Taseko
Reports Strong Fourth Quarter Financial Performance and
$190 Million of Adjusted EBITDA for
2023
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 87.5% owned Gibraltar Mine is located north of
the City of Williams Lake in south-central British Columbia.
Production and sales volumes stated in this release are on a 100%
basis unless otherwise indicated.
|
VANCOUVER, BC, March 7,
2024 - Taseko
Mines Limited (TSX: TKO) (NYSE American: TGB) (LSE: TKO) ("Taseko"
or the "Company") reports full year 2023 Adjusted EBITDA* of
$190 million and Earnings from mining
operations before depletion and amortization* of $207 million. Revenues
for 2023 were $525 million, 34%
higher than the prior year as a result of improved copper
production and an increase in the Company's effective interest in
the Gibraltar Mine, from 75% to 87.5%, in March 2023.
Net income
for the year was $83 million
($0.29 per share) and Adjusted net
earnings* were $44 million
($0.15 per share).
In the
fourth quarter, Adjusted EBITDA* was $69
million and Earnings from mining operations before depletion
and amortization* was $73 million.
Net income for the fourth quarter was $67
million ($0.23 per share) and
Adjusted net earnings* was $24
million ($0.08 per
share).
Fourth
quarter copper production from Gibraltar was 34 million pounds, and for the
full year 2023 production was 123 million pounds.
Annual
production was above the Company's original guidance and also 26%
higher than in 2022. Strong production supported lower Total
operating cash costs (C1)* of US$1.91
per pound for the fourth quarter and US$2.37 per pound for the year. Molybdenum
production for the fourth quarter and year was 369 thousand pounds
and 1.2 million pounds, respectively.
Stuart McDonald, President and CEO of Taseko, commented,
"The Gibraltar Mine finished a successful year with another strong
production quarter. The lower benches of the Gibraltar pit continued to deliver the quality
ore we expected, with copper grades averaging 0.27% for the
period.
This
resulted in strong earnings and $63
million of operating cash flow in the fourth
quarter.
For the
full year 2023, the average copper grade was 0.25%, which is in
line with Gibraltar's life of mine
reserve grade, and led to significantly improved copper production
and financial performance compared to 2022.
"At our
Florence Copper project we achieved a major milestone in the fourth
quarter, as the final Underground Injection Control permit became
effective, successfully concluding the EPA's lengthy permitting
process.
We also
announced two Florence project
financings totalling US$100 million,
from Taurus Mining Royalty Fund and Societe Generale, which
supplement the previously announced financings from Mitsui and Bank
of America.
We're now
moving forward with construction of the commercial production
facility at Florence.
Initial
activities have focused on site preparations, earthworks and civil
work for the wellfield as well as hiring additional site personnel
for the construction and operations teams. Wellfield
drilling commenced in February and construction of the SX/EW plant
and other surface infrastructure will begin in the second quarter.
First copper production expected in fourth quarter
2025."
Mr.
McDonald added, "Taseko is in a very unique position heading into
2024 with a fully permitted, low-cost project that will provide 80%
growth to our North American copper production profile in the
coming years.
Our
Gibraltar Mine is expected to continue to benefit from Gibraltar pit ore which will be the main
source of mill feed for the first half of this year, before the
transition to the Connector pit.
In
January, we had mill downtime in concentrator #2 for a planned
major component replacement, which was successfully completed in
the scheduled timeframe.
In the
second quarter, concentrator #1 will be shut down for roughly three
weeks for the in-pit crusher relocation and other mill maintenance.
Factoring in the additional down time in 2024, we expect
Gibraltar to produce approximately
115 million pounds of copper for the year, with quarterly
production less variable than in recent years," concluded Mr.
McDonald.
2023
Annual Review
-
Annual
cash flow from operations was $151.1
million and net income was $82.7
million ($0.29 per share) for
the year;
-
Earnings
from mining operations before depletion and amortization* was
$207.4 million, Adjusted EBITDA* was
$190.1 million and Adjusted net
income* was $44.4 million
($0.15 per share);
-
Total
operating costs (C1)* for the year was US$2.37 per pound produced;
-
The
Gibraltar mine produced 122.6
million pounds of copper and 1.2 million pounds of molybdenum in
2023. Copper recoveries averaged 82.6% and copper head grades were
0.25%;
-
Gibraltar sold 120.7 million pounds of copper for the year
(100% basis) which contributed to revenue for Taseko of
$525.0 million, the highest annual
revenue Taseko has ever recorded. Average realized copper prices
were US$3.84 per pound for the
year;
-
On
March 15, 2023, Taseko acquired 50%
of Cariboo Copper Corp. increasing its effective interest from 75%
to 87.5% in the Gibraltar mine;
and
-
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 and is commencing construction of the
commercial production facility at Florence.
