July 30, 2014
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 volumes stated in this release are on a 100% basis unless otherwise indicated.
July 30, 2014, Vancouver, BC - Taseko Mines Limited (TSX: TKO; NYSE MKT: TGB) (“Taseko” or the “Company”) reports the results for the three and six months ended June 30, 2014.
Second Quarter Highlights
“In addition, we continue to invest in our Aley Project, now nearing completion of the metallurgical test work”, Mr. Hallbauer added. “During the quarter, we successfully achieved the targeted niobium recovery rate, which is now repeatable in lock-cycle tests. The project team is currently working on the final step of the process which is the treatment of the niobium concentrate.”
“Following the decision by one of our independent Board members, Wayne Kirk, to not stand for re-election at the AGM, we decided to change the composition of our Board of Directors by replacing a non-independent director, Scott Cousens, with an independent director who also represents a significant shareholder of the Company. George Ireland, who is the Chief Investment Officer and Managing Member of Geologic Resource Partners LLC, has joined the Board bringing over 30 years of experience in all aspects of the resource sector to Taseko. I believe having a major shareholder representative on our Board rounds out the skillset of the existing members. I would like to thank Scott for the many years he served as a Taseko Director as he was instrumental in building Taseko to the company it is today.” concluded Mr. Hallbauer.
HIGHLIGHTS
Financial Data | Three months ended June 30, |
Six months ended June 30, |
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(Cdn$ in thousands, except for per share amounts) | 2014 | 2013 | Change | 2014 | 2013 | Change |
Revenues | 107,307 | 68,191 | 39,116 | 212,303 | 128,341 | 83,962 |
Earnings from mining operations before depletion and amortization* | 26,665 | 12,923 | 13,742 | 46,104 | 32,516 | 13,588 |
Earnings from mining operations | 13,334 | 4,592 | 8,742 | 22,121 | 17,806 | 4,315 |
Net earnings (loss) | 2,628 | (14,721) | 17,349 | (6,520) | (25,203) | 18,683 |
Per share - basic (“EPS”) | 0.01 | (0.08) | 0.09 | (0.03) | (0.13) | 0.10 |
Adjusted net earnings (loss)* | (2,172) | (10,177) | 8,005 | (4,881) | (13,010) | 8,128 |
Per share - basic (“adjusted EPS”) * | (0.01) | (0.05) | 0.04 | (0.03) | (0.07) | 0.04 |
EBITDA * | 23,336 | (2,171) | 25,507 | 32,194 | (2,495) | 34,689 |
Adjusted EBITDA * | 19,217 | 3,888 | 15,329 | 33,811 | 13,763 | 20,048 |
Cash flows provided by (used for) operations | 13,551 | 25,731 | (12,180) | 36,852 | 21,987 | 14,865 |
Operating Data (Gibraltar - 100% basis) | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Copper contained in concentrate and copper cathode |
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Production (million pounds Cu) | 38.5 | 34.5 | 33.5 | 36.7 | 28.1 |
Sales (million pounds Cu) | 38.7 | 40.0 | 37.0 | 26.6 | 27.8 |
Inventory (million pounds Cu) | 4.1 | 4.4 | 10.1 | 13.6 | 3.5 |
Per unit data (US$ per pound) * |
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Operating costs of production* | $2.11 | $2.19 | $1.88 | $1.95 | $2.09 |
By-product credits | (0.35) | (0.21) | (0.18) | (0.04) | (0.15) |
Net operating costs of production * | $1.76 | $1.98 | $1.70 | $1.91 | $1.94 |
Off-property costs | 0.36 | 0.50 | 0.44 | 0.30 | 0.40 |
Total operating costs * | $2.12 | $2.48 | $2.14 | $2.21 | $2.34 |
HIGHLIGHTS - CONTINUED
Gibraltar mine (75% Owned)
Operating results in the following table are presented on a 100% basis.
