Categories: Precious Metals
Topics: General Precious Metals

Strong Leverage to Rising Copper Prices

Taseko Mines Ltd. (TSX: TKO)(NYSE-American: TGB) — currently trading around C$1.85 per share — is a low-cost operator and developer of copper mines in North America with a primary focus on British Columbia and the southwestern United States.

The two current flagships are the 87.5%-owned Gibraltar copper-molybdenum mine in south-central British Columbia and the wholly-owned Florence in-situ copper recovery project near Phoenix, Arizona. 

Gibraltar is the second-largest open pit copper mine in Canada and fourth-largest in North America. And while it sits at the lower end of the grade scale, it’s one of the most efficient copper production operations around.

The Gibraltar Mine produced 28 million lbs of copper and 230,000 lbs of molybdenum in Q2 2023 at unit operating costs of just US$2.66/lb Cu. Full-year production for 2023 is expected to be in line with previous projections of ~115 million lbs.

Taseko Mines CEO Stuart McDonald — whom you’re about to hear from directly in our exclusive interview — commented via press release:

“Mining operations are now well established in the lower benches of the Gibraltar pit, which have higher grades and larger, more consistent ore zones. Low mill availabilities had an impact on production in April and May, but in June and July we benefited from the softer ore in the Gibraltar pit and mill throughput averaged well above nameplate capacity. Copper production in June and July was 11 million pounds in each month. The Gibraltar pit will be the sole source of ore for the remainder of 2023.  With increased copper production expected in the second half of the year we continue to track towards our original production guidance of 115 million pounds of copper (+/-5%)...” 

At the co-flagship Florence project, Taseko is awaiting final permitting from the EPA (on an underground injection control permit) with first copper production slated for early 2025; a positive permitting decision could come as early as next month.

The in-situ metals recovery methodology at Florence is particularly interesting. The highly efficient process involves drilling a wellfield into the ore body, injecting leach solvents to dissolve the minerals, and then pumping the solution to the surface. The copper can then be recovered using a conventional SXEW or electrowinning process.

Mitsui & Co. is providing Taseko with US$50 million upfront for the construction capex with an option to invest an additional US$50 million for a 10% JV interest in the Florence Mine at a 10% equity ownership. 

Annual copper production at Florence is expected to be around 85 million lbs per annum, which will be added to current copper production from Gibraltar of roughly 115 million lbs per annum. 

That level of current plus future production makes Taseko Mines particularly well-leveraged to rising copper prices. In fact, as you’re about to discover in our exclusive interview coming right up, even a miniscule 10-cent rise in copper prices would add ~US$10 million to Taseko’s  bottom line based on current production from Gibraltar alone. 

When you add in the projected 80% revenue growth from the Florence in-situ project over the next couple of years (into what we expect will be a rising market for the red metal), you can immediately see the mid to longer-term value proposition based on Taseko’s current market cap of roughly C$530 million.  

As promised, our own Gerardo Del Real of Junior Resource Monthly caught up with Taseko Mines CEO Stuart McDonald for an in-depth conversation on all-things Taseko.  Please enjoy!

For additional information on Vancouver-based Taseko Mines Limited, be sure to contact the company’s IR department at 877-441-4533 or via email at investor@tasekomines.com. Sign up to receive updates directly from the company at the Taseko Mines corporate website.

Mike Fagan
Editor, Resource Stock Digest