TIDMTKO
Taseko Reports $108 Million of Adjusted EBITDA for 2020
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 volumes stated in this release are on a 100% basis unless otherwise
indicated.
Note: Gibraltar is a contractual, unincorporated joint venture between Taseko
Mines Limited (75% interest) and Cariboo Copper Corp. (25% interest). All
production and sales figures are reported on a 100% basis, unless otherwise
noted.
VANCOUVER, BC, Feb. 24, 2021 - Taseko Mines Limited (TSX: TKO) (NYSE American:
TGB) (LSE: TKO) ("Taseko" or the "Company") reports full-year 2020 earnings
from mining operations before depletion and amortization* of $119 million and
Adjusted EBITDA* of $108 million. For the year, the Company had a Net Loss of
$24 million, or $0.09 loss per share.
Russell Hallbauer, CEO and Director, commented, "We have witnessed a remarkable
recovery in the copper market since March of last year. The price of copper has
more than doubled in that time and even since the end of 2020, the price has
climbed a further US$0.70 per pound. Last year, Gibraltar produced 123 million
pounds of copper, and our 2021 production estimate is slightly higher at 125
million pounds. Gibraltar has been Taseko's cornerstone asset for over 15
years, generating positive cash flow through the copper price cycles, but it is
times like this that we truly benefit from the leverage to copper from our
large, steady-state production base. At current copper prices, which are now
more than US$1.40 per pound higher than last year's average, we would have
generated roughly $275 million of adjusted EBITDA* in 2020."
"Copper production in the fourth quarter was 25 million pounds, which was below
prior quarters due to lower grade and harder ore as mining transitioned into
the Pollyanna pit. Mine-to-mill adjustments were made during the fourth quarter
and throughput returned to design capacity in December. The Pollyanna pit,
which is about 4% lower grade than the reserve grade, will be the main source
of ore for the first half of 2021. In the second half of the year, ore mining
will commence in the Gibraltar pit, which is higher grade and has a lower work
index (softer ore)," added Mr. Hallbauer.
Stuart McDonald, President of Taseko, continued, "The $108 million of adjusted
EBITDA* and $106 million of operating cash flow we generated in 2020 was a
tremendous accomplishment and demonstrates the resiliency of our operation in
the face of a global pandemic and volatile economic environment.
Our successes, however, were not limited to Gibraltar. At Florence Copper we
have achieved key milestones in recent months which have de-risked the project
considerably. We received the state permit in December and we continue to
expect the federal permit from the EPA in the coming months. And in February we
completed a successful US$400 million bond refinancing which was upsized to
provide financing for development of the commercial facility at Florence. We
now have a cash balance of approximately US$200 million and with the majority
of required funding in hand we are moving forward with final design engineering
and procurement initiatives. This work will facilitate a seamless construction
start up and we will move forward expeditiously with on-the-ground construction
activities as soon as we have the final permits in place."
*Non-GAAP performance measure. See end of news release.
"2021 will be a transformational year for Taseko as we take the final steps to
unlock the full value of Florence and pave the way to becoming a multi-asset
copper producer. The addition of Florence will increase Taseko's attributable
annual copper production by 85% to approximately 185 million pounds. Florence
production will also significantly reduce Taseko's consolidated operating costs
given its expected C1 operating costs of US$0.90 per pound of copper. With
increased investor focus on sustainability and environmental footprint, we are
very proud of the fact that Florence Copper will also be one of the greenest
copper production facilities in the world and will provide high quality copper
to the US domestic market in support of its green infrastructure and
electrification initiatives in the years to come," concluded Mr. McDonald.
