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 and sales volumes stated in this release are
on a 100% basis unless otherwise indicated.
|
VANCOUVER, BC, Feb. 23,
2023 /CNW/ - Taseko Mines Limited (TSX: TKO) (NYSE
American: TGB) (LSE: TKO) ("Taseko" or the "Company") reports
Adjusted EBITDA* of $109 million and
Earnings from mining operations before depletion* of $106 million for the full year 2022. Revenues for
the year were $392 million and
Adjusted net income* was $1.7
million, or $0.01 per share.
In the fourth quarter 2022, Taseko generated Adjusted EBITDA* of
$35 million, $38 million of earnings from mining operations
before depletion* and Adjusted net income* of $7 million, or $0.02 per share.
Stuart McDonald, President and
CEO of Taseko, commented, "The upward move in copper and molybdenum
prices during the fourth quarter helped drive stronger financial
performance in the period. Fourth quarter earnings from
mining operations before depletion were 103% higher than the third
quarter and Adjusted EBITDA was 3% higher. Annual earnings
for 2022 were affected by lower average copper prices (US$3.99/lb. compared to US$4.23/lb. in 2021) and higher production costs
related to fuel price increases and lower production.
Average head grade for the year was 20% below the life of mine
reserve average, and a site-wide power outage late in the year also
contributed to the lower annual copper production of 97 million
pounds. Despite the mill downtime in the fourth quarter,
Gibraltar produced 27 million
pounds of copper. Recoveries in the fourth quarter improved
to 83%, an 8% increase over the prior quarter due to better quality
ore."
Mr. McDonald added, "The quarterly production profile in 2023 is
expected to be less variable than the last two years and we believe
there is potential for mill throughput to average above design
capacity. An in-pit crusher move is scheduled for the third quarter
which will partially shut down ore processing for approximately two
weeks. We expect annual copper production at Gibraltar
Mine to increase to 115 million pounds (+/-5%) in 2023."
"Yesterday we announced an agreement with Sojitz
Corporation to acquire their 12.5% interest in Gibraltar Mine, which increases our economic
interest to 87.5%. This is an attractive transaction that
provides immediate production and earnings growth, and we maintain
the financial capacity to fund the construction of our Florence
Copper project. The acquisition price includes a minimum
amount of C$60 million payable over a
five-year period and potential contingent payments based on
Gibraltar mine revenues and copper
prices over the next five years. An initial C$10 million will be paid to Sojitz upon closing
and the remaining minimum amount will be paid in C$10 million annual instalments over the next
five years (see news release dated February
22, 2023 for details about the transaction)."
"We've also recently announced several key financing
initiatives for the Florence copper project, and we expect to start
construction in the coming months, upon receipt of the final
Underground Injection Control permit. Under the terms of our
strategic partnership agreement with Mitsui & Co. (USA), they
will make an initial investment of US$50
million for a 2.67% copper stream. Mitsui also retains
an option to invest an additional US$50
million (for a total of US$100
million) to convert the copper stream into a 10% equity
interest in Florence Copper. We are very pleased to have
completed this transaction which validates the significant value of
this project and also highlights the marketing advantages of low
impact mining and US produced copper," continued Mr.
McDonald.
Mr. McDonald concluded, "We are very excited about the
long-term fundamentals of our North American copper business.
Production growth from Gibraltar
and continued robust copper pricing is setting Taseko up for a year
of strong financial returns. The important permitting catalyst for
our Florence Copper project is on the near horizon, which we
believe will unlock the significant value of that
project."
