Taseko Reports First Quarter 2020 Financial & Operating Results
*Non-GAAP performance measure. See end of news release.
TASEKO REPORTS FIRST QUARTER 2020 FINANCIAL & OPERATING RESULTS
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 doll ars. 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.
April 29, 2020, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB; LSE: TKO)
("Taseko" or the "Company") reports the results for the three months ended March 31, 2020.
First quarter Cash flows from operations was $17.7 million and adjusted EBITDA was $5.3 million. The
Company reported Earnings from mining operations before depletion and amortization of $5.9 million and
an Adjusted net loss* of ($21.6) million, or ($0.09) loss per share. Earnings were impacted by downward
provisional price adjustments of $13.6 millio n due to the decline in copper price in March as a result of
COVID-19.
Russell Hallbauer, CEO and Director of Taseko, commented, “Although our financial results were impacted
by the falling copper price, the operating performance at Gibraltar was in line with our expectations. The
mine produced 32.4 million pounds of copper at Total operating costs* of US$1.82 per pound of copper.
To-date, there has not been any impact on Gibraltar operations as a result of COVID -19. The health and
safety of our employees remain the top priority for the Company during these very challenging times and
we are pleased to report that there have been no cases of COVID-19 at Gibraltar or any of our other
locations. We will remain vigilant and continue with the extra measures that are in place to mitigate the
risk of an outbreak, which are being supported by the efforts of our employees.”
Mr. Hallbauer continued, “Operating a large, open pit mine such as Gibraltar requires the attention of senior
management, planning and adaptability. The long-term plan we have in place at Gibraltar, provides Taseko
with the ability to respond to circumstances like we are experiencing today. In March , we announced a
number of measures being implemented at Gibraltar in response to the lower copper price environment.
These included both cost reduction initiatives as well as spending deferrals. Most of these savings only
began to be realized in April, so we expect the impact to be reflected starting in the second quarter.
Additionally, higher grade ore anticipated to be mined over the next quarters will further lower our cash
costs compared to the first quarter. Strong production has continued in April with higher throughput,
recoveries and molybdenum production. The Gibraltar Mine is also benefiting from falling input costs,
including diesel fuel which is currently 35% lower than 2019 average prices, and a weaker Canadian dollar
as 80% of Gibraltar’s costs are denominated in Canadian dollars. The new operating plan and other
identified cost savings are expected to reduce total site spending (including capitalized stripping) by at least
US$0.40 per pound for the coming quarters. These measures provide Taseko with healthy working capital
for the foreseeable future.
We will continue to monitor market conditions and adjust operating plans as required to respond to changes
in copper price movements in the future. Production guidance for 2020 remains unchanged at 130 million
pounds (+/-5%), although we now expect producti on to be at the higher end of that range based on the
revised plan.”
Stuart McDonald, President of Taseko, commented, “While we remain focussed on managing spending and
maintaining a strong cash position, we are still running the business for the long-term and planning for near-
term growth from our Florence Copper Project. The test facility wellfield and SX/EW plant operated as
planned in the quarter. We have now been producing cathode at Florence for over a year and this operating
experience will be very valuable when we ramp up to commercial scale and produce on a steady-state basis.
Permitting is progressing with the Arizona State regulators moving expeditiously . We expect the draft
Aquifer Protection Permit for the commercial scale facility will be issued in the coming weeks, with public
hearings following shortly thereafter.”
“With cash flow from Gibraltar and near -term growth at Florence , our Company remains in a strong
position. We ended the first quarter with approximately $50 million of cash and subsequent to quarter-end,
our working capital position was further strengthened as we completed a transaction with Osisko Gold
Royalties Ltd (“Osisko”). Taseko has received $8.5 million to amend the existing silver stream agreement
with Osisko by eliminating the delivery price of US$2.75 per ounce of silver. The original silver stream
agreement was put in place in early 2017 and we are happy to develop our relationship with a supp ortive
partner like Osisko,” added Mr. McDonald.
“We still believe the medium- to long-term fundamentals remain strong for copper and appear to even be
improving as more mines are shutting down, and current shutdowns being extended, due to COVID -19.
With the incentive price to build new capacity still in excess of $3.00 per pound, projects are being delayed
which will only exacerbate the supply deficit in the coming years. Taseko, on the other hand, is not delaying
the development of Florence Copper and still believe it could be permitted and financed by the end of 2020,
moving into construction at that time,” concluded Mr. Hallbauer.
