Taseko Reports Third Quarter 2024 Operational Performance and $48 Million of Adjusted EBITDA
07/11/2024 24:56
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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.sedarplus.com . Except where otherwise noted, all currency amounts are stated in Canadian dollars. In March 2024 Taseko acquired the remaining 12.5% interest and now owns 100% of the Gibraltar Mine, 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, British Columbia, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Taseko Mines
Limited (TSX: TKO; NYSE American: TGB; LSE: TKO) ("Taseko" or the "Company")
reports third quarter 2024 Adjusted EBITDA* of $48 million and Earnings from
mining operations before depletion, amortization and non-recurring items* of
$55 million. Revenues for the third quarter were $156 million from the sale of
26 million pounds of copper and 348 thousand pounds of molybdenum. A net loss
of $0.2 million ($nil per share) was recorded for the quarter and adjusted net
income* was $8 million ($0.03 per share).
Gibraltar produced 27 million pounds of copper and 421 thousand pounds of
molybdenum in the third quarter. Copper grades were 0.23%, consistent with the
prior quarter. Tons milled increased over the second quarter, however mill
availability and throughput was lower than planned due to unscheduled downtime
and the completion of the crusher move project and concurrent maintenance in
concentrator #1 in July. Copper recoveries increased modestly to 79%.
Molybdenum production was boosted by a 33% increase in grades, related to ore
from the new Connector pit. Total operating costs (C1)* for the quarter were
US$2.92 per pound of copper produced.
Stuart McDonald, President and CEO of Taseko, commented, “The development of
the new Connector pit advanced on plan in the third quarter, with the new pit
providing approximately half of the mill feed in the period. Due to the lower
than planned mill availability in the third quarter, we do not expect to
recover the production that was lost during the labour strike in June. Looking
ahead to 2025, we expect increased mill throughput and improved ore quality as
we move deeper into the Connector pit. Copper production next year is expected
to increase to the 120 to 130 million pound range, and molybdenum production
is also expected to increase. Lower-grade ore stockpiles will be used to
supplement mined ore in the first half of the year, so production will be
weighted to the second half of the year.”
Mr. McDonald continued, “Construction at Florence Copper has continued to
progress on schedule. We are now in peak construction with nearly 300
contractors working at site. The SX/EW plant activities have shifted from
earth works and concrete foundation pouring to now erecting structural steel
and installation of processing equipment and electrical services. Development
of the wellfield is advancing with four drill rigs now operating and 40 wells
completed at the end of October. Development of the wellfield, which is a
critical path item, remains on schedule to be completed in the second quarter
of next year.”
“We expect Florence Copper to become North America’s lowest GHG-intensity
primary copper producer, and we’re optimistic that the project will qualify
for the U.S. Department of Energy’s (“DOE”) Qualifying Advanced Energy
Project Credit (48C) Program, which we applied for recently. We expect to hear
whether our application was successful in January. Our balance sheet remains
in a strong position, with $209 million of cash on hand and total liquidity of
approximately $317 million at the end of September,” added Mr. McDonald.
“This is a very exciting time for Taseko as we begin to unlock the value of
our growth assets. The Florence Copper project continues to be de-risked and
is now just a year away from producing first copper. We’re also preparing to
take a big step forward with our Yellowhead copper project, which will be
entering the environmental assessment process in the coming months. We also
plan on issuing an updated feasibility study for the project next year, which
will reinforce the significant value of what could be British Columbia’s
next major copper mine,” concluded Mr. McDonald.
Third Quarter Review
* Earnings from mining operations before depletion, amortization and
non-recurring items* was $54.5 million and Adjusted EBITDA* was $47.7 million;
* Third quarter cash flow from operations was $65.0 million, and included
$26.3 million for proceeds received on the insurance claim recorded in the
prior quarter;
* Net loss was $0.2 million ($Nil per share) for the quarter and Adjusted net
income* was $8.2 million ($0.03 per share);
* Gibraltar produced 27.1 million pounds of copper in the quarter. Average
copper head grades were 0.23% and copper recoveries were 79% for the quarter;
* Although 7.6 million tons of ore was milled in the quarter, mill throughput
was impacted by nearly three weeks of downtime in Concentrator #1 at the
beginning of the quarter for the completion of the crusher relocation project,
concurrent mill maintenance, and the ramp back up to full capacity;
* Gibraltar sold 26.3 million pounds of copper in the quarter at an average
realized copper price of US$4.23 per pound;
* Total operating costs (C1)* for the quarter were US$2.92 per pound produced.
Lower off-property costs are mainly due to favorably lower treatment and
refining (“TCRC”) rates realized during the quarter as new offtake
agreements begin to take effect;
* Construction of the Florence Copper commercial production facility continues
to advance on schedule. A total of 34 production wells out of a total of 90
new wells had been completed as of September 30. Earthworks and site
preparation for the plant area and commercial wellfield is estimated to be 75%
complete and installation of structural steel, tanks, and process equipment is
underway;
* An application has been made to the U.S. Department of Energy’s Qualifying
Advanced Energy Project Credit (48C) Program for a tax credit of up to US$110
million, based on Florence Copper’s eligibility as a critical materials
project. The Company expects to hear if it has been awarded the tax credit in
mid-January 2025;
* On November 6, the Company entered into an amendment for its revolving
credit facility, extending the maturity date to November 2027 from July 2026,
and increasing the facility amount to US$110 million from US$80 million. No
amounts are drawn against the revolving credit facility;
* The Company issued 7.8 million shares under its At-the-Market (“ATM”)
equity offering in the quarter and received net proceeds of $23.1 million.
