Taseko Mines Bolsters Balance Sheet with Copper Price Protection Program

copper price

Taseko Mines Ltd. (TSX:TKO) (NYSE:TGB) has secured protection against a sharp copper price fall, with collars covering 30 million pounds of metal in 2023. The Vancouver-based company says it will support its balance sheet for the construction of the Florence copper project, which promises to boost production.

Collars to Secure Minimum Copper Price of US$3.75

Taseko Mines has acquired copper collars for the first half of 2023 to secure a minimum copper price of US$3.75 per pound and a ceiling price of US$4.72 per pound for 30 million pounds of copper. This collar was purchased in mid-June when the price of copper was around US$4.20 per pound.

These new collars extend the price protection that is in place for the current year, which guarantees a minimum copper price of US$4.00 per pound for 42 million pounds in the second half of 2022. Current contracts will provide approximately C$45 million of additional cash flow over the next year at recent copper prices.

Taseko’s president and CEO Stuart McDonald said: “We have consistently used a price protection strategy for over ten years to protect our balance sheet from sudden downward moves in the copper price, like we have seen over the last month. With this price protection in place, and with the improvements in head grades and copper production from Gibraltar that we expect in the second half of this year, our balance sheet will remain strong as we prepare for construction of our Florence Copper Project,”

Taseko-owned Florence Copper, an in-situ copper recovery project, is located midway between Phoenix and Tucson, near the community of Florence, Arizona, the company said on its website. “The advanced-stage Florence Copper Project strengthens the Company’s near-term development pipeline and will significantly increase Taseko’s copper production.” 

The project is expected to produce 85 million pounds of copper per year on average and has a lifespan of 20 years.

Taseko Mines will spend approximately $225 million to construct the Florence Copper Project.

Scotiabank Cuts Taseko Target Price

Taseko Mines had its target price cut by investment analysts at Scotiabank from C$3.00 to C$2.00 in a report released on Thursday. Scotiabank’s price target points to a potential upside of 44.93% from the stock’s current price.

On May 4, Taseko Mines reported EPS of CA$0.02 for the first quarter, missing analysts’ consensus estimates of CA$0.03. Meanwhile, revenue came in at C$118.33 million in the quarter. On average, stock analysts expect Taseko Mines to post earnings per share of $0.15 for the current fiscal year.

Taseko Mines Company Profile

Taseko’s is a mid-tier copper producer located in British Columbia, Canada developing and operating mineral properties. It explores deposits of copper, molybdenum, gold, niobium, and silver.

Taseko holds a 75% interest in the Gibraltar mine. Located in British Columbia, Gibraltar is the second-largest copper mine in Canada and the fourth largest in North America. Currently, approximately 700 employees work in Gibraltar, producing an average of 130 million pounds of copper and 2.5 million pounds of molybdenum per year. 

Taseko also owns a 100% interest in the Aley niobium project, the Yellowhead copper project, the New Prosperity gold and copper project in British Columbia, and the Florence copper project in Arizona discussed earlier.

Taseko is committed to protecting the environment and has received numerous awards for its work in Gibraltar, including the 2012 Metal Mine Reclamation Award presented by British Columbia Technical and Research Committee on Reclamation and the 2013 Mining & Sustainability Award from the Government of British Columbia and the Mining Association of British Columbia.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.