2022 Annual Review
- Earnings from mining operations before depletion and
amortization* was $106.2 million,
Adjusted EBITDA* was $109.0 million,
and cash flows from operations was $81.3
million;
- Adjusted net income* was $1.7
million ($0.01 per share) and
GAAP Net loss was $26.0 million
($0.09 per share) for the year;
- Total operating costs (C1)* for the year were US$2.98 per pound produced;
- The Gibraltar mine produced
97.0 million pounds of copper and 1.1 million pounds of molybdenum
in 2022. Copper recoveries were 79.5% and copper head grades were
0.20%;
- Gibraltar sold 101.3 million
pounds of copper for the year (100% basis) which contributed to
revenue for Taseko of $391.6 million,
Taseko's second highest revenue year after 2021. Average
realized copper prices before hedging gains were US$3.96 per pound for year, compared to the LME
average price of US$3.99 per
pound;
- The Company had a cash balance of $121
million and has approximately $190
million of available liquidity at December 31, 2022, including its undrawn
US$50 million revolving credit
facility;
- In September 2022, the EPA
concluded its 45-day public comment period for the draft
Underground Injection Control ("UIC") permit for Florence
Copper. The project received overwhelming support from business
organizations, community leaders and state-wide organizations in
written submissions and as voiced at the public hearing; and
- Development costs incurred for Florence Copper were
$101.3 million in the year and
included further payments for the major processing equipment being
delivered for the solvent extraction and
electrowinning ("SX/EW") plant, other pre-construction
activities and ongoing site costs.
Fourth Quarter Review
- In December 2022, the Company
signed agreements with Mitsui & Co. (U.S.A.) Inc. ("Mitsui") to
form a strategic partnership to develop Florence Copper. Mitsui has
committed to an initial investment of US$50
million which is conditional on receipt of the final UIC
permit, with proceeds to be used for construction of the commercial
production facility. The initial investment will be in the form of
a copper stream agreement on 2.67% of the copper produced at
Florence Copper. In addition, Mitsui has the option to invest an
additional US$50 million (for a total
investment of US$100 million) for a
10% equity interest in Florence Copper;
- Fourth quarter earnings from mining operations before depletion
and amortization* was $37.7 million,
Adjusted EBITDA* was $35.2 million,
and Adjusted net income* was $7.1
million ($0.02 per
share);
- Gibraltar produced 26.7
million pounds of copper for the quarter. Head grades were 0.22%
and were similar to the prior quarter. Lower mill throughput
and lower than expected grades due to mining dilution, impacted
production in the quarter;
- Average mill throughput in the fourth quarter was 79,000 tons
per day, as production in December was negatively impacted by
unplanned mill downtime arising from a sitewide power outage caused
by an extreme cold weather event;
- Copper recoveries were 83.4% for the quarter in line with
expectations and a significant improvement over the prior quarters
in 2022;
- Total site costs* in the fourth quarter was $5.6 million higher than the average for the last
nine months due to higher diesel costs and timing of equipment
repairs and maintenance;
- Gibraltar sold 25.5 million
pounds of copper in the quarter (100% basis) at an average realized
copper price of US$3.66 per
pound;
- GAAP net loss was $2.3
million ($0.01 loss per share)
and reflected an unrealized loss on derivatives of $20.1 million due to the recovery in copper
prices, and net of a foreign exchange gain of $4.6 million due to a strengthening Canadian
dollar;
- The Company has copper collar contracts in place to protect a
minimum copper price of US$3.75 per
pound until the end of December 2023
for the majority of the Company's needs. The Company also has
24 million litres of fuel call options in place to provide a
ceiling cost for its share of diesel over the same period;
- In December 2022, Gibraltar entered into an equipment loan
refinancing with the Company's share of net proceeds being
$25.7 million. The Company also
secured a commitment for US$25
million from Banc of America Leasing & Capital, LLC to
fund costs associated with the SX/EW plant for the Florence Copper
commercial production facility;
- In February 2023, the Company
entered into an agreement to extend the maturity date of the
undrawn revolving credit facility by an additional year to
July 2026. In addition to the
one-year extension, the lender has also agreed to an accordion
feature, which will allow the amount of the credit facility to be
increased by US$30 million, for a
total of US$80 million, subject to
credit approval and other conditions; and
- The standstill agreement between the Tŝilhqot'in Nation and
Taseko was most recently extended for a fourth one-year term in
December 2022, with the goal of
providing time and opportunity for the Tŝilhqot'in Nation and
Taseko to negotiate a final resolution. The dialogue process
has made tangible progress in the past 12 months but is not
complete. In agreeing to extend the standstill through 2023, the
Tŝilhqot'in Nation and Taseko acknowledge the constructive nature
of discussions to date, and the future opportunity to conclude a
long-term and mutually acceptable resolution of the conflict that
also makes an important contribution to the goals of reconciliation
in Canada.
