Taseko Reports $62 Million of Cash Flow from Operations IN the Second Quarter 2017
*Non-GAAP performance measure. See end of news release.
TASEKO REPORTS $62 MILLION OF CASH FLOW FROM OPERATIONS
IN THE SECOND QUARTER 2017
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 Gibraltar Mine is located north of the City
of Williams Lake in south-central British Columbia. Production volumes stated in this release are on a 100% basis
unless otherwise indicated.
August 2, 2017, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB) ("Taseko" or the
"Company") reports cash flow from operations of $62.3 million in the second quarter of 2017, earnings from mining
operations before depletion and amortization* of $46.5 million and adjusted EBITDA* of $42.8 million.
Russell Hallbauer, President & CEO commented, “In the first half of 2017 we built on the successes realized in the
fourth quarter of 2016, and capitalized on rising copper prices. Over the past nine months we have generated $192
million of cash flow from operations and $147 million in earnings from mining operations before depletion and
amortization. Over the same period, site spending has been consistent and in the second quarter site operating costs,
net of by-products was US$0.97 per pound with C1* costs of US$1.31 per pound.”
“During the second quarter we completed a US$250 million debt offering. We used the proceeds from this offering,
along with a portion of our cash balance, to repay approximately US$275 million of debt which was due in 2019.
We felt it was important to take advantage of a healthy bond market to reduce our overall debt and extend the due
date to 2022,” continued Mr. Hallbauer.
Mr. Hallbauer added, “ With the copper price recently increasing to two -year highs, combined with nearly $100
million of cash on hand plus our long-term debt reduced and termed out five years, we are in a very good position
to continue investing in and advancing our pipeline of projects.”
“For the past four weeks, uncontrolled wildfires resulted in evacuation orders for a number of communities in the
Cariboo where most of our Gibraltar employees reside. These evacuation orders have affected the complement of
personnel who operate Gibraltar, and access to and from the mine was also significantly curtailed during this period.
This has resulted in reduced production for periods of time as well as a complete mine shutdown for several days
during July. Mining and milling operations are beginning to return to normal as some evacuation orders have been
lifted over the past week. Third quarter copper sales volumes are expected to be up to 10% lower than the second
quarter of 2017. The situation continues to evolve and we are hopeful that the worst is be hind us,” concluded Mr.
Hallbauer.
. *Non-GAAP performance measure. See end of news release.
Second Quarter Highlights
• Earnings from mining operations before depletion and amortization* were $46.5 million;
• Cashflow from operations was $62.3 million for the second quarter;
• Adjusted net income* for the quarter was $14.3 million (or $0.06 per share) and net income was $5.2 million
(or $0.02 per share);
• Site operating costs, net of by- product credits* were US$0.97 per pound produced, down 44% from the
second quarter of 2016;
• The Gibraltar Mine produced 39.4 million pounds of copper and 0.8 million pounds of molybdenum (100%
basis) at a total operating cost (C1)* of US$1.31 per pound;
• Total sales for the second quarter were 40.7 million pounds of copper and 0.8 million pounds of
molybdenum;
• On April 12, 2017, the Company announced that a new long-term agreement was ratified by its unionized
employees at Gibraltar. The new agreement will be effective through May 31, 2021;
• On June 14, 2017, the Company completed an offering of US$250 million aggregate principal amount of
8.75% senior secured notes due 2022. The Company used the net proceeds of the offering and $72 million
of its existing cash balance, to fund the redemption of its US$200 million senior notes due 2019 and to
repay its senior secured credit facility (due March 2019) and the related copper call option;
• Long-term debt and other financial liabilities have been reduced by $63 million during the first six months
of 2017, and the maturity date of long-term debt has been extended from 2019 to 2022; and
• The Company’s cash balance at June 30, 2017 was $97 million, which was after the $72 million used for
the debt refinancing.
Subsequent Events
• On July 18, 2017, the Company received approval from the Province of British Columbia to undertake a
site investigation program to conduct exploratory work at the New Prosperity Gold- Copper project site.
The Notice of Work (“NOW”), which is a multi-year permit, will allow the Company to gather information
for the purpose of advancing mine permitting under the British Columbia Mines Act; and
• For the past four weeks, uncontrolled wildfires resulted in evacuation orders for a number of communities
in the Cariboo where most of our Gibraltar employees reside. These evacuation orders have affected the
complement of personnel who operate Gibraltar, and access to and from the mine was also significantly
curtailed during this period. This has resulted in reduced p roduction for periods of time as well as a
complete mine shutdown for several days during July. Mining and milling operations are beginning to
return to normal as some evacuation orders have been lifted over the past week. Third quarter copper sales
volumes are expected to be up to 10% lower than the second quarter of 2017.