Fourth
Quarter Review
-
Fourth
quarter cash flow from operations was $62.8
million and net income was $67.4
million ($0.23 per share) for
the quarter;
-
Earnings
from mining operations before depletion and amortization* was
$73.1 million, Adjusted EBITDA* was
$69.1 million, and Adjusted net
income* was $24.1 million
($0.08 per share);
-
Gibraltar produced 34.2 million pounds of copper for the
quarter. Average head grades were 0.27% and copper recoveries were
82.2% for the quarter;
-
Gibraltar sold 35.9 million pounds of copper in the quarter
(100% basis) at an average realized copper price of US$3.75 per pound;
-
Total
operating costs (C1)* for the quarter was US$1.91 per pound produced;
-
Construction
of the commercial production facility at Florence is advancing with recent site
activities focused on site preparations, earthworks and civil work
for the commercial wellfield. Wellfield drilling commenced in
February and construction of the SX/EW plant and associated surface
infrastructure is scheduled to get underway in the second quarter
of 2024;
*Non-GAAP
performance measure. See end of news release
|
Fourth
Quarter Review - Continued
-
During the
quarter, the Company closed the first Florence project debt facility with Bank of
America for gross proceeds of US$25
million, secured against the SX/EW plant and other
equipment;
-
The
Company had a cash balance of $96.5
million and has approximately $176
million of available liquidity at December 31, 2023; and
-
On
February 2, 2024, the Company closed
its US$50 million royalty with Taurus
Mining Royalty Fund L.P. ("Taurus") and the Company also received
the first US$10 million of the
US$50 million Mitsui copper stream
financing in January
2024.
Highlights
Operating
Data (Gibraltar - 100% basis)
|
Three
months ended
December
31,
|
Year
ended
December
31,
|
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
Tons mined
(millions)
|
24.1
|
22.9
|
1.2
|
88.1
|
88.7
|
(0.6)
|
Tons milled
(millions)
|
7.6
|
7.3
|
0.3
|
30.0
|
30.3
|
(0.3)
|
Production
(million pounds Cu)
|
34.2
|
26.7
|
7.5
|
122.6
|
97.0
|
25.6
|
Sales
(million pounds Cu)
|
35.9
|
25.5
|
10.4
|
120.7
|
101.3
|
19.4
|
Financial
Data
|
Three
months ended
December
31,
|
Year
ended
December
31,
|
(Cdn$ in
thousands, except for per share amounts)
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
Revenues
|
153,694
|
100,618
|
53,076
|
524,972
|
391,609
|
133,363
|
Cash flows
provided by (used for) operations
|
62,835
|
(946)
|
63,781
|
151,092
|
81,266
|
69,826
|
Net income
(loss) (GAAP)
|
67,425
|
(2,275)
|
69,700
|
82,726
|
(25,971)
|
108,697
|
Per share -
basic ("EPS")
|
0.23
|
(0.01)
|
0.24
|
0.29
|
(0.09)
|
0.38
|
Earnings
from mining operations before depletion
and
amortization*
|
73,106
|
37,653
|
35,453
|
207,354
|
106,217
|
101,137
|
Adjusted
EBITDA*
|
69,107
|
35,181
|
33,926
|
190,079
|
109,035
|
81,044
|
Adjusted
net income*
|
24,060
|
7,146
|
16,914
|
44,431
|
1,723
|
42,708
|
Per share -
basic ("Adjusted EPS")
*
|
0.08
|
0.02
|
0.06
|
0.15
|
0.01
|
0.14
|
On
March 15, 2023, the Company increased
its effective interest in the Gibraltar Mine from 75% to 87.5%
through the acquisition of a 50% interest in Cariboo Copper Corp.
The financial results reported in this MD&A include the
Company's 87.5% proportionate share of Gibraltar Mine income and
expenses for the period March 15 to December
31, 2023 (prior to March 15,
2023 – 75%).
*Non-GAAP
performance measure. See end of news release
|
Review
of Operations
Gibraltar mine
Operating
data (100% basis)
|
Q4
2023
|
Q3
2023
|
Q2
2023
|
Q1
2023
|
Q4
2022
|
YE
2023
|
YE
2022
|
Tons mined
(millions)
|
24.1
|
16.5
|
23.4
|
24.1
|
22.9
|
88.1
|
88.7
|
Tons milled
(millions)
|
7.6
|
8.0
|
7.2
|
7.1
|
7.3
|
30.0
|
30.3
|
Strip
ratio
|
1.5
|
0.4
|
1.5
|
1.9
|
1.1
|
1.3
|
1.8
|
Site
operating cost per ton milled (Cdn$)*
|
$9.72
|
$12.39
|
$13.17
|
$13.54
|
$13.88
|
$12.16
|
$11.89
|
Copper
concentrate
|
|
|
|
|
|
|
|
Head grade
(%)
|
0.27
|
0.26
|
0.24
|
0.22
|
0.22
|
0.25
|
0.20
|
Copper
recovery (%)
|
82.2
|
85.0
|
81.9
|
80.7
|
83.4
|
82.6
|
79.5
|
Production
(million pounds Cu)
|
34.2
|
35.4
|
28.2
|
24.9
|
26.7
|
122.6
|
97.0
|
Sales
(million pounds Cu)
|
35.9
|
32.1
|
26.1
|
26.6
|
25.5
|
120.7
|
101.3
|
Inventory
(million pounds Cu)
|
6.9
|
8.8
|
5.6
|
3.7
|
5.4
|
5.6
|
5.4
|
Molybdenum
concentrate
|
|
|
|
|
|
|
|
Production
(thousand pounds Mo)
|
369
|
369
|
230
|
234
|
359
|
1,202
|
1,118
|
Sales
(thousand pounds Mo)
|
364
|
370
|
231
|
225
|
402
|
1,190
|
1,131
|
Per
unit data (US$ per pound produced)*
|
|
|
|
|
|
|
|
Site
operating costs*
|
$1.59
|
$2.10
|
$2.43
|
$2.94
|
$2.79
|
$2.19
|
$2.85
|
By-product
credits*
|
(0.13)
|
(0.23)
|
(0.13)
|
(0.37)
|
(0.40)
|
(0.20)
|
(0.23)
|
Site
operating costs, net of by-product credits*
|
$1.46
|
$1.87
|
$2.30
|
$2.57
|
$2.39
|
$1.99
|
$2.62
|
Off-property
costs
|
0.45
|
0.33
|
0.36
|
0.37
|
0.36
|
0.38
|
0.36
|
Total
operating costs (C1)*
|
$1.91
|
$2.20
|
$2.66
|
$2.94
|
$2.75
|
$2.37
|
$2.98
|
*Non-GAAP
performance measure. See end of news release
|
Operations
Analysis
Full
Year Results
Gibraltar produced 122.6 million pounds of copper for the
year compared to 97.0 million pounds in 2022. The higher production
was attributable to improved ore grades and recoveries as the lower
benches of the Gibraltar pit
provided the expected higher grades and more consistent mineralized
zones. Copper grades for the year averaged 0.25% copper compared to
0.20% in 2022 and copper recoveries for 2023 were 82.6% compared to
79.5% in 2022.
