Taseko Reports $63 Million of Adjusted EBITDA for Third Quarter 2023
Press Release
November 1, 2023, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB; LSE: TKO) (“Taseko” or the “Company”) reports third quarter 2023 Adjusted EBITDA* of $63 million and Earnings from mining operations before depletion and amortization* of $65 million. Adjusted net earnings* for the quarter were $20 million, or $0.07 per share.
Gibraltar produced 35 million pounds of copper and 369 thousand pounds of molybdenum in the third quarter, 26% and 60% higher than the second quarter, respectively. Improved production was a result of higher grades, throughput and recoveries. Higher production, of both copper and molybdenum, drove Total operating costs (C1)* down 17% to US$2.20 per pound.
Adjusted EBITDA* increased by 182% over the prior quarter despite third quarter sales volumes being impacted by a port workers strike in July. The excess inventory at the end of the third quarter is expected to be shipped and sold in the fourth quarter.
Stuart McDonald, President and CEO of Taseko, commented “In the third quarter a major milestone was achieved at our Florence Copper project; receipt of the final Underground Injection Control permit from the U.S. Environmental Protection Agency (“EPA”). This week the EPA confirmed that no appeals or objections have been received and that the permit is now effective. This is a great result and evidence of the quality and integrity of the project.
We are now preparing for construction and site preparation will begin later in the fourth quarter. Florence financing discussions are well advanced and the additional financings are expected to close in early 2024, and then wellfield drilling will commence.”
Mr. McDonald continued, “We are pleased with Gibraltar’s performance in the third quarter. Copper head grade increased to 0.26% in the period as the lower benches of the Gibraltar pit provided the higher grades and more consistent mineralized zones we expected. Mill performance was also strong as copper recoveries averaged 85% and the softer ore in the Gibraltar pit helped to achieve a throughput rate over 87,000 tons per day, 10% higher than the first half of 2023. The Gibraltar pit will continue to be our main source of ore through the middle of 2024, providing us with predictable and consistent mill feed. The operation remains on track to meet the original 2023 production guidance of 115 million pounds of copper (+/-5%).”
“We continue to have our copper put protection in place US$3.75 per pound until the end of the year, and we now have a minimum price of US$3.25 per pound protected for the first quarter of 2024.” concluded Mr. McDonald.
Third Quarter Review
- In September, the U.S. Environmental Protection Agency (“EPA”) issued the Final Underground Injection Control (“UIC”) permit for the Florence Copper Project and the permit became effective on October 31, 2023. The Company now has all key permits in place to commence construction of the commercial production facility at Florence;
- Third quarter earnings from mining operations before depletion and amortization* was $65.4 million, Adjusted EBITDA* was $62.7 million, and cash flows from operations were $27.0 million;
- GAAP net income was $0.9 million (nil per share) and Adjusted net income* was $19.7 million ($0.07 per share) after normalizing for unrealized foreign exchange and derivative losses;
- Gibraltar produced 35.4 million pounds of copper for the quarter, a 26% improvement over the prior quarter as a result of higher grades, improved recoveries and increased mill throughput;
- Copper head grades in the quarter improved to 0.26% as mining progressed deeper into the Gibraltar pit and the lower benches provided the expected improvement in ore grade and quality;
- Molybdenum grades also increased in the period, resulting in a 60% increase in quarterly molybdenum production;
- Gibraltar sold 32.1 million pounds of copper in the third quarter (100% basis). The B.C. port workers labour strike in early July caused shipping delays and a build-up of Gibraltar copper concentrate inventory. As a result, third quarter sales volumes lagged production by three million pounds, and the excess inventory is expected to be shipped and sold in the fourth quarter;
- Total site costs* in the third quarter were $102.0 million on a 100% basis, $3.4 million lower than the previous quarter due to lower explosive and grinding media use, contractor services, and repairs and maintenance costs. C1 costs were US$2.20 per pound in the quarter;
- On October 25, 2023, the Company received the first US$20 million tranche of its US$25 million equipment loan commitment from Bank of America for Florence Copper; and
- The Company had a closing cash balance of $82 million at September 30, 2023.