*Non-GAAP performance
measure. See end of news release.
|
HIGHLIGHTS
Operating Data
(Gibraltar - 100% basis)
|
Three months
ended
December 31,
|
Year ended
December 31,
|
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
Tons mined
(millions)
|
22.9
|
23.3
|
(0.4)
|
88.7
|
105.4
|
(16.7)
|
Tons milled
(millions)
|
7.3
|
7.4
|
(0.1)
|
30.3
|
29.2
|
1.1
|
Production (million
pounds Cu)
|
26.7
|
28.8
|
(2.1)
|
97.0
|
112.3
|
(15.3)
|
Sales (million pounds
Cu)
|
25.5
|
23.8
|
1.7
|
101.3
|
104.9
|
(3.6)
|
Financial
Data
|
Three months
ended
December 31,
|
Year ended
December 31,
|
(Cdn$ in thousands,
except for per share amounts)
|
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
Revenues
|
100,618
|
102,972
|
(2,354)
|
391,609
|
433,278
|
(41,669)
|
Earnings from mining
operations before depletion and
amortization*
|
37,653
|
61,916
|
(24,263)
|
106,217
|
230,392
|
(124,175)
|
Cash flows (used for)
provided by operations
|
(946)
|
37,231
|
(38,177)
|
81,266
|
174,769
|
(93,503)
|
Adjusted
EBITDA*
|
35,181
|
52,988
|
(17,807)
|
109,035
|
200,733
|
(91,698)
|
Adjusted net income
*
|
7,146
|
13,312
|
(6,166)
|
1,723
|
44,745
|
(43,022)
|
Per share - basic
("Adjusted EPS")*
|
0.02
|
0.05
|
(0.03)
|
0.01
|
0.16
|
(0.15)
|
Net income (loss)
(GAAP)
|
(2,275)
|
11,762
|
(14,037)
|
(25,971)
|
36,472
|
(62,443)
|
Per share - basic
("EPS")
|
(0.01)
|
0.04
|
(0.05)
|
(0.09)
|
0.13
|
(0.22)
|
*Non-GAAP performance
measure. See end of news release.
|
REVIEW OF OPERATIONS
Gibraltar mine (75%
Owned)
Operating data (100%
basis)
|
Q4
2022
|
Q3
2022
|
Q2
2022
|
Q1
2022
|
Q4
2021
|
YE
2022
|
YE
2021
|
Tons mined
(millions)
|
22.9
|
23.2
|
22.3
|
20.3
|
23.3
|
88.7
|
105.4
|
Tons milled
(millions)
|
7.3
|
8.2
|
7.7
|
7.0
|
7.4
|
30.3
|
29.2
|
Strip ratio
|
1.1
|
1.5
|
2.8
|
2.6
|
2.2
|
1.8
|
2.5
|
Site operating cost per
ton milled (Cdn$)*
|
$13.88
|
$11.33
|
$11.13
|
$11.33
|
$9.94
|
$11.89
|
$9.21
|
Copper
concentrate
|
|
|
|
|
|
|
|
Head grade
(%)
|
0.22
|
0.22
|
0.17
|
0.19
|
0.24
|
0.20
|
0.23
|
Copper
recovery (%)
|
83.4
|
77.1
|
77.3
|
80.2
|
80.4
|
79.5
|
82.4
|
Production
(million pounds Cu)
|
26.7
|
28.3
|
20.7
|
21.4
|
28.8
|
97.0
|
112.3
|
Sales
(million pounds Cu)
|
25.5
|
26.7
|
21.7
|
27.4
|
23.8
|
101.3
|
104.9
|
Inventory
(million pounds Cu)
|
5.4
|
4.2
|
2.7
|
4.0
|
9.9
|
5.4
|
9.9
|
Molybdenum
concentrate
|
|
|
|
|
|
|
|
Production
(thousand pounds Mo)
|
359
|
324
|
199
|
236
|
450
|
1,118
|
1,954
|
Sales
(thousand pounds Mo)
|
402
|
289
|
210
|
229
|
491
|
1,131
|
2,000
|
Per unit data (US$
per pound produced)*
|
|
|
|
|
|
|
|
Site
operating costs*
|
$2.79
|
$2.52
|
$3.25
|
$2.95
|
$2.02
|
$2.85
|
$1.91
|
By-product
credits*
|
(0.40)
|
(0.15)
|
(0.15)
|
(0.18)
|
(0.30)
|
(0.23)
|
(0.27)
|
Site operating costs,
net of by-product credits*
|
$2.39
|
$2.37
|
$3.10
|
$2.77
|
$1.72
|
$2.62
|
$1.64
|
Off-property
costs
|
0.36
|
0.35
|
0.37
|
0.36
|
0.22
|
0.36
|
0.26
|
Total operating costs
(C1)*
|
$2.75
|
$2.72
|
$3.47
|
$3.13
|
$1.94
|
$2.98
|
$1.90
|
Full Year Results
Gibraltar produced 97.0 million