Operating Data (100% basis) | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
Tons mined (millions) | 30.2 | 25.9 | 21.5 | 22.6 | 22.7 |
Tons milled (millions) | 7.7 | 7.0 | 7.6 | 6.8 | 5.8 |
Strip ratio | 3.1 | 2.8 | 3.9 | 2.6 | 3.3 |
Copper concentrate |
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Grade (%) | 0.285 | 0.290 | 0.270 | 0.315 | 0.281 |
Recovery (%) | 85.3 | 84.6 | 81.7 | 85.9 | 85.8 |
Production (million pounds Cu) | 37.6 | 34.5 | 33.5 | 36.7 | 28.1 |
Sales (million pounds Cu) | 38.1 | 40.0 | 37.0 | 26.6 | 27.8 |
Inventory (million pounds Cu) | 3.9 | 4.4 | 10.1 | 13.6 | 3.5 |
Copper cathode |
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Production (million pounds) | 0.9 | - | - | - | - |
Sales (million pounds) | 0.6 | - | - | - | - |
Molybdenum concentrate |
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Grade (%) | 0.011 | 0.009 | 0.010 | 0.012 | 0.011 |
Recovery (%) | 41.4 | 42.5 | 34.8 | 17.5 | 26.4 |
Production (thousand pounds Mo) | 667 | 566 | 480 | 284 | 333 |
Sales (thousand pounds Mo) | 731 | 589 | 499 | 110 | 317 |
Per unit data (US$ per pound) * |
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Operating costs of production* | $2.11 | $2.19 | $1.88 | $1.95 | $2.09 |
By-product credits * | (0.35) | (0.21) | (0.18) | (0.04) | (0.15) |
Net operating costs of production * | $1.76 | $1.98 | $1.70 | $1.91 | $1.94 |
Off-property costs | 0.36 | 0.50 | 0.44 | 0.30 | 0.40 |
Total operating costs * | $2.12 | $2.48 | $2.14 | $2.21 | $2.34 |
Gibraltar mine operated at its design capacity of 85,000 tons per day in the second quarter of 2014. Total mill throughput for the second quarter was 7.7 million tons, an increase of 32% over tons milled in the second quarter 2013. Total copper production for the quarter was 38.5 million pounds, a 37% increase over pounds produced in the second quarter of 2013.
A total of 30.2 million tons were mined in the second quarter, a 33% increase over the second quarter of 2013. The shovel mechanical availability issues present in the first quarter of 2014 have been resolved and for much of the second quarter the mining fleet was operating at target rates.
REVIEW OF OPERATIONS - CONTINUED
Molybdenum production for the second quarter of 2014 was 667,000 pounds, a 200% increase over the second quarter of 2013 and an 18% increase over the previous quarter, due to higher head grades and increased mill throughput.
Molybdenum recoveries were 41.4% for the second quarter, a 56% increase over the second quarter of 2013 and consistent with the previous quarter. Management’s focus is on improving molybdenum recoveries to achieve the design recovery of 50%.
After 18 months of reconditioning the oxide dumps to improve the recovery of oxide copper, the Gibraltar SX/EW plant successfully recommenced operations with production of 0.9 million pounds of copper cathode in the second quarter of 2014.
In the second quarter of 2014, net operating costs per pound of copper produced were US$1.76, a 12% decrease over the US$1.98 per pound in the previous quarter. This decrease was primarily due to increased by-product credits are a result of the improved performance in the new molybdenum plant and increasing molybdenum prices during the quarter. Also contributing to the decreased unit cost were reduced maintenance costs as the mine fleet, specifically the shovels, returned to normal operating utilization. Mill operating costs were slightly higher than the first quarter due to scheduled mill liner replacements.
Off property costs, including transportation, treatment and refining charges, for the second quarter of 2014 were $0.36 per pound produced, compared to $0.40 per pound produced in the second quarter of 2013. The off property costs in the second quarter of 2014 were reduced by credits for port handling fees. Off property costs are driven by sales volumes, and therefore off property costs per pound produced fluctuates based on differences between production and sales volumes.
The total operating costs, including off-property costs, for the second quarter of 2014 were $2.12 per pound produced, lower when compared to the $2.34 per pound produced in the second quarter of 2013.
Taseko will host a conference call on Thursday, July 31, 2014 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) 303-9079 or (970) 315-0461 internationally. Alternatively, a live and archived webcast will also be available at tasekomines.com. The conference call will be archived for later playback until August 6, 2014 and can be accessed by dialing (855) 859-2056 in Canada and the United States, or (404) 537-3406 internationally and using the passcode 64898385
For further information contact: Brian Bergot, Investor Relations - 778-373-4554, toll free 1-800-667-2114
Russell Hallbauer
President and CEO
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.
Net operating costs of production
Total costs of sales include all costs absorbed into inventory, as well as treatment and refining costs and transportation costs. Operating costs of production is calculated by removing net changes in inventory and depletion and amortization from cost of sales. Net operating costs of production is calculated by removing by-product credits and offsite costs from the operating costs of production. Net operating costs of production 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 net operating costs of production and offsite costs divided by the copper pounds produced. By-product credits are calculated based on actual sales of molybdenum 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.
