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.
|
VANCOUVER, BC, May 5, 2021 /PRNewswire/ - Taseko Mines
Limited (TSX: TKO) (NYSE American: TGB) (LSE: TKO) ("Taseko" or the
"Company") reports the results for the three months ended
March 31, 2021.
The Company reported Earnings from mining operations before
depletion and amortization of $30.3
million and Adjusted EBITDA* of $23.7
million, which represent increases of 412% and 344%,
respectively, over the first quarter of 2020. For the first quarter
2021, the Company had an adjusted net loss of $5.5 million, or ($0.02) per share.
Russell Hallbauer, CEO and
Director of Taseko, commented, "Strong earnings in the first
quarter were supported by a steadily rising copper price which
reached its highest price in a decade, and sits today at about
US$4.50 per pound. We made good
progress with detailed engineering at Florence and a favourable appeals court
decision was received which clears the way for construction to
begin in a few months upon receipt of the final key permit.
We also took advantage of strong market conditions to successfully
refinance and upsize our bonds during the quarter, and at current
copper prices the Florence project
could be fully funded with cashflow from Gibraltar. So, all
in all, we are very happy with our achievements during the first
quarter and 2021 is shaping up to be a transformative year for the
Company.
From an ESG perspective, just yesterday, we were informed that
Gibraltar has won the 2020 John
Ash Award from the BC Ministry of Mines. This award is given to the
B.C. mining operation with a minimum of one million hours worked
that has the lowest injury-frequency rate. This is the fifth time
in the last seven years that Gibraltar has won this prestigious award, a
fantastic accomplishment for our team."
Mr. Hallbauer continued, "First quarter production of 22 million
pounds of copper and 530 thousand pounds of molybdenum was slightly
below expectation. Copper head grades in the first quarter were 25%
below LOM average which negatively impacted recoveries, however,
mining rates were above expectation as we benefited from shorter
waste hauls and higher productivities. As mining advances in
the Pollyanna pit, we expect improved grades and copper production
in the second quarter. And, as previously disclosed, we
expect much higher grade and production levels in the second half
of the year, which will lead to lower operating costs per pound and
improved earnings. At current copper prices, we are
forecasting operating margins of over $200
million for the remainder of 2021, which would put us in a
position to fully fund construction of the commercial facility at
Florence without a joint venture
partner, if we choose to do so."
Stuart McDonald, President of
Taseko added, "We acquired additional copper put options in the
first quarter but have retained 100% of the copper price upside so
we will continue to benefit from further copper price increases in
the future. Excess cashflow from continued high copper prices
in the years ahead, or proceeds from any accretive Florence financing transaction, could be used
for debt reduction or dividends."
"We are in a strong financial position and ready to move into a
construction program at Florence
in the coming months. Based on our ongoing dialogue with the
EPA, we expect they will issue the draft Underground Injection
Control ("UIC") Permit in June. Once the draft permit has
been issued, there will be a 30 day public comment period with a
public hearing scheduled towards the end, similar to the
Arizona state process that we
completed last year. At the conclusion of the public comment
period, the EPA will review and respond to the comments received
from the public before granting the final UIC permit. While this
permitting process has moved more slowly than expected, we know
that it is moving forward and we are closing in on having a fully
permitted and financed top tier copper project. Detailed
engineering and procurement preparation has been advancing and we
will be in very good shape to begin construction upon receipt of
the UIC, which we expect sometime in the third quarter of this
year," concluded Mr. McDonald.
