TASEKO REPORTS SECOND QUARTER 2022 FINANCIAL RESULTS

Taseko Mines Limited

 

 

Canada NewsWire


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 and sales volumes stated in this release are on a 100% basis unless otherwise indicated.



VANCOUVER, BC


,


Aug. 8, 2022


/CNW/ – Taseko Mines Limited (TSX: TKO) (NYSE American: TGB); LSE: TKO) (“Taseko” or the “Company”) reports Cash flows provided by operations of

$18.3 million

, Earnings from mining operations before depletion* of

$7.2 million

, Adjusted EBITDA* of

$1.7 million

and an Adjusted net loss* of

$16.1 million

, or

$0.06

per share for the second quarter 2022.


Stuart McDonald

, President and CEO of Taseko, stated, “Over the first half of 2022, mining operations were sequencing through the lower grade upper benches of the

Gibraltar

pit. These smaller, complex ore zones are challenging sections for our mining equipment, resulting in higher dilution and lower than expected copper grade. The mill operated at design capacity in the second quarter, but lower head grades contributed to lower recoveries, resulting in copper production of 21 million pounds.

Mining operations are now advancing deeper into the

Gibraltar

pit where the higher-grade ore for the upcoming quarters is located.  Copper production is expected to be significantly higher in the second half of the year, and we have already seen improvements since quarter-end as 9.5 million pounds of copper was produced in the month of July. We still expect to meet our original copper production guidance of 115 million pounds (+/-5%), but given the more challenging conditions in the first half of the year, now expect to be at the lower end of that range.”

“Our average realized copper price for the period was

US$4.08

per pound, but the decline in the price late in the quarter impacted our financial results as we recognized negative price adjustments and an inventory write-down totalling

$7 million

. Going forward, we have a valuable copper hedge position which protects a minimum price of

US$3.75

per pound through

June 2023

,” continued Mr. McDonald.

Mr. McDonald added, “On the cost side, we continued to see the impact of higher fuel costs in the second quarter, as diesel prices climbed by 23% quarter-over-quarter, and nearly 70% over the prior year. Other than fuel, our total site spending is generally in line with the prior quarter and prior year. Although Total operating costs (C1)* per pound of copper has been driven higher by the lower production in the second quarter, these unit costs will drop significantly in the second half of 2022 as production increases. Diesel prices have recently fallen from their highs in the second quarter.”

“At Florence Copper, we are still waiting for the US Environmental Protection Agency (“EPA”) to begin the public comment period for the draft Underground Injection Control permit. This permit is the final key permit required to construct and operate the commercial production facility. All indications from the EPA are that there are no outstanding items remaining with the permit and they are just completing final internal sign offs. The public comment period is expected to be 45 days. During the second quarter, development costs of

$27 million

were incurred including procurement of long lead time items that were committed to last year. Capital spending on Florence will now slow down until we receive the final UIC permit,” continued Mr. McDonald.


*Non-GAAP performance measure. See end of news release


Second Quarter Review

  • Second quarter cash flow from operations was

    $18.3 million

    , earnings from mining operations before depletion and amortization* was

    $7.2 million

    and net loss was

    $5.3 million

    (

    $0.02

    loss per share);

  • Gibraltar

    produced 20.7 million pounds of copper for the quarter. Head grades averaged 0.17% which was lower than expected due to the complexity of the ore zones mined in the upper benches of the

    Gibraltar

    pit resulting in higher than normal mining dilution. Grades and copper production are expected to improve significantly in the second half of the year;
  • Mill throughput outperformed recent quarters, in line with expectations, due to the softer ore from the

    Gibraltar

    pit. Copper recoveries were 77.3% for the quarter and were impacted by the lower head grade;
  • Total site costs* in the second quarter have increased due primarily to the impact of higher diesel costs;

  • Gibraltar

    sold 21.7 million pounds of copper in the quarter (100% basis) at an average realized copper price of

    US$4.08

    per pound;
  • The decline in copper prices during the second quarter resulted in negative provisional price adjustments of