A total of
88.1 million tons were mined in the year compared to 88.7 million
tons mined in 2022. The strip ratio of 1.3 was lower than the prior
year as mining operations were focused in the Gibraltar pit in 2023 which has a lower strip
ratio. Ore stockpiles also increased by 9.1 million tons, including
oxide ore from the upper benches of the Connector pit.
Total site
costs* at Gibraltar of
$430.7 million (which includes
capitalized stripping of $55.6
million) was $28.3 million
higher than 2022, primarily due to higher repairs and maintenance
costs and labour costs, partially offset by lower diesel costs and
lower grinding media costs.
Molybdenum
production was 1.2 million pounds in the year compared to 1.1
million pounds in the prior year. Molybdenum prices strengthened in
2023 with an average molybdenum price of US$24.19 per pound, an increase of 29% compared
to the 2022 average price of US$18.73
per pound.
Off-property
costs per pound produced* were US$0.38 for the year, which is US$0.02 higher than the prior year primarily due
to an increase in treatment and refining charges (TCRC)
rates.
Total
operating costs per pound produced (C1)* was US$2.37 for the year, compared to US$2.98 in the prior year as shown in the bridge
graph below:
Photo
- https://mma.prnewswire.com/media/2357629/Taseko_Mines_Limited_Taseko_Reports_Strong_Fourth_Quarter_Financ.jpg
*Non-GAAP
performance measure. See end of news release
|
Operations
Analysis - Continued
Fourth
Quarter Results
Gibraltar produced 34.2 million pounds of copper for the
quarter which was generally consistent with the prior
quarter.
Slightly
lower throughput of 7.6 million tons was offset by higher grade
compared to the prior quarter. Copper grades in the fourth quarter
were 0.27%, higher than recent quarters and in line with management
expectations as the lower benches of the Gibraltar pit provided higher grades and more
consistent mineralized zones.
Copper
recoveries in the fourth quarter were 82.2% and were impacted by
performance in concentrator #2 prior to a major component
replacement that was completed in January.
Total site
costs* at Gibraltar of
$110.6 million (which includes
capitalized stripping of $31.9
million) was $8.6 million
higher than the prior quarter due to higher labor cost, grinding
media cost and timing of repairs and maintenance. Site operating
cost per ton milled* was $9.72 and
was lower than the previous quarters in 2023 mainly due to higher
capitalized stripping costs.
Molybdenum
production was 369 thousand pounds in the fourth quarter. At an
average molybdenum price of US$18.64
per pound and the impact of negative price adjustments of
$1.8 million for Taseko's 87.5%
share, molybdenum generated a by-product credit per pound of copper
produced of US$0.13 in the fourth
quarter.
Off-property
costs per pound produced* were US$0.45 for the fourth quarter reflecting higher
sales, higher ocean freight costs (including bunker fuel) and
increased TCRCs compared to the same quarter in the prior
year.
Total
operating costs per pound produced (C1)* was US$1.91 for the quarter and was lower than the
previous quarter due to increased waste stripping costs being
capitalized from the Connector pit.
Gibraltar
Outlook
The
Gibraltar pit will continue to be
the main source of mill feed for the first half of 2024 before
mining of ore transitions into the Connector pit in the second half
of the year.
Stripping
activity will continue to be focused in the Connector pit, and
further oxide ore from this pit is expected to be added to the
leach pads in 2024.
Restart of
the SX/EW facility at the Gibraltar mine is expected in 2026.
Concentrator
#2 had additional downtime in January
2024 for a planned major component replacement, and
concentrator #1 is scheduled to be down for three weeks in June for
the in-pit crusher relocation and other mill
maintenance.
After
taking into account the reduced mill availability from these two
scheduled down times, total copper production at Gibraltar for 2024 is expected to be
approximately 115 million pounds.
The
estimated remaining capital cost of the crusher relocation project
is $10 million, and no other
significant capital projects are planned for Gibraltar in 2024.
