REG-Taseko Mines Limited: Taseko Reports Second Quarter 2024 Results
01/08/2024 07:15
Taseko Reports Second Quarter 2024 Financial and Operational Performance and
Florence Construction Update
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.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, BC, July 31, 2024 -- Taseko Mines Limited (TSX: TKO) (NYSE
American: TGB) (LSE: TKO) ("Taseko" or the "Company") reports second quarter
2024 Adjusted EBITDA* of $71 million and Earnings from mining operations
before depletion and amortization* of $77 million. Second quarter earnings
benefited from a $26 million insurance recovery related to mill repairs that
were completed in January. Revenues for the second quarter were $138 million.
A net loss of $11 million ($0.04 loss per share) was recorded for the quarter
and adjusted net income was $31 million ($0.10 per share).
Gibraltar produced 20 million pounds of copper and 185 thousand pounds of
molybdenum in the second quarter, as previously disclosed. Production was
impacted by planned downtime for the in-pit crusher relocation and other
maintenance, and an 18-day mine shutdown for a labour strike. Mill throughput
in the quarter was 5.7 million tons, processing an average grade of 0.23%
copper. Copper recoveries in the quarter averaged 78%, lower than previous
quarters due to interruptions to operating time in both concentrators. Total
operating costs (C1)* for the quarter were US$2.99 per pound of copper
produced, higher than recent quarters mainly due to lower production levels.
The in-pit crusher relocation, a project in development for nearly two years,
was completed in the second quarter. Conveyor and electrical tie ins were done
by mid-July and the new system is now running at full capacity.
Stuart McDonald, President and CEO of Taseko, commented, "This was our first
full quarter with 100% ownership of Gibraltar and despite the operational
disruptions, the mine's financial performance was quite strong as we generated
$35 million of operating cashflow. With all of the major project and mill
maintenance work now completed at Gibraltar, we're looking forward to stronger
copper production and cashflow generation in the second half."
Construction activities at the Florence Copper project continued to ramp up in
the second quarter and there are over 200 contractors now onsite. Concrete
foundations have been poured for the SX/EW plant, tank farms and other key
components of the plant site. On the wellfield, 18 production wells were
completed to the end of June, in line with the schedule, and development of
the pipeline corridor is well advanced. The first evaporation pond, which has
been brought ahead in the schedule to provide greater water management
flexibility will be fully lined and completed in the next few weeks.
Mr. McDonald added, "We're pleased with the initial construction progress at
Florence as all key activities are advancing on schedule. We've also had
good success in recruiting key management and technical roles for the
commercial operation and now have nearly half of the 170 permanent positions
filled. Many of these positions have been filled by local Arizonans and there
is excitement about participating in the development of America's next copper
mine. The project remains on schedule for first copper production in the
fourth quarter 2025."
*Non-GAAP performance measure. See end of news release
Second Quarter Review
* Earnings from mining operations before depletion, amortization and
non-recurring items* was $76.9 million, Adjusted EBITDA* was $70.8 million,
and Adjusted net income* was $30.5 million ($0.10 per share);
* Second quarter cash flow from operations was $34.7 million and net loss was
$11.0 million ($0.04 loss per share) for the quarter;
* Gibraltar produced 20.2 million pounds of copper for the quarter. Average
head grades were 0.23% and copper recoveries were 78% for the quarter;
* Gibraltar sold 22.6 million pounds of copper in the quarter at an average
realized copper price of US$4.49 per pound;
* Total operating costs (C1)* for the quarter were US$2.99 per pound produced;
* On June 1, 2024, operations at the Gibraltar mine were suspended for 18 days
due to strike action by its unionized workforce. The mine was put into
temporary care and maintenance with only essential staff operating and
maintaining critical systems during the strike. Operations at Gibraltar
resumed on June 19 after the ratification of a new agreement by union members;
* During the quarter, a total of 5.7 million tons were milled. Throughput was
impacted by both the labour strike and planned downtime in Concentrator #1 for
the relocation of the primary crusher and maintenance;
* During the quarter, the Company finalized an insurance claim for property
damage to Concentrator #2 and business interruption for the associated
production impact in 2023 and January 2024. An additional insurance recovery
of $26.3 million was recorded in the second quarter, and proceeds are expected
to be received in the third quarter;
* Construction of the commercial production facility at Florence is advancing
with recent activities focused on wellfield drilling, process pond
construction and civil works including pouring of concrete foundations;
* On April 23, 2024, the Company completed an offering of US$500 million
aggregate principal amount of 8.25% Senior Secured Notes due May 1, 2030. The
majority of the proceeds were used to redeem the outstanding US$400 million 7%
Senior Secured Notes due on February 15, 2026. The remaining proceeds, net of
transaction costs, call premium and accrued interest, were approximately $110
million and are available to fund capital projects, including construction at
Florence Copper; and
* The Company had a cash balance of $199 million at June 30, 2024 and has
approximately $308 million of available liquidity including its undrawn US$80
million revolving credit facility.
