Taseko Announces Financial and Operational Results FOR the Third Quarter 2019
TASEKO ANNOUNCES FINANCIAL AND OPERATIONAL RESULTS FOR
THE THIRD QUARTER 2019
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, sales volumes and inventory stated in this release are on a 100% basis unless otherwise
indicated.
November 6, 2019, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB)
("Taseko" or the "Company") reports earnings from mining operations before depletion and
amortization* of $12.3 million and adjusted EBITDA* of $7.9 million for the three months ended
September 30, 2019.
The third quarter copper production at Gibraltar of 33 million pounds was on plan, with grades, mill
throughput and recoveries all in line with management expectations. We expect to achieve the original
2019 guidance of 130 million pounds (+/-5%) of copper, and 2020 should be a similar production year.
An updated mineral reserve estimate for Gibraltar has been completed (details included below), and a
new NI 43-101 technical report was filed on SEDAR today.
Russell Hallbauer, CEO and Director of Taseko, commented, “The Gibraltar Mine continues to be a
cornerstone asset for our Company. We’re pursuing and evaluating a number of improvements, with a
focus on opportunities to increase mill throughput and recoveries, as well as mining related
enhancements. Mining and milling technology is constantly evolving which provides opportunities for a
steady-state mine, like Gibraltar, to improve.”
“We continued to make great strides forward at our Florence Copper Project this quarter and copper
production at the project test facility continues to increase. We’re gaining valuable operating experience
which will benefit us with the commercial facility development and we continue to maintain compliance
with all environmental guidelines. Florence Copper has the potential to transform Taseko’s production
profile in the coming years, and dramatically reduce our consolidated unit costs. We recently announced
our intention to list Taseko on the London Stock Exchange (“LSE”) Main Market, and as part of the
listing process we engaged an independent engineering firm, Roscoe Postle Associates Inc. (“RPA”), to
prepare a Competent Persons Report (“CPR”) on the Florence Copper Project. The CPR confirms a
project with a production capacity of 85 million pounds of copper over a 20 year mine life, with an after-
tax NPV (at 8%) of US$670 million and an IRR of 40%. RPA’s findings represent a strong independent
third party endorsement for the project and the previous technical work we have completed,” concluded
Stuart McDonald, President of Taseko.
*Non-GAAP performance measure. See end of news release.
Third Quarter Review
• Third quarter earnings from mining operations before depletion and amortization* were $12.3
million, and Adjusted EBITDA was $7.9 million;
• Cash flow from operations was $15.2 million, a 37% increase over the second quarter of 2019;
• The Company’s cash balance at September 30, 2019 was $42.0 million, unchanged from the
prior quarter;
• Copper production in the third quarter was steady at 33.0 million pounds and copper sales were
33.5 million pounds (100% basis);
• Molybdenum production was 620 thousand pounds in line with plan; molybdenum prices
averaged US$11.83 per pound during the quarter;
• Site operating costs, net of by-product credits* were US$1.72 per pound produced, comparable
to the second quarter of 2019 of US$1.71 per pound;
• Net loss was $24.5 million ($0.10 per share) and adjusted net loss* was $20.6 million ($0.08 per
share);
• The Florence Copper project continues to advance its production test facility operation with the
focus turning to testing different wellfield operating 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 orebody. During the quarter, Florence delivered its first shipment
of LME grade A copper cathode; and
• Finished goods inventory at September 30, 2019 at Gibraltar (100% basis) includes 5 million
pounds of copper and 129 thousand pounds of molybdenum with a sales value for Taseko’s share
of approximately $12.0 million.
Competent Person Reports for LSE Listing
As a requirement of the LSE listing process, the Company engaged Roscoe Postle Associates Inc.
(“RPA”) to prepare an independent Competent Persons Report (“CPR”) for the Gibraltar Mine and the
Florence Copper Project. The Gibraltar Mine CPR confirmed the Company’s mineral reserve estimate
in its 43-101 Technical Report dated November 6, 2019, and contains no other significant findings.
The Florence Copper Project CPR contains a number of estimates which are different than the estimates
in the 2017 Florence Technical Report dated January 16, 2017 (the “2017 Technical Report”), and the
key differences are summarized as follows:
• The mineral reserve estimate in the CPR is the same as the 2017 Technical Report, however,
RPA lowered the estimate of total copper recovery to 65% (compared to 70% in the 2017
Technical Report), based on a more conservative interpretation of previous metallurgical test
work.
• The CPR assumes accelerated wellfield development to maintain annual copper production
capacity of 85 million pounds over a mine life of 20 years.