Subsequently, the Company issued an additional 4.3 million shares under the
ATM and received net proceeds of $14.2 million; and
* The Company had a cash balance of $209 million as at September 30, 2024.
Highlights
Operating Data (Gibraltar - 100% basis) Three months ended September 30, Nine months ended September 30,
2024 2023 Change 2024 2023 Change
Tons mined (millions) 23.2 16.5 6.7 64.4 64.0 0.4
Tons milled (millions) 7.6 8.0 (0.4 ) 21.0 22.4 (1.4 )
Production (million pounds Cu) 27.1 35.4 (8.3 ) 77.0 88.5 (11.5 )
Sales (million pounds Cu) 26.3 32.1 (5.8 ) 80.6 84.8 (4.2 )
Financial Data Three months ended September 30, Nine months ended September 30,
(Cdn$ in thousands, except for per share amounts) 2024 2023 Change 2024 2023 Change
Revenues 155,617 143,835 11,782 440,294 371,278 69,016
Cash flows provided by operations 65,038 26,989 38,049 159,323 88,257 71,066
Net (loss) income (GAAP) (180 ) 871 (1,051 ) 7,763 44,650 (36,887 )
Per share – basic (“EPS”) - - - 0.03 0.15 (0.12 )
Earnings from mining operations before depletion, amortization and non-recurring items* 54,516 65,445 (10,929 ) 184,241 134,248 49,993
Adjusted EBITDA* 47,689 62,695 (15,006 ) 168,389 120,972 47,417
Adjusted net income* 8,228 19,659 (11,431 ) 46,459 20,372 26,087
Per share – basic (“adjusted EPS”)* 0.03 0.07 (0.04 ) 0.16 0.07 0.09
Effective as of March 25, 2024 the Company increased its ownership in
Gibraltar from 87.5% to 100%. As a result, the financial results reported in
this MD&A include 100% of Gibraltar income and expenses for the period March
25, 2024 to September 30, 2024 (87.5% for the period March 16, 2023 to March
24, 2024, and 75% prior to March 15, 2023). For more information on the
Company’s acquisition of Cariboo, please refer to the Financial Statements
– Note 3.
The Company finalized the accounting for the acquisition of its initial 50%
interest in Cariboo from Sojitz and the related 12.5% interest in Gibraltar in
the fourth quarter of 2023. In accordance with the accounting standards for
business combinations, the comparable financial statements as of September 30,
2023 and for the three and nine months then ended have been revised to reflect
the changes in finalizing the consideration paid and the allocation of the
purchase price to the assets and liabilities acquired.
Review of Operations
Gibraltar mine
Operating data (100% basis) Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023
Tons mined (millions) 23.2 18.4 22.8 24.1 16.5
Tons milled (millions) 7.6 5.7 7.7 7.6 8.0
Strip ratio 1.2 1.6 1.7 1.5 0.4
Site operating cost per ton milled (Cdn$) (*) $14.23 $13.93 $11.73 $9.72 $12.39
Copper concentrate
Head grade (%) 0.23 0.23 0.24 0.27 0.26
Copper recovery (%) 78.9 77.7 79.0 82.2 85.0
Production (million pounds Cu) 27.1 20.2 29.7 34.2 35.4
Sales (million pounds Cu) 26.3 22.6 31.7 35.9 32.1
Inventory (million pounds Cu) 2.9 2.3 4.9 6.9 8.8
Molybdenum concentrate
Production (thousand pounds Mo) 421 185 247 369 369
Sales (thousand pounds Mo) 348 221 258 364 370
Per unit data (US$ per pound produced) (*)
Site operating costs (*) $2.91 $2.88 $2.21 $1.59 $2.10
By-product credits (*) (0.25 ) (0.26 ) (0.17 ) (0.13 ) (0.23 )
Site operating costs, net of by-product credits (*) $2.66 $2.62 $2.04 $1.46 $1.87
Off-property costs 0.26 0.37 0.42 0.45 0.33
Total operating costs (C1) (*) $2.92 $2.99 $2.46 $1.91 $2.20
Operations Analysis
Third Quarter Review
Gibraltar produced 27 million pounds of copper in the quarter. Copper
production and mill throughput were impacted by nearly three weeks of downtime
in Concentrator #1 at the beginning of the quarter to complete the crusher
relocation project, concurrent mill maintenance, and the ramp back up to full
capacity.
Copper head grades were 0.23% and more Connector pit ore was fed to the mill.
Copper recoveries in the third quarter were 79%, in line with recent quarters,
but lower than normal, as the upper benches of the Connector pit contain
transition ore with higher oxide content. As mining progresses deeper in the
Connector pit, recoveries are expected to improve as oxide content reduces.