    $5.5 million

    and a write-down of ore stockpile inventories of

    $1.5 million

    ;
  • Adjusted EBITDA* was

    $1.7 million

    and Adjusted net loss* was

    $16.1 million

    (

    $0.06

    loss per share), and these amounts include the negative provisional price adjustments and inventory write-down;
  • The Company has copper collar contracts in place to protect a minimum copper price until mid-2023.  The copper price collars outstanding at the end of the second quarter resulted in an unrealized gain of

    $30.7 million

    . Subsequent to quarter-end,

    $15.2 million

    of this gain was realized as cash proceeds upon payout of the July contract and through a repricing of the copper price floors from

    US$4.00

    to

    US$3.75

    per pound for the remainder of 2022;
  • Development costs incurred for Florence Copper were

    $27.0 million

    in the quarter and included further payments for major processing equipment for the SX/EW plant, other pre-construction activities and ongoing site costs; and
  • The Company had a cash balance of

    $176 million

    and has approximately

    $240 million

    of available liquidity at

    June 30, 2022

    , including its undrawn

    US$50 million

    revolving credit facility.


*Non-GAAP performance measure. See end of news release


HIGHLIGHTS



Operating Data (Gibraltar – 100% basis)



Three months ended June 30,



Six months ended June 30,



2022



2021



Change



2022



2021



Change


Tons mined (millions)


22.3


24.9


(2.6)


42.6


56.9


(14.3)


Tons milled (millions)


7.7


7.2


0.5


14.7


14.4


0.3


Production (million pounds Cu)


20.7


26.8


(6.1)


42.0


49.0


(7.0)


Sales (million pounds Cu)


21.7


26.7


(5.0)


49.1


48.7


0.4



Financial Data



Three months ended June 30,



Six months ended June 30,


(Cdn$ in thousands, except for per share amounts)



2022



2021



Change



2022



2021



Change


Revenues


82,944


111,002


(28,058)


201,277


197,743


3,534


Earnings from mining operations before depletion

and amortization

*


7,221


54,482


(47,261)


49,994


84,795


(34,801)


Cash flows provided by operations


18,344


72,502


(54,158)


70,097


69,219


878


Adjusted EBITDA

*


1,684


47,732


(46,048)


39,823


71,454


(31,631)


Adjusted net income (loss)

*


(16,098)


9,948


(26,046)


(9,936)


4,414


(14,350)


Per share – basic (“adjusted EPS”)

*


(0.06)


0.04


(0.10)


(0.03)


0.02


(0.05)


Net income (loss) (GAAP)


(5,274)


13,442


(18,716)


(179)


2,225


(2,404)


Per share – basic (“EPS”)


(0.02)


0.05


(0.07)




0.01


(0.01)


*Non-GAAP performance measure. See end of news release


REVIEW OF OPERATIONS



Gibraltar

mine (75% Owned)



Operating data (100% basis)



Q2 2022



Q1 2022



Q4 2021



Q3 2021



Q2 2021


Tons mined (millions)


22.3


20.3


23.3


25.2


24.9


Tons milled (millions)


7.7


7.0


7.4


7.4


7.2


Strip ratio


2.8


2.6


2.2


1.3


2.3


Site operating cost per ton milled (Cdn$)*


$11.13


$11.33


$9.94


$8.99


$9.16



Copper concentrate


Head grade (%)


0.17


0.19


0.24


0.28


0.22


Copper recovery (%)


77.3


80.2


80.4


84.2


83.3


Production (million pounds Cu)


20.7


21.4


28.8


34.5


26.8


Sales (million pounds Cu)


21.7


27.4


23.8


32.4


26.7


Inventory (million pounds Cu)


2.7


4.0


9.9


4.9


3.5



Molybdenum concentrate


Production (thousand pounds Mo)


199


236


450


571


402


Sales (thousand pounds Mo)


210


229


491


502


455



Per unit data (US$ per pound produced)


*


Site operating costs

*


$3.25


$2.95


$2.02


$1.53


$2.02


By-product credits

*


(0.15)


(0.18)


(0.30)


(0.25)