*Non-GAAP performance measure. See end of news release.
• RPA reviewed the initial start-up results of the Florence Production Test Facility in mid-2019
but opined the results were too preliminary in nature to make firm judgements at that time.
Accordingly, the CPR does not reflect any updates to reflect these test facility operations.
• Capital and operating cost estimates were escalated to June 2019 US dollar basis using a
combination of cost indexes and updated reagent, power and labour costs. Initial capital
costs in the CPR increased to US$227 million from US$204 million in the 2017 Technical
Report. Cash requirements for reclamation bonding reduced to US$9 million from US$ 22
million in the 2017 Technical Report. Operating costs increased to US$1.13/lb of copper
produced, from US$ 1.10/lb in the 2017 Technical Report.
• An economic analysis was completed by RPA using the mine plan included in the 2017
Technical Report and their updated capital and operating cost estimates. RPA also
incorporated current federal US tax law changes resulting from the ‘Tax Cuts and Jobs Act’
(TCJA) signed into law on December 22, 2017. Using a copper price of US$3.10/lb and an
8% discount rate results in an after-tax NPV of US$667 million (versus US$680 million in
the 2017 Technical Report). The Project has an after-tax Internal Rate of Return (IRR) of
40.2% and payback period of 2.3 years from start of commercial operations (versus 37% and
2.5 years in the 2017 Technical Report).
• The CPR includes a resource estimate prepared in accordance with NI 43-101 utilizing CIM
definitions. The resource estimate includes 296 million tons of Indicated resources grading
0.35% Cu, that were reclassified from the Measured resource category in the 2017 Technical
Report, based on RPA’s assessment that there was not sufficient density information in their
opinion to support categorization as Measured resources. The total measured and indicated
resource estimate is the same as in the 2017 Technical Report.
The updates to the resource estimate and project economics contained in the CPR are not considered by
the Company to constitute a material change either in its assessment of the Florence Copper Project or in
relation to the Company as a whole. Accordingly, the 2017 Technical Report remains current and an
updated 43-101 technical report on the Florence Copper Project will not be filed.
The CPR reports for Gibraltar Mine and Florence Copper Project will be included in the LSE
Prospectus, and will be filed on SEDAR at the time of the LSE listing, which is expected to be
completed before the end of 2019.
Gibraltar Mineral Reserve Estimate
The Company has filed an updated mineral reserve estimate and NI 43-101 Technical Report entitled
“Technical Report on the Mineral Reserve Update at the Gibraltar Mine” dated November 6, 2019 on
SEDAR.com. Gibraltar’s updated proven and probable reserves as of December 31, 2018 are as follows:
Summary of Mineral Reserves – December 31, 2018
Taseko Mines – Gibraltar Mine
Ore Type Category Tonnage
(Mst)
Cu Grade
(%)
Mo Grade
(%)
Sulphide: 0.15% Cu Cut-off Grade
Proven 469 0.26 0.008
Probable 121 0.23 0.008
Ore Stockpiles 3 0.19 0.008
Total 594 0.25 0.008
Oxide: 0.10% ASCu Cut-off Grade
Proven 1 0.16
Probable 16 0.15
Total 17 0.15
Notes:
1. CIM (2014) definitions were followed for Mineral Reserves.
2. Mineral Reserves are presented on a 100% basis.
3. Mineral Reserves are estimated using a copper price of US$2.75/lb, a molybdenum price of US$8.00/lb, and an exchange
rate of US$1.00: C$1.25.
4. Mineral Reserves for sulphide ore are estimated at a cut-off grade of 0.15% Cu with a maximum 50% ASCu content
constraint. Mineral Reserves for oxide ore are estimated at a cut-off grade of 0.10% ASCu.
5. Mineral Reserves are estimated as mined and delivered to the processing facilities.
6. Numbers may not add due to rounding.
The mineral reserves stated above are contained within the measured and indicated mineral resources
below:
Summary of Mineral Resources – December 31, 2018
Taseko Mines – Gibraltar Mine
Category Tonnage
(Mst)
Cu Grade
(%)
Mo Grade
(%)
Measured 806 0.25 0.008
Indicated 303 0.23 0.007
Total Measured + Indicated 1,109 0.25 0.007
Inferred 59 0.21 0.004
Notes:
1. CIM (2014) definitions were followed for Mineral Resources.
2. Mineral Resources are presented on a 100% basis.
3. Sulphide Mineral Resources are estimated at a cut-off grade of 0.15% Cu.
4. Oxide Mineral Resources are estimated at a cut-off grade of 0.10% ASCu.
5. Mineral Resources are estimated using a long-term copper price of US$3.25/lb, a molybdenum price of US$12.00/lb, and
an exchange rate of US$1.00: C$1.25.