*Non-GAAP performance measure. See end of news release
Highlights
| Operating Data (Gibraltar – 100% basis) | Three months ended September 30, |
Nine months ended September 30, |
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| 2023 | 2022 | Change | 2023 | 2022 | Change | |
| Tons mined (millions) | 16.5 | 23.2 | (6.7) | 64.0 | 65.7 | (1.7) |
| Tons milled (millions) | 8.0 | 8.2 | (0.2) | 22.4 | 23.0 | (0.6) |
| Production (million pounds Cu) | 35.4 | 28.3 | 7.1 | 88.5 | 70.3 | 18.2 |
| Sales (million pounds Cu) | 32.1 | 26.7 | 5.4 | 84.8 | 75.8 | 9.0 |
| Financial Data | Three months ended September 30, |
Nine months ended September 30, |
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| (Cdn$ in thousands, except for per share amounts) | 2023 | 2022 | Change | 2023 | 2022 | Change |
| Revenues | 143,835 | 89,714 | 54,121 | 371,278 | 290,991 | 80,287 |
| Earnings from mining operations before depletion and amortization* | 65,445 | 18,570 | 46,875 | 134,248 | 68,564 | 65,684 |
| Cash flows provided by operations | 26,989 | 12,115 | 14,874 | 88,257 | 82,212 | 6,045 |
| Adjusted EBITDA* | 62,695 | 34,031 | 28,664 | 120,972 | 73,854 | 47,118 |
| Net income (loss) (GAAP) | 871 | (23,517) | 24,388 | 15,301 | (23,696) | 38,997 |
| Per share – basic (“EPS”) | – | (0.08) | 0.08 | 0.05 | (0.08) | 0.13 |
| Adjusted net income (loss)* | 19,659 | 4,513 | 15,146 | 20,371 | (5,423) | 25,794 |
| Per share – basic (“adjusted EPS”)* | 0.07 | 0.02 | 0.05 | 0.07 | (0.02) | 0.09 |
*Non-GAAP performance measure. See end of news release
Review of Operations
Gibraltar mine
| Operating data (100% basis) | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 |
| Tons mined (millions) | 16.5 | 23.4 | 24.1 | 22.9 | 23.2 |
| Tons milled (millions) | 8.0 | 7.2 | 7.1 | 7.3 | 8.2 |
| Strip ratio | 0.4 | 1.5 | 1.9 | 1.1 | 1.5 |
| Site operating cost per ton milled (Cdn$)* | $12.39 | $13.17 | $13.54 | $13.88 | $11.33 |
| Copper concentrate | |||||
| Head grade (%) | 0.26 | 0.24 | 0.22 | 0.22 | 0.22 |
| Copper recovery (%) | 85.0 | 81.9 | 80.7 | 83.4 | 77.1 |
| Production (million pounds Cu) | 35.4 | 28.2 | 24.9 | 26.7 | 28.3 |
| Sales (million pounds Cu) | 32.1 | 26.1 | 26.6 | 25.5 | 26.7 |
| Inventory (million pounds Cu) | 8.8 | 5.6 | 3.7 | 5.4 | 4.2 |
| Molybdenum concentrate | |||||
| Production (thousand pounds Mo) | 369 | 230 | 234 | 359 | 324 |
| Sales (thousand pounds Mo) | 370 | 231 | 225 | 402 | 289 |
| Per unit data (US$ per pound produced)* | |||||
| Site operating costs* | $2.10 | $2.43 | $2.94 | $2.79 | $2.52 |
| By-product credits* | (0.23) | (0.13) | (0.37) | (0.40) | (0.15) |
| Site operating costs, net of by-product credits* | $1.87 | $2.30 | $2.57 | $2.39 | $2.37 |
| Off-property costs | 0.33 | 0.36 | 0.37 | 0.36 | 0.35 |
| Total operating costs (C1)* | $2.20 | $2.66 | $2.94 | $2.75 | $2.72 |
Operations Analysis
Third Quarter Review
Gibraltar produced 35.4 million pounds of copper for the third quarter, a 26% increase over the second quarter due to higher mill throughput, ore grade and recoveries. The lower benches of the Gibraltar pit are providing the expected higher grades and more consistent mineralized zones. Mill throughput was 8.0 million tons for the period averaging 87,000 tons per day, which is above nameplate capacity and 10% higher than the average throughput in the first half of the year.
Copper head grades of 0.26% were higher than recent quarters as ore quality improved in the lower benches of the Gibraltar pit, in line with management expectations. Copper recoveries in the third quarter were 85.0%, improved over previous quarters with the increasing head grades.
*Non-GAAP performance measure. See end of news release
Operations Analysis – Continued
A total of 16.5 million tons were mined in the third quarter which was lower than recent quarters due to longer haul distances from the lower benches of the Gibraltar pit. Total site costs* at Gibraltar of $102.0 million were $3.4 million lower than the previous quarter. Ore stockpiles increased by 2.9 million tons in the third quarter.
Molybdenum generated a by-product credit of US$0.23 per pound of copper produced in the third quarter. Molybdenum production increased by 60% over the second quarter due to the higher grade and consistency in mill operations. The molybdenum price increased from the second quarter’s average price of US$21.30 per pound to an average of US$23.76 per pound.
Off-property costs per pound produced* were US$0.33 which is lower than the recent quarters as copper sales lagged production.
Total operating costs per pound produced (C1)* were US$2.20 for the third quarter, compared to US$2.72 in the same period in 2022 mainly attributed to the higher production and with other key variances summarized in the bridge graph below:
IBF4