. *Non-GAAP performance measure. See end of news release.
HIGHLIGHTS
Financial Data Three months ended June 30, Six months ended June 30,
(Cdn$ in thousands, except for per share amounts) 2017 2016 Change 2017 2016 Change
Revenues 99,994 55,090 44,904 204,383 113,273 91,110
Earnings (loss) from mining operations before depletion
and amortization* 46,460 (3,164) 49,624 99,887 (3,468) 103,355
Earnings (loss) from mining operations 34,661 (17,302) 51,963 78,511 (31,116) 109,627
Net income (loss) 5,247 (19,384) 24,631 21,726 (20,899) 42,625
Per share - basic (“EPS”) 0.02 (0.09) 0.11 0.10 (0.09) 0.19
Adjusted net income (loss)*
14,305 (19,758) 34,063 29,560 (37,841) 67,401
Per share - basic (“adjusted EPS”)* 0.06 (0.09) 0.15 0.13 (0.17) 0.30
EBITDA* 43,805 (7,858) 51,663 92,950 3,144 89,806
Adjusted EBITDA* 42,820 (7,642) 50,462 90,754 (12,134) 102,888
Cash flows provided by (used for) operations 62,291 (4,211) 66,502 142,056 (8,317) 150,373
Operating Data (Gibraltar - 100% basis) Three months ended June 30, Six months ended June 30,
2017 2016 Change 2017 2016 Change
Tons mined (millions) 21.1 26.2 (5.1) 42.9 47.7 (4.8)
Tons milled (millions) 7.5 7.2 0.3 14.8 14.7 0.1
Production (million pounds Cu) 39.4 30.6 8.8 80.6 59.5 21.1
Sales (million pounds Cu) 40.7 30.3 10.4 81.5 60.8 20.7
. *Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar Mine (75% Owned)
Operating data (100% basis) Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016
Tons mined (millions) 21.1 21.8 18.5 21.5 26.2
Tons milled (millions) 7.5 7.3 7.3 7.4 7.2
Strip ratio 2.8 2.4 1.1 1.0 2.4
Site operating cost per ton milled (CAD$) $7.67 $8.59 $9.13 $9.47 $9.67
Copper concentrate
Grade (%) 0.309 0.328 0.319 0.259 0.252
Recovery (%) 85.2 85.9 87.0 85.9 84.1
Production (million pounds Cu) 39.4 41.3 40.7 33.1 30.6
Sales (million pounds Cu) 40.7 40.8 40.4 29.8 30.3
Inventory (million pounds Cu) 4.6 5.9 5.6 5.4 2.1
Molybdenum concentrate
Production (thousand pounds Mo) 789 866 764 185 -
Sales (thousand pounds Mo) 794 859 798 105 -
Per unit data (US$ per pound produced)*
Site operating costs* $1.08 $1.15 $1.23 $1.64 $1.77
By-product credits* (0.11) (0.15) (0.11) (0.06) (0.03)
Site operating costs, net of by-product credits* $0.97 $1.00 $1.12 $1.58 $1.74
Off-property costs 0.34 0.33 0.36 0.31 0.33
Total operating costs (C1)* $1.31 $1.33 $1.48 $1.89 $2.07
OPERATIONS ANALYSIS
Second quarter results
Copper head grade at Gibraltar was 0.309% in the second quarter. Copper recovery for the quarter was 85% and was negatively
impacted due to periodic occurrences of oxidized ore. Combined with strong mill throughput of 7.5 million tons of ore, the
mine produced 39.4 million pounds of copper.
A total of 21.1 million tons were mined during the quarte r at a strip ratio of 2.8 to 1. Waste stripping costs of $18.2 million
(75% basis) were capitalized in the quarter primarily related to the Granite pit. During t he quarter, approximately 1.9 million
ore tons milled was drawn from the ore stockpile as planned. Site operating cost per ton milled* was $7.67 in the second quarter
of 2017, which is lower than recent quarters due to the increased capitalization of stripping costs.
Site operating costs per pound produced* decreased to US$1.08 in the second quarter of 2017 from US$1.15 in the first quarter
of 2017.