2020 Annual Review
* Earnings from mining operations before depletion and amortization* was
$119.0 million and Adjusted EBITDA* was $108.2 million;
* Cash flows from operations was $106.2 million, compared to $42.6 million in
the prior year;
* In response to the COVID-19 pandemic management implemented a number of
cost saving initiatives in 2020, including a revised mine plan for
Gibraltar, which reduced total site operating costs by $28.2 million
compared to 2019. Site operating costs, net of by-product credits* was
US$1.62 per pound produced, and total operating costs (C1)* was US$1.92 per
pound produced;
* The Gibraltar mine operated continuously through the year and produced
123.0 million pounds of copper and 2.3 million pounds of molybdenum (100%
basis). Copper recoveries were 84.3% and copper head grades for the year
were 0.243%;
* Gibraltar extended its five-year copper concentrate offtake contract, for
roughly 50% of its production, for an additional year, which is expected to
result in a 30% reduction in treatment and refining costs in 2021,
reflecting the continued tight physical copper concentrate market
conditions and the strategic demand for Gibraltar's high-quality
concentrates;
* On November 17, 2020, Taseko closed an offering of common shares for net
proceeds of $34.3 million;
* On February 10, 2021, Taseko closed an offering of US$400 million 7% Senior
Secured Notes due 2026. A portion of the proceeds will be used to redeem
all of the outstanding US$250 million 8.75% Senior Secured Notes due 2022
on March 3, 2021, including accrued interest and transaction costs;
* The Company's cash balance at December 31, 2020 was $85.1 million, and the
bond refinancing transaction in February 2021 provided additional net cash
proceeds of $167 million (or US$131 million);
* Copper prices have recovered strongly and the current price of over US$4.20
per pound is significantly higher than the average LME price of $2.80 per
pound in 2020; and
* The Arizona Department of Environmental Quality ("ADEQ") issued the Aquifer
Protection Permit ("APP") for Florence Copper on December 8, 2020. The
Company is now moving forward with final design engineering of the Florence
commercial production facility and procurement of certain critical
components.
*Non-GAAP performance measure. See end of news release.
Fourth Quarter Review
* Fourth quarter earnings from mining operations before depletion and
amortization* was $27.1 million, and Adjusted EBITDA* was $20.5 million;
* Cash flow from operations was $20.4 million;
* The Gibraltar mine produced 25.0 million pounds of copper in the fourth
quarter. Copper recoveries were 83.3% and copper head grades were 0.201%;
* Gibraltar sold 25.0 million pounds of copper in the quarter (100% basis)
which resulted in $85.9 million of revenue for Taseko. Average LME copper
prices were US$3.25 per pound in the quarter and revenue also included
positive provisional price adjustments of $8.4 million; and
* Net income (GAAP) for the fourth quarter was $5.7 million ($0.02 per
share). Adjusted net loss* was $7.5 million ($0.03 loss per share).
HIGHLIGHTS
Financial Data Year ended Three Months ended
December 31, December 31,
(Cdn$ in thousands, except 2020 2019 Change 2020 2019 Change
for per share amounts)
Revenues 343,267 329,163 14,104 87,398 89,932 (2,534)
Earnings from mining 119,026 70,613 48,413 27,062 23,921 3,141
operations before depletion
and amortization*
Adjusted EBITDA* 108,229 51,057 57,172 20,478 18,246 2,232
Cash flows provided by 106,195 42,641 63,554 20,424 9,227 11,197
operations
Earnings (loss) from mining 23,725 (39,143) 62,868 8,315 (7,459) 15,774
operations
Net income (loss) (23,524) (53,382) 29,858 5,694 (9,931) 15,625
Per share - basic ("EPS") (0.09) (0.22) 0.13 0.02 (0.04) 0.06
Adjusted net loss* (26,539) (68,610) 42,071 (7,473) (16,159) 8,686
Per share - basic ("Adjusted (0.11) (0.28) 0.17 (0.03) (0.07) 0.04
EPS")*
Operating Data (Gibraltar - 100% basis) Year ended Three Months ended
December 31, December 31,
2020 2019 Change 2020 2019 Change
Tons mined (millions) 98.7 100.4 (1.7) 26.4 25.8 0.6
Tons milled (millions) 30.1 29.9 0.2 7.5 7.8 (0.3)
Production (million pounds Cu) 123.0 125.9 (2.9) 25.0 33.4 (8.4)
Sales (million pounds Cu) 124.0 122.4 1.6 25.0 33.3 (8.3)
*Non-GAAP performance measure. See end of news release.
