Taseko Reports 2017 Fourth Quarter and Annual Financial Results
TASEKO REPORTS 2017 FOURTH QUARTER AND
ANNUAL FINANCIAL 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 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.
February 21, 2018, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB) ("Taseko" or
the "Company") reports financial results for the fourth quarter and full year ending December 31, 2017.
Russell Hallbauer, President and CEO of Taseko, commented, “2017 was an excellent year for Taseko,
demonstrated by the $211 million of cash flow from operations and $164 million of EBITDA for the year, with $32
million and $22 million, respectively, coming in the fourth quarter. Over the past three months, copper prices have
averaged approximately US$3.15 per pound, which is 30% higher than where it was at the beginning of 2017.
Additionally, molybdenum prices are 50% higher today over the same period and are now over US$12 per pound.
Given this higher metal pricing environment, our financial performance is expected to continue into 2018, allowing
us to invest in and advance our projects. I cannot stress enough how important it is to have a long life cash flowing
asset, such as Gibraltar, as the foundation upon which to build a successful company.”
Mr. Hallbauer continued, “In addition to our financial successes in 2017, we achieved a number of important
milestones during the year, on both c orporate and operational levels. Our balance sheet was greatly strengthened
after completing a new, long-term debt financing, Gibraltar had one of its strongest production years ever and we
made significant strides forward on our Florence Copper project.”
“Our Florence Copper pro ject has been advancing on -time and on budget. We now have nearly 80% of the test
wellfield completed and construction crews broke ground on the SX/EW plant in January. Pre -leaching of the
deposit and commissioning of the SX/EW plant are expected to begin in the third quarter, with first cathode
production before the end of 2018. We will be evaluating the operating data from the wellfield while we complete
permit amendments for the full scale production facility,” added Mr. Hallbauer.
“2017 was not without its challenges, the most significant being the major wildfires in the BC Cariboo region this
past summer. During these wildfires, w e maintained production with reduced operations personnel for a lengthy
period and also had a complete s hutdown of the mine for several days in July – this had an immediate impact on
mine production but, more importantly, impacted our mine plan sequencing which has continued to affect
production into the first quarter of 2018. Taking this into account, the f irst quarter will be similar to the fourth
quarter in terms of grade and copper production. Looking beyond the first quarter, with higher stripping rates and
transition into the new ore zone completed, copper grade will increase and we expect the average copper grade for
2018 to be in line with Gibraltar’s life of mine average grade.” concluded Mr. Hallbauer.
*Non-GAAP performance measure. See end of news release.
2017 Annual Highlights
• Earnings from mining operations before depletion and amortization* was $177.7 million, a significant
increase over the $54.7 million in 2016 due to higher copper and molybdenum production, lower costs and
stronger metal prices;
• The Company generated cash flows from operations of $211.1 million, up from $33.9 million in 2016;
• Higher throughput and grades in 2017 resulted in strong copper and molybdenum production of 14 1.2
million pounds and 2.6 million pounds (100% basis), an increase of 6% and 178%, respectively, over 2016;
• Net income for the year was $34.3 million, or $0.15 per share, and Adjusted net income* was $41.4 million,
or $0.18 per share;
• The cash balance at the end of 2017 was $80.2 million, slightly lower than the end of 2016 as the Company
used $72 million of cash to complete a refinancing and reduce long-term debt in June 2017;
• Site operating costs* were US$1.09 per pound produced, and Total operating costs (C1)* were US$1.43
per pound produced, reductions of 28% and 23%, respectively, over 2016 unit costs;
• In March the Company completed a US$33 million streaming agreement with Osisko Gold Royalties Ltd.
for Taseko’s 75% share of payable silver production from the Gibraltar Mine;
• In April 2017, the Company announced that a new long- term agreement w as ratified by its unionized
employees at Gibraltar. The new agreement will be effective through May 31, 2021;
• In June 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;
• In July 2017, Gibraltar’s mining and milling operations were impacted by wildfires in the Cariboo region
which limited our employees’ ability to travel to the mine site, due to restrictions on road access and
evacuation orders in the region; and
• In September 2017, the Company announced that it had received all necessary state and federal permits to
build and operate the Florence Copper Production Test Facility (“PTF”) in Arizona, and the Company’s
board of directors had approved the construction of the PTF at an estimated cost of US$25 million.
