Taseko Reports First Quarter 2019 Financial & Operating Results
TASEKO REPORTS FIRST QUARTER 2019 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 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.
May 8, 2019, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE AMERICAN: TGB) ("Taseko"
or the "Company") reports the results for the three months ended March 31, 2019.
First quarter EBITDA* was $16.7 million and adjusted EBITDA of $10.2 million. The Company reported
Earnings from mining operations before depletion and amortization of $15.7 million and a net loss of $7.9
million, or $0.03 per share.
Russell Hallbauer, President and CEO of Taseko, commented, “With a grade profile similar to 2018, copper
and molybdenum production are expected to increase through 2019 and our previously stated guidance
remains unchanged at 130 million lbs +/-5%.”
“Copper production in the first quarter was 25 million pounds, similar to the first quarter 2018. Gibraltar
mine sequencing on a quarterly basis creates some grade variability, but year-over-year production will be
much more consistent. Site operating costs* of US$1.91/lb and site operating cost per ton milled* of $10.88
remain within our expectations and should decline as production increases,” continued Mr. Hallbauer.
Mr. Hallbauer added, “Metal recoveries for both copper and molybdenum were excellent considering the
lower copper head grade. Molybdenum production was up nearly 70% from the first quarter 2018, to
738,000 pounds. With moly prices stable at approximately US$12 per pound, we recorded a by-product
credit of US$0.32 per pound, the highest in a number of years.
As was experienced throughout Western Canada in the quarter, severe winter weather affected all aspects
of our Gibraltar operation, from shovel availabilities through to waste stripping and ore release. This , in
combination with harder ore in the current Granite Pit pushback, reduced average mill throughput to 76,000
tons per day, which affected both copper and molybdenum production. Those issues are now behind us and
we are back to normal throughput, with increasing head grade.”
“We made great progress at our Florence Copper project. Wellfield operations commenced late last year
and after approximately three months of initial leaching, the copper leach solution was introduced to the
SX/EW plant. By the middle of April , the plant was producing high quality copper cathode which was
assayed at +99.9% copper. While we have always been confident with the process, it is fair to say that our
expectations were surpassed in producing such high quality copper so quickly after wellfield start -up,”
added Mr. Hallbauer.
*Non-GAAP performance measure. See end of news release.
Going forward the Company will be focusing on three key areas:
1. The amendment to the operating permits for commercial operation;
2. Optimization of the leach process; and
3. Completion of a financing package for the commercial facility build out.
“A number of years ago, the decision was made to include a test phase to the project development plan.
The permits that are currently in place only need to be amended for commercial scale-up. The advantage of
operating the test facility is to have real operational data to provide to the state and federal regulators. This
data is proof of performance and reliability, as opposed to theoretical predictions, and is constantly shared
with regulators. This data will support a seamless and expedited amendment process which will be
commencing in the coming weeks.
The success we are having with both the quantity and quality of cathode being produced is a major step in
de-risking the project and creating many different financing opportunities for Taseko. The interest to
participate in the future of one of the lowest cost copper producers in the world cannot be understated. The
economics of the project are very compelling for all types of finance providers and we believe we can
successfully arrange an attractive financing package,” concluded Mr. Hallbauer.
First Quarter Review
• First quarter earnings from mining operations before depletion and amortization* were $15.7
million, and Adjusted EBITDA was $10.2 million;
• Net loss was $7.9 million ($0.03 per share) and includes an unrealized foreign exchange gain of
$6.7 million. Adjusted net loss* was $14.4 million ($0.06 per share);
• Cash flow from operations was $7.2 million;
• Copper production in the first quarter was 24.9 million pounds and copper sales were 23.3 million
pounds (100% basis);
• Molybdenum production was 738 thousand pounds, a 67% increase over the first quarter of 2018,
due to strong operating performance in the molybdenum plant.
• Site operating costs, net of by -product credits* were US$1.91 per pound produced and Total
operating costs (C1)* were US$2.21 per pound produced;
• In April 2019, the Company announced first copper production from the test facility at the Florence
Copper project. The first harvest resulted in 3,700 pounds of copper cathode, which was assayed at
higher than 99.9% copper;
*Non-GAAP performance measure. See end of news release.