The molybdenum circuit continued to operate at design capacity in the period. A total of 0.8 million pounds of molybdenum
were produced, with recoveries averaging 48%.
. *Non-GAAP performance measure. See end of news release.
OPERATIONS ANALYSIS - CONTINUED
By-product credits per pound produced* decreased to US$0.11 in the second quarter of 2017 from US$0.15 in the first quarter
of 2017. The decrease was a result of negative provisional price adjustments for molybdenum and lower molybdenum sales
volume in the second quarter.
Off-property costs per pound produced* were US$0.34 for the second quarter of 2017, which is consistent with recent periods.
Total operating costs (C1) per pound* decreased to US$1.31, a 67% reduction from the second quarter of 2016 due to increased
copper production, higher molybdenum by -product credits due to the restart of the moly circuit in September 2016, and
increased capitalized stripping costs in the current period.
GIBRALTAR OUTLOOK
Overall, Gibraltar has maintained a stable level of operations and management continues to focus on further improvements to
operating practices to reduce unit costs. Copper prices have continued to st rengthen in the third quarter of 2017, increasing to
US$2.86 per pound as of August 1, 2017, which is 11% higher than the average LME copper price during the second quarter.
A weak Canadian dollar contributes to improved operating margins at Gibraltar as approximately 80% of mine operating costs
are paid in Canadian dollars. The Canadian dollar strengthened by approximately 2% during the second quarter of 2017, and
has strengthened by a further 3% since June 30, 2017.
For the past four weeks, uncontrolled wildfires resulted in evacuation orders for a number of communities in the Cariboo where
most of our Gibraltar employees reside. These evacuation orders have affected the complement of personnel who operate
Gibraltar, and access to and from the mine was also significantly curtailed during this period. This has resulted in reduced
production for periods of time as well as a complete mine shutdown for several days during July. Mining and milling operations
are beginning to return to normal as some evacuation orders have been lifted over the past week. Third quarter copper sales
volumes are expected to be up to 10% lower than the second quarter of 2017.
REVIEW OF PROJECTS
Taseko’s strategy has been to grow the Company by leveraging cash flow from the Gibraltar Mine to assemble and develop a
pipeline of projects. We continue to believe this will generate the best, long -term returns for shareholders. Our development
projects are located in British Columbia and Arizona and represent a diverse range of metals, including gold, copper,
molybdenum and niobium. During the second quarter of 2017, total expenditure of $4.6 million was incurred on the Florence
Copper, Aley and New Prosperi ty projects. Taseko will continue to take a prudent approach to spending on development
projects.
Florence Copper
In January 2017, the Company announced that completed technical work on the Florence property has resulted in a significant
improvement in project economics. On February 28, 2017, the NI 43-101 technical report documenting these results was filed
on www.sedar.com.
The Florence Copper project is currently in the final stages of permitting for the Production Test Facility (“PTF”). The PTF
will include a well field comprised of thirteen (four injection and ni ne recovery) commercial scale production wells and
numerous monitoring, observation and point of compliance wells, and also an integrated solvent extraction and electrowinning
plant.
REVIEW OF PROJECTS - CONTINUED
New Prosperity
On July 18, 2017, Taseko received approval from the Province of British Columbia to undertake a site investigation program
to conduct exploratory work at the New Prosperity project site. The Province issued a Notice of Work, which is a multi -year
permit from the Ministry of Energy & Mines that allows the Company to gather information for the purpose of advancing mine
permitting under the British Columbia Mines Act.
Taseko is proceeding with its request to amend the British Columbia environmental assessment certificate for the New
Prosperity Project.
The two Judicial Reviews initiated by Taseko were heard in federal court over a five day period in the week of January 30,
2017. Both Judicial Reviews focus on the principles of administrative and procedural fairness. Taseko’s allegati on is that the
Government of Canada, through the conduct of the environmental assessment and the decisions which resulted from it, failed
in their obligation to uphold those fundamental principles. A decision is expected from the court within six to nine m onths.
Note: Gibraltar is a contractual, unincorporated joint venture between Taseko Mines Limited (75% interest) and
Cariboo Copper Corp. (25% interest). All production and sales figures are reported on a 100% basis, unless
otherwise noted.