Fourth Quarter 2017 Highlights
• Earnings from mining operations before depletion and amortization* was $32.7 million, compared to $46.6
million in the fourth quarter of 2016;
• Cash flow from operations was $31.9 million, a decrease from the same period in 2016 due to lower
production and sales volumes;
*Non-GAAP performance measure. See end of news release.
Fourth Quarter 2017 Highlights - Continued
• Copper and molybdenum production in the fourth quarter was 25.5 million pounds and 0.5 million pounds,
respectively, a decrease from previous quarters as a result of the anticipated lower grade mine feed
combined with the increased use of lower grade ore stockpiles, a consequence of the summer wildfires;
• The increased use of stockpiled ore resulted in a non-cash inventory expense and additional depletion and
amortization which reduced earnings from mining operations by $10.6 million in the fourth quarter of 2017;
• Site operating costs, net of by-product credits* were US$1.69 per pound produced and Total operating costs
(C1)* were US$2.11 per pound produced. Spending in the quarter remained at a similar level as previous
quarter but unit costs were impacted by the lower grades and production; and
• Total sales (100% basis) for the q uarter were 32.0 million pounds of copper and 0.6 million pounds of
molybdenum.
HIGHLIGHTS
Financial Data
Year ended
December 31,
Three Months Ended
December 31,
(Cdn$ in thousands, except for per share
amounts) 2017 2016 Change 2017 2016 Change
Revenues 378,299 263,865 114,434 95,408 94,628 780
Earnings from mining operations before depletion
and amortization* 177,716 54,715 123,001 32,696 46,617 (13,921)
Earnings (loss) from mining operations 129,994 1,776 128,218 18,135 37,393 (19,258)
Net income (loss) 34,262 (31,396) 65,658 (7,600) 5,113 (12,713)
Per share - basic (“EPS”) 0.15 (0.14) 0.29 (0.03) 0.02 (0.05)
Adjusted net income (loss)*
41,420 (31,860) 73,280 (1,544) 16,404 (17,948)
Per share - basic (“adjusted EPS”)* 0.18 (0.14) 0.32 (0.01) 0.07 (0.08)
EBITDA* 163,757 39,520 124,237 22,350 32,312 (9,962)
Adjusted EBITDA* 161,749 41,628 120,121 28,639 44,477 (15,838)
Cash flows provided by operations 211,079 33,853 177,226 31,899 49,663 (17,764)
Operating Data (Gibraltar - 100% basis)
Year ended
December 31,
Three Months Ended
December 31,
2017 2016 Change 2017 2016 Change
Tons mined (millions) 93.1 87.6 5.5 26.9 18.5 8.4
Tons milled (millions) 29.8 29.5 0.3 7.9 7.3 0.6
Production (million pounds Cu) 141.2 133.3 7.9 25.5 40.7 (15.2)
Sales (million pounds Cu) 143.7 131.1 12.6 32.0 40.4 (8.4)
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar mine (75% Owned)
Operating Data (100% basis) Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 YE 2017 YE 2016
Tons mined (millions) 26.9 23.3 21.1 21.8 18.5 93.1 87.6
Tons milled (millions) 7.9 7.2 7.5 7.3 7.3 29.8 29.5
Strip ratio 4.9 4.1 2.8 2.4 1.1 3.4 1.5
Site operating cost per ton milled (CAD$) ** $7.68 $5.93 $7.67 $8.59 $9.13 $7.48 $9.47
Copper concentrate
Grade (%) 0.209 0.284 0.309 0.328 0.319 0.281 0.264
Recovery (%) 77.5 86.1 85.2 85.9 87.0 84.1 85.5
Production (million pounds Cu) 25.5 35.1 39.4 41.3 40.7 141.2 133.2
Sales (million pounds Cu) 32.0 30.2 40.7 40.8 40.4 143.7 131.1
Inventory (million pounds Cu) 2.7 9.3 4.6 5.9 5.6 2.7 5.6
Molybdenum concentrate
Production (thousand pounds Mo) 537 445 789 866 764 2,637 949
Sales (thousand pounds Mo) 589 403 794 859 798 2,645 903
Per unit data (US$ per pound)*
Site operating costs* $1.86 $0.97 $1.08 $1.15 $1.23 $1.22 $1.58
By-product credits* (0.17) (0.09) (0.11) (0.15) (0.11) (0.13) (0.06)
Site operating, net of by-product credits* $1.69 $0.88 $0.97 $1.00 $1.12 $1.09 $1.52
Off-property costs 0.42 0.30 0.34 0.33 0.36 0.34 0.33
Total operating costs (C1)* $2.11 $1.18 $1.31 $1.33 $1.48 $1.43 $1.85
OPERATIONS ANALYSIS
Full-year results
Gibraltar’s copper production in 2017 was 141.2 million pounds, a 6% increase over 2016 due to higher average
head grades and increased mill throughput. Mining and milling operations in July and August were impacted by
wildfires in the Cariboo region which limited our employees’ ability to travel to the mine site, resulting in reduced
mine and mill production for periods of time as well as a complete mine shutdown for several days.