A total of 23.2 million tons were mined in the third quarter, and the majority
of ore and waste mining occurred in the Connector pit during the period. A
total of 1.7 million tons of oxide ore from the upper benches of the Connector
pit were also added to the heap leach pads in the period for future copper
cathode production from Gibraltar’s currently idled SX/EW plant.
Total site costs* at Gibraltar of $111.3 million (which includes capitalized
stripping of $3.6 million) was higher compared to the previous quarter due to
the Gibraltar mine being on care and maintenance during the labour strike
in June. Total site costs* were generally in line with the fourth quarter of
2023 and first quarter of 2024. Higher repairs and maintenance costs were
incurred in the quarter due to a large maintenance project on one of the
shovels.
During the three months ended September 30, 2024, the Company incurred costs
of $4.1 million in relation to the final phase of the in-pit crusher
relocation project for Concentrator #1 including demolition of the old
station’s concrete foundation. Under IFRS, these costs are expensed in the
quarter through the statement of income (loss).
Molybdenum production was 421 thousand pounds in the third quarter. The 128%
increase in quarter-over-quarter production is primarily due to higher
molybdenum grade in the Connector pit ore. At an average molybdenum price of
US$21.77 per pound, molybdenum generated a by-product credit per pound of
copper produced of US$0.25 in the third quarter.
Off-property costs per pound produced* were US$0.26 for the third quarter,
which is lower than recent quarters and reflects lower average TCRC rates
realized on third quarter shipments, some of which were tendered earlier in
the year at negative rates.
Total operating costs per pound produced (C1)* was US$2.92 for the quarter,
compared to US$2.20 in the prior year quarter as shown in the bridge graph
below with the difference substantially attributed to the lower copper
production in the quarter:
https://www.globenewswire.com/NewsRoom/AttachmentNg/0d7f5203-7171-4c0b-a812-df2577edc1cf
Gibraltar Outlook
The major project and related mill maintenance work was completed in the third
quarter, and lower than planned mill availability and throughput impacted
copper production in the period. As a result, management does not expect to
recover the copper production that was lost during the 18-day strike in June
and copper production for the year is now expected to be in the range of 105
to 110 million pounds, compared to the original guidance of 115 million
pounds. Increased mill availability and higher throughput is expected to be
the primary driver of improved copper production in the fourth quarter.
Mining activities have mostly transitioned to the Connector pit, which will be
the main source of mill feed in the fourth quarter and going forward. Mining
of the current phase of the Gibraltar pit is expected to be finished in the
first quarter of 2025. Additional oxide ore from the Connector pit will also
be added to the heap leach pads this year. Refurbishment of Gibraltar’s
SX/EW plant, which has been idle since 2015, has begun and the plant is
expected to be restarted in mid-2025.
For 2025, copper head grade and tonnes milled are expected to improve and
total copper production is expected to be in the range of 120 to 130 million
pounds. Lower grade ore stockpiles will be utilized to supplement mined ore in
the first half of 2025, which will result in copper production being weighted
to the second half of the year. Molybdenum production is forecast to increase
next year as molybdenum head grades are expected to be notably higher in the
Connector pit compared to the Gibraltar pit.
The Company has tendered Gibraltar concentrate to various customers for the
remainder of 2024 and for significant tonnages in 2025 and 2026. In 2023,
TCRCs accounted for approximately US$0.17 per pound of off-property costs.
With these recently awarded offtake contracts, the Company expects TCRCs to
reduce to nil on average in 2025 on the sale of its copper concentrate.
The Company has a prudent hedging program in place to protect a minimum copper
price during the Florence construction period. Currently, the Company has
copper collar contracts that secure a minimum copper price of US$3.75 per
pound for 21 million pounds of copper covering the fourth quarter of 2024, and
copper collar contracts that secure a minimum copper price of US$4.00 per
pound for 108 million pounds of copper for 2025. The copper collar contracts
also have ceiling prices between US$5.00 and US$5.40 per pound (refer to the
section “Hedging Strategy” for details).
Florence Copper
The Company has all the key permits in place for the commercial production
facility at Florence Copper and construction has commenced. First copper
production is expected in the fourth quarter of 2025.
The Company has a technical report entitled “NI 43-101 Technical Report
Florence Copper Project, Pinal County, Arizona” dated March 30, 2023 (the
“2023 Technical Report”) on SEDAR+. The 2023 Technical Report was prepared
in accordance with NI 43-101 and incorporated the results of testwork from the
Production Test Facility (“PTF”) as well as updated capital and operating
costs (Q3 2022 basis) for the commercial production facility.
