Taseko Announces 43 Million Pounds of Copper Production and Financial Results for the Third Quarter
Press Release
October 31, 2018, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB) (“Taseko” or the “Company”) reports earnings from mining operations before depletion and amortization* of $33.7 million and adjusted net income* of $1.5 million for the three months ended September 30, 2018.
Russell Hallbauer, President & CEO commented, “In August, Gibraltar’s mine engineering group determined that the Granite Pit high wall could be steepened, based on data from geotechnical and rock structure evaluations. We immediately redesigned the Granite Pit pushback, which allowed us earlier access to high grade ore benches. These benches, which we partially mined in the third quarter, were not included in the 2018 mine plan and ended up having a dramatic impact on copper production during the quarter.”
“Not only did we benefit from higher grade ore in the third quarter, but the ore that was processed was also softer and we were able to achieve higher than design throughput of 87,000 tons per day, 6% higher than the previous quarter. The combination of higher grade ore and throughput resulted in 43 million pounds of copper production in the third quarter,” added Mr. Hallbauer.
Mr. Hallbauer continued, “Sales of 29 million pounds in the quarter were below production due to extremely poor rail service, which stranded 18.5 million pounds of copper in concentrate at the mine. The lower sales affected our quarterly revenues by approximately $40 million and cash flow by approximately $30 million, based on current copper pricing.”
“We continued to make progress at our Florence Copper Project during the quarter. The wellfield, SX/EW plant and all associated infrastructure are now commissioned and pre-operations tests are being performed with positive results to-date. We anticipate final authorizations to commence operations from the regulators shortly, and are ready to immediately commence leaching operations. This project represents many near-term catalysts for the Company as we demonstrate the low-cost, environmental and technical attributes of the in-situ production process,” continued Mr. Hallbauer.
“Fourth quarter production is expected to be at a more normalized level, with estimated total copper production of 130 million pounds for 2018. We anticipate that during the fourth quarter the railway will be able to move most of the excess copper concentrate inventory, in addition to the fourth quarter production, to the port for shipping. Depending on vessel scheduling and berth availability, we could realize sales of approximately 45 million pounds (100% basis) for the quarter,” concluded Mr. Hallbauer.
Third Quarter Highlights
- Copper production in the third quarter was 43.0 million pounds (100% basis), which represents a 28% increase over the previous quarter as a result of the higher head grades and increased mill throughput;
- Total copper sales for the quarter were 29.0 million pounds (100% basis), as concentrate shipments were delayed by poor rail service between the mine and the port terminal. As a result, inventories increased to 18.5 million pounds of copper (100% basis) at September 30, 2018. The lower sales affected the Company’s quarterly revenues by approximately $40 million and cash flow by approximately $30 million, based on current copper pricing. The excess inventory is expected to be sold in the fourth quarter;
- Third quarter earnings from mining operations before depletion and amortization* were $33.7 million;
- Net income was $7.1 million ($0.03 net earnings per share) and Adjusted net income* was $1.5 million ($0.01 per share);
- Site operating costs, net of by-product credits* were US$1.34 per pound produced and Total operating costs (C1)* were US$1.58 per pound produced, as unit costs were positively impacted by the higher grades and production;
- The Company has finalized an insurance claim of $7.9 million (75% basis) related to the Cariboo region wildfires in July 2017. Third quarter earnings include an insurance recovery of $3.9 million;
- Construction of the Production Test Facility (“PTF”) for the Florence Copper Project was completed in October, on time and on budget. The facility is operational and first copper cathode is expected by the end of this year;
- Cash flow from operations was $18.1 million, which was impacted by a $12.6 million working capital adjustment related to the increased inventories and the timing of customer payments;
- At September 30, 2018 the Company held put options for 15 million pounds of copper with scheduled maturities over the fourth quarter of 2018 at a strike price of US$2.80 per pound; and
- The Company’s cash balance at September 30, 2018 was $45 million, a reduction from the previous quarter mainly due to the build-up of unsold copper concentrate inventories.
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