The
Company continues to purchase options to provide copper
price and fuel price protection. Currently, the Company has copper
put contracts in place that secure a minimum copper price of
US$3.25 per pound for 42 million
pounds of copper and diesel call options for 12.5 million litres of
diesel, covering the first half of 2024.
*Non-GAAP
performance measure. See end of news release
|
Florence
Copper
On
September 14, 2023, the Company
received the final UIC permit from the EPA, and the UIC permit
became effective on October 31, 2023.
The Company now has all the key permits in place for the commercial
production facility and is commencing construction.
Site
activities to-date have focused on site preparations, earthworks
and civil work for the commercial wellfield and the hiring of
additional management and site personnel positions for the
construction and operations teams. The initial drilling contracts
have been awarded and finalized, and drilling of the commercial
facility wellfield commenced in February.
The
Company recently executed a fixed-price contract with the general
contractor for construction of the SX/EW plant and associated
surface infrastructure which is scheduled to commence in the second
quarter of 2024. All the major plant components are on site and the
early work on detailed engineering and procurement of long-lead
items has significantly de-risked the construction schedule. First
copper production is expected in the fourth quarter of
2025.
The
Company has advanced Florence
project level financing to fund construction. In the fourth
quarter, the Company closed a US$25
million equipment loan with Bank of America. In January 2024, the Company received the initial
US$10 million deposit from the
US$50 million streaming transaction
with Mitsui. The remaining amounts will be paid on a quarterly
basis in US$10 million instalments.
On February 2, 2024, the Company
closed a US$50 million royalty with
Taurus, which was funded in one lump-sum payment at that time.
Additionally, in October 2023, the
Florence project received a credit
committee approved commitment from Societe Generale for a
US$50 million project debt facility
with an additional US$25 million
uncommitted accordion feature.
In
March 2023, the Company announced the
results of recent technical work and updated economics for the
Florence Copper project. The Company has a technical report
entitled "NI 43-101 Technical Report Florence Copper Project,
Pinal County, Arizona" dated
March 30, 2023 (the "Technical
Report") on SEDAR. The Technical Report was prepared in accordance
with NI 43-101 and incorporates updated capital and operating costs
(with a basis as of Q3 2022) for the commercial production facility
and refinements made to the operating models, based on the
Production Test Facility ("PTF") results.
Florence
Copper Project Highlights:
-
Net
present value of US$930 million
(after-tax at an 8% discount rate)
-
Internal
rate of return of 47% (after-tax)
-
Payback
period of 2.6 years
-
Operating
costs (C1) of US$1.11 per pound of
copper
-
Annual
production capacity of 85 million pounds of LME grade A cathode
copper
-
22 year
mine life
-
Total life
of mine production of 1.5 billion pounds of copper
-
Total
estimated initial capital cost of US$232
million remaining
-
Long-term
copper price of US$3.75 per
pound
Long-term
Growth Strategy
Taseko's
strategy has been to grow the Company by acquiring and developing a
pipeline of complementary projects focused on copper in stable
mining jurisdictions. We continue to believe this will generate
long-term returns for shareholders. Our other development projects
are located in British
Columbia.
Yellowhead
Copper Project
Yellowhead
Mining Inc. ("Yellowhead") has an 817 million tonnes reserve and a
25-year mine life with a pre-tax net present value of $1.3 billion at an 8% discount rate using a
US$3.10 per pound copper price
based on
the Company's 2020 NI 43-101 technical report. Capital costs of the
project are estimated at $1.3 billion
over a 2-year construction period. During the first 5 years of
operation, the copper equivalent grade will average 0.35% producing
an average of 200 million pounds of copper per year at an average
C1* cost, net of by-product credit, of US$1.67 per pound of copper produced. The
Yellowhead copper project contains valuable precious metal
by-products with 440,000 ounces of gold and 19 million ounces of
silver with a life of mine value of over $1
billion at current prices.
The
Company is preparing to advance into the environmental assessment
process and is undertaking some additional engineering work in
conjunction with ongoing engagement with local communities
including First Nations. The Company is also collecting baseline
data and modeling which will be used to support the environmental
assessment and permitting of the project.
New
Prosperity Gold-Copper Project
In late
2019, the Tŝilhqot'in Nation, as represented by Tŝilhqot'in
National Government, and Taseko Mines Limited entered into a
confidential dialogue, with the involvement of the Province of
British Columbia, seeking a
long-term resolution of the conflict regarding Taseko's proposed
copper-gold mine previously known as New Prosperity, acknowledging
Taseko's commercial interests and the Tŝilhqot'in Nation's
opposition to the project.
This
dialogue has been supported by the parties' agreement, beginning
December 2019, to a series of
standstill agreements on certain outstanding litigation and
regulatory matters relating to Taseko's tenures and the area in the
vicinity of Teztan Biny (Fish Lake).
The
dialogue process has made meaningful progress in recent months but
is not complete. The Tŝilhqot'in Nation and Taseko acknowledge the
constructive nature of discussions, and the opportunity to conclude
a long-term and mutually acceptable resolution of the conflict that
also makes an important contribution to the goals of reconciliation
in Canada.
In
March 2024, Tŝilhqot'in and Taseko
formally reinstated the standstill agreement for a final term, with
the goal of finalizing a resolution before the end of this
year.