First Quarter Review
• The Gibraltar Mine (100% basis) produced 32.4 million pounds of copper in the first quarter.
Copper recoveries were 83.4% and copper head grades were 0.259%;
• Site operating costs, net of by -product credits* was US$1.53 per pound produced, and total
operating costs (C1)* was US$1.82 per pound produced;
• Cash flow from operations was $17.7 million and the C ompany had an ending cash balance at
March 31, 2020 of $50.2 million, similar to the end of 2019;
• Revenue and earnings were negatively impacted by downward provisional price adjustments of
$13.6 million due to the decline in copper price in March as a result of COVID-19;
• Earnings from mining operations before depletion and amortization* was $5.9 million, and
Adjusted EBITDA* was $5.3 million;
*Non-GAAP performance measure. See end of news release.
• Net loss (GAAP) for the first quarter was $ 49.0 million ($ 0.20 per share) after depletion and
amortization of $27.1 million and an unrealized foreign exchange loss of $29.7 million. Adjusted
net loss* was $21.6 million ($0.09 per share);
• The Company realized $2.9 million in proceeds from its copper put s in the quarter, and its
outstanding copper puts for April had a fair value of $3.8 million at March 31, 2020; and
• On April 24, 2020, Taseko concluded an amendment to its silver stream with Osisko Gold Royalties
and received $8.5 million in exchange for reducing the delivery price of silver from US$2.75 per
ounce to nil, which further improved its liquidity.
HIGHLIGHTS
Operating Data (Gibraltar - 100% basis) Three months ended March 31,
2020 2019 Change
Tons mined (millions) 28.5 23.3 5.2
Tons milled (millions) 7.5 6.8 0.7
Production (million pounds Cu) 32.4 24.9 7.5
Sales (million pounds Cu) 31.1 23.3 7.8
Financial Data Three months ended March 31,
(Cdn$ in thousands, except for per share amounts) 2020 2019 Change
Revenues 62,084 70,274 (8,190)
Earnings from mining operations before depletion and
amortization* 5,923 15,729 (9,806)
Adjusted EBITDA* 5,346 10,245 (4,899)
Cash flows provided by operations 17,671 7,191 10,480
Adjusted net loss* (21,647) (14,419) (7,228)
Per share - basic (“adjusted EPS”)* (0.09) (0.06) (0.03)
Net loss (GAAP) (48,950) (7,931) (41,019)
Per share - basic (“EPS”) (0.20) (0.03) (0.17)
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar Mine (75% Owned)
Operating data (100% basis) Q1
2020
Q4
2019
Q3
2019
Q2
2019
Q1
2019
Tons mined (millions) 28.5 25.8 24.7 26.6 23.3
Tons milled (millions) 7.5 7.8 7.5 7.7 6.8
Strip ratio 2.7 2.1 3.0 2.3 3.2
Site operating cost per ton milled (CAD$)* $9.52 $10.46 $10.83 $11.51 $10.88
Copper concentrate
Head grade (%) 0.259 0.253 0.249 0.256 0.216
Copper recovery (%) 83.4 84.5 87.7 87.7 84.6
Production (million pounds Cu) 32.4 33.4 33.0 34.7 24.9
Sales (million pounds Cu) 31.1 33.3 33.5 32.3 23.3
Inventory (million pounds Cu) 6.4 5.0 5.0 5.5 3.1
Molybdenum concentrate
Production (thousand pounds Mo) 412 728 620 653 738
Sales (thousand pounds Mo) 403 791 518 708 770
Per unit data (US$ per pound produced)*
Site operating costs* $1.64 $1.85 $1.88 $1.92 $2.23
By-product credits* (0.11) (0.16) (0.16) (0.21) (0.32)
Site operating costs, net of by-product
credits* $1.53 $1.69 $1.72 $1.71 $1.91
Off-property costs 0.29 0.32 0.33 0.30 0.30
Total operating costs (C1)* $1.82 $2.01 $2.05 $2.01 $2.21
*Non-GAAP performance measure. See end of news release.
OPERATIONS ANALYSIS
First quarter results
Copper production in the first quarter was 32.4 million pounds and copper grade for the quarter averaged
0.259%, both in line with the life of mine average. Copper recovery in the mill was 83.4% during the quarter
which was lower than previous quarters due to the higher iron content in the ore.
