Taseko Delivers Solid Operational Performance and $51 Million of Adjusted EBITDA IN the Second Quarter
TASEKO DELIVERS SOLID OPERATIONAL PERFORMANCE AND $51 MILLION
OF ADJUSTED EBITDA IN THE SECOND QUARTER
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 am ounts 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 5, 2020, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB ; LSE:
TKO) ("Taseko" or the "Company") reports earnings from mining operations before depletion and
amortization* of $50.3 million, Adjusted EBITDA* of $50.9 million and Net income of $18.7 million, or
$0.08 per share, in the second quarter of 2020.
Russell Hallbauer, CEO and Director, commented, “ In March, in response to a lower copper pricing
environment, we seamlessly implemented a modified mine plan at Gibraltar and are very pleased with our
operating results for the first half of 2020, and our response to the changing market conditions. The copper
price recovery from the lows in mid -March is remarkable and demonstrates how strong the fundamentals
for copper really are. With current pricing at US$2.95 per pound, copper is 20% higher than the second
quarter average price. This price increase flows straight to Taseko’s bottom line and directly increases cash
flow from Gibraltar. While we remain very bullish on the prospect s for copper, it is still early days in the
recovery and we have no intentions to adjust this current mine plan.”
Stuart McDonald, President of Taseko stated, “Strong second quarter production of 36.8 million pounds of
copper and 644,000 pounds of molybdenum resulted in a significant uptick in quarterly financial
performance. Total operating costs (C1)* of US$1.34 per pound combined with average copper prices for
the quarter of US$2.43 per pound provided Taseko with a strong operating margin of $50 million (excluding
depletion and amortization) for the quarter. Our cash balance increased to $6 4 million at the end of June,
after making the C$15 million interest payment on our outstanding bonds.”
“Copper production for the first half of 2020 was right on plan and in line with the higher end of our original
guidance. Production and site spending in the second half of the year is expected to be at similar levels as
the first half,” added Mr. McDonald.
Mr. Hallbauer continued, “As previously disclosed, we are expecting the draft Aquifer Protection Permit to
be issued by the Arizona Department of Environmental Quality tomorrow. This is a very exciting milestone
to have achieved and is another important step closer to adding 85 million pounds of low cost copper
production to our Gibraltar base.”
*Non-GAAP performance measure. See end of news release.
“The US Environmental Protection Agency is nearing completion of their technical review and no
significant issues have been identified. While progress is being made, the COVID-19 situation in Arizona
has had an impact on the permitting process and this has extended the timeline by a few months, but we
still expect to have a fully permitted project in early 2021.”
“Discussions with potential joint venture partners and lenders, as well as streaming and royalty companies,
continue. Interest on all fronts remains at a high level and we believe a financing package will be finalized
and committed prior to final permits being issued. For the most part, this process has not been hindered by
COVID-19,” concluded Mr. Hallbauer.
Second Quarter Review
• The Gibraltar Mine (100% basis) produced 36.8 million pounds of copper in the second quarter, a
14% increase over the first quarter. Copper recoveries w ere 85.2% and copper head grades were
0.281%;
• In April, management implemented a revised mine plan and budget for Gibraltar which has reduced
site spending in the current year while maintaining long -term mine plan requirements. Total
operating costs (C1)* were US$1.34 per pound produced in the second quarter, which is US$0.48
per pound lower than the prior quarter, and in line with the revised operating plan;
• Earnings from mining operations before depletion and amortization* were $50.3 million, and
Adjusted EBITDA* was $50.9 million;
• Cash flow from operations were $37.1 million and the Company had an ending cash balance at
June 30, 2020 of $63.6 million;
• Gibraltar sold 39.3 million pounds of copper in the quarter (100% basis) which resulted in $106.0
million of revenue for Taseko, a 71% increase from the first quarter. Revenue included upward
provisional price adjustments of $10.1 million;
• Net income (GAAP) for the second quarter was $ 18.7 million ($0.08 per share). A djusted net
income* was $8.3 million ($0.03 per share);
• 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$2.75 per
ounce to nil;
• Gibraltar also concluded a spot tender for copper concentrate in the second half of the year at a
TC/RC rate approximately 40% below the 2020 benchmark level as buyers competed for clean,
high quality concentrate like Gibraltar’s;
• With all required produc tion test results completed, Florence Copper made the decision to begin
the wind-down of the production test facility and to commence the final phase of rinsing the small
section of the orebody where the test wellfield is located. The Arizona Department of
Environmental Quality (“ADEQ”) has informed Taseko it plans to issue the draft Aquifer
Protection Permit on August 6, 2020; and
*Non-GAAP performance measure. See end of news release.