(0.25)


Site operating costs, net of by-product credits

*


$3.10


$2.77


$1.72


$1.28


$1.77


Off-property costs


0.37


0.36


0.22


0.29


0.25


Total operating costs (C1)

*


$3.47


$3.13


$1.94


$1.57


$2.02


Second Quarter Review


Gibraltar

produced 20.7 million pounds of copper for the quarter. Head grades averaged 0.17% in the quarter which was lower than expected due to the complexity of the ore in the upper benches of the

Gibraltar

pit which resulted in higher than normal mining dilution. Ore grades are expected to improve for the remainder of the year as mining progresses deeper into the

Gibraltar

pit where ore zones are more consistent and less complex in nature.

A total of 22.3 million tons were mined in the second quarter with the decrease from 2021 rates due to longer haul distances in the current phase of mining. Mill throughput improved over the prior quarters due to the softer

Gibraltar

ore in line with expectations.

The strip ratio of 2.8 was inline with the average for the

Gibraltar

pit and the prior quarter. Ore stockpiles also decreased by 1.8 million tons in the second quarter to supplement mill feed from the mine in accordance with the mine plan.

Total site costs* at

Gibraltar

of

$76.1 million

(which includes capitalized stripping of

$11.9 million

) for Taseko’s 75% share was generally consistent with the first quarter but was

$11.6 million

higher than the same quarter last year due to higher diesel costs with diesel prices nearly 70% higher than 2021 and with some other input costs increasing including grinding media used in the mill.


*Non-GAAP performance measure. See end of news release


REVIEW OF OPERATIONS – CONTINUED

Molybdenum production was 199 thousand pounds in the second quarter due to lower grades. At an average molybdenum price of

US$18.37

per pound, molybdenum generated a by-product credit per pound of copper produced of

US$0.15

in the second quarter.

Off-property costs per pound produced* were

US$0.37

for the second quarter reflecting higher ocean freight (including bunker costs) and increased treatment and refining charges (TCRC) as the same quarter in the prior year achieved extremely low TCRCs from spot tenders that were awarded given the tight physical market in the second quarter of 2021.

Total operating costs per pound produced (C1)* were

US$3.47

for the quarter and were

US$1.45

per pound higher than the second quarter last year as shown in the graph below:

Of the

US$1.45

variance in C1 costs in the second quarter of 2022 compared to the prior year quarter,

US$0.78

was due to decreased copper production,

US$0.12

was due to less mining costs being capitalized,

US$0.10

was due to lower molybdenum production,

US$0.26

was due to inflation arising from increased prices for diesel and grinding media,

US$0.11

was due to higher treatment and refining charges, and

US$0.08

for other miscellaneous cost impacts offset by favorable foreign exchange impacts.



GIBRALTAR

OUTLOOK

Copper production is expected to significantly increase in the second half of the year as mining progresses deeper in the

Gibraltar

pit as ore quality and grade improves. Management still expects to meet the original copper production guidance of 115 million pounds (+/-5%), but given the more challenging conditions in the first half of the year, now expect to be at the lower end of that range.

The Company currently has copper price collar contracts in place that secure a minimum copper price of

US$3.75

per pound for a substantial portion of its attributable production until

June 30, 2023

. Improved production combined with this copper hedge protection should continue to provide the foundation for stable financial performance and operating margins at the

Gibraltar

mine over the coming quarters.


*Non-GAAP performance measure. See end of news release



GIBRALTAR

OUTLOOK – CONTINUED

The Company has a long track record of purchasing copper price options to manage short term copper price volatility. This strategy provides security over the Company’s cash flow as it prepares for construction of the commercial facility at Florence Copper while continuing to provide significant copper price upside should copper prices continue their rebound. Copper prices in the first half of 2022 averaged

US$4.43

per pound and are currently around

US$3.55

per pound.

In

March 2022

, the Company announced a new 706 million ton proven and probable sulphide reserve for the

Gibraltar

mine, a 40% increase as of

December 31, 2021

. The new reserve estimate allows for a significant extension of the mine life to 23 years with total recoverable metal of 3.0 billion pounds of copper and 53 million pounds of molybdenum.