REVIEW OF OPERATIONS
Gibraltar mine (75% Owned)
Operating data (100% basis) Q4 Q3 Q2 Q1 Q4 YE YE
2020 2020 2020 2020 2019 2020 2019
Tons mined (millions) 26.4 23.3 20.5 28.5 25.8 98.7 100.4
Tons milled (millions) 7.5 7.5 7.7 7.5 7.8 30.1 29.9
Strip ratio 1.9 1.5 1.9 2.7 2.1 2.0 2.6
Site operating cost per ton $11.67 $9.57 $7.66 $9.52 $10.46 $9.59 $10.92
milled (CAD$)*
Copper concentrate
Head grade (%) 0.201 0.228 0.281 0.259 0.253 0.243 0.245
Copper recovery (%) 83.3 85.0 85.2 83.4 84.5 84.3 86.2
Production (million pounds Cu) 25.0 28.9 36.8 32.4 33.4 123.0 125.9
Sales (million pounds Cu) 25.0 28.6 39.3 31.1 33.3 124.0 122.4
Inventory (million pounds Cu) 3.4 3.6 3.8 6.4 5.0 3.4 5.0
Molybdenum concentrate
Production (thousand pounds 549 668 639 412 728 2,269 2,739
Mo)
Sales (thousand pounds Mo) 487 693 656 403 791 2,239 2,787
Per unit data (US$ per pound
produced)*
Site operating costs* $2.67 $1.85 $1.15 $1.64 $1.85 $1.75 $1.95
By-product credits* (0.14) (0.14) (0.11) (0.11) (0.16) (0.13) (0.20)
Site operating costs, net of $2.53 $1.71 $1.04 $1.53 $1.69 $1.62 $1.75
by-product credits*
Off-property costs 0.29 0.29 0.30 0.29 0.32 0.30 0.31
Total operating costs (C1)* $2.82 $2.00 $1.34 $1.82 $2.01 $1.92 $2.06
OPERATIONS ANALYSIS
Full-year results
To-date, there have been no interruptions to the Company's operations,
logistics and supply chains as a result of the COVID-19 pandemic. Heightened
health and safety protocols continue to be implemented and monitored for
effectiveness.
In 2020, Gibraltar produced 123.0 million pounds of copper compared to 125.9
million in 2019. Copper grade for the year averaged 0.243% copper which was
consistent with 2019. Copper recovery for 2020 was 84.3% and was affected by
higher iron content in the ore in the first quarter and increased oxide ore and
ore hardness in the initial Pollyanna Pit benches in the fourth quarter.
*Non-GAAP performance measure. See end of news release.
A total of 98.7 million tons were mined in 2020, a slight decrease over the
prior year. In response to COVID-19, management implemented a revised mining
plan in March 2020 that reduced operating costs over the second and third
quarters of 2020 while still maintaining long-term mine plan requirements. Site
operating costs, net of by-product credit for the year were US$1.62 per pound
of copper produced, a decrease of US$0.13 per pound from 2019.
The strip ratio for the year was 2.0 to 1 compared to 2.6 to 1 in 2019
reflecting the revised mine plan. In addition, ore stockpiles increased over
2020 by 3.0 million tons from initial mining of ore in Pollyanna.
Molybdenum by-product credits per pound of copper produced* were US$0.13,
compared to US$0.20 in the prior year. The decrease was due to a drop in the
average molybdenum price, which was US$8.68 per pound in 2020 compared to
US$11.36 per pound in 2019. Molybdenum production for 2020 was 2.3 million
pounds and 0.4 million pounds lower than in 2019.
Off-property costs per pound produced* were US$0.30 in 2020 and consist of
concentrate treatment, refining and transportation costs. These costs are in
line with the prior year on a per pound basis.
Total operating costs per pound produced (C1)* were US$1.92 for the year
compared to US$2.06 in 2019 due to the reduction in site spending.
Fourth quarter results
Copper production in the fourth quarter was 25.0 million pounds and was
impacted by lower mined ore grades in November and December. Mining in the
Granite pit was completed in early October 2020. Additionally, increased oxide
ore and ore hardness in the initial Pollyanna Pit benches affected recoveries
and throughput in the fourth quarter.
Total site spending (including capitalized stripping) was consistent with the
fourth quarter of 2019 as the mining rate returned to normal levels. The strip
ratio for the fourth quarter was 1.9 to 1 consistent with the average for the
year. Capital expenditures in the fourth quarter included costs associated with
the dewatering system for the Gibraltar pit.