6. Tonnage factors are 12 ft3/st for in situ material and 15 ft3/st for fill.
7. Mineral Resources are inclusive of Mineral Reserves.
8. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
9. Numbers may not add due to rounding.
The resource and reserve estimation was completed by Taseko staff under the supervision of Richard Weymark, P.Eng.,
MBA, Chief Engineer and a Qualified Person under National Instrument 43-101. Mr. Weymark has reviewed this release.
HIGHLIGHTS
Financial Data
Three months ended
September 30,
Nine months ended
September 30,
(Cdn$ in thousands, except for per share amounts) 2019 2018 Change 2019 2018 Change
Revenues 82,436 74,297 8,139 239,231 232,749 6,482
Earnings from mining operations before depletion
and amortization* 12,317 33,742 (21,425) 46,692 83,553 (36,861)
Earnings (loss) from mining operations (15,737) 13,568 (29,305) (31,684) 30,644 (62,328)
Net income (loss) (24,508) 7,098 (31,606) (43,451) (16,054) (27,397)
Per share - basic (“EPS”) (0.10) 0.03 (0.13) (0.18) (0.07) (0.09)
Adjusted net income (loss)*
(20,561) 1,464 (22,025) (52,451) (7,198) (45,253)
Per share - basic (“adjusted EPS”)* (0.08) 0.01 (0.09) (0.22) (0.03) (0.19)
Adjusted EBITDA* 7,906 31,940 (24,844) 32,811 71,728 (38,917)
Cash flows provided by operations 15,150 18,053 (2,903) 33,414 49,958 (16,544)
Operating Data (Gibraltar - 100% basis)
Three months ended
September 30,
Nine months ended
September 30,
2019 2018 Change
2019 2018 Change
Tons mined (millions) 24.7 29.0 (4.3) 74.7 83.1 (8.4)
Tons milled (millions) 7.5 8.0 (0.5) 22.1 22.9 (0.8)
Production (million pounds Cu) 33.0 43.0 (10.0) 92.5 99.4 (6.9)
Sales (million pounds Cu) 33.5 30.2 3.3 89.1 83.8 5.3
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar Mine (75% Owned)
Operating data (100% basis) Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018
Tons mined (millions) 24.7 26.6 23.3 28.4 29.0
Tons milled (millions) 7.5 7.7 6.8 7.1 8.0
Strip ratio 3.0 2.3 3.2 5.1 1.7
Site operating cost per ton milled (CAD$)* $10.83 $11.51 $10.88 $9.16 $10.60
Copper concentrate
Head grade (%) 0.249 0.256 0.216 0.222 0.314
Copper recovery (%) 87.7 87.7 84.6 81.3 85.9
Production (million pounds Cu) 33.0 34.7 24.9 25.8 43.0
Sales (million pounds Cu) 33.5 32.3 23.3 42.7 28.8
Inventory (million pounds Cu) 5.0 5.5 3.1 1.6 18.5
Molybdenum concentrate
Production (thousand pounds Mo) 620 653 738 727 690
Sales (thousand pounds Mo) 518 708 770 738 709
Per unit data (US$ per pound produced)*
Site operating costs* $1.88 $1.92 $2.23 $1.92 $1.50
By-product credits* (0.16) (0.21) (0.32) (0.30) (0.16)
Site operating costs, net of by-product credits* $1.72 $1.71 $1.91 $1.62 $1.34
Off-property costs 0.33 0.30 0.30 0.49 0.24
Total operating costs (C1)* $2.05 $2.01 $2.21 $2.11 $1.58
OPERATIONS ANALYSIS
Third Quarter Operating Results
Copper production in the third quarter was 33.0 million pounds. Copper grade for the quarter averaged 0.249%,
which was in line with management expectations, the mine plan, and the life of mine average grade. Copper recovery
in the mill was 87.7% during the quarter which was consistent with Q2 and improved over the prior year. Production
was also affected by slightly lower mill throughput during the quarter.
A total of 24.7 million tons were mined during the period, a decrease of 1.9 million tons over the previous quarter
and the ore stockpile was drawn down by 1.4 million tons. The strip ratio for the third quarter was 3.0 to 1.
Capitalized stripping costs totaled $8.6 million (75% basis) compared to $2.0 million in the prior quarter due to
advancement into the Pollyanna pit and associated waste stripping. These factors contributed to the decrease in site
operating cost per ton milled*, which was $10.83 for the quarter, 6% lower than the prior quarter.