• In May 2020, Taseko published its first Environmental, Social, and Governance report, which
includes an examination of the Company’s sustainable performance, with specific details for 2017,
2018 and 2019. The report is available on the Company’s website at www.tasekomines.com/esg.
HIGHLIGHTS
Operating Data (Gibraltar - 100% basis) Three months ended June 30, Six months ended June 30,
2020 2019 Change 2020 2019 Change
Tons mined (millions) 20.5 26.6 (6.1) 49.0 50.0 (1.0)
Tons milled (millions) 7.7 7.7 - 15.2 14.5 0.7
Production (million pounds Cu) 36.8 34.7 2.1 69.2 59.5 9.7
Sales (million pounds Cu) 39.3 32.3 7.0 70.4 55.6 14.8
Financial Data Three months ended June 30, Six months ended June 30,
(Cdn$ in thousands, except for per share amounts) 2020 2019 Change 2020 2019 Change
Revenues 106,005 86,521 19,484 168,089 156,795 11,294
Earnings from mining operations before depletion
and amortization* 50,336 18,646 31,690 56,259 34,375 21,884
Adjusted EBITDA* 50,860 14,660 36,200 56,206 24,905 31,301
Cash flows provided by operations 37,079 11,073 26,006 54,750 18,264 36.486
Adjusted net income (loss)* 8,335 (17,471) 25,806 (13,312) (31,890) 18,578
Per share - basic (“adjusted EPS”)* 0.03 (0.07) 0.10 (0.05) (0.13) 0.08
Net income (loss) (GAAP) 18,745 (11,012) 29,757 (30,205) (18,943) (11,262)
Per share - basic (“EPS”) 0.08 (0.04) 0.12 (0.12) (0.08) (0.04)
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar Mine (75% Owned)
Operating data (100% basis) Q2
2020
Q1
2020
Q4
2019
Q3
2019
Q2
2019
Tons mined (millions) 20.5 28.5 25.8 24.7 26.6
Tons milled (millions) 7.7 7.5 7.8 7.5 7.7
Strip ratio 1.9 2.7 2.1 3.0 2.3
Site operating cost per ton milled (CAD$)* $7.66 $9.52 $10.46 $10.83 $11.51
Copper concentrate
Head grade (%) 0.281 0.259 0.253 0.249 0.256
Copper recovery (%) 85.2 83.4 84.5 87.7 87.7
Production (million pounds Cu) 36.8 32.4 33.4 33.0 34.7
Sales (million pounds Cu) 39.3 31.1 33.3 33.5 32.3
Inventory (million pounds Cu) 3.8 6.4 5.0 5.0 5.5
Molybdenum concentrate
Production (thousand pounds Mo) 639 412 728 620 653
Sales (thousand pounds Mo) 656 403 791 518 708
Per unit data (US$ per pound produced)*
Site operating costs* $1.15 $1.64 $1.85 $1.88 $1.92
By-product credits* (0.11) (0.11) (0.16) (0.16) (0.21)
Site operating costs, net of by-product credits* $1.04 $1.53 $1.69 $1.72 $1.71
Off-property costs 0.30 0.29 0.32 0.33 0.30
Total operating costs (C1)* $1.34 $1.82 $2.01 $2.05 $2.01
OPERATIONS ANALYSIS
Second quarter results
To-date, there have been no interruptions to the Company’s operations, logistics and supply chains as a
result of the COVID-19 pandemic. Effective health and safety protocols continue to be implemented. There
have been no known cases of COVID-19 at any of Taseko’s locations in Canada and the US to-date.
*Non-GAAP performance measure. See end of news release.
OPERATIONS ANALYSIS - CONTINUED
However, the COVID-19 situation has had a significant impact on the global economy which has led to
increased volatility in commodity prices. In light of the volatility, management has reviewed a number of
mine plan options for Gibraltar and commencing in April implemented a revised mining plan for 2020 that
will reduce spending in the near term while sti ll maintaining long -term mine plan requirements and
flexibility, and without negatively impacting 2020 copper production. Copper production in the second
quarter was 36.8 million pounds as a result of grade and recovery as higher grade ore was mined from t he
bottom of the Granite pit.
