May 2, 2018, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB) (“Taseko” or the “Company”) reports the results for the three months ended March 31, 2018.
Russell Hallbauer, President and CEO of Taseko, commented, “As disclosed in our year-end report, production in early 2018 continued to be impacted by waste stripping shortfalls from 2017, where we effectively lost two months of waste stripping. With our stripping schedule compromised, our new pushback was delayed and only lower grade ore was available to process.”
The lower grades and resultant reduced copper and molybdenum production had a significant impact on our financial performance in the first quarter. But even with the low grades, we still managed to generate $12 million of Cash flow from operations and $14 million of earnings from mining operations before depreciation and amortization* in the quarter. Our adjusted net loss* of $11 million (or $0.05 per share) was negatively impacted by increased use of stockpiled ore as well as provisional pricing adjustments,” stated Mr. Hallbauer.
Mr. Hallbauer continued, “Gibraltar head grades can fluctuate quite dramatically quarter-over-quarter as a result of the mining sequence, consistent with any other large mining operation. However, over longer periods of time average mined grades will revert to the life of mine average grade. Gibraltar has 21 years of mine life remaining, so this quarter’s metal production shortfall is a short-term issue. The Canadian dollar price of copper remains roughly $4.00 per pound, the strongest it has been since 2011, and with copper grades increasing we see both metal production and financial performance returning to more representative levels.”
“I am very pleased to report that our Florence Copper Project continues to advance on-time and on budget. We will begin testing the injection and recovery well systems in the coming weeks and the SX/EW plant construction is well underway and expected to be operational in the next six months. Importantly, the recent changes to US tax legislation have had a significant impact on the project’s after tax net present value, raising it from US$680 million** to approximately US$760 million, based on current estimates. Florence Copper, with its very low capital and operating costs, is one of the best near-term copper projects on the horizon and will have a material impact on our Company,” added Mr. Hallbauer.
“In addition to Florence Copper, we have an exciting near-term catalyst with our Aley Niobium Project. After three years of additional engineering work, we are in the final stages of completing an updated technical report. This report will demonstrate both lower capital costs and improved mine economics at a lower long-term niobium price. We look forward to publicly releasing that report in the near future. Both of these projects point to a bright future for the Company,” concluded Mr. Hallbauer.
Note: For up-to-date Florence Copper site photos and construction updates, please visit Taseko’s website at tasekomines.com.
*Non-GAAP performance measure. See end of news release.
**Based on the Florence Copper Project NI 43-101 technical report dated February 28, 2017 filed on SEDAR.
First Quarter Highlights
•Earnings from mining operations before depletion and amortization* was $13.5 million;
•The increased use of stockpiled ore resulted in a non-cash inventory expense and additional depletion and amortization which reduced earnings from mining operations by $5.2 million in the first quarter of 2018;
•Cash flow from operations was $11.6 million, a decrease from the same period in 2017 due to lower copper production and sales volumes;
•In September 2017, the Company announced that it was moving forward with the construction of the Production Test Facility (“PTF”) for the Florence Copper Project. The SX/EW plant and the associated wellfield, comprised of 24 production, monitoring, observation and point of compliance wells, will be built for approximately US$25 million. Wellfield drilling was completed in early April and construction of the process plant progressed smoothly through the first quarter, with steel for the plant being erected at the end of the quarter. The project is on-time and on budget with expenditures in the first quarter being approximately $14.3 million or US$10.8 million. The facility is expected to be operational by the end of the third quarter of 2018, with first copper cathode being produced in December;
•Copper and molybdenum production in the first quarter was 22.9 million pounds and 0.4 million pounds, respectively, a decrease from previous quarters as a result of the anticipated lower grade mine feed combined with the increased use of lower grade ore stockpiles, a consequence of the summer wildfires;
•Net loss was $18.5 million (or $0.08 per share) and Adjusted net loss* was $11.0 million (or $0.05 per share);
•Site operating costs, net of by-product credits* were US$2.02 per pound produced and Total operating costs (C1)* were US$2.33 per pound produced. Spending in the quarter remained at a similar level as previous quarter but unit costs were impacted by the lower grades and production;
•Total sales (100% basis) for the quarter were 22.8 million pounds of copper and 0.4 million pounds of molybdenum; and
•The Company’s cash balance at March 31, 2018 was $64 million, reduced from $80 million at the end of 2017 due in part to cash used for construction of the Florence Copper PTF.
Financial Data Three months ended March 31,
(Cdn$ in thousands, except for per share amounts) 2018 2017 Change
Revenues 64,179 104,389 (40,210)
Earnings from mining operations before depletion and amortization* 13,544 53,427 (39,883)
Earnings (loss) from mining operations (1,236) 43,850 (45,086)
Net income (loss) (18,481) 16,479 (34,960)
Per share - basic (“EPS”) (0.08) 0.07 (0.15)
Adjusted net income (loss)* (10,999) 15,254 (26,253)
Per share - basic (“adjusted EPS”)* (0.05) 0.07 (0.12)
EBITDA* 370 49,145 (48,775)
Adjusted EBITDA* 7,537 47,934 (40,397)
Cash flows provided by operations 11,556 79,765 (68,209)
Operating Data (Gibraltar - 100% basis) Three months ended March 31,
2018 2017 Change
Tons mined (millions) 26.7 21.8 4.9
Tons milled (millions) 7.5 7.3 0.2
Production (million pounds Cu) 22.9 41.3 (18.4)
Sales (million pounds Cu) 22.8 40.8 (18.0)
First quarter results
First quarter copper production at Gibraltar was 22.9 million pounds, lower than recent quarters as a result of reduced head grades and recoveries. Copper head grade at Gibraltar was 0.201% in the first quarter and the Company expects the head grade for the remainder of 2018 to be in line with the average life of mine reserve grade of 0.26%. Although the lower head grade in the first quarter was expected in the mine plan, head grade was also affected by reduced waste stripping in the third quarter of 2017 due to the summer wildfires in the Cariboo region and as a result more mill feed came from the stockpile than planned in the first quarter. The low head grades and some oxidation from stockpile ore also impacted copper recoveries which averaged 76% for the period.
A total of 26.7 million tons were mined during the quarter at a strip ratio of 4.1 to 1. Waste stripping costs of $14.7 million (75% basis) were capitalized in the quarter related to the new pushback in the Granite pit. Approximately 2.5 million tons of ore were drawn from the ore stockpile in the first quarter.
Site operating cost per ton milled* was $8.68 in the first quarter of 2018, which is higher than the fourth quarter of 2017 primarily due to the decreased capitalization of stripping costs and a decrease in the tons milled during the first quarter.
Site operating costs, net of by-product credits per pound produced* increased to US$2.02 in the first quarter of 2018 from US$1.69 in the fourth quarter of 2017. Total site spending in the first quarter remained at a similar level to the previous quarter, but unit operating costs increased due to the lower copper production and lower capitalized stripping costs in the period. A total of 0.4 million pounds of molybdenum were sold resulting in by-product credits per pound produced* of US$0.23 in the first quarter. The increase in molybdenum by-product credit was a result of higher molybdenum prices.
Off-property costs per pound produced* were US$0.31 for the first quarter of 2018 compared to US$0.34 for the 2017 year. The lower Off-property costs per pound produced* was primarily a result of lower treatment and refining costs charged on the Company’s copper concentrate sales.
Total operating costs (C1) per pound* increased to US$2.33, a 10% increase from the fourth quarter of 2017.
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