First Quarter Review
- First quarter earnings from mining operations before depletion
and amortization* was $30.3 million,
Adjusted EBITDA* was $23.7 million
and Adjusted net loss* was $5.5
million ($0.02 loss per
share);
- Site operating costs, net of by-product credits* were
US$1.96 per pound produced, and total
operating costs (C1)* were US$2.23
per pound produced;
- The Gibraltar mine produced
22.2 million pounds of copper in the first quarter. Copper
recoveries were 81.5% and copper head grades were 0.19%;
- Gibraltar sold 22.0 million
pounds of copper in the quarter (100% basis) which resulted in
$82.3 million of revenue for
Taseko. Average LME copper prices were US$3.86 per pound in the quarter and revenue also
included positive provisional price adjustments of $3.6 million due to the rising copper price;
- As mining advances in the Pollyanna pit, management expects
improved grades and copper production in the second quarter, and
much higher grade and production levels in the second half of the
year, which will lead to lower operating costs per pound and
improved earnings;
- On February 10, 2021, Taseko
closed an offering of US$400 million
7% Senior Secured Notes due in 2026. A portion of the proceeds were
used to redeem all of the outstanding US$250
million 8.75% 2022 Senior Secured Notes on March 3, 2021;
- The Company's cash balance at March 31,
2021 was $197.0 million, and
was affected by a negative working capital adjustment of
$27.2 million in the first quarter
related primarily to an increase in accounts receivable due to
shipment timing;
- In March 2021, the Company
extended its copper price protection strategy by purchasing put
options covering 41 million pounds of copper at a strike price of
US$3.75 per pound for the second half
of 2021;
- During the quarter, Gibraltar
entered into an off-take contract for 45 thousand tonnes of copper
concentrate shipments in the second half of this year which
included deeply discounted TCRC's at some of the lowest levels the
mine has ever seen since it was re-opened in 2004;
- On May 4, 2021, the Gibraltar mine was awarded the prestigious
2020 John Ash Safety Award presented by the Ministry of Energy and
Mines for having the lowest injury-frequency rate that has worked
at least one million hours during the year. This is the 5th
time Gibraltar has won this award
over the last 7 years; and
- Final design and engineering of the commercial in-situ
production facility as well as procurement of certain critical
components is well underway to ensure construction of the
commercial facility can commence following receipt of the UIC
permit, which is expected in the third quarter of this year.
*Non-GAAP performance
measure. See end of news release
|
HIGHLIGHTS
Operating Data
(Gibraltar - 100% basis)
|
Three months ended
March 31,
|
|
2021
|
2020
|
Change
|
Tons mined
(millions)
|
32.0
|
28.5
|
3.5
|
Tons milled
(millions)
|
7.2
|
7.5
|
(0.3)
|
Production (million
pounds Cu)
|
22.2
|
32.4
|
(10.2)
|
Sales (million pounds
Cu)
|
22.0
|
31.1
|
(9.1)
|
|
|
Financial
Data
|
Three months ended
March 31,
|
(Cdn$ in thousands,
except for per share amounts)
|
2021
|
2020
|
Change
|
Revenues
|
86,741
|
62,084
|
24,657
|
Earnings from mining
operations before depletion and amortization*
|
30,313
|
5,923
|
24,390
|
Adjusted
EBITDA*
|
23,722
|
5,346
|
18,376
|
Adjusted net
loss*
|
(5,534)
|
(21,647)
|
16,113
|
Per share - basic
("Adjusted EPS")*
|
(0.02)
|
(0.09)
|
0.07
|
Net loss
(GAAP)
|
(11,217)
|
(48,950)
|
37,733
|
Per share - basic
("EPS")
|
(0.04)
|
(0.20)
|
0.16
|
*Non-GAAP performance
measure. See end of news release
|
REVIEW OF OPERATIONS
Gibraltar mine (75%
Owned)
Operating data
(100% basis)
|
|
Q1
2021
|
Q4
2020
|
Q3
2020
|
Q2
2020
|
Q1
2020
|
Tons mined
(millions)
|
|
32.0
|
26.4
|
23.3
|
20.5
|
28.5
|
Tons milled
(millions)
|
|
7.2
|
7.5
|
7.5
|
7.7
|
7.5
|
Strip
ratio
|
|
6.0
|
1.9
|
1.5
|
1.9
|
2.7
|
Site operating cost
per ton milled (CAD$)*
|
|
$8.73
|
$11.67
|
$9.57
|
$7.66
|
$9.52
|
Copper
concentrate
|
|
|
|
|
|
|
Head
grade (%)
|
|
0.19
|
0.20
|
0.23
|
0.28
|
0.26
|
Copper
recovery (%)
|
|
81.5
|
83.3
|
85.0
|
85.2
|
83.4
|
Production (million pounds Cu)
|
|
22.2
|
25.0
|
28.9
|
36.8
|
32.4
|
Sales
(million pounds Cu)
|
|
22.0
|
25.0
|
28.6
|
39.3
|
31.1