Molybdenum production was 549 thousand pounds in the fourth quarter, a decrease
from the prior quarter due to lower molybdenum grade, which also decreased
recovery. Molybdenum prices continued their recovery in the fourth quarter and
averaged US$9.01 per pound but were still lower compared to US$9.67 per pound
in Q4 2019. By-product credits per pound of copper produced* was US$0.14 in the
fourth quarter.
Off-property costs per pound produced* were US$0.29 for the fourth quarter and
consistent with prior quarters.
Total operating costs (C1)* costs were US$2.82 per pound produced for the
quarter. In addition to fewer copper pounds being produced in the fourth
quarter, contributing to the increase in C1* costs was a decrease in
capitalized stripping costs which was only $1.2 million compared to $3.6
million in the third quarter, higher operating costs due to mining rates
returning to normal levels and a strengthening Canadian dollar.
*Non-GAAP performance measure. See end of news release.
ENVIRONMENT, SOCIAL AND GOVERNANCE
In May 2020, Taseko published its first Environmental, Social, and Governance
report, which includes an examination of the Company's sustainable performance,
with specific details for 2017, 2018 and 2019. The report is available on the
Company's website at www.tasekomines.com/esg.
Nothing is more important to Taseko than the safety, health and well-being of
our workers and their families. Taseko is committed to operational practices
that result in improved efficiencies, safety performance and occupational
health.
Taseko places a high priority on the continuous improvement of performance in
the areas of employee health and safety at the workplace and protection of the
environment. In 2020, Gibraltar's days lost, loss time incidents, lost time
frequency, and loss time severity were all zero. The British Columbia mining
industry averages for 2020 were 0.68 for loss time frequency (per 200,000 hours
worked) and 105.7 for loss time severity.
The same priority on health, safety, and environmental performance, as well as
the methods and culture at Gibraltar are being implemented at Florence Copper
as it prepares for construction.
GIBRALTAR OUTLOOK
Gibraltar is expected to produce approximately 125 million pounds on a 100%
basis in 2021, compared to 123 million pounds in 2020. Copper prices are
currently over US$4.20 per pound, compared to the average LME copper price of
$2.80 per pound in 2020. Molybdenum prices are currently 44% higher than the
average price in 2020. All of these factors are supportive of improved
financial performance at the Gibraltar mine in 2021.
With a strong copper price backdrop, mining rates have returned to more normal
levels. Mining has transitioned to the Pollyanna pit which will be the main
source of ore in 2021. Copper production is expected to be greater in the
second half of 2021 as higher grade areas in Pollyanna are opened up. Mining of
the Gibraltar pit will commence in the first part of 2021 with ore release
commencing in the second half of the year. Ore from the Gibraltar pit is
relatively softer and is expected to require less energy to grind, which will
provide opportunities for increased mill throughput in the future.
Copper prices have recovered swiftly since March 2020 and are reaching
multi-year highs due to recovery in Chinese demand coupled with continued
supply disruptions, most notably in South America. Many governments are now
focusing on increased infrastructure investment to stimulate economic recovery
after the pandemic, including green initiatives, which will require new primary
supplies of copper. Most industry analysts are projecting ongoing supply
constraints and deficits, which should support higher copper prices in the
years to come.
FLORENCE COPPER
Florence Copper represents a low-cost growth project that will have an annual
production capacity of 85 million pounds of copper over a 21-year mine life,
and with the expected C1 operating cost of US$0.90 per pound puts Florence
Copper in the lowest quartile of the global copper cost curve. The commercial
production facility at Florence will also be one of the greenest sources of
mined copper, with carbon emissions, water and energy consumption all
dramatically lower than a conventional mine. We have successfully operated a
Production Test Facility ("PTF") for the last two years 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 include the construction and operation
of the commercial ISCR facility with an estimated capital cost of US$230
million (including reclamation bonding and working capital). At a long-term
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.
On December 8, 2020, the Company received the Aquifer Protection Permit ("APP")
permit from the Arizona Department of Environmental Quality ("ADEQ"). The APP
permit was issued following a public comment period and public hearing in
August 2020 where the project received strong support from local community
members, business owners and elected officials. The other required permit is
the Underground Injection Control ("UIC") Permit from the U.S. Environmental
Protection Agency ("EPA"). The EPA's technical review for the UIC permit has
identified no significant issues and the Company expects to receive this permit
in the coming months.