Highlights from the new reserve:

  • 706 million tons grading 0.25% copper;
  • Recoverable copper of 3.0 billion pounds and 53 million pounds of molybdenum;
  • 23 year mine life with average annual production of approximately 129 million pounds of copper and 2.3 million pounds of molybdenum;
  • Life-of-mine average strip ratio of 2.4:1; and
  • After-tax NPV of

    $1.1 billion

    (75% basis) and free cash flow of

    $2.3 billion

    (75% basis) at a long-term copper price of

    US$3.50

    per pound

    1

    .


1

The NPV and cash flow is based on copper prices of

US$4.25

(2022),

US$3.90

(2023) and

US$3.50

per pound long-term, and a molybdenum price of

US$18

(2022),

US$15

(2023) and

US$13

per pound long-term, a foreign exchange rate of 1.3:1 (C$:US$), and a discount rate of 8%.


FLORENCE COPPER

The commercial production facility at Florence Copper will be one of the greenest sources of copper for US domestic consumption, with carbon emissions, water and energy consumption all dramatically lower than a conventional mine. It is a low-cost copper project with an annual production capacity of 85 million pounds of copper over a 21-year mine life. With the expected C1* operating cost of

US$1.10

per pound, Florence Copper will be in the lowest quartile of the global copper cost curve and will have one of the smallest environmental footprints of any copper mine in the world.

The Company has successfully operated a Production Test Facility (“PTF”) since 2018 at

Florence

to demonstrate that the in-situ copper recovery (“ISCR”) process can produce high quality cathode while operating within permit conditions.

The next phase of Florence Copper will be the construction and operation of the commercial ISCR facility with an estimated capital cost of

US$230 million

(including reclamation bonding and working capital) based on the Company’s published 2017 NI 43-101 technical report. At a conservative copper price of

US$3.00

per pound, Florence Copper is expected to generate an after-tax internal rate of return of 37%, an after-tax net present value of

US$680 million

at a 7.5% discount rate, and an after-tax payback period of 2.5 years.



FLORENCE

COPPER – CONTINUED

In

December 2020

, the Company received the Aquifer Protection Permit (“APP”) from the Arizona Department of Environmental Quality (“ADEQ”). During the APP process, Florence Copper received strong support from local community members, business owners and elected officials. The other required permit is the Underground Injection Control permit (“UIC”) from the U.S. Environmental Protection Agency (“EPA”), which is the final permitting step required prior to construction of the commercial ISCR facility. On

November 22, 2021

, the EPA provided the Company with an initial draft of the UIC permit. Taseko’s project technical team completed its review of the draft UIC permit in early

December 2021

and no significant issues were identified. We are awaiting the EPA to begin the public comment period for the draft UIC. All indications from the EPA are that there are no outstanding items remaining with the permit and they are completing final internal sign offs. The public comment period is expected to be 45 days.

Detailed engineering and design for the commercial production facility was completed in 2021 and procurement activities are well advanced with the Company having made most of the initial deposits and awarding the key contract for the major processing equipment associated with the SX/EW plant. The Company incurred

$52.2 million

of costs for

Florence

in the first half of 2022 which includes commercial facility activities. Florence Copper also has outstanding purchase commitments of

$22.3 million

as at

June 30, 2022

for the remaining equipment to be delivered. Deploying this strategic capital and awarding key contracts will assist with protecting the project execution plan, mitigating inflation risk and the potential impact of supply chain disruptions and ensure a smooth transition into construction once the final UIC permit is received.


LONG-TERM GROWTH STRATEGY

Taseko’s strategy has been to grow the Company by acquiring and developing a pipeline of complementary projects focused on copper in stable mining jurisdictions. We continue to believe this will generate long-term returns for shareholders. Our other development projects are located in British Columbia.