|
Inventory (million pounds Cu)
|
|
3.6
|
3.4
|
3.6
|
3.8
|
6.4
|
Molybdenum
concentrate
|
|
|
|
|
|
|
Production (thousand pounds Mo)
|
|
530
|
549
|
668
|
639
|
412
|
Sales
(thousand pounds Mo)
|
|
552
|
487
|
693
|
656
|
403
|
Per unit data (US$
per pound produced)*
|
|
|
|
|
|
|
Site
operating costs*
|
|
$2.23
|
$2.67
|
$1.85
|
$1.15
|
$1.64
|
By-product credits*
|
|
(0.27)
|
(0.14)
|
(0.14)
|
(0.11)
|
(0.11)
|
Site operating costs,
net of by-product credits*
|
|
$1.96
|
$2.53
|
$1.71
|
$1.04
|
$1.53
|
Off-property
costs
|
|
0.27
|
0.29
|
0.29
|
0.30
|
0.29
|
Total operating costs
(C1)*
|
|
$2.23
|
$2.82
|
$2.00
|
$1.34
|
$1.82
|
*Non-GAAP performance
measure. See end of news release
|
OPERATIONS ANALYSIS
First Quarter Review
To-date, there have been no interruptions to the Company's
operations, logistics and supply chains as a result of the COVID-19
pandemic. Heightened health and safety protocols continue to
be implemented and monitored for effectiveness.
Copper production in the first quarter was 22.2 million pounds
and was impacted by lower mined ore grades from the Pollyanna
pit. Additionally, ore hardness in the Pollyanna Pit benches
and in ore drawn from the stockpiles continued to have some affect
on recoveries and mill throughput in the quarter.
A total of 32.0 million tons were mined in the first quarter of
2021, an increase of 5.6 million tons over the prior quarter.
The increased waste stripping was attributed to higher
productivities and shorter hauling distances in the upper benches
of the Pollyanna pit. Site operating costs, net of by-product
credits for the first quarter were US$1.96 per pound of copper produced.
The strip ratio for the first quarter was 6.0 to 1 and reflects
the increased waste stripping in Pollyanna. In addition, ore
stockpiles decreased during the quarter by 2.6 million tons.
Total site spending (including capitalized stripping of
$21.5 million spent in the quarter)
was generally consistent with the prior quarter. Capital
expenditures in the first quarter also included costs associated
with the dewatering system for the Gibraltar pit where mining is expected to
start in the second quarter.
Molybdenum production was 530 thousand pounds in the first
quarter. Molybdenum prices strengthened in the first quarter and
averaged US$11.32 per pound, compared
to US$9.01 per pound in Q4
2020. By-product credits per pound of copper produced* was
US$0.27 in the first quarter, an
increase over the prior quarters due to the higher molybdenum price
and fewer copper pounds produced in the current period.
Off-property costs per pound produced* were US$0.27 for the first quarter and lower than
prior quarters due to the benefit of lower treatment and refining
charges in the current year. Gibraltar extended its long-term copper
concentrate offtake contract, for roughly 50% of its production,
for 2021 which is expected to result in at least a 30% reduction in
treatment and refining costs in 2021. The Company also
entered into an offtake contract for 45,000 tons of copper
concentrate for later in the year at some of the lowest TCRC levels
ever seen by the mine.
Total operating costs per pound produced (C1)* were US$2.23 for the quarter. Contributing to the
decrease in C1* costs was significantly increased capitalized
stripping costs in the first quarter, which was $20.3 million more than the prior quarter.
The impact of capitalized stripping costs on lower C1* costs is
partially offset by fewer copper pounds being produced in the first
quarter and the weakening US dollar.
GIBRALTAR
OUTLOOK
Mining will continue to be focused on the Pollyanna pit which
will be the main source of ore in 2021. Management expects improved
grades and copper production in the second quarter and much higher
grade and production levels in the second half of the year as
higher-grade areas in Pollyanna are opened-up and available for
processing. Ore release from the Gibraltar pit will commence in the second half
of the year. Ore from the Gibraltar pit is relatively softer and is
expected to require less energy to grind, which will provide
opportunities for increased mill throughput in the future.
Gibraltar produced 123 million
pounds in 2020 and is expected to produce 125 million pounds on a
100% basis in 2021.