Taseko will host a conference call on Thursday, August 3, 2017 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific) to discuss
these results. The conference call may be accessed by dialing (877) 303-9079 in Canada and the United States, or (970) 315-
0461 internationally. Alternatively, a live and archived webcast will also be available at tasekomines.com. The conference
call will be archived for later playback until August 10, 2017 and can be accessed by dialing (855) 859-2056 in Canada and
the United States, or (404) 537-3406 internationally and using the passcode 86630167.
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
Russell Hallbauer
President and 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 m easures 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. Site operating costs is calc ulated by removing
net changes in inventory and depletion and amortization and transp ortation costs from cost of sales. Site operating costs, net of by -product
credits is calculated by removing by -product credits from the site operating costs. Site operating costs, net of by -product credits per pound
are calculated by dividing the aggregat e 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.
Three months ended
June 30,
Six months ended
June 30,
(Cdn$ in thousands, unless otherwise indicated) – 75% basis 2017 2016 2017 2016
Cost of sales 65,333 72,392 125,872 144,389
Less:
Depletion and amortization (11,799) (14,138) (21,376) (27,648)
Net change in inventory (4,998) (1,833) (3,593) (2,920)
Transportation costs (5,492) (4,012) (10,709) (7,605)
Site operating costs 43,044 52,409 90,194 106,216
Less by-product credits:
Molybdenum, net of treatment costs (4,335) - (10,142) -
Silver, excluding amortization of deferred revenue (82) (926) (530) (1,842)
Site operating costs, net of by-product credits 38,627 51,483 79,522 104,374
Total copper produced (thousand pounds) 29,531 22,973 60,474 44,588
Total costs per pound produced 1.31 2.24 1.31 2.34
Average exchange rate for the period (CAD/USD) 1.34 1.29 1.33 1.33
Site operating costs, net of by-product credits (US$ per pound) 0.97 1.74 0.99 1.76
Site operating costs, net of by-product credits 38,627 51,483 79,522 104,374
Add off-property costs:
Treatment and refining costs of copper concentrate 8,066 5,765 16,522 12,079
Transportation costs 5,492 4,012 10,709 7,605
Total operating costs 52,185 61,260 106,753 124,058
Total operating costs (C1) (US$ per pound) 1.31 2.07 1.32 2.09
NON-GAAP PERFORMANCE MEASURES - CONTINUED
Adjusted net income (loss)
Adjusted net income (loss) remove the effect of the following transactions from net income as reported under IFRS:
• Unrealized gains/losses on copper put options;
• Unrealized foreign currency gains/losses;
• Loss on settlement of long-term debt; and
• Non-recurring transactions, including related tax adjustments.
Management believes these transactions do not reflect the u nderlying 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 f oreign currency gains/losses are not necessarily reflective of the underlying operating results for the
reporting periods presented.
Three months ended
June 30,
Six months ended
June 30,
($ in thousands, except per share amounts) 2017 2016 2017 2016
Net income (loss) 5,247 (19,384) 21,726 (20,899)
Unrealized (gain) loss on copper put options 373 (163) 425 -
Loss on copper call option 4,891 453 6,305 991
Unrealized foreign exchange gain (6,249) (2,052) (8,926) (21,677)
Loss on settlement of long-term debt 13,102 - 13,102 -
Other non-recurring expenses* - 1,978 - 5,408
Estimated tax effect of adjustments (3,059) (590) (3,072) (1,664)
Adjusted net income (loss) 14,305 (19,758) 29,560 (37,841)
Adjusted EPS 0.06 (0.09) 0.13 (0.17)
* Other non-recurring expenses includes legal and other advisory costs associated with the special shareholder meeting, the proxy contest and related litigation,
and other non-recurring financing costs.
EBITDA and adjusted EBITDA
EBITDA represents net income before interest, income taxes, and depreciation. EBITDA is presented because it is an important supplemental
measure of our performance and is frequently used by securities analysts, investors and other interested parties in the evaluation of companies
in the industry, many of which present EBITDA when reporting their results. Issuers of “high yield” securities also present EBITDA because
investors, analysts and rating agencies consider it useful in measuring the ability of those issuers to meet debt service obligations. The
Company believes EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interes t are, by
definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense goes down as deductible
interest expense goes up; depreciation is a non-cash charge.
Adjusted EBITDA is presented as a further supplemental measure of the Company’s performance and ability to service debt. A djusted
EBITDA is prepared by adjusting EBITDA to eliminate the impact of a number of items that are not considered indicative of ong oing
operating performance.