Yellowhead Copper Project

Yellowhead Mining Inc. (“Yellowhead”) has an 817 million tonnes reserve and a 25-year mine life with a pre-tax net present value of

$1.3 billion

at an 8% discount rate using a

US$3.10

per pound copper price based on the Company’s 2020 NI 43-101 technical report. Capital costs of the project are estimated at

$1.3 billion

over a 2-year construction period. Over the first 5 years of operation, the copper equivalent grade will average 0.35% producing an average of 200 million pounds of copper per year at an average C1* cost, net of by-product credit, of

US$1.67

per pound of copper. The Yellowhead copper project contains valuable precious metal by-products with 440,000 ounces of gold and 19 million ounces of silver with a life of mine value of over

$1 billion

at current prices.

The Company is focusing its current efforts on advancing into the environmental assessment process and is undertaking some additional engineering work in conjunction with ongoing engagement with local communities including First Nations. The Company is also collecting baseline data and modeling which will be used to support the environmental assessment and permitting of the project.


New Prosperity Gold-Copper Project

In

December 2019

, the Tŝilhqot’in Nation, as represented by the Tŝilhqot’in National Government, and Taseko entered into a confidential dialogue, with the involvement of the Province of

British Columbia

, to try to obtain a long-term resolution to the conflict regarding Taseko’s proposed gold-copper mine currently known as New Prosperity, acknowledging Taseko’s commercial interests and the Tŝilhqot’in Nation’s opposition to the project.


LONG-TERM GROWTH STRATEGY

The dialogue was supported by the parties’ agreement on

December 7, 2019

to a one-year standstill on certain outstanding litigation and regulatory matters that relate to Taseko’s tenures and the area in the vicinity of Teẑtan Biny (Fish Lake). The standstill was extended on

December 4, 2020

, to continue what was a constructive dialogue that had been delayed by the COVID-19 pandemic. The dialogue is not complete but it remains constructive, and in

December 2021

, the parties agreed to extend the standstill for a further year so that they and the Province of

British Columbia

can continue to pursue a long-term and mutually acceptable resolution of the conflict.


Aley Niobium Project

Environmental monitoring and product marketing initiatives on the Aley niobium project continue. The converter pilot test is ongoing and is providing additional process data to support the design of the commercial process facilities and will provide final product samples for marketing purposes.


The Company will host a telephone conference call and live webcast on Tuesday, August 9, 2022 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific) to discuss these results. After opening remarks by management, there will be a question and answer session open to analysts and investors.


The conference call may be accessed by dialing 647-484-0258 in Toronto, 800-289-0720 toll free in North America, 0800 279 6877 in the United Kingdom, or online at

tasekomines.com/investors/events

and using the entry code 8913919.


The conference call will be archived for later playback until August 23, 2022 and can be accessed by dialing 647-436-0148 in Toronto, 888-203-1112 toll free in North America, or online at

tasekomines.com/investors/events

and using the entry code 8913919.


Stuart McDonald


President & CEO

No regulatory authority has approved or disapproved of the information in this news release.


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.


Total operating costs and site operating costs, net of by-product credits

Total costs of sales include all costs absorbed into inventory, as well as transportation costs and insurance recoverable. Site operating costs are calculated by removing net changes in inventory, depletion and amortization, insurance recoverable, and transportation costs from cost of sales. Site operating costs, net of by-product credits is calculated by subtracting by-product credits from the site operating costs. Site operating costs, net of by-product credits 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 site operating costs, net of by-product credits and off-property costs divided by the copper pounds produced. By-product credits are calculated based on actual sales of molybdenum (net of treatment costs) 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.


(Cdn$ in thousands, unless otherwise indicated) –


75% basis



2022



Q2



2022



Q1



2021



Q4



2021



Q3



2021



Q2


Cost of sales


90,992


89,066


57,258


65,893


74,056


Less:


Depletion and amortization


(15,269)


(13,506)


(16,202)


(17,011)


(17,536)


Net change in inventories of finished goods


(3,653)


(7,577)


13,497


762


(4,723)


Net change in inventories of ore stockpiles


(3,463)


(3,009)


4,804


6,291


2,259


Transportation costs


(4,370)


(5,115)


(4,436)


(5,801)


(4,303)