Copper prices are currently around US$4.50 per pound, compared to the average LME
copper price of US$3.86 per pound in
Q1 and US$2.80 per pound in
2020. Copper prices have recovered swiftly since March 2020 and are testing decade high levels due
to recovery in Chinese and the rest of world demand coupled with
continued supply and political disruptions, most notably in
South America. Many governments
are now focusing on increased infrastructure investment to
stimulate economic recovery after the pandemic, including green
initiatives, which will require new primary supplies of copper.
Most industry analysts are projecting ongoing supply constraints
and deficits, which should support these higher copper prices in
the years to come.
In March 2021 and in preparation
for capital spend at Florence, the
Company extended its copper price protection strategy by purchasing
put options covering 41 million pounds of copper at a strike price
of US$3.75 per pound for the second
half of 2021. Protecting a significant operating margin in
2021 allows the Company to focus on and advance near-term capital
growth plans related to Florence Copper, and fund the Yellowhead
Copper Project's ongoing environmental assessment work. This
approach to managing copper price volatility does not cap the
Company's cash flow should copper prices continue at these levels
or increase further.
All of the above factors are supportive of improved financial
performance at the Gibraltar mine
for the remainder of 2021.
FLORENCE COPPER
Florence Copper represents a low-cost growth project that will
have an annual production capacity of 85 million pounds of copper
over a 21-year mine life, and with the expected C1* operating cost
of US$0.90 per pound puts Florence
Copper in the lowest quartile of the global copper cost
curve. The commercial production facility at Florence will also be one of the greenest
sources of mined copper, with carbon emissions, water and energy
consumption all dramatically lower than a conventional mine.
We have successfully operated a Production Test Facility ("PTF")
for the last two years at Florence
to demonstrate that the in-situ copper recovery ("ISCR") process
can produce high quality cathode while operating within permit
conditions.
The next phase of Florence Copper will include the construction
and operation of the commercial ISCR facility with an estimated
capital cost of US$230 million
(including reclamation bonding and working capital). At a
conservative copper price of US$3.00
per pound, Florence Copper is expected to generate an after-tax
internal rate of return of 37%, an after-tax net present value of
US$680 million at a 7.5% discount
rate, and an after-tax payback period of 2.5 years.
In December 2020, the Company received the Aquifer
Protection Permit ("APP") from the Arizona Department of
Environmental Quality ("ADEQ"). During the APP process,
Florence Copper received strong support from local community
members, business owners and elected officials. The other
required permit is the Underground Injection Control ("UIC") permit
from the U.S. Environmental Protection Agency ("EPA"). The EPA's
technical review for the UIC permit has identified no significant
issues and the Company expects to receive the draft permit in the
coming months followed by the final UIC permit in the third quarter
after which construction of the commercial ISCR facility at
Florence Copper can commence.
On March 23, 2021, the Company
announced a favourable appeals court decision that upholds Florence
Copper's right to mine its private property within the Town, and
also awarded US$1.7 million in legal
fees and costs to Florence Copper.
The Company now has the majority of the required
construction funding for Florence Copper in hand, and
with stronger expected operating cash flows from Gibraltar due to higher prevailing copper
prices, the Company has numerous options available to obtain the
remaining funding including retaining 100% ownership of the
project.
Final design engineering for the commercial production facility
as well as procurement of certain critical components is well
underway to ensure a smooth and efficient transition into
construction once the final UIC permit is received later this
year.
ANNUAL ESG REPORT
The Company recently published its annual Environmental, Social,
and Governance ("ESG") Report, titled 'Sustainability: Our Low
Carbon Future' (the "Report"), highlighting Taseko's sustainability
performance for 2020.
In this year's Report, Taseko has reported Scope 1 and 2
greenhouse gas emissions for Gibraltar which shows that the mine ranks in
the first quartile of all copper mines globally. When commercial
operations at Florence Copper commence, the Company's combined
greenhouse gas emissions intensity will drop even lower, to an
estimated 1.53 tonnes of carbon dioxide equivalent ("CO2e") per
tonne of copper equivalent, based on an independent analysis by
Skarn Associates.