Project highlights based on the 2023 Technical Report:
* Net present value of US$930 million (at $US 3.75 copper price, 8% after-tax
discount rate)
* Internal rate of return of 47% (after-tax)
* Payback period of 2.6 years
* Operating costs (C1) of US$1.11 per pound of copper
* Annual production capacity of 85 million pounds of LME grade A cathode
copper
* 22 year mine life
* Total life of mine production of 1.5 billion pounds of copper
* Remaining initial capital cost of US$232 million (Q3 2022 basis)
Construction of the Florence Copper commercial production facility continues
to advance on schedule. A total of 34 production wells out of a total of 90
new wells had been completed as of September 30, 2024. Earthworks and site
preparation for the plant area and commercial wellfield is estimated to be 75%
complete and installation of structural steel, tanks, and process equipment is
underway. Construction of process and surface water run off ponds and the
hiring of additional personnel for the construction and operations teams
continues.
The Company has a fixed-price contract with the general contractor for
construction of the SX/EW plant and associated surface infrastructure.
Florence Copper Quarterly Capital Spend
Three months ended Nine months ended
(US$ in thousands) September 30, 2024 September 30, 2024
Site and PTF operations 4,946 13,505
Commercial facility construction costs 42,405 97,253
Other capital costs 6,251 29,013
Total Florence project expenditures 53,602 139,771
Based on the 2023 Technical report, the estimated remaining construction costs
for the commercial facility were US$232 million (basis Q3 2022), and
management expects that total costs will be within 10% to 15% of that
estimate. The project remains on track for first copper production in late
2025.
Construction costs in the third quarter were US$42.4 million, and US$97.3
million has been incurred for the nine months ended September 30, 2024. Other
capital costs of US$29.0 million include final payments for delivery of
long-lead equipment that was ordered in 2022, and the construction of an
evaporation pond to provide additional water management flexibility.
Construction of this evaporation pond was completed in the third quarter.
The Company has closed several Florence project level financings to fund
initial commercial facility construction costs. In July the Company received
the third deposit of US$10 million from the US$50 million copper stream
transaction with Mitsui & Co. (U.S.A.) Inc. (“Mitsui”). The fourth deposit
was received in October and the remaining US$10 million is scheduled to be
received in January 2025.
In addition, the Company has applied to the U.S. Department of Energy’s
(“DOE”) Qualifying Advanced Energy Project Credit (48C) Program. Florence
Copper, which is set to become North America’s lowest GHG-intensity primary
copper producer, qualifies as a critical materials project. After submitting a
concept paper in June, Florence Copper received encouragement to proceed with
the full application. The full application has now been filed seeking a tax
credit of up to US$110 million, and the Company expects to hear whether the
project receives the credit, or not, in mid-January 2025. The Department of
the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”), in
partnership with DOE, have announced up to US$6 billion
(https://www.globenewswire.com/Tracker?data=6POWV94RrdoYjoKQJcUCIV2UH_9IeCWyBsHI26kd_tP3ahv3-DC3-fELb8o8BliDOaWO4Qtvhj4F5ew_nbalOVw_mU9lZszC2Ut6g8trxhvuRzuGjTF6xEuRz8mOroYxEbQaZPKXqPV89OYgYlZerQ==) in
a second round of tax credit allocations for projects that expand clean energy
manufacturing and recycling and critical materials refining, processing and
recycling, and for projects that reduce greenhouse gas emissions at industrial
facilities. DOE’s Office of Manufacturing & Energy Supply Chains manages
the 48C program on behalf of IRS and Treasury.
Remaining project construction costs are expected to be funded with the
Company’s available liquidity, remaining instalment from Mitsui, and
cashflow from its 100% ownership interest in Gibraltar. The Company also has
in place an undrawn corporate revolving credit facility for US$110 million.
Long-term Growth Strategy
Taseko’s strategy has been to grow the Company by acquiring and developing a
pipeline of projects focused on copper in North America. We continue to
believe this will generate long-term returns for shareholders. Our other
development projects are located in British Columbia, Canada.
Yellowhead Copper Project
Based on a NI 43-101 technical report published in 2020, the Yellowhead Copper
Project (“Yellowhead”) has an 817 million tonne mineral reserve and a
25-year mine life. During the first 5 years of operation, the copper
equivalent grade will average 0.35% producing an average of 200 million pounds
of copper per year at an average C1* cost, net of by-product credit, of
US$1.67 per pound. The Yellowhead copper project contains valuable precious
metal by-products with 440,000 ounces of gold and 19 million ounces of silver
production over the life of mine.
The 2020 technical report was prepared using long-term copper price of US$3.10
per pound, a gold price of US$1,350 per ounce, and silver price of US$18 per
ounce. A new technical report will be published in 2025 using updated
long-term metal price assumptions, updated project costing, and incorporating
the new Canadian tax credits available for copper mine development.
The Company is preparing to enter the environmental assessment process in
early 2025, and has recently opened a project office to support ongoing
engagement with local communities including First Nations. A site
investigation field program was completed in the third quarter, and the
additional baseline data and modeling will be used to support the
environmental assessment and permitting of the project.
New Prosperity Gold-Copper Project
In late 2019, the Tŝilhqot’in Nation, as represented by Tŝilhqot’in
National Government, and Taseko Mines Limited entered into a confidential
dialogue, with the involvement of the Province of British Columbia, seeking a
long-term resolution of the conflict regarding Taseko’s proposed copper-gold
mine previously known as New Prosperity, acknowledging Taseko’s commercial
interests and the Tŝilhqot’in Nation’s opposition to the project.