*Non-GAAP performance measure. See end of news release
Highlights
Operating Data (Gibraltar - 100% basis) Three months ended June 30, Six months ended June 30,
2024 2023 Change 2024 2023 Change
Tons mined (millions) 18.4 23.4 (5.0) 41.2 47.5 (6.3)
Tons milled (millions) 5.7 7.2 (1.5) 13.4 14.3 (0.9)
Production (million pounds Cu) 20.2 28.2 (8.0) 49.9 53.1 (3.2)
Sales (million pounds Cu) 22.6 26.1 (3.5) 54.3 52.7 1.6
Financial Data Three months ended June 30, Six months ended June 30,
(Cdn$ in thousands, except for per share amounts) 2024 2023 Change 2024 2023 Change
Revenues 137,730 111,924 25,806 284,677 227,443 57,234
Cash flows provided by operations 34,711 33,269 1,442 94,285 61,268 33,017
Net (loss) income (GAAP) (10,953) 9,991 (20,944) 7,943 43,779 (35,836)
Per share – basic ("EPS") (0.04) 0.03 (0.07) 0.03 0.15 (0.12)
Earnings from mining operations before 76,928 27,664 49,264 129,725 68,803 60,922
depletion, amortization and non-recurring
items*
Adjusted EBITDA* 70,777 22,218 48,559 120,700 58,277 62,423
Adjusted net income (loss)* 30,503 (4,376) 34,879 38,231 712 37,519
Per share – basic ("adjusted EPS")* 0.10 (0.02) 0.12 0.13 - 0.13
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 June 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 June 30, 2023
and for the three and six 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.
*Non-GAAP performance measure. See end of news release
Review of Operations
Gibraltar mine
Operating data (100% basis) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023
Tons mined (millions) 18.4 22.8 24.1 16.5 23.4
Tons milled (millions) 5.7 7.7 7.6 8.0 7.2
Strip ratio 1.6 1.7 1.5 0.4 1.5
Site operating cost per ton milled (Cdn$) * $13.93 $11.73 $9.72 $12.39 $13.17
Copper concentrate
Head grade (%) 0.23 0.24 0.27 0.26 0.24
Copper recovery (%) 77.7 79.0 82.2 85.0 81.9
Production (million pounds Cu) 20.2 29.7 34.2 35.4 28.2
Sales (million pounds Cu) 22.6 31.7 35.9 32.1 26.1
Inventory (million pounds Cu) 2.3 4.9 6.9 8.8 5.6
Molybdenum concentrate
Production (thousand pounds Mo) 185 247 369 369 230
Sales (thousand pounds Mo) 221 258 364 370 231
Per unit data (US$ per pound produced) *
Site operating costs * $2.88 $2.21 $1.59 $2.10 $2.43
By-product credits * (0.26) (0.17) (0.13) (0.23) (0.13)
Site operating costs, net of by-product credits * $2.62 $2.04 $1.46 $1.87 $2.30
Off-property costs 0.37 0.42 0.45 0.33 0.36
Total operating costs (C1) * $2.99 $2.46 $1.91 $2.20 $2.66
Review of Operations
Second Quarter Review
Gibraltar produced 20.2 million pounds of copper for the quarter. Copper
production and mill throughput in the quarter were impacted by a strike in
June 2024 and planned downtime in Concentrator #1 for the relocation of the
in-pit crusher and other concurrent maintenance.