• The Company closed its acquisition of Yellowhead Mining Inc. (“Yellowhead”) on February 15,
2019. The environmental review process for the Yellowhead Project has been restarted, and
Taseko’s technical team is working on a number of engineering initiatives to improve the project
economics with the objective of issuing a new 43-101 technical report by the end of 2019; and
• The Company’s cash balance at March 31, 2019 was $34.5 million. Subsequent to the first quarter,
the Company entered into an equipment l oan, secured on existing mine equipment, and received
net proceeds of $12.5 million.
HIGHLIGHTS
Financial Data Three months ended March 31,
(Cdn$ in thousands, except for per share amounts) 2019 2018 Change
Revenues 70,274 64,179 6,095
Earnings from mining operations before depletion and amortization* 15,729 13,544 2,185
Loss from mining operations (4,455) (1,236) (3,219)
Net loss (7,931) (18,481) 10,550
Per share - basic (“EPS”) (0.03) (0.08) 0.05
Adjusted net loss*
(14,419) (10,999) (3,420)
Per share - basic (“adjusted EPS”)* (0.06) (0.05) (0.01)
EBITDA* 16,658 370 16,288
Adjusted EBITDA* 10,245 7,537 2,708
Cash flows provided by operations 7,191 11,556 (4,365)
Operating Data (Gibraltar - 100% basis) Three months ended March 31,
2019 2018 Change
Tons mined (millions) 23.3 26.7 (3.4)
Tons milled (millions) 6.8 7.5 (0.7)
Production (million pounds Cu) 24.9 22.9 2.0
Sales (million pounds Cu) 23.3 22.8 0.5
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar Mine (75% Owned)
Operating data (100% basis) Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018
Tons mined (millions) 23.3 28.4 29.0 27.4 26.7
Tons milled (millions) 6.8 7.1 8.0 7.5 7.5
Strip ratio 3.2 5.1 1.7 1.9 4.1
Site operating cost per ton milled (CAD$)* $10.88 $9.16 $10.60 $10.31 $8.68
Copper concentrate
Head grade (%) 0.216 0.222 0.314 0.263 0.201
Copper recovery (%) 84.6 81.3 85.9 85.3 75.7
Production (million pounds Cu) 24.9 25.8 43.0 33.5 22.9
Sales (million pounds Cu) 23.3 42.7 28.8 32.2 22.8
Inventory (million pounds Cu) 3.1 1.6 18.5 4.2 2.9
Molybdenum concentrate
Production (thousand pounds Mo) 738 727 690 506 443
Sales (thousand pounds Mo) 770 738 709 424 433
Per unit data (US$ per pound produced)*
Site operating costs* $2.23 $1.92 $1.50 $1.78 $2.25
By-product credits* (0.32) (0.30) (0.16) (0.12) (0.23)
Site operating costs, net of by-product credits* $1.91 $1.62 $1.34 $1.66 $2.02
Off-property costs 0.30 0.49 0.24 0.32 0.31
Total operating costs (C1)* $2.21 $2.11 $1.58 $1.98 $2.33
OPERATIONS ANALYSIS
First Quarter Operating Results
Copper production in the first quarter was 24.9 million pounds. Copper grade for the quarter averaged
0.216%, which was in line with management expectations and the mine plan, and approximately 15% below
the life of mine average grade. Production was also affected by lower than planned mill throughput as a
result of harder ore.
A total of 23.3 million tons were mined during the period, which was below plan due an extended period
of extremely cold weather and unplanned mechanical issues which impacted shovel availability. The strip
ratio for the first quarter was 3.2 to 1, and mill feed was supp lemented with 1.2 million tons of ore drawn
from the stockpile.
*Non-GAAP performance measure. See end of news release.
OPERATIONS ANALYSIS - CONTINUED
Site operating cost per ton milled* was $10.88 in the first quarter of 2019. In addition, capitalized stripping
costs totaled $8.0 million (75% basis), or $1.57 per ton milled.
Total site spending (including capitalized stripping costs) was 7% lower than the previous quarter.
However, site operating costs per pound produced* increased to US$2.23 f rom US$1.92 in the previous
quarter, as a smaller portion of costs were allocated to capitalized stripping in the current period.
Molybdenum production was 738 thousand pounds in the first quarter, a result of continued strong
molybdenum plant operating performance. By -product credits per pound of copper produced* increased
to US$0.32 in the first quarter from US$0.30 in the previous quarter.