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Three Months ended June 30, |
Six Months ended June 30, |
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(Cdn$ in thousands, unless otherwise indicated) — 75% basis | 2014 | 2013 | 2014 | 2013 |
Cost of sales | 93,973 | 63,599 | 190,182 | 110,535 |
Less Depletion and amortization | (13,331) | (8,331) | (23,983) | (14,710) |
Net change in inventory | (3,113) | (1,641) | (11,735) | 4,561 |
Operating costs of production | 77,529 | 53,627 | 154,464 | 100,386 |
Less by-product credits: |
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Molybdenum | (10,084) | (2,517) | (15,174) | (5,252) |
Silver | (1,047) | (763) | (2,059) | (1,719) |
Less offsite costs: |
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Treatment and refining costs | (7,287) | (4,085) | (14,989) | (7,497) |
Transportation costs | (4,012) | (4,397) | (10,524) | (7,730) |
Net operating costs of production | 55,099 | 41,865 | 111,718 | 78,188 |
Total copper produced (thousand pounds) | 28,858 | 21,059 | 54,764 | 38,479 |
Net operating costs of production (CAD per pound) | 1.90 | 1.99 | 2.03 | 2.03 |
Average exchange rate for the period (CAD/USD) | 1.0902 | 1.0235 | 1.0968 | 1.0161 |
Net operating costs of production (US$ per pound) | 1.76 | 1.94 | 1.86 | 2.0 |
Net operating costs of production | 55,099 | 41,865 | 111,718 | 78,188 |
Add offsite costs: |
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Treatment and refining costs | 7,287 | 4,085 | 14,989 | 7,497 |
Transportation costs | 4,012 | 4,397 | 10,524 | 7,730 |
Total operating costs | 66,398 | 50,347 | 137,231 | 93,415 |
Total operating costs (US$ per pound) | 2.12 | 2.34 | 2.28 | 2.39 |
Adjusted net earnings
Adjusted net earnings removes the effect of the following transactions from net earnings as reported under IFRS:
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Three months ended June 30, |
Six months ended June 30, |
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($ in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 |
Net (loss) earnings | 2,628 | (14,721) | (6,520) | (25,203) |
Unrealized loss (gain) on derivatives | 2,660 | (4,830) | (84) | (6,815) |
Unrealized foreign exchange (gains)/losses | (7,198) | 6,526 | 1,282 | 9,753 |
Write down of marketable securities | 419 | 4,363 | 419 | 13,750 |
Non-recurring other expenses (income) | - | - | - | (430) |
Estimated tax effect of adjustments | (681) | (1,515) | 22 | (4,065) |
Adjusted net earnings (loss) | (2,172) | (10,177) | (4,881) | (13,010) |
Adjusted EPS | (0.01) | (0.05) | (0.03) | (0.07) |
EBITDA and adjusted EBITDA
EBITDA represents net earnings before interest, income taxes, and depreciation. EBITDA is presented because it is an important supplemental measure of our performance and is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, many of which present EBITDA when reporting their results. Issuers of “high yield” securities also present EBITDA because investors, analysts and rating agencies consider it useful in measuring the ability of those issuers to meet debt service obligations. The Company believes EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense goes down as deductible interest expense goes up; depreciation is a non-cash charge.
Adjusted EBITDA is presented as a further supplemental measure of the Company’s performance and ability to service debt. Adjusted EBITDA is prepared by adjusting EBITDA to eliminate the impact of a number of items that are not considered indicative of ongoing operating performance.
Adjusted EBITDA is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that are not likely to recur or are not indicative of the Company’s future operating performance consisting of:
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Three months ended June 30, |
Six months ended June 30, |
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(Cdn$ in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 |
Net earnings (loss) | 2,628 | (14,721) | (6,520) | (25,203) |
Add: |
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Depreciation | 13,380 | 8,461 | 24,115 | 14,979 |
Amortization of stock based compensation | 478 | 213 | 2,561 | 1,568 |
Finance expense | 6,535 | 5,761 | 13,182 | 8,054 |
Interest income | (942) | (1,965) | (2,064) | (3,440) |
Income tax expense (recovery) | 1,257 | 80 | 920 | 1,547 |
EBITDA | 23,336 | (2,171) | 32,194 | (2,495) |
Adjustments: |
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Unrealized (gain)/loss on derivative instruments | 2,660 | (4,830) | (84) | (6,815) |
Write-down of marketable securities | 419 | 4,363 | 419 | 13,750 |
Non-recurring other expenses (income) | - | - | - | 430 |
Foreign currency translation (gains) losses | (7,198) | 6,526 | 1,282 | 9,753 |
Adjusted EBITDA | 19,217 | 3,888 | 33,811 | 13,763 |
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.
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Three months ended June 30, |
Six months ended June 30, |
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(Cdn$ in thousands, except per share amounts) | 2014 | 2013 | 2014 | 2013 |
Earnings from mining operations | 13,334 | 4,592 | 22,121 | 17,806 |
Add: |
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Depletion and amortization | 13,331 | 8,331 | 23,983 | 14,710 |
Earnings from mining operations before depletion and amortization | 26,665 | 12,923 | 46,104 | 32,516 |
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:
No regulatory authority has approved or disapproved of the information contained in this news release.
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:
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.