08 0.07 (0.02) 0.02 0.15
(Cdn$ in thousands, except per share amounts) 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 YE
Net (loss) income (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 loss (gain) 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
Adjusted EBITDA
Adjusted EBITDA is presented as a supplemental measure of the Company's
performance and ability to service debt. Adjusted EBITDA is frequently used by
securities analysts, investors and other interested parties in the evaluation
of companies in the industry, many of which present Adjusted EBITDA when
reporting their results. Issuers of "high yield" securities also present
Adjusted EBITDA because investors, analysts and rating agencies consider it
useful in measuring the ability of those issuers to meet debt service
obligations.
Adjusted EBITDA represents net income before interest, income taxes, and
depreciation and also eliminates the impact of a number of items that are not
considered indicative of ongoing operating performance. Certain items of
expense are added and certain items of income are deducted from net income
that are not likely to recur or are not indicative of the Company's underlying
operating results for the reporting periods presented or for future operating
performance and consist of:
* Unrealized foreign exchange gains/losses;
* Unrealized gain/loss on derivatives;
* Amortization of share-based compensation expense;
* Gain on Cariboo acquisition; and
* Non-recurring other expenses.
Non-GAAP Performance Measures (Continued)
Adjusted EBITDA (Continued)
(Cdn$ in thousands) 2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 YE
Net income 67,425 871 9,991 4,439 82,726
Add:
Depletion and amortization 13,326 15,993 15,594 12,027 56,940
Finance expense 12,804 14,285 13,468 12,309 52,866
Finance income (972) (322) (757) (921) (2,972)
Income tax expense 34,068 12,041 678 3,356 50,143
Unrealized foreign exchange (gain) loss (14,541) 14,582 (10,966) (950) (11,875)
Unrealized loss (gain) on derivatives 1,636 4,518 (6,470) 2,190 1,874
Amortization of share-based compensation expense 1,573 727 417 3,609 6,326
Gain on Cariboo acquisition (46,212) - - - (46,212)
Non-recurring other expenses - - 263 - 263
Adjusted EBITDA 69,107 62,695 22,218 36,059 190,079
(Cdn$ in thousands) 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 YE
Net (loss) income (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 loss (gain) on derivatives 20,137 (72) (30,747) 7,486 (3,196)
Amortization of share-based compensation expense (recovery) 1,794 1,146 (2,061) 3,273 4,152
Adjusted EBITDA 35,181 34,031 1,684 38,139 109,035
No regulatory authority has approved or disapproved of the information in this
news release.
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: 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
SOURCE Taseko Mines Limited
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