Taseko’s Gibraltar mine hit by severe winter

The Gibraltar mine near Williams Lake, British Columbia. Source: Taseko Mines Ltd.

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Taseko Mines Ltd. [TKO-TSX; TGB-NYSE American] posted disappointing results in the first quarter of 2019 that were largely driven by a weaker-than-expected operating performance at the company’s Gibraltar copper mine in central British Columbia.

On Thursday, Taseko shares fell 4.65% or $0.04 to 82 cents, and now trade in a 52-week range of $1.80  and 60 cents.

The 75%-owned Gibraltar mine is Taseko’s flagship asset. 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.

“As was experienced throughout Western Canada in the quarter, severe winter weather affected all aspects of our Gibraltar operation, from shovel availabilities through to waste stripping and ore release,” said Taseko President and CEO Russell Hallbauer.

“This in combination with harder ore in the current Granite Pit pushback, reduced average mill throughput to 76,000 tons per day, which affected both copper and molybdenum production,” he said. “Those issues are now behind us and we are back to normal throughput, with increasing head grade.”

Taseko posted a first quarter net loss of $7.9 million or $0.03 per share, including an unrealized foreign exchange gain of $6.7 million. The adjusted net loss was $14.4 million or $0.06, which compares to a consensus estimate of a loss of $0.01.

“With a grade profile similar to 2018, copper and molybdenum production are expected to increase through 2019 and our previously stated guidance remains unchanged at 130 million pounds +/-5%,” Hallbauer said.

However, total operating costs at Gibraltar jumped to $2.21 a pound in the first quarter from $2.11 in the fourth quarter of 2018.

While first quarter 2019 output of 25 million pounds represents only 19% of the annual target, grades are expected to increase throughout the year.

Taseko recently announced the first copper production from its 100%-owned Florence Project in Arizona.

Florence is an in-situ copper recovery project, located midway between Phoenix and Tucson, near the community of Florence.

The facility is expected to produce an average of 85 million pounds of copper annually for 20 years at an average operating cost of US$1.10 a pound.

Meanwhile, Taseko closed its acquisition of Yellowhead Mining Inc. on February 15, 2019. The environmental review process for the Yellowhead Project has been restarted and Taseko’s technical team is working on a number of engineering initiatives to improve the project economics with a view to issuing a NI 43-101 technical report by the end of 2019.

The Yellowhead Project is located in the Thompson-Nicola area of B.C., approximately 150 km northeast of Kamloops. A 2014 feasibility study envisages a 70,000 tonne-per-day open pit copper mine at the site with a 28-year mine life.

The project contains proven and probable reserves of 3.6 billion pounds of recoverable copper, supplemented by 370,000 ounces of gold and 15.6 million ounces of silver.


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