On June 1, 2024, operations at the mine were suspended for 18 days due to
strike action by Gibraltar's unionized workforce strike. During this period
all mining and milling operations were shut down and only essential staff
remained on site to operate and maintain critical systems. Operations resumed
on June 19, after the ratification of a new agreement by union members.
Copper head grades of 0.23% were in line with management expectations and the
mine plan. Copper recoveries in the second quarter were 78%, lower than the
recent quarters due to increased milling of partially oxidized ore from the
Connector pit and variable mill operating conditions during the strike and
maintenance activities.
Operations Analysis - Continued
A total of 18.4 million tons were mined in the second quarter, lower than
previous quarters due to the labour disruption. Stripping continued in the
Connector pit and ore release will transition from the Gibraltar pit to the
Connector pit in the coming months. A total of 1.5 million tons of oxide ore
from the upper benches of the Connector pit were also added to the heap leach
pads in the period.
Total site costs* at Gibraltar of $90.5 million (which includes capitalized
stripping of $10.7 million) was lower compared to the previous quarter due to
the strike in June. A total of $2.5 million care and maintenance costs were
incurred during the strike which are not included in total site costs or cost
of sales.
During the six months ended June 30, 2024, the Company incurred total costs of
$9.7 million in relation to the primary crusher relocation project for
Concentrator #1. Direct costs for the physical move of the crusher of $7.9
million have been included in the statement of income (loss).
Molybdenum production was 185 thousand pounds in the second quarter and
production was impacted by mill availability. At an average molybdenum price
of US$21.79 per pound, molybdenum generated a by-product credit per pound of
copper produced of US$0.26 in the second quarter.
Off-property costs per pound produced* were US$0.37 for the second quarter and
also reflected higher copper sales volumes relative to production volumes
compared to the prior quarter.
Total operating costs per pound produced (C1)* was US$2.99 for the quarter,
compared to US$2.66 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:
Photo -
https://mma.prnewswire.com/media/2473015/Taseko_Mines_Limited_Taseko_Reports_Second_Quarter_2024_Financia.jpg
Gibraltar Outlook
With the major project and maintenance work in both concentrators now
completed, production in the second half of 2024 is expected to be stronger
than the first half of 2024. An updated mine plan and mill throughput
opportunities are being evaluated to recover some of the production that was
lost during the strike. Copper production for the year is expected to be in
the range of 110 to 115 million pounds, compared to original guidance of
approximately 115 million pounds.
The Gibraltar pit continued to be the main source of mill feed in the second
quarter and mining of ore is now transitioning into the Connector pit, which
will be the primary source of mill feed in the second half of the year.
Additional oxide ore from Connector pit is expected to be added to the heap
leach pads this year. Refurbishment of Gibraltar's SX/EW plant, which has
been idle since 2015, will begin later this year and management is planning to
restart the facility in 2025.
*Non-GAAP performance measure. See end of news release
Gibraltar Outlook - Continued
In the quarter, the Company has tendered Gibraltar concentrate to various
customers for the remainder of 2024 and for significant tonnages in 2025 and
2026. In 2023, Treatment and Refining Costs ("TCRCs") accounted for
approximately US$0.17 per pound of off-property costs. With these recently
awarded offtake contracts, the Company expects off-property costs to reduce to
US$0.05 per pound or less over the next two and a half years due to these
fixed, lower TCRCs 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 42 million pounds of copper covering the second half 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. All the major
SX/EW plant components are on site and previous work on detailed engineering
and procurement of long-lead items has de-risked the construction schedule.