pounds of copper for the year compared to 112.3 million pounds in
2021. Head grades for the year averaged 0.20% copper, compared to
0.23% in 2021. The copper head grades were impacted by higher
than expected mining dilution. Copper recoveries for 2022 were
79.5%, compared to 82.4% in 2021.
A total of 88.7 million tons were mined in the year compared to
105.4 million tons mined in the prior year period. The strip
ratio of 1.8 was lower than the prior year as mining operations
were focused in the Gibraltar pit
in 2022 which has a lower strip ratio than the Pollyanna pit.
Total site costs* at Gibraltar
of $301.8 million (which includes
capitalized stripping of $32.0
million) for Taseko's 75% share were $40.0 million higher than 2021, primarily due to
higher diesel prices (55% higher than 2021) and increased diesel
volume consumed (21% higher than 2021) due to the longer hauls and
higher truck hours and with grinding media and other input costs
also increasing due to inflationary
pressures.
*Non-GAAP performance
measure. See end of news release.
|
REVIEW OF OPERATIONS – CONTINUED
Molybdenum production was 1.1 million pounds in the year
compared to 2.0 million pounds in the prior year. Molybdenum prices
strengthened in 2022 with an average molybdenum price of
US$18.73 per pound, an increase of
18% compared to the 2021 average price of US$15.94 per pound. By-product credits per pound
of copper produced was US$0.23 in the
year compared to US$0.27 in the prior
year. The higher molybdenum price and favorable provisional
price adjustments at year end were offset by lower molybdenum sales
in 2022 compared to the prior year.
Off-property costs per pound produced* were
US$0.36 for the year, which is
US$0.10 higher than the prior year.
In 2021 the Company benefited from lower benchmark treatment and
refining charges ("TCRC") and realized lower TCRCs for
spot tenders due to tight copper market conditions last
year. Ocean freight costs also increased in 2022 as the
Company entered into a new contract at a higher rate earlier in the
year. Also contributing to the increased off-property costs per
pound produced in 2022 is the fact that sales of copper exceeded
production by 4.3 million pounds.
Total operating costs per pound produced (C1)* were US$2.98 for the year, compared to US$1.90 in the prior year as shown in the bridge
graph below:
Fourth Quarter Results
Gibraltar produced 26.7 million
pounds of copper for the quarter, a 6% decrease over the third
quarter. Copper production in December was impacted by
unplanned mill downtime, including a sitewide power outage late in
the month.
Although the power outage was only 24 hours in duration, the severe
cold temperatures of -35° Celsius (-31° Fahrenheit) immediately
froze a number of essential systems in the mills. This
extreme weather delayed the restart of milling operations for
several days followed by a gradual return to full capacity by the
end of December. Mill throughput in October and November averaged
above design capacity at 88,000 tons per day, but mill throughput
averaged only 63,000 tons per day in December.