Aley
Niobium Project
Environmental
monitoring and product marketing initiatives on the Aley niobium
project continue. The converter pilot test is ongoing and is
providing additional process data to support the design of the
commercial process facilities and will provide final product
samples for marketing purposes. The Company has also initiated a
scoping study to investigate the potential production of niobium
oxide at Aley to supply the growing market for niobium-based
batteries.
Environmental,
Social and Governance ("ESG")
Nothing is
more important to Taseko than the safety, health and well-being of
our workers and their families. Taseko places a high priority on
the continuous improvement of performance in the areas of employee
health and safety at the workplace and protection of the
environment.
The full
report is available on the Company's website at https://tasekomines.com/sustainability/overview/.
Taseko's
2023 ESG report will be published in the second quarter of
2024.
Market
Review
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Prices (USD
per pound for Commodities)
|
(Source
Data: Bank of Canada, Platts Metals, and London Metals
Exchange)
|
Copper
prices are currently around US$3.90
per pound, compared to US$3.84 per
pound at December 31,
2023.
Short-term
volatility in copper prices is expected to continue in the near
term due to macroeconomic uncertainty, geopolitical events and
recessionary risks from higher interest rates which is causing a
slowdown in industrial demand.
Electrification
of transportation and the focus on government investment in
construction and infrastructure including initiatives focused on
the renewable energy, electrification and meeting net zero targets
by 2050, are inherently copper intensive and supports higher copper
prices in the longer term. According to S&P
Global's copper
market outlook report published in July
2022, titled 'The
Future of Copper: Will the looming supply gap short-circuit the
energy transition?', global
demand for copper is projected to double from approximately 25
million metric tons today to roughly 50 million metric tons by
2035, a record high that will be sustained and continue to grow to
53 million metric tons by 2050, in order to achieve net-zero
targets.
All of
these factors continue to provide unprecedented catalysts for
higher copper prices in the future as new mine supply lags growth
in copper demand.
Approximately
4% of the Company's revenue is made up of molybdenum sales. During
the fourth quarter of 2023, the average molybdenum price was
US$18.64 per
pound. Molybdenum prices are currently around US$20 per
pound. Molybdenum demand and prices have been driven by supply
challenges at large South American copper mines that produce
molybdenum as a by-product. Continued strong demand from the energy
sector has boosted demand for alloyed steel products, as well as
growing demand from the renewables and military sectors. The
Company's sales agreements
specify molybdenum pricing based on the published Platts Metals
reports.
Approximately
80% of the Gibraltar mine's costs
are Canadian dollar denominated and therefore, fluctuations in the
Canadian/US dollar exchange rate can have a significant effect on
the Company's financial results.
The Company
will host a telephone conference call and live webcast on Friday,
March 8, 2024 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)
to discuss these results.
After
opening remarks by management, there will be a question and answer
session open to analysts and investors.
|
To join the
conference call without operator assistance, you may pre-register
at https://emportal.ink/41ycQtM
to
receive an instant automated call back just prior to the start of
the conference call. Otherwise, the conference call may be accessed
by dialing 888-390-0546 toll free, 416-764-8688 in Canada, or
online at tasekomines.com/investors/events.
|
The
conference call will be archived for later playback until March 15,
2024 and can be accessed by dialing
888-390-0541
toll free, 416-764-8677 in Canada, or online at tasekomines.com/investors/events/
and using
the entry code 758609#.
|
Stuart McDonald
President
& CEO
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 insurance recoverable. Site operating
costs are 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 subtracting 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 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 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.
Non-GAAP
Performance Measures (Continued)
(Cdn$ in
thousands, unless otherwise indicated) –
87.5%
basis
|
2023
Q41
|
2023
Q31
|
2023
Q21
|
2023
Q11
|
2023
YE
|
Cost of
sales
|
93,914
|
94,383
|
99,854
|
86,407
|
374,558
|
Less:
|
|
|
|
|
|
Depletion
and amortization
|
(13,326)
|
(15,993)
|
(15,594)
|
(12,027)
|
(56,940)
|
Net change
in inventories of finished goods
|
(1,678)
|
4,267
|
3,356
|
(399)
|
5,546
|
Net change
in inventories of ore stockpiles
|
(3,771)
|
12,172
|
2,724
|
5,561
|
16,686
|
Transportation
costs
|
(10,294)
|
(7,681)
|
(6,966)
|
(5,104)
|
(30,045)
|
Site
operating costs
|
64,845
|
87,148
|
83,374
|
74,438
|
309,805
|
Oxide ore
stockpile reclassification from capitalized stripping
|
-
|
-
|
(3,183)
|
3,183
|
-
|
Less
by-product credits:
|
|
|
|
|
|
Molybdenum,
net of treatment costs
|
(5,441)
|
(9,900)
|
(4,018)
|
(9,208)
|
(28,567)
|
Silver,
excluding amortization of deferred revenue
|
124
|
290
|
(103)
|
(160)
|
151
|
Site
operating costs, net of by-product credits
|
59,528
|
77,538
|
76,070
|
68,253
|
281,389
|
Total
copper produced (thousand pounds)
|
29,883
|
30,978
|
24,640
|
19,491
|
104,992
|
Total costs
per pound produced
|
1.99
|
2.50
|
3.09
|
3.50
|
2.68
|
Average
exchange rate for the period (CAD/USD)
|
1.36
|
1.34
|
1.34
|
1.35
|
1.35
|
Site
operating costs, net of by-product credits (US$ per
pound)
|
1.46
|
1.87
|
2.30
|
2.59
|
1.99
|
Site
operating costs, net of by-product credits
|
59,528
|
77,538
|
76,070
|
68,253
|
281,389
|
Add
off-property costs:
|
|
|
|
|
|
Treatment
and refining costs
|
7,885
|
6,123
|
4,986
|
4,142
|
23,136
|
Transportation
costs
|
10,294
|
7,681
|
6,966
|
5,104
|
30,045
|
Total
operating costs
|
77,707
|
91,342
|
88,022
|
77,499
|
334,570
|
Total
operating costs (C1) (US$ per pound)
|
1.91
|
2.20
|
2.66
|
2.94
|
2.37
|
1 Q1,
Q2, Q3 and Q4 2023 includes the impact from the March 15, 2023
acquisition of Cariboo from Sojitz, which increased the Company's
Gibraltar mine ownership from 75% to 87.5%.