Off-property costs per pound produced* were US$0.30 for the first quarter of 2019. Off -property costs
consist of concentrate treatment, refining and transportation costs, and these costs are in line with recent
quarters.
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. While there will be quarterly fluctuations in both
copper and molybdenum production, the Company does not anticipate those fluctuations to be as significant
as 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.
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 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 curre nt focus is on the
development of the Florence Copper Project.
Florence Copper
Wellfield operations at the Production Test Facility (“PTF”) commenced in the fourth quarter of
2018. During the first quarter of 2019, concentrations of copper in the leach solution increased to levels
which allowed the SX/EW plant to begin operation, and on April 12 th the Company announced that the
SX/EW plant was producing first copper.
The initial leaching period has taken approximately three months which was in line with expectations. The
proportion of ore contacted underground with leach solution (known as “Sweep Efficiency”) has been
encouraging to-date. The Company’s modelling predicted a 55% Sweep Efficiency after the first year of
leaching and that level was achieved after the first three months.
*Non-GAAP performance measure. See end of news release.
REVIEW OF PROJECTS - 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 valuable data to validate the Company’s
leach model as well as optimize well designs and performance and hydraulic control parameters. Successful
operation of the in- situ leaching process will allow permits to be amend ed for the full scale commercial
operation, which is expected to produce 85 million pounds of copper cathode annually for 20 years. The
permit amendment process has started and i t is anticipated that construction of the commercial scale
operation could be commenced in the first half of 2020.
The estimated capital cost of the commercial scale operation is US$204 million and the Company has begun
initial discussions to advance project financing options from a variety of sources including debt providers,
royalty companies, and potential joint venture partners. Management is encouraged by the expressions of
interest from all potential sources to date, and is targeting to have committed funding in place before the
end of the year.
Total expenditures at the Florence Project in the first quarter of 2019 were $3.3 million which includes PTF
operation and other project development costs.
Yellowhead Copper
On December 4, 2018, the Company entered into an ag reement to acquire 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. The transaction was structured as a plan of arrangement pursuant to the Busines s
Corporations Act (British Columbia) and required the approval of the Supreme Court of British Columbia
and Yellowhead shareholders. All approvals were received and the transaction closed on February 15, 2019.
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 avera ge 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 closing of the acquisition, Taseko has restarted the environmental review process for the
Yellowhead Copper Project, and the Company’s technical team has commenced work on a number of
engineering initiatives to improve the project economics with the objective of issuing a new 43 -101
technical report by the end of 2019.
Aley Niobium
Environmental monitoring on the project continues and product marketing initiatives are underway. A drill
program was completed in the third quarter of 2018 t o collect samples for further metallurgical testing.
Aley project expenditures were $0.1 million in the first quarter of 2019.
The Company will host a telephone conference call and live webcast on Thursday, May 9, 2019 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 16, 2019 and can be accessed by dialing (888) 390-0541 in Canada and the United States, or (416)
764-8677 internationally and using the passcode 676442.
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 measures 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 and i nsurance recoverable. Site
operating costs is calculated by removing net changes in inventory, depletion and amortization, insurance recoverable, and
transportation 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 aggregate of
the applicable costs by copper pounds produced. Total operating costs per pound is the sum of s ite 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 March 31,
(Cdn$ in thousands, unless otherwise indicated) – 75% basis 2019 2018
Cost of sales 74,729 65,415
Less:
Depletion and amortization (20,184) (14,780)
Net change in inventories of finished goods 4,046 967
Net change in inventories of ore stockpiles 127 (3,896)
Transportation costs (3,288) (2,829)
Insurance recovery - 4,000
Site operating costs 55,430 48,877
Less by-product credits:
Molybdenum, net of treatment costs (7,819) (5,009)
Silver, excluding amortization of deferred revenue (186) (92)
Site operating costs, net of by-product credits 47,425 43,776
Total copper produced (thousand pounds) 18,641 17,145
Total costs per pound produced 2.54 2.55
Average exchange rate for the period (CAD/USD) 1.33 1.26
Site operating costs, net of by-product credits (US$ per pound) 1.91 2.02
Site operating costs, net of by-product credits 47,425 43,776
Add off-property costs:
Treatment and refining costs 4,266 3,954
Transportation costs 3,288 2,829
Total operating costs 54,979 50,559
Total operating costs (C1) (US$ per pound) 2.21 2.33