Head grades were in line with the prior quarter and management
continues to work on reducing the mining dilution being experienced
in the Gibraltar pit. Copper
recoveries in the fourth quarter were 83%, an improvement over the
prior quarters in 2022 due to improving ore quality as mining
advances deeper into the Gibraltar
pit.
*Non-GAAP performance
measure. See end of news release.
|
REVIEW OF OPERATIONS – CONTINUED
A total of 22.9 million tons were mined in the fourth
quarter. The strip ratio of 1.1 was lower than prior quarter
and included some initial stripping activity in the Connector
pit. The ore stockpiles increased by 3.8 million tons in the
fourth quarter.
Total site costs* at Gibraltar
of $79.7 million (which includes
capitalized stripping of $3.9
million) for Taseko's 75% share were $5.6 million higher than the average of the first
three quarters of 2022 due to higher diesel costs, timing of
repairs and maintenance and year-end wage related
costs. Site operating cost per ton milled* was
$13.88 was higher than the previous
quarters in 2022 due to the higher site costs and lower mill
throughput.
Molybdenum production was 359 thousand pounds in the fourth
quarter. At an average molybdenum price of US$21.39 per pound and the impact of favorable
provisional price adjustments of $3.9
million for Taseko's 75% share, molybdenum generated a
by-product credit per pound of copper produced of US$0.40 in the fourth quarter.
Off-property costs per pound produced* were US$0.36 for the fourth quarter reflecting higher
ocean freight costs (including bunker fuel) and increased treatment
and refining charges (TCRC) compared to the same quarter in the
prior year.
Total operating costs per pound produced (C1)* were US$2.75 for the quarter and was in line with the
previous quarter.
GIBRALTAR
OUTLOOK
Gibraltar is expected to
produce 115 million pounds of copper (+/-5%) in 2023 on a 100%
basis. The Gibraltar pit
will be the sole source of mill feed in 2023 and the quarterly
production profile is expected to be less variable than 2022 due to
improving quality and consistency of ore as mining progresses
deeper into the pit. Annual mill throughput is expected to
exceed design capacity in 2023 due to the softer ore in
Gibraltar pit.
Stripping activities are underway in the new Connector
pit. While the strip ratio is expected to be in line with the
LOM average, the allocation of costs to capitalized stripping in
2023 will be higher than in 2022. The primary crusher for mill 1
which overlays the Connector zone is scheduled to be moved to its
new location in the third quarter of this year.
Strong metal prices combined with our copper hedge protection
continues to provide tailwinds for robust financial performance and
operating margins at the Gibraltar
mine over the coming year. Copper prices in 2022 averaged
US$3.99 per pound and have started
the current year above these levels. Molybdenum prices are
currently US$36.95 per pound, 97%
higher than the average price in 2022.
The Company currently has copper price collar contracts in place
that secure a minimum copper price of US$3.75 per pound for 72 million pounds of copper
until December 31, 2023. The
Company has also executed price caps for its share of diesel
purchases. Improving production combined with this copper
hedge and diesel price protection program should continue to
provide the foundation for stable financial performance and
operating margins at the Gibraltar
mine in 2023.
*Non-GAAP performance
measure. See end of news release.
|
FLORENCE COPPER
The Company is awaiting the issuance of the final Underground
Injection Control permit ("UIC") from the U.S. Environmental
Protection Agency ("EPA"), which is the final permitting step
required prior to construction commencing on the commercial
production facility. The EPA is currently addressing comments
that were received during the public comment period, which was held
in the fall of 2022. Public comments submitted to the EPA
have demonstrated strong support for the Florence Copper project
among local residents, business organizations, community leaders
and state-wide organizations.
In December 2022, the
Company signed agreements with Mitsui to form a strategic
partnership to develop Florence Copper. Mitsui has committed
to an initial investment of US$50
million which is conditional on receipt of the
final UIC permit, with proceeds to be used for
construction of the commercial production facility. The initial
investment will be in the form of a copper stream agreement on
2.67% of the copper produced at Florence Copper. In addition,
Mitsui has the option to invest an additional US$50 million (for a total investment of
US$100 million) for a 10% equity
interest in Florence Copper.
