This release should be read with the Company's Financial Statements and Management Discussion & Analysis ("MD&A"), available at www.tasekomines.com and filed on www.sedar.com. Except where otherwise noted, all currency amounts are stated in Canadian dollars. Taseko's 75% owned |
Mining operations are now advancing deeper into the
"Our average realized copper price for the period was
"At
*Non-GAAP performance measure. See end of news release |
Second Quarter Review
- Second quarter cash flow from operations was
$18.3 million , earnings from mining operations before depletion and amortization* was$7.2 million and net loss was$5.3 million ($0.02 loss per share); Gibraltar produced 20.7 million pounds of copper for the quarter. Head grades averaged 0.17% which was lower than expected due to the complexity of the ore zones mined in the upper benches of theGibraltar pit resulting in higher than normal mining dilution. Grades and copper production are expected to improve significantly in the second half of the year;- Mill throughput outperformed recent quarters, in line with expectations, due to the softer ore from the
Gibraltar pit. Copper recoveries were 77.3% for the quarter and were impacted by the lower head grade; - Total site costs* in the second quarter have increased due primarily to the impact of higher diesel costs;
Gibraltar sold 21.7 million pounds of copper in the quarter (100% basis) at an average realized copper price ofUS$4.08 per pound;- The decline in copper prices during the second quarter resulted in negative provisional price adjustments of
$5.5 million and a write-down of ore stockpile inventories of$1.5 million ; - Adjusted EBITDA* was
$1.7 million and Adjusted net loss* was$16.1 million ($0.06 loss per share), and these amounts include the negative provisional price adjustments and inventory write-down; - The Company has copper collar contracts in place to protect a minimum copper price until mid-2023. The copper price collars outstanding at the end of the second quarter resulted in an unrealized gain of
$30.7 million . Subsequent to quarter-end,$15.2 million of this gain was realized as cash proceeds upon payout of the July contract and through a repricing of the copper price floors fromUS$4.00 toUS$3.75 per pound for the remainder of 2022; - Development costs incurred for
Florence Copper were$27.0 million in the quarter and included further payments for major processing equipment for the SX/EW plant, other pre-construction activities and ongoing site costs; and - The Company had a cash balance of
$176 million and has approximately$240 million of available liquidity atJune 30, 2022 , including its undrawnUS$50 million revolving credit facility.
*Non-GAAP performance measure. See end of news release |
HIGHLIGHTS
Operating Data ( | Three months ended | Six months ended | ||||
2022 | 2021 | Change | 2022 | 2021 | Change | |
Tons mined (millions) | 22.3 | 24.9 | (2.6) | 42.6 | 56.9 | (14.3) |
Tons milled (millions) | 7.7 | 7.2 | 0.5 | 14.7 | 14.4 | 0.3 |
Production (million pounds Cu) | 20.7 | 26.8 | (6.1) | 42.0 | 49.0 | (7.0) |
Sales (million pounds Cu) | 21.7 | 26.7 | (5.0) | 49.1 | 48.7 | 0.4 |
Financial Data | Three months ended | Six months ended | ||||
(Cdn$ in thousands, except for per share amounts) | 2022 | 2021 | Change | 2022 | 2021 | Change |
Revenues | 82,944 | 111,002 | (28,058) | 201,277 | 197,743 | 3,534 |
Earnings from mining operations before depletion | 7,221 | 54,482 | (47,261) | 49,994 | 84,795 | (34,801) |
Cash flows provided by operations | 18,344 | 72,502 | (54,158) | 70,097 | 69,219 | 878 |
Adjusted EBITDA* | 1,684 | 47,732 | (46,048) | 39,823 | 71,454 | (31,631) |
Adjusted net income (loss)* | (16,098) | 9,948 | (26,046) | (9,936) | 4,414 | (14,350) |
Per share - basic ("adjusted EPS")* | (0.06) | 0.04 | (0.10) | (0.03) | 0.02 | (0.05) |
Net income (loss) (GAAP) | (5,274) | 13,442 | (18,716) | (179) | 2,225 | (2,404) |
Per share - basic ("EPS") | (0.02) | 0.05 | (0.07) | - | 0.01 | (0.01) |
*Non-GAAP performance measure. See end of news release |
REVIEW OF OPERATIONS
Operating data (100% basis) | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | |
Tons mined (millions) | 22.3 | 20.3 | 23.3 | 25.2 | 24.9 | |
Tons milled (millions) | 7.7 | 7.0 | 7.4 | 7.4 | 7.2 | |
Strip ratio | 2.8 | 2.6 | 2.2 | 1.3 | 2.3 | |
Site operating cost per ton milled (Cdn$)* | ||||||
Copper concentrate | ||||||
Head grade (%) | 0.17 | 0.19 | 0.24 | 0.28 | 0.22 | |
Copper recovery (%) | 77.3 | 80.2 | 80.4 | 84.2 | 83.3 | |
Production (million pounds Cu) | 20.7 | 21.4 | 28.8 | 34.5 | 26.8 | |
