Taseko Reports Second Quarter 2019 Financial and Operational Results
TASEKO REPORTS SECOND QUARTER 2019
FINANCIAL AND OPERATIONAL 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 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 7, 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 $18.6
million, Adjusted EBITDA* of $14.7 million and a net loss of $11.0 mi llion, or $0.04 per share, in the
second quarter of 2019.
Stuart McDonald, President of Taseko stated, “Gibraltar produced 34.7 million pounds of copper in the
second quarter, a 39% increase from the previous quarter, as copper head grades increased as expected. We
also benefited from improved recoveries and higher mill throughput. Year-to-date copper production is on
budget and we expect to meet our original 2019 copper production guidance of 130 million pounds (+/ -
5%). Quarterly fluctuations have always been a characteristic of Gibraltar, but on an annual basis the
variability is low.”
“Site operating costs, net of by- product credits* were US$1.71 per pound, 10% lower than the previous
quarter as a result of the increased copper production in the quarter . Our cash balance increased to $42
million during the period and we have a number of initiatives underway to further improve this position as
we move towards potential development of our Florence Copper Project next year,” added Mr. McDonald.
Russell Hallbauer, CEO commented, “The emerging story for Taseko is the Florence Copper Project and
we’ve achieved some significant milestones recently. In April, we plated the first batch of high quality
99.9% copper cathode, just four months after leaching operations commenced. In June, copper grades in
the leach solutions reached commercial levels, well in advance of when we expected this to occur. We also
filed the Aquifer Protection Permit amendment application in June with the Arizona Department of
Environmental Quality and just this week, the Underground Injection Control Permit amendment with the
US EPA. In addition to the continued technical successes, financing discussions are progressing with a
number of potential lenders and joint venture partners.”
Mr. Hallbauer concluded, “We continue the engineering work on our recently acquired Yellowhead Copper
Project. The environmental assessment process is underway and discussions are ongoing with local first
nations and Provincial and Federal government regulators.”
*Non-GAAP performance measure. See end of news release.
Second Quarter Review
Second quarter earnings from mining operations before de pletion and amortization* were $18.6
million, and Adjusted EBITDA was $14.7 million;
Cash flow from operations was $11.1 million, a 54% increase over the first quarter of 2019;
Copper production in the second quarter was 34.7 million pounds and copper sale s were 32.3
million pounds (100% basis), both increasing 39% over the first quarter of 2019;
Molybdenum production was 653 thousand pounds; molybdenum prices remained steady and
averaged US$12.18 per pound during the quarter;
Site operating costs, net of by-product credits* were US$1.71 per pound produced, a 10% decrease
from the first quarter of 2019;
Net loss was $11.0 million ($0.04 per share) and adjusted net loss* was $17.5 million ($0.07 per
share);
Depletion and amortization was $30.1 million in the second quarter, an increase of $10.0 million
(or $0.04/share) from the prior quarter due to increased depreciation of capitalized strip associated
with ore processed from the Granite pit;
During the quarter, the Company entered into equipment refinancings at attractive rates on existing
mine equipment at Gibraltar and received net proceeds of $22.2 million, and made its semi-annual
bond interest payment of $14.3 million;
In April 2019, the Company announced first copper production from the test facility at the Florence
Copper project. In June 2019, the Company announced its submission of the permit amendment
application for the Aquifer Protection Permit to the Arizona Department of Environmental Quality
and that it achieved commercial grade leach solution; and
The Company’s cash balance at June 30, 2019 was $42.0 million.
*Non-GAAP performance measure. See end of news release.