This dialogue has been supported by the parties’ agreement, beginning
December 2019, to a series of standstill agreements on certain outstanding
litigation and regulatory matters relating to Taseko’s tenures and the area
in the vicinity of Teẑtan Biny (Fish Lake).
The dialogue process has made meaningful progress in recent months but is not
complete. The Tŝilhqot’in Nation and Taseko acknowledge the constructive
nature of discussions, and the opportunity to conclude a long-term and
mutually acceptable resolution of the conflict that also makes an important
contribution to the goals of reconciliation in Canada.
In March 2024, Tŝilhqot’in and Taseko formally reinstated the standstill
agreement for a final term, with the goal of finalizing a resolution before
the end of this year.
Aley Niobium Project
Environmental monitoring and product marketing initiatives on the Aley niobium
project continue. The converter pilot test is ongoing and is providing
additional process data to support the design of the commercial process
facilities and will provide final product samples for marketing purposes. The
Company has also initiated a scoping study to investigate the potential
production of niobium oxide at Aley to supply the growing market for
niobium-based batteries.
Conference Call and Webcast The Company will host a telephone conference call and live webcast on Thursday, November 7, 2024, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific) to discuss these results. After opening remarks by management, there will be a question-and-answer session open to analysts and investors. Participants can join by conference call dial-in or webcast: Conference Call Dial-In * Participants can dial in to the conference call; however, pre-registration is required
* To register, visit https://bit.ly/TasekoQ32024_Dial-in
* Once registered, an email will be sent, including dial-in details and a unique access code required to join the live call
* Please ensure you have registered at least 15 minutes prior to the conference call start time
Webcast * A live webcast of the conference call can be accessed at https://bit.ly/TasekoQ32024
* The webcast will be archived for later playback until February 5, 2025 at tasekomines.com/investors/events/ (https://tasekomines.com/investors/events/)
For further information on Taseko, please see the Company's website at
www.tasekomines.com or contact:
Brian Bergot, Vice President, Investor Relations – 778-373-4554, toll free
1-800-667-2114
Stuart 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) 2024 Q3 2024 Q2 2024 Q1 (1) 2023 Q4 (1) 2023 Q3 (1)
Cost of sales 124,833 108,637 122,528 93,914 94,383
Less:
Depletion and amortization (20,466 ) (13,721 ) (15,024 ) (13,326 ) (15,993 )
Net change in inventories of finished goods 2,938 (10,462 ) (20,392 ) (1,678 ) 4,267
Net change in inventories of ore stockpiles 9,089 1,758 2,719 (3,771 ) 12,172
Transportation costs (8,682 ) (6,408 ) (10,153 ) (10,294 ) (7,681 )
Site operating costs 107,712 79,804 79,678 64,845 87,148
Less by-product credits:
Molybdenum, net of treatment costs (8,962 ) (7,071 ) (6,112 ) (5,441 ) (9,900 )
Silver, excluding amortization of deferred revenue (241 ) (144 ) (137 ) 124 290
Site operating costs, net of by-product credits 98,509 72,589 73,429 59,528 77,538
Total copper produced (thousand pounds) 27,101 20,225 26,694 29,883 30,978
Total costs per pound produced 3.63 3.59 2.75 1.99 2.50
Average exchange rate for the period (CAD/USD) 1.36 1.37 1.35 1.36 1.34
Site operating costs, net of by-product credits (US$ per pound) 2.66 2.62 2.04 1.46 1.87
Site operating costs, net of by-product credits 98,509 72,589 73,429 59,528 77,538
Add off-property costs:
Treatment and refining costs 816 3,941 4,816 7,885 6,123
Transportation costs 8,682 6,408 10,153 10,294 7,681
Total operating costs 108,008 82,938 88,398 77,707 91,342
Total operating costs (C1) (US$ per pound) 2.92 2.99 2.46 1.91 2.20
(1) Q3 and Q4 2023 includes the impact from the March 15, 2023 acquisition of
Cariboo from Sojitz, which increased the Company’s Gibraltar ownership from
75% to 87.5%. Q1 2024 includes the impact from the March 25, 2024 acquisition
of Cariboo from Dowa and Furukawa, which increased the Company’s Gibraltar
ownership from 87.5% to 100%.
Total Site Costs
Total site costs are comprised of the site operating costs charged to cost of
sales as well as mining costs capitalized to property, plant and equipment in
the period. This measure is intended to capture Taseko’s share of the total
site operating costs incurred in the quarter at Gibraltar calculated on a
consistent basis for the periods presented.
(Cdn$ in thousands, unless otherwise indicated) – 87.5% basis (except for Q1, Q2 and Q3 2024) 2024 Q3 2024 Q2 2024 Q1 (1) 2023 Q4 (1) 2023 Q3 (1)
Site operating costs 107,712 79,804 79,678 64,845 87,148
Add:
Capitalized stripping costs 3,631 10,732 16,152 31,916 2,083
Total site costs – Taseko share 111,343 90,536 95,830 96,761 89,231
Total site costs – 100% basis 111,343 90,536 109,520 110,584 101,978
(1) Q3 and Q4 2023 includes the impact from the March 15, 2023 acquisition of
Cariboo from Sojitz, which increased the Company’s Gibraltar ownership from
75% to 87.5%. Q1 2024 includes the impact from the March 25, 2024 acquisition
of Cariboo from Dowa and Furukawa, which increased the Company’s Gibraltar
ownership from 87.5% to 100%.