Detailed engineering and design for the commercial production
facility is substantially completed and procurement activities are
well advanced. The Company has purchased the major processing
equipment associated with the SX/EW plant and the equipment has now
been delivered to the Florence site. The Company is well
positioned to transition into construction once the final UIC
permit is received. The Company incurred $101.3 million of capital expenditures at the
Florence project in 2022 funded from available cash.
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. 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 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.
LONG-TERM GROWTH STRATEGY – CONTINUED
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, with the involvement of the Province of
British Columbia, in order to
obtain 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 one-year standstills on certain outstanding litigation and
regulatory matters relating to Taseko's tenures and the area in the
vicinity of Teztan Biny (Fish Lake). The standstill agreement was
most recently extended for a fourth one-year term in December 2022, with the goal of providing time
and opportunity for the Tŝilhqot'in Nation and Taseko to negotiate
a final resolution.
The dialogue process has made tangible progress in the past 12
months but is not complete. In agreeing to extend the standstill
through 2023, the Tŝilhqot'in Nation and Taseko acknowledge the
constructive nature of discussions to date, and the future
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.
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.
The Company will host a
telephone conference call and live webcast on Friday, February 24,
2023 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.
To join the conference call without operator assistance, you may
pre-register at https://bit.ly/3HbbVpt 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
416-764-8688 in Canada, 888-390-0546 in the United States,
08006522435 in the United Kingdom, or online at
tasekomines.com/investors/events using the entry code 613140#.
The conference call will be archived for later playback until March
9, 2023 and can be accessed by dialing 416-764-8677 in Toronto,
888-390-0541 toll free in North America, or online at
tasekomines.com/investors/events and using the entry code
613140#.
|
Stuart McDonald
President & CEO
No regulatory authority has approved or disapproved of the
information in this news release.
NON-GAAP PERFORMANCE MEASURES
This document includes certain non-GAAP performance measures
that do not have a standardized meaning prescribed by IFRS. These
measures may differ from those used by, and may not be comparable
to such measures as reported by, other issuers. The Company
believes that these measures are commonly used by certain
investors, in conjunction with conventional IFRS measures, to
enhance their understanding of the Company's performance. These
measures have been derived from the Company's financial statements
and applied on a consistent basis. The following tables below
provide a reconciliation of these non-GAAP measures to the most
directly comparable IFRS measure.
Total operating costs and site operating costs, net of
by-product credits
Total costs of sales include all 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.
(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
|
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/US$)
|
1.36
|
1.31
|
1.28
|
1.27
|
1.30
|
Site operating
costs, net of by-product credits
(US$ 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
(Cdn$ in thousands,
unless otherwise indicated) –
75% basis
|
2021