HIGHLIGHTS
Financial Data Three months ended June 30, Six months ended June 30,
(Cdn$ in thousands, except for per share amounts) 2019 2018 Change 2019 2018 Change
Revenues 86,521 94,273 (7,752) 156,795 158,452 (1,657)
Earnings from mining operations before depletion
and amortization* 18,646 36,267 (17,621) 34,375 49,811 (15,436)
Earnings (loss) from mining operations (11,492) 18,312 (29,804) (15,947) 17,076 (33,023)
Net loss (11,012) (4,671) (6,341) (18,943) (23,152) 4,209
Per share - basic (“EPS”) (0.04) (0.02) (0.02) (0.08) (0.10) 0.02
Adjusted net income (loss)*
(17,471) 2,337 (19,808) (31,890) (8,662) (23,228)
Per share - basic (“adjusted EPS”)* (0.07) 0.01 (0.08) (0.13) (0.04) (0.09)
Adjusted EBITDA* 14,660 32,251 (17,591) 24,905 39,788 (14,883)
Cash flows provided by operations 11,073 20,349 (9,276) 18,264 31,905 (13,641)
Operating Data (Gibraltar - 100% basis) Three months ended June 30, Six months ended June 30,
2019 2018 Change
2019 2018 Change
Tons mined (millions) 26.6 27.4 (0.8) 50.0 54.1 (4.1)
Tons milled (millions) 7.7 7.5 0.2 14.5 15.0 (0.5)
Production (million pounds Cu) 34.7 33.5 1.2 59.5 56.4 3.1
Sales (million pounds Cu) 32.3 32.2 0.1 55.6 55.0 0.6
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar Mine (75% Owned)
Operating data (100% basis) Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018
Tons mined (millions) 26.6 23.3 28.4 29.0 27.4
Tons milled (millions) 7.7 6.8 7.1 8.0 7.5
Strip ratio 2.3 3.2 5.1 1.7 1.9
Site operating cost per ton milled (CAD$)* $11.51 $10.88 $9.16 $10.60 $10.31
Copper concentrate
Head grade (%) 0.256 0.216 0.222 0.314 0.263
Copper recovery (%) 87.7 84.6 81.3 85.9 85.3
Production (million pounds Cu) 34.7 24.9 25.8 43.0 33.5
Sales (million pounds Cu) 32.3 23.3 42.7 28.8 32.2
Inventory (million pounds Cu) 5.5 3.1 1.6 18.5 4.2
Molybdenum concentrate
Production (thousand pounds Mo) 653 738 727 690 506
Sales (thousand pounds Mo) 708 770 738 709 424
Per unit data (US$ per pound produced)*
Site operating costs* $1.92 $2.23 $1.92 $1.50 $1.78
By-product credits* (0.21) (0.32) (0.30) (0.16) (0.12)
Site operating costs, net of by-product credits* $1.71 $1.91 $1.62 $1.34 $1.66
Off-property costs 0.30 0.30 0.49 0.24 0.32
Total operating costs (C1)* $2.01 $2.21 $2.11 $1.58 $1.98
OPERATIONS ANALYSIS
Second Quarter Operating Results
Copper production in the second quarter was 34.7 million pounds. Copper grade for the quarter averaged
0.256%, which was in line with management expectations, the mine plan, and the life of mine av erage
grade. Copper recovery in the mill was 87.7% during the quarter. Production was also positively affected
by higher mill throughput during the quarter.
A total of 26.6 million tons were mined during the period, an increase of 3.3 million tons over the previous
quarter as shovel fleet availability returned to planned levels. The strip ratio for the second quarter was 2.3
to 1.
*Non-GAAP performance measure. See end of news release.
OPERATIONS ANALYSIS - CONTINUED
Total site spending (includ ing capitalized stripping costs) was 6% higher than the previous quarter. The
increase was a result of higher mine operations costs from an increase in tons mined and timing of
maintenance related costs. A smaller proportion of mining costs are being capitalized in the second quarter
because of advancement in the Granite pit. Capitalized stripping costs totaled $2.0 million (75% basis)
compared to $8.0 million in the prior quarter. These factors contributed to the increase in site operating
cost per ton milled*, which was $11.51 for the period.
Molybdenum production was 653 thousand pounds in the second quarter. Molybdenum prices held steady
and averaged US$12.18 per pound over the quarter. By -product credits per pound of copper produced*
decreased to US$0.21 in the second quarter from US$0.32 in the previous quarter as a result of the increase
in copper production.