Adjusted net income (loss) and Adjusted EPS
Adjusted net income (loss) removes the effect of the following transactions
from net income as reported under IFRS:
* Unrealized foreign currency gains/losses;
* Unrealized gain/loss on derivatives;
* Other operating costs;
* Call premium on settlement of debt;
* Loss on settlement of long-term debt, net of capitalized interest;
* Gain on Cariboo acquisition;
* Gain on acquisition of control of Gibraltar;
* Realized gain on sale of inventory;
* Inventory write-ups to net realizable value that was sold or processed;
* Accretion and fair value adjustment on Florence royalty obligation; and
* Finance and other non-recurring costs for Cariboo acquisition.
Management believes these transactions do not reflect the underlying operating
performance of our core mining business and are not necessarily indicative of
future operating results. Furthermore, unrealized gains/losses on derivative
instruments, changes in the fair value of financial instruments, and
unrealized foreign currency gains/losses are not necessarily reflective of the
underlying operating results for the reporting periods presented.
Adjusted net income (loss) and Adjusted EPS
(Cdn$ in thousands, except per share amounts) 2024 Q3 2024 Q2 2024 Q1 2023 Q4
Net (loss) income (180 ) (10,953 ) 18,896 38,076
Unrealized foreign exchange (gain) loss (7,259 ) 5,408 13,688 (14,541 )
Unrealized loss on derivatives 1,821 10,033 3,519 1,636
Other operating costs 4,098 10,435 - -
Call premium on settlement of debt - 9,571 - -
Loss on settlement of long-term debt, net of capitalized interest - 2,904 - -
Gain on Cariboo acquisition - - (47,426 ) -
Gain on acquisition of control of Gibraltar** - - (14,982 ) -
Realized gain on sale of inventory*** - 3,768 13,354 -
Inventory write-ups to net realizable value that was sold or processed**** 3,266 4,056 - -
Accretion and fair value adjustment on Florence royalty obligation 3,703 2,132 3,416 -
Accretion and fair value adjustment on consideration payable to Cariboo 9,423 8,399 1,555 (916 )
Non-recurring other expenses for Cariboo acquisition - 394 138 -
Estimated tax effect of adjustments (6,644 ) (15,644 ) 15,570 (195 )
Adjusted net income 8,228 30,503 7,728 24,060
Adjusted EPS 0.03 0.10 0.03 0.08
(Cdn$ in thousands, except per share amounts) 2023 Q3 2023 Q2 2023 Q1 2022 Q4
Net income (loss) 871 9,991 33,788 (2,275 )
Unrealized foreign exchange loss (gain) 14,582 (10,966 ) (950 ) (5,279 )
Unrealized loss (gain) on derivatives 4,518 (6,470 ) 2,190 20,137
Gain on Cariboo acquisition - - (46,212 ) -
Accretion and fair value adjustment on consideration payable to Cariboo 1,244 1,451 - -
Non-recurring other expenses for Cariboo acquisition - 263 - -
Estimated tax effect of adjustments (1,556 ) 1,355 16,272 (5,437 )
Adjusted net income (loss) 19,659 (4,376 ) 5,088 7,146
Adjusted EPS 0.07 (0.02 ) 0.02 0.02
** The $15.0 million gain on acquisition of control of Gibraltar in Q1 2024
relates to the write-up of finished copper concentrate inventory for
Taseko’s 87.5% share to its fair value at March 25, 2024.
*** Cost of sales for the nine months ended September 30, 2024 included $17.1
million in write-ups to net realizable value for concentrate inventory held at
the date of acquisition of control of Gibraltar (March 25, 2024) that were
subsequently sold. The realized portion of the gains recorded in the first
quarter for GAAP purposes was $13.4 million and for the second quarter were
$3.8 million and have been included in Adjusted net income in the period they
were sold.
**** Write-ups to net realizable value for inventory held at the date of
acquisition of control of Gibraltar (March 25, 2024) totaled $9.2 million. The
inventory write-ups in the first quarter for GAAP purposes have been included
in Adjusted net income in the period they were sold or processed. Cost of
sales for the nine months ended September 30, 2024 included $7.3 million in
inventory write-ups that were subsequently sold or processed in the second and
third quarters.
Adjusted EBITDA
Adjusted EBITDA is presented as a supplemental measure of the Company’s
performance and ability to service debt. Adjusted EBITDA is frequently used by
securities analysts, investors and other interested parties in the evaluation
of companies in the industry, many of which present Adjusted EBITDA when
reporting their results. Issuers of “high yield” securities also present
Adjusted EBITDA because investors, analysts and rating agencies consider it
useful in measuring the ability of those issuers to meet debt service
obligations.