Site operating costs


64,237


59,859


54,921


50,134


49,753


Less by-product credits:


Molybdenum, net of treatment costs


(3,023)


(3,831)


(7,755)


(8,574)


(6,138)


Silver, excluding amortization of deferred revenue


36


202


(330)


300


64


Site operating costs, net of by-product credits


61,250


56,230


46,836


41,860


43,679


Total copper produced (thousand pounds)


15,497


16,024


21,590


25,891


20,082


Total costs per pound produced


3.95


3.51


2.17


1.62


2.18


Average exchange rate for the period (CAD/USD)


1.28


1.27


1.26


1.26


1.23



Site operating costs, net of by-product credits



(US$ per pound)



3.10



2.77



1.72



1.28



1.77


Site operating costs, net of by-product credits


61,250


56,230


46,836


41,860


43,679


Add off-property costs:


Treatment and refining costs


2,948


2,133


1,480


3,643


1,879


Transportation costs


4,370


5,115


4,436


5,801


4,303


Total operating costs


68,568


63,478


52,752


51,304


49,861



Total operating costs (C1) (US$ per pound)



3.47



3.13



1.94



1.57



2.02


Total Site Costs

Total site costs is comprised of the site operating costs charged to cost of sales as well as mining costs capitalized to property, plant and equipment in the period. This measure is intended to capture Taseko’s share of the total site operating costs incurred in the quarter at the

Gibraltar

mine calculated on a consistent basis for the periods presented.


(Cdn$ in thousands, unless otherwise indicated) –


75% basis



2022



Q2



2022



Q1



2021



Q4



2021



Q3



2021



Q2


Site operating costs


64,237


59,859


54,921


50,134


49,753


Add:


Capitalized stripping costs


11,887


15,142


12,737


10,882


14,794



Total site costs



76,124



75,001



67,658



61,016



64,547


Adjusted net income (loss)

Adjusted net income (loss) removes the effect of the following transactions from net income as reported under IFRS:

  • Unrealized foreign currency gains/losses;
  • Unrealized gain/loss on derivatives; and
  • Loss on settlement of long-term debt and call premium, including realized foreign exchange gains.

Management believes these transactions do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results. Furthermore, unrealized gains/losses on derivative instruments, changes in the fair value of financial instruments, and unrealized foreign currency gains/losses are not necessarily reflective of the underlying operating results for the reporting periods presented.


(Cdn$ in thousands, except per share amounts)



2022



Q2



2022



Q1



2021



Q4



2021



Q3



Net income (loss)



(5,274)



5,095



11,762



22,485


Unrealized foreign exchange (gain) loss


11,621


(4,398)


(1,817)


9,511


Unrealized (gain) loss on derivatives


(30,747)


7,486


4,612


(6,817)


Estimated tax effect of adjustments


8,302


(2,021)


(1,245)


1,841



Adjusted net income (loss)



(16,098)



6,162



13,312



27,020



Adjusted EPS



(0.06)



0.02



0.05



0.10


(Cdn$ in thousands, except per share amounts)



2021



Q2



2021



Q1



2020



Q4



2020



Q3



Net income (loss)



13,442



(11,217)



5,694



987


Unrealized foreign exchange (gain) loss


(3,764)


8,798


(13,595)


(7,512)


Realized foreign exchange gain on settlement of long-term debt




(13,000)






Loss on settlement of long-term debt




5,798






Call premium on settlement of long-term debt




6,941






Unrealized loss on derivatives


370


802


586


1,056


Estimated tax effect of adjustments


(100)


(3,656)


(158)


(285)



Adjusted net income (loss)



9,948



(5,534)



(7,473)



(5,754)



Adjusted EPS



0.04



(0.02)



(0.03)



(0.02)


Adjusted EBITDA

Adjusted EBITDA is presented as a supplemental measure of the Company’s performance and ability to service debt. Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, many of which present Adjusted EBITDA when reporting their results.  Issuers of “high yield” securities also present Adjusted EBITDA because investors, analysts and rating agencies consider it useful in measuring the ability of those issuers to meet debt service obligations.