*Non-GAAP performance measure. See end of news release.
OPERATIONS ANALYSIS - CONTINUED
Total site spending (including capitalized stripping costs) was generally in line with the previous quarter.
Molybdenum production was 620 thousand pounds in the third quarter. Molybdenum prices held steady and
averaged US$11.83 per pound over the quarter. By- product credits per pound of copper produced* decreased to
US$0.16 in the third quarter from US$0.21 in the previous quarter as a result of the lower molybdenum sales.
Off-property costs per pound produced* were US$0.33 for the third quarter of 2019. Off -property costs consist of
concentrate treatment, refining and transportation costs, and these costs are in line with recent quarters relative to
copper sold.
GIBRALTAR OUTLOOK
Gibraltar is expected to produce approximately 130 million pounds (+/-5%) on a 100% basis in 2019, comparable
to the production level achieved in 2018.
The fundamentals for copper remain strong and most industry analysts are projecting a growing deficit and higher
copper prices in the coming years. Expansion of overseas copper smelting capacity and tighter supply conditions
has recently resulted in notably lower concentrate treatment and refining charges (“TCRC”). The Company recently
completed a spot copper concentrate contract at an attractive rate significantly below the 2019 benchmark.
On November 6, 2019, the Company will publish an updated 43-101 Technical report on the Gibraltar Mine. Based
on this updated technical report, sufficient Mineral Reserves exist to support an approximate 19- year production
plan out to 2038 with annual average copper production of 130 million pounds, and the Mineral Resource potential
exists to further extend the mine life.
PROJECT UPDATE
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 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. Our current focus is on the development of the Florence Copper Project.
Florence Copper
The Production Test Facility (“PTF”) continued to operate as planned in the quarter . On October 21, 2019, the
Company provided an operational update highlighti ng that steady state operation has been achieved, with focus
turning to testing different wellfield operating strategies, including adjusting pumping rates, solution strength, flow
direction, and the use of packers in recovery and injection wells to isolat e different zones of the orebody. Sweep
efficiencies in the wellfield continue to outperform management expectations. The Florence Copper technical team
is using physical and operating control mechanisms to adjust solution chemistry and flow rates and is successfully
increasing copper concentration in solution. The main recovery well is now producing copper in solution at an
annualized rate of approximately 600,000 pounds per year, and the expectation is for steady improvement as the
well matures.
*Non-GAAP performance measure. See end of news release.
PROJECT UPDATE - CONTINUED
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 val uable 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 up to 85 million pounds of annual copper cathode capacity for 19 years.
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”). In
June 2019, the Company submitted the APP application to the ADEQ. The UIC permi t application was submitted
to the EPA in the first week of August. Operating permits for the commercial scale wellfield are expected to be
received in the summer of 2020. The Company is planning to continue to operate the PTF until the end of 2020.
The Company has continued to advance various project financing options from debt providers, royalty companies,
and potential joint venture partners. Management is targeting to have the project finance funding committed in
advance of both the APP and UIC permit amendments being issued by the ADEQ and EPA, respectively.
Total expenditures at the Florence Project for the nine months ending September 30, 2019 were $10.8 million
including the PTF operation and other project development costs.
Yellowhead Copper
On February 15, 2019, the Company acquired all of the outstanding common shares of Yellowhead Mining Inc.
(“Yellowhead”) that it did not already own, in exchange for 17.3 million Taseko common shares.
Yellowhead holds a 100% interest in a copper -gold-silver development project located in south -central British
Columbia. The project feasibility study dated July 31, 2014, proposed a 70,000 tonne per day concentrator with
total pre-production capital costs of approximately $1 billion and an average operating cost of US$1.46 per pound
of copper. Using US$3.00 per pound of copper, a Canadian/US dollar exchange rate of 0.80, an 8% discount rate
and other assumptions from the 2014 feasibility study results in a pre-tax net present value of $1.1 billion.
Since the acquisition, Taseko has restarted the environmental review process for the Yellowhead Copper Project,
and the Company’s technical team has commenced an engineering redesign of the project to enhance economics
with the objective of issuing a new 43-101 technical report in due course.
Aley Niobium
Environmental monitoring and product marketing initiatives on the project continue. A drill program was completed
in 2018 to collect samples for further metallurgical testing. A pilot plant scale program commenced in the second
quarter on the currently bench scale proven niobium flotation and converter processes. The pilot plant will also
provide final product samples for marketing purposes. Aley project expenditures for the nine months ended
September 30, 2019 were $0.5 million.