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$232 million (Q3 2022 basis)
Construction activities in the second quarter of 2024 have focused on
wellfield drilling, site preparations and earthworks for the commercial
wellfield and plant area including the excavation of process ponds and
concrete foundation work for the plant, and the hiring of additional personnel
for the construction and operations teams.
Drilling of the commercial facility wellfield commenced in February and two
drills operated during the second quarter, with a third drill mobilized in
July. As of the end of June, a total of 18 production wells had been drilled
which is in line with the planned construction schedule.
The Company has a fixed-price contract with the general contractor for
construction of the SX/EW plant and associated surface infrastructure.
Florence Copper - Continued
Florence Copper Quarterly Capital Spend
Three months ended Six months ended
(US$ in thousands) June 30, 2024 June 30, 2024
Site and PTF operations 4,314 8,559
Commercial facility construction costs 36,850 54,848
Other capital costs 7,053 22,762
Total Florence project expenditures 48,217 86,169
The estimated remaining capital costs in the 2023 Technical Report for
construction of the commercial facility was US$232 million, of which US$36.9
million has been incurred in the second quarter of 2024 and US$54.8 million
has been incurred for the six months ended June 30, 2024. Other capital
costs of US$22.8 million include final payments for delivery of long-lead
equipment that was ordered in 2022, and to bring forward the construction of
an evaporation pond to provide additional water management flexibility.
The Company has closed several Florence project level financings to fund
initial commercial facility construction costs. On April 26th, the Company
received the second deposit of US$10 million from the US$50 million copper
stream transaction with Mitsui & Co. (U.S.A.) Inc. ("Mitsui"). The third
deposit was received in July and the remaining amounts of US$20 million should
be received in October 2024 and January 2025.
The Company considers that the construction of Florence Copper is now fully
funded, and remaining project costs are expected to be funded with the
Company's available liquidity, remaining instalments from Mitsui, and cashflow
from its 100% ownership interest in Gibraltar. The Company also has in place
an undrawn revolving credit facility for US$80 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
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 were 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 production over the life of
mine.
Long-term Growth Strategy - Continued
The Company is preparing to advance into the environmental assessment process
and has recently opened a project office to support ongoing engagement with
local communities including First Nations. The Company is also conducting a
site investigation field program this year, and 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 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.
Annual Sustainability Report
In June 2024, the Company published its annual Sustainability Report, titled
H2O + ESG (the "Report"). The Report focuses on the 2023 operational and
sustainability performance of Taseko's foundational asset, the Gibraltar
copper mine in British Columbia, and highlights social and economic
contributions from the Florence Copper project in Arizona, which will soon
become the Company's second operating asset.
Taseko's 2023 Sustainability Report features several significant initiatives
underway across the Company to conserve and reuse water, and to achieve water
management objectives. This includes a pioneering in-situ biological water
treatment initiative undertaken at the Gibraltar mine last year – part of a
long-term water management program that has achieved a 77% reduction in free
water stored in the mine's tailings storage facility over the past decade.
While profitable operations and return on investment are critical drivers for
Taseko's success, the Company also delivers value to its employees and
operating communities, business partners, Indigenous Nations and governments.
The annual Sustainability Report is an opportunity to showcase the important
benefits that the Company generates through its operations, investments and
people.