Adjusted EBITDA represents net income before interest, income taxes, and
depreciation and also eliminates the impact of a number of items that are not
considered indicative of ongoing operating performance. Certain items of
expense are added and certain items of income are deducted from net income
that are not likely to recur or are not indicative of the Company’s
underlying operating results for the reporting periods presented or for future
operating performance and consist of:
* Unrealized foreign exchange gains/losses;
* Unrealized gain/loss on derivatives;
* Amortization of share-based compensation expense;
* Other operating costs;
* Call premium on settlement of debt;
* Loss on settlement of long-term debt;
* Gain on Cariboo acquisition;
* Gain on acquisition of control of Gibraltar;
* Realized gain on sale of inventory;
* Inventory write-ups to net realizable value that was sold or processed; and
* Finance and other non-recurring costs for Cariboo acquisition.
(Cdn$ in thousands) 2024 Q3 2024 Q2 2024 Q1 2023 Q4
Net (loss) income (180 ) (10,953 ) 18,896 38,076
Add:
Depletion and amortization 20,466 13,721 15,024 13,326
Finance expense 25,685 21,271 19,849 12,804
Finance income (1,504 ) (911 ) (1,086 ) (972 )
Income tax (recovery) expense (200 ) (3,247 ) 23,282 17,205
Unrealized foreign exchange (gain) loss (7,259 ) 5,408 13,688 (14,541 )
Unrealized loss on derivatives 1,821 10,033 3,519 1,636
Amortization of share-based compensation expense 1,496 2,585 5,667 1,573
Other operating costs 4,098 10,435 - -
Call premium on settlement of debt - 9,571 - -
Loss on settlement of long-term debt - 4,646 - -
Gain on Cariboo acquisition - - (47,426 ) -
Gain on acquisition of control of Gibraltar** - - (14,982 ) -
Realized gain on sale of inventory*** - 3,768 13,354 -
Inventory write-ups to net realizable value that was sold or processed**** 3,266 4,056 - -
Non-recurring other expenses for Cariboo acquisition - 394 138 -
Adjusted EBITDA 47,689 70,777 49,923 69,107
** The $15.0 million gain on acquisition of control of Gibraltar in Q1 2024
relates to the write-up of finished copper concentrate inventory for
Taseko’s 87.5% share to its fair value at March 25, 2024.
*** Cost of sales for the nine months ended September 30, 2024 included $17.1
million in write-ups to net realizable value for concentrate inventory held at
the date of acquisition of control of Gibraltar (March 25, 2024) that were
subsequently sold. The realized portion of the gains recorded in the first
quarter for GAAP purposes was $13.4 million and for the second quarter were
$3.8 million and have been included in Adjusted net income in the period they
were sold.
**** Write-ups to net realizable value for inventory held at the date of
acquisition of control of Gibraltar (March 25, 2024) totaled $9.2 million. The
inventory write-ups in the first quarter for GAAP purposes have been included
in Adjusted net income in the period they were sold or processed. Cost of
sales for the nine months ended September 30, 2024 included $7.3 million in
inventory write-ups that were subsequently sold or processed in the second and
third quarters.
(Cdn$ in thousands) 2023 Q3 2023 Q2 2023 Q1 2022 Q4
Net income (loss) 871 9,991 33,788 (2,275 )
Add:
Depletion and amortization 15,993 15,594 12,027 10,147
Finance expense 14,285 13,468 12,309 10,135
Finance income (322 ) (757 ) (921 ) (700 )
Income tax expense 12,041 678 20,219 1,222
Unrealized foreign exchange loss (gain) 14,582 (10,966 ) (950 ) (5,279 )
Unrealized loss (gain) on derivatives 4,518 (6,470 ) 2,190 20,137
Amortization of share-based compensation expense 727 417 3,609 1,794
Gain on Cariboo acquisition - - (46,212 ) -
Non-recurring other expenses for Cariboo acquisition - 263 - -
Adjusted EBITDA 62,695 22,218 36,059 35,181
Earnings from mining operations before depletion, amortization and
non-recurring items
Earnings from mining operations before depletion, amortization and
non-recurring items is earnings from mining operations with depletion and
amortization, and any items that are not considered indicative of ongoing
operating performance added back. The Company discloses this measure, which
has been derived from our financial statements and applied on a consistent
basis, to assist in understanding the results of the Company’s operations
and financial position and it is meant to provide further information about
the financial results to investors.
Three months ended September 30, Nine months ended September 30,
(Cdn$ in thousands) 2024 2023 2024 2023
Earnings from mining operations 26,686 49,452 96,053 90,634
Add:
Depletion and amortization 20,466 15,993 49,211 43,614
Realized gain on sale of inventory - - 17,122 -
Inventory write-ups to net realizable value that was sold or processed 3,266 - 7,322 -
Other operating costs 4,098 - 14,533 -
Earnings from mining operations before depletion, amortization and non-recurring items 54,516 65,445 184,241 134,248
During the nine months ended September 30, 2024, the realized gain on sale of
inventory and inventory write-ups to net realizable value that was sold or
processed, relates to inventory held at the date of acquisition of control of
Gibraltar (March 25, 2024) that was written-up from book value to net
realizable value and subsequently sold or processed.
