May 13, 2009, Vancouver, BC - Taseko Mines Limited (TSX: TKO; NYSE Amex: TGB) (“Taseko” or the “Company”) reports the results for the three months ended March 31, 2009. 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.
For the quarter ended March 31, 2009, the Company reports an operating profit of $6.6 million and net earnings of $3.5 million or $0.02 per share. This compares to an operating loss of $40.5 million and a net loss of $39.6 million for the quarter ended December 31, 2008. Revenue for the quarter was $40.2 million from the sale of 18.5 million pounds of copper and 230,000 pounds of molybdenum at an average realized price of US$1.61 per pound for copper and US$8.38 per pound for molybdenum.
Russell Hallbauer, President and CEO of Taseko commented, “During the first quarter of 2009, our Gibraltar Mine management team continued on its rigorous cost cutting program and by the end of March we had reduced total site cash costs of production to US$0.85 per pound, down US$0.12 per pound from that achieved in January 2009. Our total cost structure, including off property costs of US$1.18 per pound clearly demonstrates our ability to operate Gibraltar through all phases of the copper cycle. While we are extremely pleased with these operating results, particularly as they relate to our ability to contain costs and operate the upgraded concentrator at design recovery rates for copper, mine management recognizes that further upside exists with improved recovery rates from our molybdenum circuit and increased reliability and throughput of the SAG mill. These two important operating metrics will be the focus of our attention now that winter is over and operating conditions have improved.”
Mr. Hallbauer continued, “Copper prices averaged US$1.46 per pound in January, US$1.50 per pound in February and US$1.70 per pound in March. As a result of the increasing copper price, approximately 60% of our operating profit, or $4 million, was generated in March. With copper trading at over US$2.00 per pound since that time, we have initiated a copper hedge program to ensure we capitalize on this recent copper price strength, securing solid operating cash flows. From May to December, we have secured a minimum price of US$1.88 per pound for 50% of our production, approximately 30 million pounds. The zero-cost facility we have established also sets a maximum price of US$2.36 per pound; however, we will maintain upside potential on the 50% of our production that remains unhedged.”
Mr. Hallbauer concluded, “In addition to the many initiatives taking place at Gibraltar, significant progress has been made on our Prosperity Gold-Copper Project. On March 16, 2009, the Environmental Assessment Report for Prosperity was filed with the BC Provincial Government. The report consists of 3,000 pages of expert opinion supported by scientific data, technical analysis and includes more than 10 years of examination in the areas of geography, ecology, sociology and archaeology. The review process must be completed by the Provincial Government within 180 days from the date the Environmental Assessment Report was filed.”
Financial Results and Current Market Conditions
- The average realized price of copper for the three months ending March 31, 2009 was US$1.61 per pound and US$8.38 per pound of molybdenum
- Copper in concentrate sales for the quarter were 17.8 million pounds, copper in cathode sales were 0.7 million pounds.
- Molybdenum in concentrate sales during the quarter were 230,000 pounds.
- In February 2009, a US$30 million term loan facility was completed with Credit Suisse to fund completion of key capital projects.
- In April 2009, Taseko established a hedging program for approximately 50% of targeted copper production to the end of 2009.
The following table is a summary of the operating statistics for the three months ended March 31, 2009 (Q1 - 2009) compared to the three months ended March 31, 2008 (Q2 - 2008).
| Three months ended March 31, 2009
|| Three months ended March 31, 2008
Total tons mined (millions) 1
Tons of ore milled (millions)
Copper grade (%)
Molybdenum grade (%Mo)
Copper recovery (%)
Molybdenum recovery (%)
Copper production (millions lb)2
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 4 per lb of copper
Notes to table:
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 pit limit during the period.
2 2009 copper production includes 19.7 million lb in concentrate and 0.2 million lb in cathode. 2008 copper production includes 12.6 million lb in concentrate and 0.8 million lb in cathode.
