Taseko CEO bullish after recent rise in copper, molybdenum prices

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Taseko Mines Ltd. [TKO-TSX; TGB-NYSE AMERICAN] has released its financial results for the fourth quarter and full year ended December 31, 2017.

Open pit mining at Taseko’s Gibraltar copper-molybdenum mine near Williams Lake, British Columbia. Source: Taseko Mines Ltd.

Taseko’s flagship asset is its 75%-owned Gibraltar Mine 65 km north of Williams Lake, south-central British Columbia. Production volumes stated in the earnings release are on a 100% basis unless otherwise stated. The company’s strategy has been to grow by leveraging cash flow from the Gibraltar Mine to assemble and develop a pipeline of projects in British Columbia and Arizona, which feature a diverse range of metals, including gold, copper, molybdenum and niobium.

Gibraltar’s copper production in 2017 was 141.2 million pounds, a 6% increase over 2016, due to higher average head grades and increased mill throughput. Mining and milling operations in July and August were impacted by wildfires in the Cariboo region, which limited the ability of Taseko employees to travel to the mine site.

This resulted in reduced mine and mill production for periods of time, as well as a complete mine shutdown for several days. More importantly, it impacted mine plan sequencing which has continued to affect copper production into the first quarter of 2018.

Taking this into account, head grades and copper production in the first quarter of 2018 will be similar to the fourth quarter of 2017, the company said.

Meanwhile, Taseko President and CEO Russell Hallbauer said 2017 was “an excellent year for Taseko, demonstrated by the $211 million of cash flow from operations and $164 million of EBITDA for the year, with $32 million and $22 million respectively, coming in the fourth quarter.

“Over the past three months, copper prices have averaged approximately US $3.15 a pound, which is 30% higher than were it was at the beginning of 2017,” Hallbauer said. “Additionally, molybdenum prices are 50% higher today over the same period and are now over US $12 a pound.”

He went on to say that given this higher metal price environment, the company’s financial performance is expected to continue into 2018, allowing Taseko to invest in and advance its projects.

Net income for the year was $34.3 million, or 15 cents a share, and adjusted net income was $41.4 million or 18 cents.

The cash balance at the end of 2017 was $80.2 million, slightly lower than at the end of 2016, as the company used $72 million of cash to complete a refinancing and reduce long-term debt in June, 2017.

In September, 2017, the company announced that it received all necessary state and federal permits to build and operate the Florence copper production test facility in Arizona, at an estimated cost of US $25 million. The 100%-owned Florence Copper is an in-situ copper recovery project located midway between Pheonix and Tuscon. Successful operation of the test facility will be a major step towards realizing the full value of the project.

Fourth quarter earnings from mining operations before depletion and amortization were $32.7 million, compared with $46.6 million in the fourth quarter of 2016.

On Thursday, Taseko shares eased 11.9% or $0.27 to $2.00.

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