A total of 93.1 million tons were mined in the year at a strip ratio of 3.4 to 1. Waste stripping costs of $69.0 million
(75% basis) were capitalized in 2017, an increase over the $9.2 million capitalized in 2016, as a new pushback in
the Granite pit was initiated in the current year. Approximately 8.5 million tons of ore were drawn from ore
stockpiles during the year.
*Non-GAAP performance measure. See end of news release.
OPERATIONS ANALYSIS – CONTINUED
Site operating costs per pound* for the year were US$1.22 per pound of copper produced, a 23% reduction from 2016,
primarily due to the higher copper production and increased capitalization of stripping costs in 2017.
Molybdenum production for 2017 was approximately 2.6 million pounds, resulting in by -product credits per pound
produced* of US $0.13, an increase from US$0.06 in the prior year.
Off property costs per pound produced* were US$0.34 per pound of copper produced, consistent with US$0.33 per pound
produced in 2016. Long-term contracts for treatment and refining costs and ocean freight were completed in 2016.
Total operating costs (C1)* decreased to US$1.43 per pound for the year, compared to US$1.85 per pound in 2016.
Fourth quarter results
Fourth quarter copper production at Gibraltar was 25.5 million pounds, lower than the previous quarters in 2017 as a
result of reduced head grades. Although a reduction in head grade was expected in the mine plan, head grade was further
affected by reduced waste stripping in the third quarter as a result of the summer wildfires in the Cariboo region whereby
more mill feed came from the stockpile than planned. Copper head grade at Gibraltar was 0.209% in the fourth quarter.
The low head grades and some oxidation from stockpile also impacted copper recoveries which averaged 78% for the
period.
A total of 26.9 million tons were mined during the quarter at a strip ratio of 4.9 to 1. Waste stripping costs of $17.5
million (75% basis) were capitalized in the quarter related to the new pushback in the Granite pit. Approximately 4.3
million tons of ore were drawn from the ore stockpile in the fourth quarter.
Site operating cost per ton milled* was $7.68 in the fourth quarter of 2017, which is higher than the third quarter primarily
due to the decreased capitalization of stripping costs.
Site operating costs per pound produced* increased to US$1.86 in the fourth quarter of 2017 from US$0.97 in the third
quarter of 2017. The increase is due to the lower copper production and lower capitalized stripping costs during the fourth
quarter. A total of 0.6 million pounds of molybdenum were sold resulting in by-product credits per pound produced* of
US$0.17 in the fourth quarter.
Off-property costs per pound produced* were US$0.42 for the fourth quarter of 2017 compared to the prior quarter off-
property costs of US$0.30. The increase is due to the higher sales volumes, as treatment and refining and ocean freight
costs are recognized at the time of sale.
Total operating costs (C1) per pound* increased to US$2.11, a 79% increase from the third quarter of 2017.
Health and Safety Milestones
Health and safety have always been a high-level commitment for Taseko, Gibraltar, and Florence management. Taseko
is committed to operational practices that result in improved efficiencies, safety performance and occupational health.
Nothing is more important to the Company than the safety, health and well-being of our workers and their families.
*Non-GAAP performance measure. See end of news release.
OPERATIONS ANALYSIS – CONTINUED
Gibraltar’s 2017 loss time frequency was 0.59 per one million man hours worked, below the British Columbia
mining industry average of 1.06.