|
Non-GAAP
Performance Measures (Continued)
(Cdn$ in
thousands, unless otherwise indicated) –
75%
basis
|
2022
Q4
|
2022
Q3
|
2022
Q2
|
2022
Q1
|
2022
YE
|
Cost of
sales
|
73,112
|
84,204
|
90,992
|
89,066
|
337,374
|
Less:
|
|
|
|
|
|
Depletion
and amortization
|
(10,147)
|
(13,060)
|
(15,269)
|
(13,506)
|
(51,982)
|
Net change
in inventories of finished goods
|
1,462
|
2,042
|
(3,653)
|
(7,577)
|
(7,726)
|
Net change
in inventories of ore stockpiles
|
18,050
|
3,050
|
(3,463)
|
(3,009)
|
14,628
|
Transportation
costs
|
(6,671)
|
(6,316)
|
(4,370)
|
(5,115)
|
(22,472)
|
Site
operating costs
|
75,806
|
69,920
|
64,237
|
59,859
|
269,822
|
Oxide ore
stockpile reclassification from capitalized stripping
|
-
|
-
|
|
|
-
|
Less
by-product credits:
|
|
|
|
|
|
Molybdenum,
net of treatment costs
|
(11,022)
|
(4,122)
|
(3,023)
|
(3,831)
|
(21,999)
|
Silver,
excluding amortization of deferred revenue
|
263
|
25
|
36
|
202
|
526
|
Site
operating costs, net of by-product credits
|
65,047
|
65,823
|
61,250
|
56,230
|
248,349
|
Total
copper produced (thousand pounds)
|
20,020
|
21,238
|
15,497
|
16,024
|
72,778
|
Total costs
per pound produced
|
3.25
|
3.10
|
3.95
|
3.51
|
3.41
|
Average
exchange rate for the period (CAD/USD)
|
1.36
|
1.31
|
1.28
|
1.27
|
1.30
|
Site
operating costs, net of by-product credits (US$ per
pound)
|
2.39
|
2.37
|
3.10
|
2.77
|
2.62
|
Site
operating costs, net of by-product credits
|
65,047
|
65,823
|
61,250
|
56,230
|
248,349
|
Add
off-property costs:
|
|
|
|
|
|
Treatment
and refining costs
|
3,104
|
3,302
|
2,948
|
2,133
|
11,486
|
Transportation
costs
|
6,671
|
6,316
|
4,370
|
5,115
|
22,472
|
Total
operating costs
|
74,822
|
75,441
|
68,568
|
63,478
|
282,307
|
Total
operating costs (C1) (US$ per pound)
|
2.75
|
2.72
|
3.47
|
3.13
|
2.98
|
Non-GAAP
Performance Measures (Continued)
Total
Site Costs
Total site
costs are comprised of the site operating costs charged to cost of
sales as well as mining costs capitalized to property, plant and
equipment in the period. This measure is intended to capture
Taseko's share of the total site operating costs incurred in the
quarter at the Gibraltar mine
calculated on a consistent basis for the periods
presented.
(Cdn$ in
thousands, unless otherwise indicated) –
87.5% basis
(except for Q1 2023)
|
2023
Q4
|
2023
Q3
|
2023
Q2
|
2023
Q11
|
2023
YE1
|
Site
operating costs
|
64,845
|
87,148
|
83,374
|
74,438
|
309,805
|
Add:
|
|
|
|
|
|
Capitalized
stripping costs
|
31,916
|
2,083
|
8,832
|
12,721
|
55,552
|
Total
site costs – Taseko share
|
96,761
|
89,231
|
92,206
|
87,159
|
365,357
|
Total
site costs – 100% basis
|
110,584
|
101,978
|
105,378
|
112,799
|
430,739
|
1 Q1
2023 includes the impact from the March 15,
2023 acquisition of Cariboo from Sojitz, which increased the
Company's Gibraltar mine ownership
from 75% to 87.5%.