Sustainability report highlights:
- Rigorous health and safety protocols enabled operations to
continue at Gibraltar and at
Florence Copper during the COVID-19 pandemic;
- Recognition from the British Columbia Technical and Research
Committee on Reclamation with the Jake
McDonald Award for outstanding work in mine reclamation and
Indigenous collaboration;
- Outstanding safety performance at Gibraltar with zero loss time incidents, zero
days lost, zero loss time severity, and zero loss time
frequency;
- Continued commitment to a diverse workforce that reflects the
communities in which we operate. In 2020 28% of the new hires at
Taseko were female and 15% were Indigenous people;
- A priority on securing local goods and services with
$116 million and US$2.5 million being distributed to local
suppliers from Gibraltar and
Florence Copper, respectively; $72
million and US$2.1 million was
distributed in wages to local employees from Gibraltar and Florence Copper,
respectively;
- Low Scope 1 and 2 greenhouse gas emission of 1.66 tonnes of
CO2e per tonnes of copper produced equivalent and 0.09 tonnes of
CO2e per tonnes of copper equivalent produced, respectively;
and
- Continued discussions with our Indigenous neighbours, that
included a Framework Agreement with a local Indigenous Nation to
begin discussions on the Yellowhead Copper Project, as well as an
extension to the standstill agreement with Tŝilhqot'in Nation as
both parties seek a long-term solution to the conflict regarding
New Prosperity.
The full Report can be viewed and downloaded at
www.tasekomines.com/esg/overview.
On May 4, 2021, the Gibraltar mine was awarded the prestigious
2020 John Ash Safety Award presented by the Ministry of Energy and
Mines for having the lowest injury-frequency rate that has worked
at least one million hours during the year. This is the 5th
time Gibraltar has won this award
over the last 7 years.
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 focused primarily on copper and 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. Capital costs of the project are estimated at $1.3 billion over a 2-year construction
period. Over 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. 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 focusing its current efforts on advancing the
environmental assessment and some additional engineering work in
conjunction with ongoing engagement with local communities
including First Nations. A focus group has been formed
between the Company and high-level regulators in the appropriate
Provincial ministries in order to expedite the advancement of
the environmental assessment and the permitting of the
project. Management also commenced joint venture partnering
discussions in 2020 with a number of strategic industry groups that
are interested in potentially investing in the Yellowhead project
in combination with acquiring significant copper offtake
rights.
New Prosperity Gold-Copper Project
In late 2019, the Tŝilhqot'in Nation, as represented by
Tŝilhqot'in National Government, and Taseko entered into a
confidential dialogue, facilitated by the Province of British Columbia, to try to obtain a long-term
solution to the conflict regarding Taseko's proposed gold-copper
mine currently known as New Prosperity, acknowledging Taseko's
commercial interests and the Tŝilhqot'in Nation's opposition to the
project. The dialogue was supported by the parties' agreement
on December 7, 2019 to a one-year
standstill on certain outstanding litigation and regulatory matters
that relate to Taseko's tenures and the area in the vicinity of
Teẑtan Biny (Fish Lake).
The COVID-19 pandemic delayed the commencement of the dialogue,
but the Tŝilhqot'in Nation and Taseko have made progress in
establishing a constructive dialogue. In December 2020, the parties agreed to extend the
standstill for a further year to continue this dialogue.
Aley Niobium Project
Environmental monitoring and product marketing initiatives on
the Aley Niobium project continue. The pilot plant program has
successfully completed the niobium flotation process portion of the
test, raising confidence in the design and providing feed to the
converter portion of the process. Completion of the converter pilot
test, which is underway, will provide additional process data to
support the design of the commercial process facilities and provide
final product samples for marketing purposes.
The Company will host
a telephone conference call and live webcast on Thursday, May 6,
2021 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
416-764-8688 in Canada, 888-390-0546 in the United States,
08006522435 in the United Kingdom, or online at
tasekomines.com/investors/events. The conference call will be
archived for later playback until May 20, 2021 and can be accessed
by dialing 416-764-8688 Canada, 888-390-0541 in the United States,
or online at tasekomines.com/investors/events and using the
passcode 998786 #.
|
Russell Hallbauer
CEO and Director
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.