Q4
|
2021
Q3
|
2021
Q2
|
2021
Q1
|
2021
YE
|
Cost of
sales
|
57,258
|
65,893
|
74,056
|
72,266
|
269,473
|
Less:
|
|
|
|
|
|
Depletion and
amortization
|
(16,202)
|
(17,011)
|
(17,536)
|
(15,838)
|
(66,587)
|
Net change in
inventories of finished goods
|
13,497
|
762
|
(4,723)
|
2,259
|
11,795
|
Net change in
inventories of ore stockpiles
|
4,804
|
6,291
|
2,259
|
(8,226)
|
5,128
|
Transportation
costs
|
(4,436)
|
(5,801)
|
(4,303)
|
(3,305)
|
(17,845)
|
Site operating
costs
|
54,921
|
50,134
|
49,753
|
47,156
|
201,964
|
Less by-product
credits:
|
|
|
|
|
|
Molybdenum, net
of treatment costs
|
(7,755)
|
(8,574)
|
(6,138)
|
(5,604)
|
(28,071)
|
Silver,
excluding amortization of deferred revenue
|
(330)
|
300
|
64
|
(238)
|
(204)
|
Site operating costs,
net of by-product credits
|
46,836
|
41,860
|
43,679
|
41,314
|
173,689
|
Total copper produced
(thousand pounds)
|
21,590
|
25,891
|
20,082
|
16,684
|
84,247
|
Total costs per pound
produced
|
2.17
|
1.62
|
2.18
|
2.48
|
2.06
|
Average exchange rate
for the period (CAD/USD)
|
1.26
|
1.26
|
1.23
|
1.27
|
1.25
|
Site operating
costs, net of by-product credits
(US$ per
pound)
|
1.72
|
1.28
|
1.77
|
1.96
|
1.64
|
Site operating costs,
net of by-product credits
|
46,836
|
41,860
|
43,679
|
41,314
|
173,689
|
Add off-property
costs:
|
|
|
|
|
|
Treatment and
refining costs
|
1,480
|
3,643
|
1,879
|
2,414
|
9,416
|
Transportation
costs
|
4,436
|
5,801
|
4,303
|
3,305
|
17,845
|
Total operating
costs
|
52,752
|
51,304
|
49,861
|
47,033
|
200,950
|
Total operating
costs (C1) (US$ per pound)
|
1.94
|
1.57
|
2.02
|
2.23
|
1.90
|
Total Site Costs
Total site costs is 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) –
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
|
79,672
|
71,041
|
76,124
|
75,001
|
301,838
|
NON-GAAP PERFORMANCE MEASURES – CONTINUED
(Cdn$ in thousands,
unless otherwise indicated) –
75% basis
|
2021
Q4
|
2021
Q3
|
2021
Q2
|
2021
Q1
|
2021
YE
|
Site operating
costs
|
54,921
|
50,134
|
49,753
|
47,156
|
201,964
|
Add:
|
|
|
|
|
|
Capitalized
stripping costs
|
12,737
|
10,882
|
14,794
|
21,452
|
59,865
|
Total site
costs
|
67,658
|
61,016
|
64,547
|
68,608
|
261,829
|
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 derivatives; and
- Loss on settlement of long-term debt and call premium,
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.
(Cdn$ in thousands,
except per share amounts)
|
2022
Q4
|
2022
Q3
|
2022
Q2
|
2022
Q1
|
2022
YE
|
Net income
(loss)
|
(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
(gain) loss 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
|
(Cdn$ in thousands,
except per share amounts)
|
2021
Q4
|
2021
Q3
|
2021
Q2
|
2021
Q1
|
2021
YE
|
Net income
(loss)
|
11,762
|
22,485
|
13,442
|
(11,217)
|
36,472
|
Unrealized
foreign exchange (gain) loss
|
(1,817)
|
9,511
|
(3,764)
|
8,798
|
12,728
|
Realized foreign
exchange gain on settlement of long-
term
debt
|
-
|
-
|
-
|
(13,000)
|
(13,000)
|
Loss on
settlement of long-term debt
|
-
|
-
|
-
|
5,798
|
5,798
|
Call premium on
settlement of long-term debt
|
-
|
-
|
-
|
6,941
|
6,941
|
Unrealized
(gain) loss on derivatives
|
4,612
|
(6,817)
|
370
|
802
|
(1,033)
|
Estimated tax
effect of adjustments
|
(1,245)
|
1,841
|
(100)
|
(3,657)
|
(3,161)
|
Adjusted net income
(loss)
|
13,312
|
27,020
|
9,948
|
(5,535)
|
44,745
|
Adjusted
EPS
|
0.05
|
0.10
|
0.04
|
(0.02)
|
0.16
|
NON-GAAP PERFORMANCE MEASURES – CONTINUED
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;
- Loss on settlement of long-term debt (included in finance
expenses) and call premium;
- Realized foreign exchange gains on settlement of long-term
debt; and
- Amortization of share-based compensation expense.