The full report can be viewed and downloaded at:
tasekomines.com/sustainability/overview/
(https://c212.net/c/link/?t=0&l=en&o=4223619-1&h=1723561401&u=https%3A%2F%2Ftasekomines.com%2Fsustainability%2Foverview%2F&a=tasekomines.com%2Fsustainability%2Foverview%2F)
The Company will host a telephone conference call and live webcast on Thursday, August 1, 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. To join the conference call without operator assistance, you may pre-register at https://emportal.ink/4fnpKl1to 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/ (https://c212.net/c/link/?t=0&l=en&o=4223619-1&h=3405685033&u=https%3A%2F%2Ftasekomines.com%2Finvestors%2Fevents%2F&a=tasekomines.com%2Finvestors%2Fevents%2F). The conference call will be archived for later playback until August 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=4223619-1&h=2361495394&u=https%3A%2F%2Fwww.tasekomines.com%2Finvestors%2Fevents%2F&a=tasekomines.com%2Finvestors%2Fevents%2F) and using the entry code 099395 #.
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 Q2 2024 Q1 1 2023 Q4 1 2023 Q3 1 2023 Q2 1
Cost of sales 108,637 122,528 93,914 94,383 99,854
Less:
Depletion and amortization (13,721) (15,024) (13,326) (15,993) (15,594)
Net change in inventories of finished goods (10,462) (20,392) (1,678) 4,267 3,356
Net change in inventories of ore stockpiles 1,758 2,719 (3,771) 12,172 2,724
Transportation costs (6,408) (10,153) (10,294) (7,681) (6,966)
Site operating costs 79,804 79,678 64,845 87,148 83,374
Oxide ore stockpile reclassification from capitalized stripping - - - - (3,183)
Less by-product credits:
Molybdenum, net of treatment costs (7,071) (6,112) (5,441) (9,900) (4,018)
Silver, excluding amortization of deferred revenue (144) (137) 124 290 (103)
Site operating costs, net of by-product credits 72,589 73,429 59,528 77,538 76,070
Total copper produced (thousand pounds) 20,225 26,694 29,883 30,978 24,640
Total costs per pound produced 3.59 2.75 1.99 2.50 3.09
Average exchange rate for the period (CAD/USD) 1.37 1.35 1.36 1.34 1.34
Site operating costs, net of by-product credits (US$ per pound) 2.62 2.04 1.46 1.87 2.30
Site operating costs, net of by-product credits 72,589 73,429 59,528 77,538 76,070
Add off-property costs:
Treatment and refining costs 3,941 4,816 7,885 6,123 4,986
Transportation costs 6,408 10,153 10,294 7,681 6,966
Total operating costs 82,938 88,398 77,707 91,342 88,022
Total operating costs (C1) (US$ per pound) 2.99 2.46 1.91 2.20 2.66
1 Q2, 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%.
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 Gibraltar calculated on a
consistent basis for the periods presented.
(Cdn$ in thousands, unless otherwise indicated) – 87.5% basis (except for Q1 2024 and Q2 2024) 2024 Q2 2024 Q1 1 2023 Q4 1 2023 Q3 1 2023 Q2 1
Site operating costs 79,804 79,678 64,845 87,148 83,374
Add:
Capitalized stripping costs 10,732 16,152 31,916 2,083 8,832
Total site costs – Taseko share 90,536 95,830 96,761 89,231 92,206
Total site costs – 100% basis 90,536 109,520 110,584 101,978 105,378
1 Q2, 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;
* Realized gain on processing of ore stockpiles; 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.