A total of 28.5 million tons were mined during the period, an increase of 2.7 million tons over the previous
quarter. The strip ratio for the first quarter was 2.7 to 1 as waste stripping to further open up the Pollyanna
pit was increased during the quarter in accordance with the long-term mine plan.
Capitalized stripping costs totaled $13.9 million (75% basis) compared to $8.0 million in Q1 2019. The
capitalized stripping costs are attributable to the above-mentioned advancement into the Pollyanna pit. Total
site spending (including capitalized stripping costs) was lower than the previous quarter, despite increased
mined tons, due to a decline in fuel prices and other costs in the month of March. Shorter haul distances in
the Pollyanna pit also contributed to lower spending.
Molybdenum production was 412 thousand pounds in the first quarter, a decrease from prior quarters due
to lower molybdenum grade, which also reduced recovery. Molybdenum prices averaged US $9.63 per
pound over the first quarter compared to US$9.67 per pound in the prior quarter and US$11.78 per pound
in Q1 2019. By-product credits per pound of copper produced* was US$0.11 in the first quarter, compared
to US$0.16 in the prior quarter.
Off-property costs per pound produced* were US$0.29 for the first quarter of 2020 and consist of
concentrate treatment, refining and transportation costs. These costs are in line with recent quarters relative
to pounds of copper sold.
GIBRALTAR OUTLOOK
To-date, there have been no interruptions to the Company’s operations, logistics and supply chains as a
result of the global COVID-19 pandemic. There have also been no confirmed cases of COVID -19 at any
of Taseko’s operations or offices in Canada and the US.
However, the COVID-19 situation has had a significant impact on the global economy which has led to
lower commodity prices. In light of the lower copper price environment, management has reviewed a
number of mine plan options for Gibraltar and comm encing in April implemented a revised mining plan
for 2020 that will reduce spending in the near term while still maintaining long-term mine plan requirements
and flexibility, and without negatively impacting 2020 copper production. Discretionary capital spending
has been eliminated and major maintenance and equipment rebuilds have been deferred where possible.
The operation is also benefiting from falling input costs, including diesel fuel which is currently 35% lower
than 2019 average prices, and a weak er Canadian dollar (relative to the US dollar) as 80% of Gibraltar’s
costs are denominated in Canadian dollars. The new operating plan and other identified cost savings are
*Non-GAAP performance measure. See end of news release.
GIBRALTAR OUTLOOK - CONTINUED
expected to reduce total site spending (including capitalized stripping) by at least US$0.40 per pound for
the coming quarters
Operating a large, open pit mine such as Gibraltar requires adaptability and management will continue to
monitor market conditions and adjust operating plans as required to respond to changes in copper price
movements in the future. Production guidance for 2020 remains unchanged at 130 million pounds (+/-5%),
although management expects production to be at the higher end of that range based on its revised plan.
The Company is continuing to work with suppliers to identify further cost saving and deferral opportunities
and is also pursuing the BC Hydro power cost deferral program and other government initiatives.
The medium to long-term fundamentals for copper remain strong despite recent volatility caused by global
economic events arising from the coronavirus pandemic, most industry analysts are projecting supply
constraints after an economic recovery which should bring hig her incentive copper prices in the coming
years.
REVIEW OF PROJECTS
Taseko’s strategy has been to grow the Company from the operating cash flow and credit quality of the
Gibraltar Mine to assemble and develop a pipeline of complimentary projects. We continue to believe this
will generate long-term returns for shareholders. Our development projects are focused primarily on copper
and are located in stable mining jurisdictions in British Columbia and Arizona. Our current focus is on the
near term development of the Florence Copper Project.
Florence Copper Project
The Production Test Facility (“PTF”) operated as planned during the first quarter of 2020. Steady state
operation was achieved in 2019 and the focus turned to testing different wellfield oper ating strategies,
including adjusting pumping rates, solution strength, flow direction, and the use of packers in recovery and
injection wells to isolate different zones of the ore body. The Florence Copper technical team is using
physical and operating control mechanisms to adjust solution chemistry and flow rates and is successfully
achieving targeted copper concentration in solution. The PTF wellfield is performing to its design and the
SX-EW plant continues to produce copper cathode.
The main focus of the PTF phase is to demonstrate to regulators and key stakeholders that hydraulic control
of underground leach solutions can be maintained and provide valuable data to validate the Company’s
leach model as well as optimize well design and performance and hydraulic control parameters. Successful
operation of the in- situ leaching process will allow permits to be amended for the full -scale commercial
operation, which is expected to produce 85 million pounds of copper cathode annually for 20 years.