(Cdn$ in
thousands)
|
2022
Q4
|
2022
Q3
|
2022
Q2
|
2022
Q1
|
2022
YE
|
Net income
(loss)
|
(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
(gain) loss on derivatives
|
20,137
|
(72)
|
(30,747)
|
7,486
|
(3,196)
|
Amortization of
share-based compensation expense
|
1,794
|
1,146
|
(2,061)
|
3,273
|
4,152
|
Adjusted
EBITDA
|
35,181
|
34,031
|
1,684
|
38,139
|
109,035
|
(Cdn$ in
thousands)
|
2021
Q4
|
2021
Q3
|
2021
Q2
|
2021
Q1
|
2021
YE
|
Net income
(loss)
|
11,762
|
22,485
|
13,442
|
(11,217)
|
36,472
|
Add:
|
|
|
|
|
|
Depletion and
amortization
|
16,202
|
17,011
|
17,536
|
15,838
|
66,587
|
Finance expense
(includes loss on settlement of long-
term
debt and call premium)
|
12,072
|
11,875
|
11,649
|
23,958
|
59,554
|
Finance
income
|
(218)
|
(201)
|
(184)
|
(75)
|
(678)
|
Income tax
(recovery) expense
|
9,300
|
22,310
|
7,033
|
(4,302)
|
34,341
|
Unrealized
foreign exchange (gain) loss
|
(1,817)
|
9,511
|
(3,764)
|
8,798
|
12,728
|
Realized foreign
exchange gain on settlement of long-
term
debt
|
-
|
-
|
-
|
(13,000)
|
(13,000)
|
Unrealized
(gain) loss on derivatives
|
4,612
|
(6,817)
|
370
|
802
|
(1,033)
|
Amortization of
share-based compensation expense
|
1,075
|
117
|
1,650
|
2,920
|
5,762
|
Adjusted
EBITDA
|
52,988
|
76,291
|
47,732
|
23,722
|
200,733
|
NON-GAAP PERFORMANCE MEASURES – CONTINUED
Earnings 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.
(Cdn$ in
thousands)
|
2022
Q4
|
2022
Q3
|
2022
Q2
|
2022
Q1
|
2022
YE
|
Earnings (loss) from
mining operations
|
27,506
|
5,510
|
(8,048)
|
29,267
|
54,235
|
Add:
|
|
|
|
|
|
Depletion and
amortization
|
10,147
|
13,060
|
15,269
|
13,506
|
51,982
|
Earnings from mining
operations before depletion and amortization
|
37,653
|
18,570
|
7,221
|
42,773
|
106,217
|
(Cdn$ in
thousands)
|
2021
Q4
|
2021
Q3
|
2021
Q2
|
2021
Q1
|
2021
YE
|
Earnings from mining
operations
|
45,714
|
66,670
|
36,946
|
14,475
|
163,805
|
Add:
|
|
|
|
|
|
Depletion and
amortization
|
16,202
|
17,011
|
17,536
|
15,838
|
66,587
|
Earnings from mining
operations before depletion and amortization
|
61,916
|
83,681
|
54,482
|
30,313
|
230,392
|
Site operating costs per ton milled
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 Company's site operations
on a tons milled basis.
(Cdn$ in thousands,
except per ton milled amounts)
|
2022
Q4
|
2022
Q3
|
2022
Q2
|
2022
Q1
|
2022
YE
|
Site operating costs
(included in cost of sales)
|
75,806
|
69,920
|
64,237
|
59,859
|
269,822
|
|
|
|
|
|
|
Tons milled (thousands)
(75% basis)
|
5,462
|
6,172
|
5,774
|
5,285
|
22,692
|
Site operating costs
per ton milled
|
$13.88
|
$11.33
|
$11.13
|
$11.33
|
$11.89
|
(Cdn$ in thousands,
except per ton milled amounts)
|
2021
Q4
|
2021
Q3
|
2021
Q2
|
2021
Q1
|
2021
YE
|
Site operating costs
(included in cost of sales)
|
54,921
|
50,134
|
49,753
|
47,156
|
201,964
|
|
|
|
|
|
|
Tons milled (thousands)
(75% basis)
|
5,523
|
5,576
|
5,429
|
5,402
|
21,930
|
Site operating costs
per ton milled
|
$9.94
|
$8.99
|
$9.16
|
$8.73
|
$9.21
|
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.
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SOURCE Taseko Mines Limited