Sales (million pounds Cu) | 21.7 | 27.4 | 23.8 | 32.4 | 26.7 | |
Inventory (million pounds Cu) | 2.7 | 4.0 | 9.9 | 4.9 | 3.5 | |
Molybdenum concentrate | ||||||
Production (thousand pounds Mo) | 199 | 236 | 450 | 571 | 402 | |
Sales (thousand pounds Mo) | 210 | 229 | 491 | 502 | 455 | |
Per unit data (US$ per pound produced)* | ||||||
Site operating costs* | ||||||
By-product credits* | (0.15) | (0.18) | (0.30) | (0.25) | (0.25) | |
Site operating costs, net of by-product credits* | ||||||
Off-property costs | 0.37 | 0.36 | 0.22 | 0.29 | 0.25 | |
Total operating costs (C1)* |
Second Quarter Review
A total of 22.3 million tons were mined in the second quarter with the decrease from 2021 rates due to longer haul distances in the current phase of mining. Mill throughput improved over the prior quarters due to the softer
The strip ratio of 2.8 was inline with the average for the
Total site costs* at
*Non-GAAP performance measure. See end of news release |
REVIEW OF OPERATIONS - CONTINUED
Molybdenum production was 199 thousand pounds in the second quarter due to lower grades. At an average molybdenum price of
Off-property costs per pound produced* were
Total operating costs per pound produced (C1)* were
Of the
Copper production is expected to significantly increase in the second half of the year as mining progresses deeper in the
The Company currently has copper price collar contracts in place that secure a minimum copper price of
*Non-GAAP performance measure. See end of news release |
The Company has a long track record of purchasing copper price options to manage short term copper price volatility. This strategy provides security over the Company's cash flow as it prepares for construction of the commercial facility at Florence Copper while continuing to provide significant copper price upside should copper prices continue their rebound. Copper prices in the first half of 2022 averaged
In
Highlights from the new reserve:
- 706 million tons grading 0.25% copper;
- Recoverable copper of 3.0 billion pounds and 53 million pounds of molybdenum;
- 23 year mine life with average annual production of approximately 129 million pounds of copper and 2.3 million pounds of molybdenum;
- Life-of-mine average strip ratio of 2.4:1; and
- After-tax NPV of
$1.1 billion (75% basis) and free cash flow of$2.3 billion (75% basis) at a long-term copper price ofUS$3.50 per pound1.
1 The NPV and cash flow is based on copper prices of
The commercial production facility at Florence Copper will be one of the greenest sources of copper for US domestic consumption, with carbon emissions, water and energy consumption all dramatically lower than a conventional mine. It is a low-cost copper project with an annual production capacity of 85 million pounds of copper over a 21-year mine life. With the expected C1* operating cost of
The Company has successfully operated a Production Test Facility ("PTF") since 2018 at Florence to demonstrate that the in-situ copper recovery ("ISCR") process can produce high quality cathode while operating within permit conditions.
The next phase of
In
Detailed engineering and design for the commercial production facility was completed in 2021 and procurement activities are well advanced with the Company having made most of the initial deposits and awarding the key contract for the major processing equipment associated with the SX/EW plant. The Company incurred
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.
The Company is focusing its current efforts on advancing into the environmental assessment process and is undertaking some additional engineering work in conjunction with ongoing engagement with local communities including First Nations. The Company is also collecting baseline data and modeling which will be used to support the environmental assessment and permitting of the project.
In
LONG-TERM GROWTH STRATEGY
The dialogue was supported by the parties' agreement on
Environmental monitoring and product marketing initiatives on the Aley niobium project continue. The converter pilot test is ongoing and is providing additional process data to support the design of the commercial process facilities and will provide final product samples for marketing purposes.
The Company will host a telephone conference call and live webcast on |
The conference call may be accessed by dialing 647-484-0258 in |
The conference call will be archived for later playback until |
President & CEO
No regulatory authority has approved or disapproved of the information in this news release.
