Taseko Announces Financial Results For Twelve Months Ending September 30, 2008
November 6, 2008
November 6, 2008, Vancouver, BC - Taseko Mines Limited (TSX: TKO; AMEX: TGB) (“Taseko” or the “Company”) reports the results for the twelve months ended September 30, 2008. This release should be read with the Company’s Financial Statements and Management Discussion & Analysis, available at www.tasekomines.com and filed on www.sedar.com. Currency is Canadian dollars unless otherwise indicated.
The Company reported an operating profit of $68.5 million and net earnings of $43.2 million or $0.31 per share. Sales for the period were 59.1 million pounds of copper at an average realized price of US$3.42 and 661,000 pounds of molybdenum at an average price of US$33.04 per pound.
A summary of the key results in the twelve months in fiscal 2008 compared to the same period in the prior year are:
12 months ended
September 30, 2008
12 months ended September 30, 2007
Cash Flow 2
Cash Flow per Share (basic)
Operating Profit 3
Earnings before income tax
Earnings (after tax)
Earnings per share (basic)
1 Copper revenue in 2008 includes proceeds from sales of copper concentrate and copper cathode.
2 Cash flow and cash flow per share are numbers used by the Company to assess its performance. They are not terms recognized under generally accepted accounting principles. Cash flow is defined as cash flow from operations including net change in working capital balances and cash flow per share is the same measure divided by the number of common shares outstanding during the period. 3 Operating profit is comprised of revenues less cost of sales and depletion, depreciation and amortization.
Russell Hallbauer, President and CEO of Taseko commented, “Our 59 million pounds of copper production is a 12% increase over that achieved in the same 12-month period in 2007, with 31% of our metal production for the year coming in the last three months as the Gibraltar concentrator began to produce at 42,000 tons per day. Margins decreased during the last half of the year as we were faced with a strong Canadian dollar, higher input costs and increasing operating expenses related to preparations for accelerated mining rates.
The increase in concentrator throughput in the past few months and the resultant 7.8 million pounds of copper produced in September has had a dramatic effect on production costs, which were US$1.30/lb during the month. It is important to note that in September the Canadian dollar was at $0.94 per US dollar, and operations continued to experience high input costs for fuel, grinding media, explosives and reagents. These input costs, along with value of the Canadian dollar, have dropped even more dramatically in the last five weeks, and our operating costs continue to decrease on a month over month basis.”
Mr. Hallbauer continued, “A thorough review of Gibraltar’s operating costs has been undertaken during the past six weeks. Gibraltar engineering staff has optimized Gibraltar’s mine plan in light of the current copper price retrenchment, which will reduce mining and milling costs by US$0.40/lb. The weakening of the Canadian dollar, along with the significant decrease in shipping and other off-property costs, is expected to further reduce our total cost of production in the coming months by another US$0.40/lb.
When we began construction on our mill expansions twenty months ago, we knew that modernization and development of Gibraltar’s mining and milling facilities was the most important value-creating opportunity that we could provide for our shareholders. The premise of our business plan has been to ensure that Gibraltar will continue to generate cash flow and earnings at the bottom of the metal price cycle, which we felt would be approximately US$1.50/lb. In 2005, when copper averaged US$1.65/lb, our total site and off-site cost were US$1.15/lb. With the trend of input costs indicating a decrease to 2005 levels, in combination with our optimization plans, cost review and a nearly 50% expansion in copper production, we expect to achieve an operating cost structure consistent with or lower than what we achieved in 2005. The September results give a clear indication of our decreasing cost profile. With our Phase I expansion now complete, Phase II within months of completion and our immediate capital spending program winding down, we are positioned to weather these tumultuous times in the metal markets and come out of it a stronger and more productive company.”
129 holes, totalling approximately 114,000 feet were drilled in and around the Gibraltar East Pit area. Geological modeling and engineering of the incoming data is ongoing and new mineral reserve estimates are expected in the next few weeks.
Construction of the Phase II expansion, required to increase mill production capacity to 55,000 tons per day, is scheduled to be completed on budget by February 2009.
Phase III mill expansion engineering has confirmed earlier capital cost and scheduling estimates.
An engineering and construction schedule for the new molybdenum plant was finalized and dependent on market conditions, a decision will be made regarding moving forward with the project.
In October 2008, the Canadian Environmental Assessment Agency and the BC Environmental Assessment Office issued a joint letter detailing how the provincial and federal processes will proceed in a coordinated manner. The coordinated process is currently underway and scheduled for completion in October 2009. Federal and provincial government decisions on the acceptability of the Project will be made following completion of the coordinated process.
Detailed engineering was performed on machinery and infrastructure that requires securing long-lead delivery items. This work mitigates the impact of rapidly escalating capital costs being seen in other projects, worldwide.
As a result of the changes that came from this engineering work, capital cost increases are well below those that would have been incurred on the basis of the 2007 design and are within the range of previously reported sensitivity analysis.
The revised designs improve energy and operational efficiency in order to improve operating costs.
The mine plan was re-done in order to achieve a much more operationally efficient pit that will minimize operating costs while maintaining the revenue profile.
Gibraltar Quarterly Operating Costs
Total tons mined in the twelve-month period ending September 30, 2008 increased by 7.8 million tons or 22% compared to 2007 and ore processed by 9% over twelve months in fiscal 2007, resulting in a 10% increase in metal production to 58.1 million pounds. The added material mined, combined with longer ore haul distances from the Granite pit, resulted in increased costs associated with truck hours at a time when diesel fuel and other mining costs escalated by 100% over the year. The combination of this with additional cost for stripping resulted in an overall increase in the cost per ton mined.
Tons milled increased as the new Semi Autogenous Grinding (SAG) mill performance improved dramatically in August and September, but this did not offset the surge in input costs during the year. However, site cash costs were reduced to US$1.30/lb in September as metal production increased to 7.8 million pounds.
For further details on Taseko and its properties, please visit the Company’s website at www.tasekomines.com or contact Investor Services at (604) 684-6365 or within North America at 1-800-667-2114.
Russell Hallbauer President and CEO
No regulatory authority has approved or disapproved of the information contained 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 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 our ability to complete the mill upgrade on time estimated and at the scheduled cost;
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 or ongoing 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.