Non-GAAP Performance Measures – Continued
(Cdn$ in thousands, except per share amounts) 2024 Q2 2024 Q1 2023 Q4 2023 Q3
Net (loss) income (10,953) 18,896 38,076 871
Unrealized foreign exchange loss (gain) 5,408 13,688 (14,541) 14,582
Unrealized loss on derivatives 10,033 3,519 1,636 4,518
Other operating costs 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*** 4,633 13,354 - -
Realized gain on processing of ore stockpiles**** 3,191 - - -
Accretion and fair value adjustment on Florence royalty obligation 2,132 3,416 - -
Accretion and fair value adjustment on consideration payable to Cariboo 8,399 1,555 (916) 1,244
Non-recurring other expenses for Cariboo acquisition 394 138 - -
Estimated tax effect of adjustments (15,644) 15,570 (195) (1,556)
Adjusted net income 30,503 7,728 24,060 19,659
Adjusted EPS 0.10 0.03 0.08 0.07
(Cdn$ in thousands, except per share amounts) 2023 Q2 2023 Q1 2022 Q4 2022 Q3
Net income (loss) 9,991 33,788 (2,275) (23,517)
Unrealized foreign exchange (gain) loss (10,966) (950) (5,279) 28,083
Unrealized (gain) loss on derivatives (6,470) 2,190 20,137 (72)
Gain on Cariboo acquisition - (46,212) - -
Accretion and fair value adjustment on consideration payable to Cariboo 1,451 - - -
Non-recurring other expenses for Cariboo acquisition 263 - - -
Estimated tax effect of adjustments 1,355 16,272 (5,437) 19
Adjusted net (loss) income (4,376) 5,088 7,146 4,513
Adjusted EPS (0.02) 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 three months ended June 30, 2024 included $4.6 million in write-ups to net realizable value for concentrate inventory held at March 25, 2024 that were subsequently sold in April. The realized portion of the gains recorded in the prior quarter for GAAP purposes have been included in Adjusted net income (loss) in the current quarter reflecting the period they were sold. **** Cost of sales for the three months ended June 30, 2024 included $3.2 million in write-ups to net realizable
value for ore stockpiles held at March 25, 2024 that were subsequently processed in the second quarter. The realized portion of the write-ups recorded in the prior quarter for GAAP purposes have been included in Adjusted net income (loss) in the current quarter reflecting the period they were processed.
Non-GAAP Performance Measures - Continued
Adjusted EBITDA
Adjusted EBITDA is presented as a supplemental measure of the Company's
performance and ability to service debt. Adjusted EBITDA is frequently used by
securities analysts, investors and other interested parties in the evaluation
of companies in the industry, many of which present Adjusted EBITDA when
reporting their results. Issuers of "high yield" securities also present
Adjusted EBITDA because investors, analysts and rating agencies consider it
useful in measuring the ability of those issuers to meet debt service
obligations.
Adjusted EBITDA represents net income before interest, income taxes, and
depreciation and also eliminates the impact of a number of items that are not
considered indicative of ongoing operating performance. Certain items of
expense are added and certain items of income are deducted from net income
that are not likely to recur or are not indicative of the Company's underlying
operating results for the reporting periods presented or for future operating
performance and consist of:
* Unrealized foreign exchange gains/losses;
* Unrealized gain/loss on derivatives;
* Amortization of share-based compensation expense;
* Other operating costs;
* Call premium on settlement of debt;
* Loss on settlement of long-term debt;
* Gain on Cariboo acquisition;
* Gain on acquisition of control of Gibraltar;
* Realized gain on sale of inventory;
* Realized gain on processing of ore stockpiles; and
* Non-recurring other expenses for Cariboo acquisition.
Non-GAAP Performance Measures - Continued
(Cdn$ in thousands) 2024 Q2 2024 Q1 2023 Q4 2023 Q3
Net (loss) income (10,953) 18,896 38,076 871
Add:
Depletion and amortization 13,721 15,024 13,326 15,993
Finance expense 21,271 19,849 12,804 14,285
Finance income (911) (1,086) (972) (322)
Income tax (recovery) expense (3,247) 23,282 17,205 12,041
Unrealized foreign exchange loss (gain) 5,408 13,688 (14,541) 14,582
Unrealized loss on derivatives 10,033 3,519 1,636 4,518
Amortization of share-based compensation expense 2,585 5,667 1,573 727
Other operating costs 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*** 4,633 13,354 - -
Realized gain on processing of ore stockpiles**** 3,191 - - -
Non-recurring other expenses for Cariboo acquisition 394 138 - -
Adjusted EBITDA 70,777 49,923 69,107 62,695
**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 three months ended June 30, 2024 included $4.6 million in write-ups to net realizable value for concentrate inventory held at March 25, 2024 that were subsequently sold in April. The realized portion of the gains recorded in the prior quarter for GAAP purposes have been included in Adjusted net income (loss) in the current quarter reflecting the period they were sold. **** Cost of sales for the three months ended June 30, 2024 included $3.2 million in write-ups to net realizable
value for ore stockpiles held at March 25, 2024 that were subsequently processed in the second quarter. The realized portion of the write-ups recorded in the prior quarter for GAAP purposes have been included in Adjusted net income (loss) in the current quarter reflecting the period they were processed.