Adjusted EBITDA represents net income before interest, income taxes, and depreciation and also eliminates the impact of a number of items that are not considered indicative of ongoing operating performance. Certain items of expense are added and certain items of income are deducted from net income that are not likely to recur or are not indicative of the Company’s underlying operating results for the reporting periods presented or for future operating performance and consist of:

  • Unrealized foreign exchange gains/losses;
  • Unrealized gain/loss on derivatives;
  • Loss on settlement of long-term debt (included in finance expenses) and call premium;
  • Realized foreign exchange gains on settlement of long-term debt; and
  • Amortization of share-based compensation expense.


(Cdn$ in thousands)



2022



Q2



2022



Q1



2021



Q4



2021



Q3



Net income (loss)



(5,274)



5,095



11,762



22,485


Add:


Depletion and amortization


15,269


13,506


16,202


17,011


Finance expense


12,236


12,155


12,072


11,875


Finance income


(282)


(166)


(218)


(201)


Income tax expense


922


1,188


9,300


22,310


Unrealized foreign exchange (gain) loss


11,621


(4,398)


(1,817)


9,511


Unrealized (gain) loss on derivatives


(30,747)


7,486


4,612


(6,817)


Amortization of share-based compensation expense (recovery)


(2,061)


3,273


1,075


117



Adjusted EBITDA



1,684



38,139



52,988



76,291


(Cdn$ in thousands)



2021



Q2



2021



Q1



2020



Q4



2020



Q3



Net income (loss)



13,442



(11,217)



5,694



987


Add:


Depletion and amortization


17,536


15,838


18,747


23,894


Finance expense (includes loss on settlement of long-term debt


and call premium)


11,649


23,958


10,575


11,203


Finance income


(184)


(75)


(47)


(4)


Income tax (recovery) expense


7,033


(4,302)


(2,724)


(580)


Unrealized foreign exchange (gain) loss


(3,764)


8,798


(13,595)


(7,512)


Realized foreign exchange gain on settlement of long-term debt




(13,000)






Unrealized loss on derivatives


370


802


586


1,056


Amortization of share-based compensation expense


1,650


2,920


1,242


2,501



Adjusted EBITDA



47,732



23,722



20,478



31,545


Earnings (loss) from mining operations before depletion and amortization

Earnings (loss) 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.



Three months ended

June 30,



Six months ended

June 30,


(Cdn$ in thousands)



2022



2021



2022



2021



Earnings (loss) from mining operations



(8,048)



36,946



21,219



51,421


Add:


Depletion and amortization


15,269


17,536


28,775


33,374



Earnings from mining operations before depletion and

amortization



7,221



54,482



49,994



84,795


Site operating costs per ton milled


(Cdn$ in thousands, except per ton milled amounts)



2022



Q2



2022



Q1



2021



Q4



2021



Q3



2021



Q2



Site operating costs (included in cost of sales)



64,237



59,859



54,921



50,134



49,753


Tons milled (thousands) (75% basis)


5,774


5,285


5,523


5,576


5,429



Site operating costs per ton milled



$11.13



$11.33



$9.94



$8.99



$9.16


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 about the effect of COVID-19 and the response of local, provincial, federal and international governments to the threat of COVID-19 on our operations (including our suppliers, customers, supply chain, employees and contractors) and economic conditions generally and in particular with respect to the demand for copper and other metals we produce;
  • 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 the ability to obtain necessary licenses permits for development projects and project delays due to third party opposition;
  • uncertainties related to unexpected 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


.


Cautionary Statement on Forward-Looking Information

This discussion includes certain statements that may be deemed “forward-looking statements”. All statements in this discussion, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities, and events or developments that the Company expects are forward-looking statements. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. All of the forward-looking statements made in this MD&A are qualified by these cautionary statements. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by applicable law. Further information concerning risks and uncertainties associated with these forward-looking statements and our business may be found in our most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities.

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SOURCE Taseko Mines Limited

rt TASEKO REPORTS SECOND QUARTER 2022 FINANCIAL RESULTS

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