Off-property costs per pound produced* were US$0.30 for the second quarter of 2019. Off -property costs
consist of concentrate treatme nt, 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 produ ction 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
for the remainder of the year. The fundamentals for copper remain str ong 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 pipe line 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. O ur current 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. On
April 12, 2019, the Company announced that the SX/EW plant wa s producing first copper and the first
harvest from the PTF resulted in 3,700 pounds of copper cathode which was assayed at higher than 99.9%
copper. In June, the Company announced that after approximately six months of operating the PTF, the
leach solution reached commercial grade levels well in advance of expectations.
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 key permit amendments are required to commence construction of the commercial scale facility at
Florence Copper. These are the Aquifer Protection Permit (“APP”) amendment application to the Arizona
Department of Environmental Quality (“ADEQ”) and the permit amendment application for the
Underground Injection Control (“UIC”) Permit to the U.S. Environmental Protection Agency (“EPA”). In
June 201 9, the Company submitted the APP amendment application to the ADEQ. The UIC permit
amendment application was submitted to the EPA in the first week of August. It is anticipated that
permitting of the commercial scale operation could be completed in the first half of 2020.
The estimated capital cost of the commercial scale operation is US$204 million based on the Company’s
2017 43-101 technical report and 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 in the second quarter of 2019 were $3.5 million which includes
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 3 1, 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 by the end of 2019.
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 were $0.1 million in the first half of 2019.
REVIEW OF PROJECTS - CONTINUED
New Prosperity
In June 2019, the Supreme Court of Canada dismissed the Tsilhqot’in First Nation application to appeal an
earlier judgment by the BC Supreme Court and by the British Columbia Court of Appeal. These court
rulings confirm that the Company can proceed with the site investigation work that was authorized by t he
Province of British Columbia in July 2017. The approved work program is investigative in nature and will
gather hydrological and other information required for the British Columbia Mines Act Permitting process.
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 conference call on Thursday, August 8, 2 019 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific) to
discuss these results. The conference call may be accessed by dialing (888) 390-0546 in Canada and the United States,
or (416) 764 -8688 internationally. Alternatively, a live and archived webcast will also be available at
tasekomines.com. The conference call will be archived for later playback until August 22, 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
190432.
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
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 co sts absorbed into inventory, as well as transportation costs and insurance 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 coppe r pounds produced. Total operating costs per pound is the sum of site 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 tre atment 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
June 30,
Six months ended
June 30,
(Cdn$ in thousands, unless otherwise indicated) – 75%
basis 2019 2018 2019 2018
Cost of sales 98,013 75,961 172,742 141,376
Less:
Depletion and amortization (30,138) (17,955) (50,322) (32,735)
Net change in inventories of finished goods 3,989 (813) 8,035 154
Net change in inventories of ore stockpiles (540) 5,007 (413) 1,111
Transportation costs (4,630) (4,529) (7,918) (7,358)
Insurance recoverable - - - 4,000
Site operating costs 66,694 57,671 122,124 106,548
Less by-product credits:
Molybdenum, net of treatment costs (7,243) (3,830) (15,062) (8,839)
Silver, excluding amortization of deferred revenue (93) (159) (279) (251)
Site operating costs, net of by-product credits 59,358 53,682 106,783 97,458
Total copper produced (thousand pounds) 26,020 25,120 44,661 42,265
Total costs per pound produced 2.28 2.14 2.39 2.31
Average exchange rate for the period (CAD/USD) 1.34 1.29 1.33 1.28
Site operating costs, net of by-product credits (US$ per
pound) 1.71 1.66 1.79 1.80
Site operating costs, net of by-product credits 59,358 53,682 106,783 97,458
Add off-property costs:
Treatment and refining costs 5,839 5,938 10,105 9,892
Transportation costs 4,630 4,529 7,918 7,358
Total operating costs 69,827 64,149 124,806 114,708
Total operating costs (C1) (US$ per pound) 2.01 1.98 2.10 2.12