Non-GAAP Performance Measures - Continued
(Cdn$ in thousands) 2023 Q2 2023 Q1 2022 Q4 2022 Q3
Net income(loss) 9,991 33,788 (2,275) (23,517)
Add:
Depletion and amortization 15,594 12,027 10,147 13,060
Finance expense 13,468 12,309 10,135 12,481
Finance income (757) (921) (700) (650)
Income tax expense 678 20,219 1,222 3,500
Unrealized foreign exchange (gain) loss (10,966) (950) (5,279) 28,083
Unrealized (gain) loss on derivatives (6,470) 2,190 20,137 (72)
Amortization of share-based compensation expense 417 3,609 1,794 1,146
Gain on Cariboo acquisition - (46,212) - -
Non-recurring other expenses for Cariboo acquisition 263 - - -
Adjusted EBITDA 22,218 36,059 35,181 34,031
Earnings from mining operations before depletion and amortization
Earnings from mining operations before depletion and amortization is earnings
from mining operations with depletion and amortization, also any items that
are not considered indicative of ongoing operating performance are added back.
The Company discloses this measure, which has been derived from our financial
statements and applied on a consistent basis, to provide assistance in
understanding the results of the Company's operations and financial position
and it is meant to provide further information about the financial results to
investors.
Three months ended Six months ended
June 30, June 30,
(Cdn$ in thousands) 2024 2023 2024 2023
Earnings from mining operations 44,948 12,070 69,367 41,182
Add:
Depletion and amortization 13,721 15,594 28,745 27,621
Realized gain on sale of inventory 4,633 - 17,987 -
Realized gain on processing of ore stockpiles 3,191 - 3,191 -
Other operating costs 10,435 - 10,435 -
Earnings from mining operations before depletion, amortization and non-recurring items 76,928 27,664 129,725 68,803
During the three and six months ended June 30, 2024 the realized gains on sale
of inventory and processing of ore stockpiles relates to inventory held at
March 25, 2024 that was written-up from book value to net realizable value and
subsequently sold or processed between March 26 and June 30, 2024.
Non-GAAP Performance Measures - Continued
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 Q2 2024 Q1 1 2023 Q4 1 2023 Q3 1 2023 Q2 1
Site operating costs (included in cost of sales) – Taseko share 79,804 79,678 64,845 87,148 83,374
Site operating costs – 100% basis 79,804 90,040 74,109 99,598 95,285
Tons milled (thousands) 5,728 7,677 7,626 8,041 7,234
Site operating costs per ton milled $13.93 $11.73 $9.72 $12.39 $13.17
1 Q2, 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%.
Technical Information
The technical information contained in this MD&A related to the Florence
Copper Project is based upon the report entitled: "NI 43-101 Technical Report
– Florence Copper Project, Pinal County, Arizona" issued March 30, 2023 with
an effective date of March 15, 2023 which is available on SEDAR+. The Florence
Copper Project Technical Report was prepared under the supervision of Richard
Tremblay, P.Eng., MBA, Richard Weymark, P.Eng., MBA, and Robert Rotzinger,
P.Eng. Mr. Tremblay is employed by the Company as Chief Operating Officer, Mr.