(Cdn$ in
thousands, unless otherwise indicated) –
75%
basis
|
2022
Q4
|
2022
Q3
|
2022
Q2
|
2022
Q1
|
2022
YE
|
Site
operating costs
|
75,806
|
69,920
|
64,237
|
59,859
|
269,822
|
Add:
|
|
|
|
|
|
Capitalized
stripping costs
|
3,866
|
1,121
|
11,887
|
15,142
|
32,016
|
Total
site costs – Taseko share
|
79,672
|
71,041
|
76,124
|
75,001
|
301,838
|
Total
site costs – 100% basis
|
106,230
|
94,721
|
101,499
|
100,001
|
402,451
|
Adjusted
net income (loss) and Adjusted EPS
Adjusted
net income (loss) removes the effect of the following transactions
from net income as reported under IFRS:
-
Unrealized
foreign currency gains/losses;
-
Unrealized
gain/loss on derivatives;
-
Gain on
Cariboo acquisition; and
-
Finance
and other non-recurring costs.
Management
believes these transactions do not reflect the underlying operating
performance of our core mining business and are not necessarily
indicative of future operating results. Furthermore, unrealized
gains/losses on derivative instruments, changes in the fair value
of financial instruments, and unrealized foreign currency
gains/losses are not necessarily reflective of the underlying
operating results for the reporting periods presented.
Adjusted
EPS is the Adjusted net income attributable to common shareholders
of the Company divided by the weighted average number of common
shares outstanding during the period.
Non-GAAP
Performance Measures (Continued)
Adjusted
net income (loss) and Adjusted EPS (Continued)
(Cdn$ in
thousands, except per share amounts)
|
2023
Q4
|
2023
Q3
|
2023
Q2
|
2023
Q1
|
2023
YE
|
Net
income
|
67,425
|
871
|
9,991
|
4,439
|
82,726
|
Unrealized
foreign exchange (gain) loss
|
(14,541)
|
14,582
|
(10,966)
|
(950)
|
(11,875)
|
Unrealized
loss (gain) on derivatives
|
1,636
|
4,518
|
(6,470)
|
2,190
|
1,874
|
Gain on
Cariboo acquisition
|
(46,212)
|
-
|
-
|
-
|
(46,212)
|
Finance and
other non-recurring costs
|
(916)
|
1,244
|
1,714
|
-
|
2,042
|
Estimated
tax effect of adjustments
|
16,668
|
(1,556)
|
1,355
|
(591)
|
15,876
|
Adjusted
net income (loss)
|
24,060
|
19,659
|
(4,376)
|
5,088
|
44,431
|
Adjusted
EPS
|
0.08
|
0.07
|
(0.02)
|
0.02
|
0.15
|
(Cdn$ in
thousands, except per share amounts)
|
2022
Q4
|
2022
Q3
|
2022
Q2
|
2022
Q1
|
2022
YE
|
Net
(loss) income
|
(2,275)
|
(23,517)
|
(5,274)
|
5,095
|
(25,971)
|
Unrealized
foreign exchange (gain) loss
|
(5,279)
|
28,083
|
11,621
|
(4,398)
|
30,027
|
Unrealized
loss (gain) on derivatives
|
20,137
|
(72)
|
(30,747)
|
7,486
|
(3,196)
|
Estimated
tax effect of adjustments
|
(5,437)
|
19
|
8,302
|
(2,021)
|
863
|
Adjusted
net income (loss)
|
7,146
|
4,513
|
(16,098)
|
6,162
|
1,723
|
Adjusted
EPS
|
0.02
|
0.02
|
(0.06)
|
0.02
|
0.01
|
Adjusted
EBITDA
Adjusted
EBITDA is presented as a supplemental measure of the Company's
performance and ability to service debt. Adjusted EBITDA is
frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in the industry,
many of which present Adjusted EBITDA when reporting their
results.
Issuers of
"high yield" securities also present Adjusted EBITDA because
investors, analysts and rating agencies consider it useful in
measuring the ability of those issuers to meet debt service
obligations.
Adjusted
EBITDA represents net income before interest, income taxes, and
depreciation and also eliminates the impact of a number of items
that are not considered indicative of ongoing operating
performance. Certain items of expense are added and certain items
of income are deducted from net income that are not likely to recur
or are not indicative of the Company's underlying operating results
for the reporting periods presented or for future operating
performance and consist of:
-
Unrealized
foreign exchange gains/losses;
-
Unrealized
gain/loss on derivatives;
-
Amortization
of share-based compensation expense;
-
Gain on
Cariboo acquisition; and
-
Non-recurring
other expenses.