The strip ratio for the second quarter was 1.9 to 1 and was lower than previous quarters due to less waste
rock remaining in the Granite pit, but in line with the life of mine average strip ratio. The lower overall
mining rate resulted in reduced costs and the operation also benefited from falling input costs, including
diesel fuel which was 35% lower than 2019 average prices. As a result, total site spending (including
capitalized stripping costs) was 24% lower than the previous quarter. Shorter haul distances in the Pollyanna
pit also contributed to lower spending.
Molybdenum production was 639 thousand pounds in the second quarter, an increase from the prior quarter
due to higher molybdenum grade, which also increased recovery. Molybdenum prices averaged US$ 8.37
per pound over the second quarter compared to US$9.63 per pound in the prior quarter and US$12.18 per
pound in Q2 2019. By-product credits per pound of copper produced* was US$0.11 in the second quarter,
consistent with the prior quarter.
Off-property costs per pound produced* were US$0.30 for the second 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
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 and the strong first half of
2020. The new operating plan and other identified cost savings will continue to result in lower site spending
in the coming months. Total site spending in the second half of the year is expected to be at similar levels
as the first half of 20 20. Operating a large, open pit mine such as Gibraltar requires adaptability thus
management will continue to monitor market conditions and adjust operating plans as required to respond
to copper price movements.
Mine site engineering has found opportunities in changing the pit development sequencing by incorporating
the Gibraltar pit after completion of the current mining phase of the Granite pit. The Gibraltar pit has not
been mined since the 1970s and is the lowest work index ore (softer ore) on the Gibraltar property. Access
to, and processing of, this ore type will provide substantial productivity and cost improvements to the
operation once developed and active.
*Non-GAAP performance measure. See end of news release.
GIBRALTAR OUTLOOK - CONTINUED
Copper prices have recovered swiftly due to recovery in Chinese demand and supply disruptions, most
notably in South America. The medium to long-term fundamentals for copper remain strong despite recent
volatility caused by uncertain global economic demand arising from the COVID -19 pandemic. Most
industry analysts are projecting supply constraints after an economic recovery, which should bring higher
copper prices in the coming years.
REVIEW OF PROJECTS
Taseko’s strategy has been to grow the Compan y 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 continuously without disruption during the second quarter
of 2020. Steady state operation was achieved in 2019 and the focus turned 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 ore body. The operating team has
used physical and operating control mechanisms to adjust solution chemistry and flow rates and has
successfully achieved targeted copper concentration in solution. Pregnant leach solution (“PLS”) grade in
the centre recovery well (most representative of the performance of the commercial wellfield) has been
stable at roughly two grams per litre since November and in June and July the SX/EW plant produced at a
rate of approximately one million pounds of copper cathode per year, mainly from the centre recovery well.
The PTF has provided valuable data to validate the Company’s modelled assumptions and operating
parameters, and this data is being used to refine operating plans for the commercial phase. With all of the
required data in hand, we recently made the decision to wind down the production phase of the test facility
and commence rinsing the small section of the orebody where the wellfield has been operating.
Two permits are required to commence construction of the commercial scale wellfield at Florence Copper,
which is expected to produce 85 million pounds of copper cathode annually for 20 years. 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 has been informed by the ADEQ that it will issue the draft APP on August 6, 2020.
After the draft permit is issued there will be a 30 -day public comment period and public meetings before
the final APP permit is approved. The EPA is also nearing completion of its technical review for the UIC
permit, and no significant i ssues have been identified. While progress is being made, the COVID -19
situation in Arizona has had an impact on the EPA process and this has extended the timeline by a few
months, but management still expects the project will be fully permitted in early 2021.
REVIEW OF PROJECTS - CONTINUED
During the second 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 are ongoing. The Company targets having a committed financing
package in place prior to receipt of the permits.
Total net expenditures at the Florence Project during the first half of 2020 were $9.1 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 ( 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 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 first 5 years of operation, the coppe r 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 the environmental assessment and some
additional engineering work in con junction 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 the environmental assessment
and the permitting of the project. Management also commenced joint venture partnering discussions in
2020 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.
In May 2020, the Company announced it has entered into an agreement with an Indigenous Nation
regarding Taseko’s intentions to commence the regulatory approval process of the Yellowhead Copper
Project. The agreement represents Taseko’s commitment to recognize and respect the Nation’s inherent
right to govern its lands, and the importance of assessing the Yellowhead Copper Project in accordance
with its values, laws, and community aspirations to make an informed decision on the project.
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 progra m 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 o f 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.
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 telephone conference call and live webcast on Thursday, August 6, 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 o pen 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 August 20, 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 273649 #.
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.