NON-GAAP PERFORMANCE MEASURES
This document includes certain non-GAAP performance measures that do not have a standardized meaning prescribed by IFRS. These measures may differ from those used by, and may not be comparable to such measures as reported by, other issuers. The Company believes that these measures are commonly used by certain investors, in conjunction with conventional IFRS measures, to enhance their understanding of the Company's performance. These measures have been derived from the Company's financial statements and applied on a consistent basis. The following tables below provide a reconciliation of these non-GAAP measures to the most directly comparable IFRS measure.
Total operating costs and site operating costs, net of by-product credits
Total costs of sales include all costs absorbed into inventory, as well as transportation costs and insurance recoverable. Site operating costs are calculated by removing net changes in inventory, depletion and amortization, insurance recoverable, and transportation costs from cost of sales. Site operating costs, net of by-product credits is calculated by subtracting by-product credits from the site operating costs. Site operating costs, net of by-product credits per pound are calculated by dividing the aggregate of the applicable costs by copper pounds produced. Total operating costs per pound is the sum of site operating costs, net of by-product credits and off-property costs divided by the copper pounds produced. By-product credits are calculated based on actual sales of molybdenum (net of treatment costs) and silver during the period divided by the total pounds of copper produced during the period. These measures are calculated on a consistent basis for the periods presented.
(Cdn$ in thousands, unless otherwise indicated) – 75% basis | 2022 Q2 | 2022 Q1 | 2021 Q4 | 2021 Q3 | 2021 Q2 |
Cost of sales | 90,992 | 89,066 | 57,258 | 65,893 | 74,056 |
Less: | |||||
Depletion and amortization | (15,269) | (13,506) | (16,202) | (17,011) | (17,536) |
Net change in inventories of finished goods | (3,653) | (7,577) | 13,497 | 762 | (4,723) |
Net change in inventories of ore stockpiles | (3,463) | (3,009) | 4,804 | 6,291 | 2,259 |
Transportation costs | (4,370) | (5,115) | (4,436) | (5,801) | (4,303) |
Site operating costs | 64,237 | 59,859 | 54,921 | 50,134 | 49,753 |
Less by-product credits: | |||||
Molybdenum, net of treatment costs | (3,023) | (3,831) | (7,755) | (8,574) | (6,138) |
Silver, excluding amortization of deferred revenue | 36 | 202 | (330) | 300 | 64 |
Site operating costs, net of by-product credits | 61,250 | 56,230 | 46,836 | 41,860 | 43,679 |
Total copper produced (thousand pounds) | 15,497 | 16,024 | 21,590 | 25,891 | 20,082 |
Total costs per pound produced | 3.95 | 3.51 | 2.17 | 1.62 | 2.18 |
Average exchange rate for the period (CAD/USD) | 1.28 | 1.27 | 1.26 | 1.26 | 1.23 |
Site operating costs, net of by-product credits (US$ per pound) | 3.10 | 2.77 | 1.72 | 1.28 | 1.77 |
Site operating costs, net of by-product credits | 61,250 | 56,230 | 46,836 | 41,860 | 43,679 |
Add off-property costs: | |||||
Treatment and refining costs | 2,948 | 2,133 | 1,480 | 3,643 | 1,879 |
Transportation costs | 4,370 | 5,115 | 4,436 | 5,801 | 4,303 |
Total operating costs | 68,568 | 63,478 | 52,752 | 51,304 | 49,861 |
Total operating costs (C1) (US$ per pound) | 3.47 | 3.13 | 1.94 | 1.57 | 2.02 |
Total Site Costs
Total site costs is comprised of the site operating costs charged to cost of sales as well as mining costs capitalized to property, plant and equipment in the period. This measure is intended to capture Taseko's share of the total site operating costs incurred in the quarter at the
(Cdn$ in thousands, unless otherwise indicated) – 75% basis | 2022 Q2 | 2022 Q1 | 2021 Q4 | 2021 Q3 | 2021 Q2 |
Site operating costs | 64,237 | 59,859 | 54,921 | 50,134 | 49,753 |
Add: | |||||
Capitalized stripping costs | 11,887 | 15,142 | 12,737 | 10,882 | 14,794 |
Total site costs | 76,124 | 75,001 | 67,658 | 61,016 | 64,547 |
Adjusted net income (loss)
Adjusted net income (loss) removes the effect of the following transactions from net income as reported under IFRS:
- Unrealized foreign currency gains/losses;
- Unrealized gain/loss on derivatives; and
- Loss on settlement of long-term debt and call premium, including realized foreign exchange gains.