Weymark is Vice President Engineering, and Robert Rotzinger is Vice President
Capital Projects. All three are Qualified Persons as defined by NI 43–101.
Caution Regarding Forward-Looking Information
This document contains "forward-looking statements" that were based on
Taseko's expectations, estimates and projections as of the dates as of which
those statements were made. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as "outlook",
"anticipate", "project", "target", "believe", "estimate", "expect", "intend",
"should" and similar expressions.
Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause the Company's actual results,
level of activity, performance or achievements to be materially different from
those expressed or implied by such forward-looking statements. These included
but are not limited to:
* uncertainties about the effect of COVID-19 and the response of local,
provincial, federal and international governments to the threat of COVID-19 on
our operations (including our suppliers, customers, supply chain, employees
and contractors) and economic conditions generally and in particular with
respect to the demand for copper and other metals we produce;
* uncertainties and costs related to the Company's exploration and development
activities, such as those associated with continuity of mineralization or
determining whether mineral resources or reserves exist on a property;
* uncertainties related to the accuracy of our estimates of mineral reserves,
mineral resources, production rates and timing of production, future
production and future cash and total costs of production and milling;
* uncertainties related to feasibility studies that provide estimates of
expected or anticipated costs, expenditures and economic returns from a mining
project;
* uncertainties related to the ability to obtain necessary licenses permits
for development projects and project delays due to third party opposition;
* uncertainties related to unexpected judicial or regulatory proceedings;
* changes in, and the effects of, the laws, regulations and government
policies affecting our exploration and development activities and mining
operations, particularly laws, regulations and policies;
* changes in general economic conditions, the financial markets and in the
demand and market price for copper, gold and other minerals and commodities,
such as diesel fuel, steel, concrete, electricity and other forms of energy,
mining equipment, and fluctuations in exchange rates, particularly with
respect to the value of the U.S. dollar and Canadian dollar, and the continued
availability of capital and financing;
* the effects of forward selling instruments to protect against fluctuations
in copper prices and exchange rate movements and the risks of counterparty
defaults, and mark to market risk;
* the risk of inadequate insurance or inability to obtain insurance to cover
mining risks;
* the risk of loss of key employees; the risk of changes in accounting
policies and methods we use to report our financial condition, including
uncertainties associated with critical accounting assumptions and estimates;
* environmental issues and liabilities associated with mining including
processing and stock piling ore; and
* labour strikes, work stoppages, or other interruptions to, or difficulties
in, the employment of labour in markets in which we operate mines, or
environmental hazards, industrial accidents or other events or occurrences,
including third party interference that interrupt the production of minerals
in our mines.
For further information on Taseko, investors should review the Company's
annual Form 40-F filing with the United States Securities and Exchange
Commission www.sec.gov and home jurisdiction filings that are available at
www.sedar.com.
Cautionary Statement on Forward-Looking Information
This discussion includes certain statements that may be deemed
"forward-looking statements". All statements in this discussion, other than
statements of historical facts, that address future production, reserve
potential, exploration drilling, exploitation activities, and events or
developments that the Company expects are forward-looking statements.
Although we believe the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors that could
cause actual results to differ materially from those in forward-looking
statements include market prices, exploitation and exploration successes,
continued availability of capital and financing and general economic, market
or business conditions. Investors are cautioned that any such statements are
not guarantees of future performance and actual results or developments may
differ materially from those projected in the forward-looking statements.
All of the forward-looking statements made in this MD&A are qualified by these
cautionary statements. We disclaim any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise, except to the extent required by applicable law.
Further information concerning risks and uncertainties associated with these
forward-looking statements and our business may be found in our most recent
Form 40-F/Annual Information Form on file with the SEC and Canadian provincial
securities regulatory authorities.
For further information on Taseko, please see the Company's website at
www.tasekomines.com or contact: Brian Bergot, Vice President, Investor
Relations – 778-373-4554, toll free 1-800-667-2114
SOURCE Taseko Mines Limited
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