In February 2017, the Province of British Columbia Ministry of Energy and Mines awarded Gibraltar with the 2016
John Ash award at the 55th Annual Mine Safety Awards held in Victoria, BC, for the third year in a row. This
prestigious award goes to the mining operation in British Columbia that has worked at least one million hours during
the year with the lowest injury-frequency rate.
As site activities ramp up at the Florence PTF we are pleased to report that there were no lost time accidents in
2017.
GIBRALTAR OUTLOOK
During the summer wildfires, the Gibraltar Mine maintained production with reduced operations personnel for a
lengthy period and also had a complete shutdown for several days in July. This had an immediate impact on mine
production but, more importantly, impacted mine plan sequencing which has continued to affect copper production
into the first quarter of 2018. Taking this into account, head grades and copper production in the first quarter of
2018 will be similar to the fourth quarter of 2017. Looking beyond the first quarter, with the higher stripping rates
and the transition into the new ore zone completed, copper grade will increase and we expect the average copper
grade for 2018 to be in line with Gibraltar’s life of mine average grade.
Copper markets have shown continued strength in early 2018 with prices rising to US$3.19 per pound as of February
20, 2018. Molybdenum prices have also continued to strengthen in the first quarter of 2018, increasing to US$12.33
per pound as of February 20, 2018, which is 40% higher than the average molybdenum price in the fourth quarter
of 2017. The Company continues to review engineering plans for a potential mill expansion at Gibraltar.
The Company is pursuing an insurance claim related to the Cariboo region wildfires in July 2017. The amount of
the claim cannot be determined at this time, but could be in the range of $3 to $10 million.
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. Our project focus is currently on the development of the Florence
Copper Project where we incurred expenditures of $15.2 million in 2017 (2016 - $5.0 million). We also spent $1.7
million on the Aley Niobium project in 2017 (2016 - $0.8 million) and $1.7 million on the New Prosperity project
(2016 - $1.7 million). Taseko will continue to take a prudent approach to spending on development projects.
*Non-GAAP performance measure. See end of news release.
REVIEW OF PROJECTS – CONTINUED
Florence Copper Project
In January 2017, the Company announced that completed technical work on the Florence property has resulted in a
significant improvement in project economics. The NI 43-101 technical report documenting these results was filed
on www.sedar.com on February 28, 2017.
Florence Copper Technical Report Highlights:
• Pre-tax net present value of US$920 million at a 7.5% discount rate;
• Post-tax net present value of US$680 million* at a 7.5% discount rate;
• Pre-tax internal rate of return of 44% with a 2.3 year payback;
• Operating costs of US$1.10 per pound LME grade cathode copper;
• Total life of mine production in excess of 1.7 billion pounds of copper;
• Average annual production of 81 million pounds of copper for the life of mine;
• 21 year mine life;
• Total pre-production capital cost of US$200 million; and
• Long-term copper price of US$3.00 per pound.
*The Company expects that the reduced US corporate income tax rates, announced in December 2017, will have a
significant positive impact on the project’s post-tax net present value.
In September 2017, the Company announced that it has now received all necessary state and federal permits to build
and operate the Production Test Facility (“PTF”) and is moving forward with construction of the PTF at an estimated
cost of US$25 million. PTF construction expenditures in the fourth quarter of 2017 were $5.3 million.
The PTF will include a well field comprised of thirteen commercial scale production wells, numerous monitoring,
observation and point of compliance wells, and an integrated SX/EW plant. The PTF is expected to be operational
in the latter half of 2018.
Aley Niobium Project
In 2014, the Company filed an NI43 -101 technical report for the Aley Niobium Project. Further engineering and
metallurgical testwork has been completed since then which is expected to result in improved project economics.
Environmental monitoring on the project continues and a number of product marketing initiatives are underway.
The Company will host a telephone conference call and live webcast on Thursday, February 22, 2018 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 di aling (877) 303- 9079 in Canada and the
United States, or (970) 315-0461 internationally.
The conference call will be archived for later playback until March 1, 2018 and can be accessed by dialing (855) 859 -2056 in
Canada and the United States, or (404) 537-3406 internationally and using the passcode 1099316.
For further information on Taseko, please see the Company’s website www.tasekomines.com or contact:
Brian Bergot, Vice President, Investor Relations - 778-373-4533 or toll free 1-877-441-4533
Russell Hallbauer
President and CEO
No regulatory authority has approved or disapproved of the information in this news release.