Management believes these transactions do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results. Furthermore, unrealized gains/losses on derivative instruments, changes in the fair value of financial instruments, and unrealized foreign currency gains/losses are not necessarily reflective of the underlying operating results for the reporting periods presented.
(Cdn$ in thousands, except per share amounts) | 2022 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 |
(Cdn$ in thousands, except per share amounts) | 2021 Q2 | 2021 Q1 | 2020 Q4 | 2020 Q3 |
Net income (loss) | 13,442 | (11,217) | 5,694 | 987 |
Unrealized foreign exchange (gain) loss | (3,764) | 8,798 | (13,595) | (7,512) |
Realized foreign exchange gain on settlement of long-term debt | - | (13,000) | - | - |
Loss on settlement of long-term debt | - | 5,798 | - | - |
Call premium on settlement of long-term debt | - | 6,941 | - | - |
Unrealized loss on derivatives | 370 | 802 | 586 | 1,056 |
Estimated tax effect of adjustments | (100) | (3,656) | (158) | (285) |
Adjusted net income (loss) | 9,948 | (5,534) | (7,473) | (5,754) |
Adjusted EPS | 0.04 | (0.02) | (0.03) | (0.02) |
Adjusted EBITDA
Adjusted EBITDA is presented as a supplemental measure of the Company's performance and ability to service debt. Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, many of which present Adjusted EBITDA when reporting their results. Issuers of "high yield" securities also present Adjusted EBITDA because investors, analysts and rating agencies consider it useful in measuring the ability of those issuers to meet debt service obligations.
Adjusted EBITDA represents net income before interest, income taxes, and depreciation and also eliminates the impact of a number of items that are not considered indicative of ongoing operating performance. Certain items of expense are added and certain items of income are deducted from net income that are not likely to recur or are not indicative of the Company's underlying operating results for the reporting periods presented or for future operating performance and consist of:
- Unrealized foreign exchange gains/losses;
- Unrealized gain/loss on derivatives;
- Loss on settlement of long-term debt (included in finance expenses) and call premium;
- Realized foreign exchange gains on settlement of long-term debt; and
- Amortization of share-based compensation expense.
(Cdn$ in thousands) | 2022 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 (recovery) | (2,061) | 3,273 | 1,075 | 117 |
Adjusted EBITDA | 1,684 | 38,139 | 52,988 | 76,291 |
(Cdn$ in thousands) | 2021 Q2 | 2021 Q1 | 2020 Q4 | 2020 Q3 |
Net income (loss) | 13,442 | (11,217) | 5,694 | 987 |
Add: | ||||
Depletion and amortization | 17,536 | 15,838 | 18,747 | 23,894 |
Finance expense (includes loss on settlement of long-term debt and call premium) | 11,649 | 23,958 | 10,575 | 11,203 |
Finance income | (184) | (75) | (47) | (4) |
Income tax (recovery) expense | 7,033 | (4,302) | (2,724) | (580) |
Unrealized foreign exchange (gain) loss | (3,764) | 8,798 | (13,595) | (7,512) |
Realized foreign exchange gain on settlement of long-term debt | - | (13,000) | - | - |
Unrealized loss on derivatives | 370 | 802 | 586 | 1,056 |
Amortization of share-based compensation expense | 1,650 | 2,920 | 1,242 | 2,501 |
Adjusted EBITDA | 47,732 | 23,722 | 20,478 | 31,545 |
Earnings (loss) from mining operations before depletion and amortization
Earnings (loss) 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 | |||
(Cdn$ in thousands) | 2022 | 2021 | 2022 | 2021 |
Earnings (loss) from mining operations | (8,048) | 36,946 | 21,219 | 51,421 |
Add: | ||||
Depletion and amortization | 15,269 | 17,536 | 28,775 | 33,374 |
Earnings from mining operations before depletion and | 7,221 | 54,482 | 49,994 | 84,795 |
Site operating costs per ton milled
(Cdn$ in thousands, except per ton milled amounts) | 2022 Q2 | 2022 Q1 | 2021 Q4 | 2021 Q3 | 2021 Q2 |
Site operating costs (included in cost of sales) | 64,237 | 59,859 | 54,921 | 50,134 | 49,753 |
Tons milled (thousands) (75% basis) | 5,774 | 5,285 | 5,523 | 5,576 | 5,429 |
Site operating costs per ton milled |
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
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
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