Taseko Announces First Quarter Fiscal 2008 Results
February 13, 2008
February 13, 2008, Vancouver, BC - Taseko Mines Limited (“Taseko” or the “Company”) (TSX: TKO; AMEX: TGB) announces its financial results including production and sales for the Gibraltar Mine located near the City of Williams Lake in south-central British Columbia. Dollar amounts are in Canadian currency unless otherwise indicated.
For the three months ended December 31, 2007, Taseko reported an operating profit of $19.2 million, and net earnings of $16.3 million or $0.12 per share ($0.11 per share fully diluted).
Cash out-flow from operations in the quarter of $2.1 million is net of positive contributions made to non-cash operating working capital, totalling $20.4 million.
Financial results from operating activities during the quarter compared to the same period in the prior year are shown in the table below:
Quarter Ended December 31, 2007
Quarter Ended December 31, 2006
Cash Flow 2
Cash Flow per Share (basic)
Operating profit 3
Earnings before income tax
Earnings after income 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.
For the quarter, Gibraltar produced 14.4 million pounds of copper and 291,000 pounds of molybdenum.
The average realized price for copper and molybdenum sales during the quarter were US$3.26 per pound and US$32.18 per pound, respectively.
Copper sales were 12.2 million pounds. Copper inventory was 7.2 million pounds at the end of the quarter.
Molybdenum sales were 210,000 pounds. Molybdenum inventory was 96,000 pounds at the end of the quarter.
The Semi Autogenous Grinding (“SAG”) mill was released from the construction group to the Gibraltar operations team on December 27, 2007.
The pro rata capacity for the Phase I concentrator expansion was achieved on the secondary grinding line on February 1, 2008 - 30 days ahead of schedule.
First Quarter Fiscal 2008 Production
The following is a summary of the operating statistics for the first quarter of 2008 (Q1 2008) compared to the same quarter in fiscal 2007 (Q1 2007).
Q1 - Fiscal 2008
Q1 - Fiscal 2007
Total tons mined (millions) 1
Tons of ore milled (millions)
Copper grade (%)
Molybdenum grade (%Mo)
Copper recovery (%)
Molybdenum recovery (%)
Copper production (millions lb)
Molybdenum production (thousands lb)
Copper production costs, net of by-product credits 3, per lb of copper
Off property costs for transport, treatment (smelting & refining) & sales per lb of copper
Total cash costs of production net of by-product credits 3, per lb of copper
1 Total tons mined includes sulphide ore, oxide ore, low grade stockpile material, overburden, and waste rock which were moved from within pit limit to outside the pit limit during the period.
2 2008 copper production includes 13.4 M lb in concentrate and 1.0 M lb in cathode.
3 The by-product credit is based on pounds of molybdenum and ounces of silver sold.
Tons mined in the first quarter of fiscal 2008 were 10.1 million tons, 31% higher than the 7.7 million tons mined in the first quarter of fiscal 2007, primarily as a result of improved operating efficiencies. Ore milled during the quarter was essentially the same as Q1 2007, even though 30% of the mill capacity was off-line during the month of December as part of the Phase I expansion conversion, to integrate the new SAG mill into the grinding circuit.
Copper recovery was higher in Q1 2008 compared with the same quarter in fiscal 2007 as a result of the performance of the new flotation circuit and higher head grades.
Copper in concentrate production during the quarter was 13.4 million pounds, compared to 10.6 million pounds produced in the first quarter of fiscal 2007. Copper in cathode production during the quarter was 1.0 million pounds, compared to nil in the same quarter of fiscal 2007.
Molybdenum production was significantly higher than in fiscal 2007, as the mechanical issues experienced in the molybdenum circuit have been resolved. Molybdenum in concentrate production in the quarter was 291,000 pounds, an increase from 120,000 pounds in the same quarter of fiscal 2007.
Cost per pound of copper produced was lower in 2008 than the same quarter in 2007 as a result of maintaining expenditure levels while increasing copper and molybdenum production. Off-property costs increased during the quarter as bulk ocean freight rates rose significantly related to higher seasonal shipping prices, roasting fees for molybdenum increased and the effect of the stronger Canadian dollar.
Concentrator Expansion Project
The two phase expansion underway at the concentrator facility at Gibraltar is continuing on time and on budget. The first phase, now essentially complete, has involved the installation of a new thirty-four foot diameter SAG mill as well as installation of ten new flotation cells and other upgrades. At the end of the quarter, the SAG mill was operational and the full complement of new flotation cells had been operating for four months. The 46,000 tons per day pro rata grinding capacity was reached in early February.
The second phase of the expansion consists of modernizing and increasing the capacity of the regrind, cleaner flotation, and concentrate circuits, installing a two stage tailings pumping system and adding a pebble crusher to the SAG mill circuit. Phase two is designed to increase concentrator capacity to 55,000 tons per day. Design work, procurement, and construction are proceeding on schedule for project completion by late 2008.
Taseko holds a 100% interest in the Prosperity property, located 125 kilometers southwest of the City of Williams Lake. The property hosts a large porphyry gold-copper deposit amenable to open pit mining.