Non-GAAP
Performance Measures (Continued)
Adjusted
EBITDA (Continued)
(Cdn$ in
thousands)
|
2023
Q4
|
2023
Q3
|
2023
Q2
|
2023
Q1
|
2023
YE
|
Net
income
|
67,425
|
871
|
9,991
|
4,439
|
82,726
|
Add:
|
|
|
|
|
|
Depletion
and amortization
|
13,326
|
15,993
|
15,594
|
12,027
|
56,940
|
Finance
expense
|
12,804
|
14,285
|
13,468
|
12,309
|
52,866
|
Finance
income
|
(972)
|
(322)
|
(757)
|
(921)
|
(2,972)
|
Income tax
expense
|
34,068
|
12,041
|
678
|
3,356
|
50,143
|
Unrealized
foreign exchange (gain) loss
|
(14,541)
|
14,582
|
(10,966)
|
(950)
|
(11,875)
|
Unrealized
loss (gain) on derivatives
|
1,636
|
4,518
|
(6,470)
|
2,190
|
1,874
|
Amortization
of share-based compensation expense
|
1,573
|
727
|
417
|
3,609
|
6,326
|
Gain on
Cariboo acquisition
|
(46,212)
|
-
|
-
|
-
|
(46,212)
|
Non-recurring
other expenses
|
-
|
-
|
263
|
-
|
263
|
Adjusted
EBITDA
|
69,107
|
62,695
|
22,218
|
36,059
|
190,079
|
(Cdn$ in
thousands)
|
2022
Q4
|
2022
Q3
|
2022
Q2
|
2022
Q1
|
2022
YE
|
Net
(loss) income
|
(2,275)
|
(23,517)
|
(5,274)
|
5,095
|
(25,971)
|
Add:
|
|
|
|
|
|
Depletion
and amortization
|
10,147
|
13,060
|
15,269
|
13,506
|
51,982
|
Finance
expense
|
10,135
|
12,481
|
12,236
|
12,155
|
47,007
|
Finance
income
|
(700)
|
(650)
|
(282)
|
(166)
|
(1,798)
|
Income tax
expense
|
1,222
|
3,500
|
922
|
1,188
|
6,832
|
Unrealized
foreign exchange (gain) loss
|
(5,279)
|
28,083
|
11,621
|
(4,398)
|
30,027
|
Unrealized
loss (gain) on derivatives
|
20,137
|
(72)
|
(30,747)
|
7,486
|
(3,196)
|
Amortization
of share-based compensation expense (recovery)
|
1,794
|
1,146
|
(2,061)
|
3,273
|
4,152
|
Adjusted
EBITDA
|
35,181
|
34,031
|
1,684
|
38,139
|
109,035
|
No
regulatory authority has approved or disapproved of the information
in this news release.
Caution
Regarding Forward-Looking Information
This
document contains "forward-looking statements" that were based on
Taseko's expectations, estimates and projections as of the dates as
of which those statements were made. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "outlook", "anticipate",
"project", "target", "believe", "estimate", "expect", "intend",
"should" and similar expressions.
Forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the Company's actual results,
level of activity, performance or achievements to be materially
different from those expressed or implied by such forward-looking
statements. These included but are not limited to:
-
uncertainties
about the effect of COVID-19 and the response of local, provincial,
federal and international governments to the threat of COVID-19 on
our operations (including our suppliers, customers, supply chain,
employees and contractors) and economic conditions generally and in
particular with respect to the demand for copper and other metals
we produce;
-
uncertainties
and costs related to the Company's exploration and development
activities, such as those associated with continuity of
mineralization or determining whether mineral resources or reserves
exist on a property;
-
uncertainties
related to the accuracy of our estimates of mineral reserves,
mineral resources, production rates and timing of production,
future production and future cash and total costs of production and
milling;
-
uncertainties
related to feasibility studies that provide estimates of expected
or anticipated costs, expenditures and economic returns from a
mining project;
-
uncertainties
related to the ability to obtain necessary licenses permits for
development projects and project delays due to third party
opposition;
-
uncertainties
related to unexpected judicial or regulatory
proceedings;
-
changes
in, and the effects of, the laws, regulations and government
policies affecting our exploration and development activities and
mining operations, particularly laws, regulations and
policies;
-
changes in
general economic conditions, the financial markets and in the
demand and market price for copper, gold and other minerals and
commodities, such as diesel fuel, steel, concrete, electricity and
other forms of energy, mining equipment, and fluctuations in
exchange rates, particularly with respect to the value of the U.S.
dollar and Canadian dollar, and the continued availability of
capital and financing;
-
the
effects of forward selling instruments to protect against
fluctuations in copper prices and exchange rate movements and the
risks of counterparty defaults, and mark to market
risk;
-
the risk
of inadequate insurance or inability to obtain insurance to cover
mining risks;
-
the risk
of loss of key employees; the risk of changes in accounting
policies and methods we use to report our financial condition,
including uncertainties associated with critical accounting
assumptions and estimates;
-
environmental
issues and liabilities associated with mining including processing
and stock piling ore; and
-
labour
strikes, work stoppages, or other interruptions to, or difficulties
in, the employment of labour in markets in which we operate mines,
or environmental hazards, industrial accidents or other events or
occurrences, including third party interference that interrupt the
production of minerals in our mines.
For
further information on Taseko, investors should review the
Company's annual Form 40-F filing with the United States Securities
and Exchange Commission www.sec.gov
and home
jurisdiction filings that are available at www.sedar.com.
Cautionary
Statement on Forward-Looking Information
This
discussion includes certain statements that may be deemed
"forward-looking statements".
All
statements in this discussion, other than statements of historical
facts, that address future production, reserve potential,
exploration drilling, exploitation activities, and events or
developments that the Company expects are forward-looking
statements.
Although
we believe the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are
not guarantees of future performance and actual results or
developments may differ materially from those in the
forward-looking statements.
Factors
that could cause actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, continued availability of capital and
financing and general economic, market or business
conditions.
Investors
are cautioned that any such statements are not guarantees of future
performance and actual results or developments may differ
materially from those projected in the forward-looking
statements.
All of the
forward-looking statements made in this MD&A are qualified by
these cautionary statements.
We
disclaim any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
future events or otherwise, except to the extent required by
applicable law.
Further
information concerning risks and uncertainties associated with
these forward-looking statements and our business may be found in
our most recent Form 40-F/Annual Information Form on file with the
SEC and Canadian provincial securities regulatory
authorities.
For
further information: 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
SOURCE Taseko
Mines Limited