3 By-product credit is based on pounds of molybdenum and ounces of silver sold.
4 Cash costs of production is a non-GAAP measure. This non-GAAP measure is intended to provide additional information to investor and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Cash costs of production is a common performance measure in the copper industry and includes direct cost of operations and related costs through to refined metal.
Tons mined during the three months ended March 31, 2009 decreased compared to the same period in 2008 as a result of implementation of the revised mine plan.
Copper in concentrate production during the three-month period ended March 31, 2009 was 19.7 million pounds, an increase from the 12.6 million pounds produced in the three-month period ended March 31, 2008.
Copper cathode production decreased from 0.8 million pounds in 2008 to 0.2 million pounds in 2009. The Solvent Extraction/Electrowinning plant was shutdown in February, March and April to reduce costs during cold weather months and to allow the oxide pads to recharge.
Cost of production during the quarter ended March 31, 2009 was US$1.18 per pound, a nearly 40% decrease in costs from the three months ending March 31, 2008, and the result of a number of factors. Over the past six months, management has successfully implemented cost reduction measures and a new two-year mine plan which includes a reduced strip ratio and operation of only the most cost effective mining equipment. In addition, the cumulative effects of new technology, increased recoveries and throughput from the Phase 1 expansion and upgrade to the mill, and reduced costs of consumables and purchased services such as steel, fuel and ocean freight, and effect of foreign exchange, have supported the significant drop in operating costs.
Gibraltar Expansion Project
Construction of the Phase 1 mill expansion was completed in February 2008. The ramp up to the rated processing capacity of 46,000 tons per day (“tpd”) has been ongoing since completion of the construction phase with sustained periods of operation at the rated capacity becoming more frequent and of longer duration as mill operations personnel continue to refine the metallurgical performance relating to grind size at higher mill throughput rates and metal recovery. The improved performance is evidenced by the change in copper recovery from 73.2% in October 2008 to 83.3% in March 2009, a 14% increase.
The Phase 2 expansion program consists of modernizing and increasing the capacity of the regrind, cleaner flotation, and ancillary circuits along with installation of a two-stage tailings pumping system, designed to increase concentrator capacity from 46,000 to 55,000 tpd. Under the modified construction schedule established after a review of capital spending, the regrind mill and cleaner flotation circuits that are expected to substantially improve copper and molybdenum recoveries will be completed in the summer of 2009. Ramp up to 55,000 tpd will occur following completion of the rest of the Phase 2 program and completion of the in-pit crusher and conveyor.
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 Ministry of Environment of British Columbia accepted Taseko’s Environmental Assessment (“EA”) report as complete in March 2009 and is moving forward under provisions of the Environmental Assessment Act with an Environmental Assessment Office (“EAO”)-led review of this Project. The Canadian Environmental Assessment Agency and the B.C. EAO are collaborating on their respective federal and provincial environmental assessment processes in a coordinated manner. The Provincial EA review is mandated by law to be completed within 180 calendar days of March 16, 2009. Federal and provincial government decisions on proceeding with the Project will be made following completion of the Environmental Assessment process.
- Forecasted production for 2009 is approximately 80 million pounds of copper and 800,000 pounds of molybdenum.
- Total cash costs are expected to average US$1.15 per pound for 2009 as cost saving initiatives take full effect.
- Prosperity Environmental Assessment approvals expected in October 2009.
Additional details can be found in the Company’s Financial Statements and Management Discussion and Analysis which are filed on www.sedar.com.
Taseko will host a conference call on Thursday, May 14, 2009 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific) to discuss these results. The conference call may be accessed by dialing (877) 879-6201, or (719) 325-4830 internationally. A live and archived audio webcast will also be available at www.tasekomines.com.
The conference call will be archived for later playback until May 21, 2009 and can be accessed by dialing (888) 203-1112 in Canada and the United States, or (719) 457-0820 internationally and using the passcode 3624601.
Contact: Brian Bergot, Investor Relations - 778-373-4545, toll free 1-800-667-2114
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.
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