In September 2007, the Company announced the positive results of a feasibility study for the Project. The Company is actively advancing opportunities for improved economic performance through further metallurgical testing and optimization of the concentrator flowsheet, applying the most up-to-date facility designs and construction techniques, and reducing indirect costs. Advanced engineering began in January 2008.
The Project is currently in the joint Federal/Provincial Environmental Assessment process. The Department of Fisheries and Oceans, Transport Canada, and Natural Resources Canada, have recommended to the Federal Minster of Environment that the project be referred to a Joint Panel Review. Provincially, the Executive Director of the Environmental Assessment Office has also referred the project to the Provincial Minister of Environment for a decision regarding a Joint Panel Review. Taseko is actively engaged with federal and provincial regulatory agencies in the review of the Project and are also engaged in discussions with local First Nations and other communities.
Taseko holds 100% of the Harmony gold project, located on the Queen Charlotte-Haida Gwaii Islands on the northwest coast of British Columbia. The Company has undertaken property maintenance and environmental monitoring activities at Harmony since acquiring the project in 2001.
The Company initiated a review of engineering work on the project in late 2007 following the designation of the area as a mineral development zone under the Queen Charlotte-Haida Gwaii Land and Resource Management Plan. This review is continuing and plans to move the project ahead during 2008 are being evaluated.
Taseko acquired 100% of the Aley niobium project in northern British Columbia in fiscal 2007. The Aley property hosts a niobium deposit. Niobium is a metal used in making high strength steels required in the manufacture of automobiles, bridges, pipes, jet turbines and other high technology applications. The metal is currently selling for $30/kg and the market is growing at 5-8% per year. Currently, the world supply is dominated by only two producers: CBMM, a Brazilian miner, and Iamgold, which operates the Niobec Mine in Quebec.
Taseko successfully completed an initial exploration program on the Aley deposit in 2007, and is evaluating an accelerated drilling and engineering work program in the summer of 2008 with the intention of advancing the Aley Project toward a feasibility study.
Taseko reported revenues of $44.9 million for the quarter, compared to $56.4 million in the first quarter of the prior year. The decrease in revenue was largely the result of lower copper concentrate sales. In Q1 2008, sales were 11.8 million pounds compared to 16.9 million pounds in Q1 2007 because of timing of shipments. Management chose to retain inventory in anticipation of lower seaborne costs and higher copper prices in 2008. Revenues were also impacted by the increase in the value of the Canadian dollar, but this was partially offset by significant increases in the average price per pound of copper sold from US$2.77 per pound in fiscal 2007 to US$3.26 per pound in Q1 2008, and revenue from copper cathode sales (0.44 million pounds) in Q1 2008. Cathode production had not yet begun in Q1 2007.
Revenues in the first quarter consisted of copper concentrate sales of $36.8 million (2007 - $53.2 million), copper cathode sales of $1.3 million and molybdenum concentrate sales of $6.8 million (2007 - $3.3 million).
Cost of sales was $25.0 million, compared to $36.6 million for the same period in fiscal 2007. Costs of sales includes total cost for metal produced and sold, including treatment and transportation, during the quarter of $26.7 million (2007 - $24.4 million) and a concentrate inventory adjustment of ($1.6 million) (2007 - $13.2 million). The decrease in cost of sales for the period was due to lower production costs per pound of copper and lower sales volumes compared to Q1 2007.
Exploration expenses increased to $2.1 million in the first three months of fiscal 2008, compared to $1.9 million for the same period in fiscal 2007. The increase in expenditures during the current quarter is related to activities on the Prosperity Project, including preparation of an environmental impact assessment and ongoing engineering work. During the quarter, the Company also capitalized $0.5 million (Q1 2007 - $1.0 million) of exploration expenses related to increasing the reserves and mine life at Gibraltar.
General and administrative costs increased to $2.0 million in the first three months of fiscal 2008 compared to $1.4 million for the same period in fiscal 2007. The main increase was attributable to higher staffing levels and an increase in corporate activities relating to the Company’s acquisition and tax planning initiatives.
Stock-based compensation increased to $2.8 million in the current quarter, compared to $0.8 million in the same period in fiscal 2007, as a result of the amortization of stock compensation on options granted in the prior fiscal year.
Interest and other income were $2.5 million as compared to $2.8 million in 2007. The decrease was due to interest earned on the Company’s decreasing average cash balances, prior to the completion of financings in late October 27. Interest expense and interest accretion were the same as in the first quarter of 2007.
Current income tax expense of $1.2 million was recorded in the quarter, compared to $1.8 in the same period of fiscal 2007. In addition, the Company had a future income tax recovery of $2.5 million in the current quarter compared to future income tax expense of $3.8 million in the same period of fiscal 2007. The decrease in current income taxes is due mainly to the Company’s ability to realize certain tax pools and a lower net income for tax purposes this quarter when compared to the same quarter in fiscal 2007. The future income tax recovery is mainly related to the reduction in corporate tax rates announced by the Canadian government in December 2007.
At December 31, 2007, Taseko had working capital of $90.8 million, as compared to a $50.0 million at September 30, 2007. Bought deal and private placement financings were completed during the quarter that added to working capital.
Additional details can be found in the Company’s Financial Statements and Management Discussion and Analysis which are filed on www.sedar.com.
For further information on the Company, please visit 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.