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.
|
Three months ended
March 31,
|
(Cdn$ in thousands,
unless otherwise indicated) – 75% basis
|
2021
|
2020
|
Cost of
sales
|
72,266
|
83,309
|
Less:
|
|
|
Depletion and
amortization
|
(15,838)
|
(27,148)
|
Net change in
inventories of finished goods
|
2,259
|
1,302
|
Net change in
inventories of ore stockpiles
|
(8,226)
|
603
|
Transportation
costs
|
(3,305)
|
(4,519)
|
Site operating
costs
|
47,156
|
53,547
|
Less by-product
credits:
|
|
|
Molybdenum,
net of treatment costs
|
(5,604)
|
(3,231)
|
Silver,
excluding amortization of deferred revenue
|
(238)
|
(354)
|
Site operating costs,
net of by-product credits
|
41,314
|
49,962
|
Total copper produced
(thousand pounds)
|
16,684
|
24,318
|
Total costs per pound
produced
|
2.48
|
2.05
|
Average exchange rate
for the period (CAD/USD)
|
1.27
|
1.34
|
Site operating
costs, net of by-product credits (US$ per pound)
|
1.96
|
1.53
|
Site operating costs,
net of by-product credits
|
41,314
|
49,962
|
Add off-property
costs:
|
|
|
Treatment and
refining costs
|
2,414
|
4,956
|
Transportation
costs
|
3,305
|
4,519
|
Total operating
costs
|
47,033
|
59,437
|
Total operating
costs (C1) (US$ per pound)
|
2.23
|
1.82
|
Adjusted net income (loss)
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 copper put and fuel call options;
and
- Loss on settlement of long-term debt, including realized
foreign exchange gains.
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.
|
Three months ended
March 31,
|
(Cdn$ in thousands,
except per share amounts)
|
2021
|
2020
|
Net
loss
|
(11,217)
|
(48,950)
|
Unrealized
foreign exchange loss
|
8,798
|
29,747
|
Realized
foreign exchange gain on settlement of long-term debt
|
(13,000)
|
|
Unrealized
(gain) loss on copper put and fuel call options
|
802
|
(3,348)
|
Loss on
settlement of long-term debt
|
12,739
|
-
|
Estimated tax
effect of adjustments
|
(3,656)
|
904
|
Adjusted net
loss
|
(5,534)
|
(21,647)
|
Adjusted
EPS
|
(0.02)
|
(0.09)
|
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 copper put and fuel call options;
- Loss on settlement of long term debt (included in finance
expenses) ;
- Realized foreign exchange gains on settlement of long-term
debt; and
- Amortization of share-based compensation expense.
|
Three months ended
March 31,
|
(Cdn$ in
thousands)
|
2021
|
2020
|
Net
loss
|
(11,217)
|
(48,950)
|
Add:
|
|
|
Depletion and
amortization
|
15,838
|
27,148
|
Finance
expense (includes loss on settlement of long-term debt)
|
23,958
|
10,771
|
Finance
income
|
(75)
|
(150)
|
Income tax
recovery
|
(4,302)
|
(10,118)
|
Unrealized
foreign exchange loss
|
8,798
|
29,747
|
Realized
foreign exchange gain on settlement of long-term debt
|
(13,000)
|
-
|
Unrealized
(gain) loss on copper put and fuel call options
|
802
|
(3,348)
|
Amortization of
share-based compensation expense
|
2,920
|
246
|
Adjusted
EBITDA
|
23,722
|
5,346
|
Earnings (loss) from mining operations before depletion
and amortization
Earnings from mining operations before depletion and
amortization is earnings from mining operations with depletion and
amortization added back. The Company discloses this measure, which
has been derived from our financial statements and applied on a
consistent basis, to provide assistance in understanding the
results of the Company's operations and financial position and it
is meant to provide further information about the financial results
to investors.
|
Three months ended
March 31,
|
(Cdn$ in
thousands)
|
2021
|
2020
|
Earnings (loss)
from mining operations
|
14,475
|
(21,225)
|
Add:
|
|
|
Depletion and
amortization
|
15,838
|
27,148
|
Earnings from
mining operations before depletion and amortization
|
30,313
|
5,923
|
Site operating costs per ton milled
|
Three months ended
March 31,
|
(Cdn$ in thousands,
except per ton milled amounts)
|
2021
|
2020
|
Site operating
costs (included in cost of sales)
|
47,156
|
53,547
|
|
|
|
Tons milled
(thousands) (75% basis)
|
5,402
|
5,622
|
Site operating
costs per ton milled
|
$8.73
|
$9.52
|
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SOURCE Taseko Mines Limited