August 5, 2020, Vancouver, BC – Taseko Mines Limited (TSX: TKO; NYSE American: TGB; LSE: TKO) (“Taseko” or the “Company”) reports earnings from mining operations before depletion and amortization* of $50.3 million, Adjusted EBITDA* of $50.9 million and Net income of $18.7 million, or $0.08 per share, in the second quarter of 2020.
Russell Hallbauer, CEO and Director, commented, “In March, in response to a lower copper pricing environment, we seamlessly implemented a modified mine plan at Gibraltar and are very pleased with our operating results for the first half of 2020, and our response to the changing market conditions. The copper price recovery from the lows in mid-March is remarkable and demonstrates how strong the fundamentals for copper really are. With current pricing at US$2.95 per pound, copper is 20% higher than the second quarter average price. This price increase flows straight to Taseko’s bottom line and directly increases cash flow from Gibraltar. While we remain very bullish on the prospects for copper, it is still early days in the recovery and we have no intentions to adjust this current mine plan.”
Stuart McDonald, President of Taseko stated, “Strong second quarter production of 36.8 million pounds of copper and 644,000 pounds of molybdenum resulted in a significant uptick in quarterly financial performance. Total operating costs (C1)* of US$1.34 per pound combined with average copper prices for the quarter of US$2.43 per pound provided Taseko with a strong operating margin of $50 million (excluding depletion and amortization) for the quarter. Our cash balance increased to $64 million at the end of June, after making the C$15 million interest payment on our outstanding bonds.”
“Copper production for the first half of 2020 was right on plan and in line with the higher end of our original guidance. Production and site spending in the second half of the year is expected to be at similar levels as the first half,” added Mr. McDonald.
Mr. Hallbauer continued, “As previously disclosed, we are expecting the draft Aquifer Protection Permit to be issued by the Arizona Department of Environmental Quality tomorrow. This is a very exciting milestone to have achieved and is another important step closer to adding 85 million pounds of low cost copper production to our Gibraltar base.”
*Non-GAAP performance measure. See end of news release.
“The US Environmental Protection Agency is nearing completion of their technical review and no significant issues have been identified. While progress is being made, the COVID-19 situation in Arizona has had an impact on the permitting process and this has extended the timeline by a few months, but we still expect to have a fully permitted project in early 2021.”
“Discussions with potential joint venture partners and lenders, as well as streaming and royalty companies, continue. Interest on all fronts remains at a high level and we believe a financing package will be finalized and committed prior to final permits being issued. For the most part, this process has not been hindered by COVID-19,” concluded Mr. Hallbauer.
Second Quarter Review
•The Gibraltar Mine (100% basis) produced 36.8 million pounds of copper in the second quarter, a 14% increase over the first quarter. Copper recoveries were 85.2% and copper head grades were 0.281%;
•In April, management implemented a revised mine plan and budget for Gibraltar which has reduced site spending in the current year while maintaining long-term mine plan requirements. Total operating costs (C1)* were US$1.34 per pound produced in the second quarter, which is US$0.48 per pound lower than the prior quarter, and in line with the revised operating plan;
•Earnings from mining operations before depletion and amortization* were $50.3 million, and Adjusted EBITDA* was $50.9 million;
•Cash flow from operations were $37.1 million and the Company had an ending cash balance at June 30, 2020 of $63.6 million;
•Gibraltar sold 39.3 million pounds of copper in the quarter (100% basis) which resulted in $106.0 million of revenue for Taseko, a 71% increase from the first quarter. Revenue included upward provisional price adjustments of $10.1 million;
•Net income (GAAP) for the second quarter was $18.7 million ($0.08 per share). Adjusted net income* was $8.3 million ($0.03 per share);
•On April 24, 2020, Taseko concluded an amendment to its silver stream with Osisko Gold Royalties and received $8.5 million in exchange for reducing the delivery price of silver from US$2.75 per ounce to nil;
•Gibraltar also concluded a spot tender for copper concentrate in the second half of the year at a TC/RC rate approximately 40% below the 2020 benchmark level as buyers competed for clean, high quality concentrate like Gibraltar’s;
•With all required production test results completed, Florence Copper made the decision to begin the wind-down of the production test facility and to commence the final phase of rinsing the small section of the orebody where the test wellfield is located. The Arizona Department of Environmental Quality (“ADEQ”) has informed Taseko it plans to issue the draft Aquifer Protection Permit on August 6, 2020; and
•In May 2020, Taseko published its first Environmental, Social, and Governance report, which includes an examination of the Company’s sustainable performance, with specific details for 2017, 2018 and 2019. The report is available on the Company’s website at www.tasekomines.com/esg.
*Non-GAAP performance measure. See end of news release.
HIGHLIGHTS
Operating Data (Gibraltar - 100% basis) Three months ended June 30,
Six months ended June 30,
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