REVIEW OF PROJECTS - CONTINUED
Two permits are required to commence construction of the commercial scale wellfield at Florence Copper.
These are the Aquifer Protection Permit (“APP”) from the Arizona Department of Environmental Quality
(“ADEQ”) and the Underground Injection Control (“UIC”) Permit from the U.S. Environmental Protection
Agency (“EPA”). The Company submitted the applications for both permits in mid -2019 and is in active
dialogue with the regulators and targeting to have permitting for the commercial facility completed in 2020.
During the first quarter, the Company continued to advance discussions with interested parties regarding
the potential sale of a minority interest in the Florence project, and the proceeds of any such sale could fund
a significant portion of the capital required to develop the commercial operation. Discussions with potential
lenders and other finance providers will re -commence near the end of the second quarter. The Company
continues to target having a committed fina ncing package in place prior to receipt of the APP and UIC
permits.
Total net expenditures at the Florence Project for the three months ended March 31, 2020 were $4.8 million
including operation of the PTF and other project development costs.
Yellowhead Copper Project
In January 2020, the Company announced the results of its technical studies on Yellowhead Mining Inc.
(“Yellowhead”) which resulted in a 22% increase in recoverable copper reserves and significantly improved
project economics. The Company filed a new NI 43-101 technical report (“Technical Report on the Mineral
Reserve Update at the Yellowhead Copper Project” dated January 16, 2020) (the “Technical Report”) on
Sedar. Yellowhead holds a 100% interest in a copper -gold-silver development project located in south-
central British Columbia.
The updated Technical Report outlines a new development plan for the project, which includes an 817
million tonne reserve and a 25- year mine life with a pre- tax NPV of $1.3 billion at an 8% discount rate
using a US$3.10 per pound copper price. This represents a $500 million increase over the 2014 Feasibility
Study completed by the previous owner. Capital costs of the project are estimated at $1.3 billion over a 2-
year construction period. Over the f irst 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. The Yellowhead Copper Project contains valuable precious
metal by-products with 440,000 ounces of gold and 19 million ounces of silver with a life of mine value of
over $1 billion at current prices.
The Company is focusing its current efforts on advancing environmental assessment and some additional
engineering work in conjunction with ongoing engagement with local communities including First Nations.
A focus group has been formed between the Company and high- level regulators in the appropriate
Provincial Ministries in order to expedite the advancement of environmental assessment and permitting of
the project. Management also commenced joint venture partnering discussions in the first quarter with a
number of strategic industry groups that are interested in potentially investing in the Yellowhead project in
combination with acquiring the significant copper offtake rights.
REVIEW OF PROJECTS - CONTINUED
New Prosperity Gold- Copper Project
On December 5, 2019, the Company announced that the Tŝilhqot’in Nation as represented by Tŝilhqot’in
National Government and Taseko have entered into a dialogue, facilitated by the Province of British
Columbia, to try to obtain a long -term solution to the conflict regarding Taseko’s proposed gold- copper
mine currently known as New Prosperity, acknowledging Taseko’s commercial interests and the opposition
of the Tŝilhqot’in Nation to the Project. While the details of this process are confidential, in order to
facilitate a dialogue, the parties have agreed to a standstill on certain outstanding litigation and regulatory
matters which relate to Taseko’s tenures and the area in the vicinity of Teztan Biny (Fish Lake).
Aley Niobium Project
Environmental monitoring and product marketing initiatives on the Aley Niobium project continue. The
pilot plant progr am commenced in the second quarter of 2019 has successfully completed the niobium
flotation process portion of the test, raising confidence in the design and providing feed to begin the
converter portion of the process. Completion of the converter portion of the pilot plant will provide
additional process data to support the design of the commercial process facilities and provide final product
samples for marketing purposes.
The Company will host a telephone conference call and live webcast on Thursday, April 30, 2020 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. The conference call may be accessed by dialing (888) 390 -0546 in
Canada and the United States, or (416) 764 -8688 internationally. The conference call will be archived for later
playback until May 14, 2020 and can be accessed by dialing (888) 390-0541 in Canada and the United States, or (416)
764-8677 internationally and using the passcode 247553 #.
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
CEO and Director
No regulatory authority has approved or disapproved of the information in this news release.