Site operating costs per ton milled
The Company discloses this measure, which has been derived from our financial
statements and applied on a consistent basis, to provide assistance in
understanding the Company’s site operations on a tons milled basis.
(Cdn$ in thousands, except per ton milled amounts) 2024 Q3 2024 Q2 2024 Q1 (1) 2023 Q4 (1) 2023 Q3 (1)
Site operating costs (included in cost of sales) – Taseko share 107,712 79,804 79,678 64,845 87,148
Site operating costs – 100% basis 107,712 79,804 90,040 74,109 99,598
Tons milled (thousands) 7,572 5,728 7,677 7,626 8,041
Site operating costs per ton milled $ 14.23 $ 13.93 $ 11.73 $ 9.72 $ 12.39
(1) Q3 and Q4 2023 includes the impact from the March 15, 2023 acquisition of
Cariboo from Sojitz, which increased the Company’s Gibraltar ownership from
75% to 87.5%. Q1 2024 includes the impact from the March 25, 2024 acquisition
of Cariboo from Dowa and Furukawa, which increased the Company’s Gibraltar
ownership from 87.5% to 100%.
Caution Regarding Forward-Looking Information
This document contains “forward-looking statements” that were based on
Taseko’s expectations, estimates and projections as of the dates as of which
those statements were made. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as “outlook”,
“anticipate”, “project”, “target”, “believe”, “estimate”,
“expect”, “intend”, “should” and similar expressions.
Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause the Company’s actual results,
level of activity, performance or achievements to be materially different from
those expressed or implied by such forward-looking statements. These included
but are not limited to:
* uncertainties about the effect of COVID-19 and the response of local,
provincial, federal and international governments to the threat of COVID-19 on
our operations (including our suppliers, customers, supply chain, employees
and contractors) and economic conditions generally and in particular with
respect to the demand for copper and other metals we produce;
* uncertainties and costs related to the Company’s exploration and
development activities, such as those associated with continuity of
mineralization or determining whether mineral resources or reserves exist on a
property;
* uncertainties related to the accuracy of our estimates of mineral reserves,
mineral resources, production rates and timing of production, future
production and future cash and total costs of production and milling;
* uncertainties related to feasibility studies that provide estimates of
expected or anticipated costs, expenditures and economic returns from a mining
project;
* uncertainties related to the ability to obtain necessary licenses permits
for development projects and project delays due to third party opposition;
* uncertainties related to unexpected judicial or regulatory proceedings;
* changes in, and the effects of, the laws, regulations and government
policies affecting our exploration and development activities and mining
operations, particularly laws, regulations and policies;
* changes in general economic conditions, the financial markets and in the
demand and market price for copper, gold and other minerals and commodities,
such as diesel fuel, steel, concrete, electricity and other forms of energy,
mining equipment, and fluctuations in exchange rates, particularly with
respect to the value of the U.S. dollar and Canadian dollar, and the continued
availability of capital and financing;
* the effects of forward selling instruments to protect against fluctuations
in copper prices and exchange rate movements and the risks of counterparty
defaults, and mark to market risk;
* the risk of inadequate insurance or inability to obtain insurance to cover
mining risks;
* the risk of loss of key employees; the risk of changes in accounting
policies and methods we use to report our financial condition, including
uncertainties associated with critical accounting assumptions and estimates;
* environmental issues and liabilities associated with mining including
processing and stock piling ore; and
* labour strikes, work stoppages, or other interruptions to, or difficulties
in, the employment of labour in markets in which we operate mines, or
environmental hazards, industrial accidents or other events or occurrences,
including third party interference that interrupt the production of minerals
in our mines.
For further information on Taseko, investors should review the Company’s
annual Form 40-F filing with the United States Securities and Exchange
Commission www.sec.gov and home jurisdiction filings that are available at
www.sedarplus.com.
Cautionary Statement on Forward-Looking Information
This discussion includes certain statements that may be deemed
"forward-looking statements". All statements in this discussion, other than
statements of historical facts, that address future production, reserve
potential, exploration drilling, exploitation activities, and events or
developments that the Company expects are forward-looking statements. Although
we believe the expectations expressed in such forward-looking statements are
based on reasonable assumptions, such statements are not guarantees of future
performance and actual results or developments may differ materially from
those in the forward-looking statements. Factors that could cause actual
results to differ materially from those in forward-looking statements include
market prices, exploitation and exploration successes, continued availability
of capital and financing and general economic, market or business conditions.
Investors are cautioned that any such statements are not guarantees of future
performance and actual results or developments may differ materially from
those projected in the forward-looking statements. All of the forward-looking
statements made in this MD&A are qualified by these cautionary statements. We
disclaim any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or otherwise,
except to the extent required by applicable law. Further information
concerning risks and uncertainties associated with these forward-looking
statements and our business may be found in our most recent Form 40-F/Annual
Information Form on file with the SEC and Canadian provincial securities
regulatory authorities