With the recently concluded equity and bond financings, the Company now has the
majority of the required Florence Copper construction funding in hand.
Discussions with potential joint venture partners continue to advance, and with
the improved cash position and stronger expected cash flows from Gibraltar due
to higher prevailing copper prices, the Company has numerous options available
to obtain the remaining funding.
Management is now moving forward with final design engineering for the
commercial production facility as well as procurement of certain long-lead
critical components.
LONG-TERM GROWTH STRATEGY
Taseko's strategy has been to grow the Company by acquiring and developing a
pipeline of complimentary 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 focused primarily on copper
and 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 long-term copper price. 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 the environmental
assessment and some additional engineering work in conjunction with ongoing
engagement with local communities including First Nations. A focus group has
been formed between the Company and high-level regulators in the appropriate
Provincial ministries in order to expedite the advancement of the environmental
assessment and the permitting of the project. Management also commenced joint
venture partnering discussions in 2020 with a number of strategic industry
groups that are interested in potentially investing in the Yellowhead project
in combination with acquiring significant copper offtake rights.
New Prosperity Gold-Copper Project
In late 2019 the T?ilhqot'in Nation, as represented by T?ilhqot'in National
Government, and Taseko entered into a confidential dialogue, facilitated by the
Province of British Columbia, to try to obtain a long-term solution to the
conflict regarding Taseko's proposed gold-copper mine currently known as New
Prosperity, acknowledging Taseko's commercial interests and the T?ilhqot'in
Nation's opposition to the project. 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 Teztan Biny (Fish Lake).
The COVID-19 pandemic delayed the commencement of the dialogue for several
months, but the T?ilhqot'in Nation and Taseko have made progress in
establishing a constructive dialogue. In December 2020 they agreed to extend
the standstill for a further year so they can continue this dialogue.
Aley Niobium Project
Environmental monitoring and product marketing initiatives on the Aley Niobium
project continue. The pilot plant program has successfully completed the
niobium flotation process portion of the test, raising confidence in the design
and providing feed to the converter portion of the process. Completion of the
converter pilot test, which is underway, will provide additional process data
to support the design of the commercial process facilities and provide final
product samples for marketing purposes.
The Company will host a telephone conference call and live webcast on Thursday,
February 25, 2021 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time, 4:00 p.m.
GMT) 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 (888) 390-0546 within North America, or (416)
764-8688 for international callers.
The conference call will be archived for later playback until March 11, 2021
and can be accessed by dialing (888) 390-0541 within North America or (416)
764-8677 internationally and using the passcode 585262 #.
Russell Hallbauer
CEO and Director
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.
Three months Year ended
ended December 31,
December 31,
(Cdn$ in thousands, unless otherwise 2020 2019 2020 2019
indicated) - 75% basis
Cost of sales 79,083 97,391 319,542 368,306
Less:
Depletion and amortization (18,747) (31,380) (95,301) (109,756)
Net change in inventories of finished 2,087 (1,193) (939) 5,570
goods
Net change in inventories of ore 6,632 1,426 11,361 (1,677)
stockpiles
Transportation costs (3,768) (5,025) (18,248) (17,832)
Site operating costs 65,287 61,219 216,415 244,611
Less by-product credits:
Molybdenum, net of treatment costs (3,649) (5,205) (15,241) (25,223)
Silver, excluding amortization of deferred 133 30 (303) (557)
revenue
Site operating costs, net of by-product 61,771 56,044 200,871 218,831
credits
Total copper produced (thousand pounds) 18,725 25,047 92,277 94,428
Total costs per pound produced 3.30 2.24 2.18 2.32
Average exchange rate for the period (CAD/ 1.30 1.32 1.34 1.33
USD)
Site operating costs, net of by-product 2.53 1.69 1.62 1.75
credits (US$ per pound)
Site operating costs, net of by-product 61,771 56,044 200,871 218,831
credits
Add off-property costs:
Treatment and refining costs 3,284 5,520 18,169 21,417
Transportation costs 3,768 5,025 18,248 17,832
Total operating costs 68,823 66,589 237,288 258,080
Total operating costs (C1) (US$ per pound) 2.82 2.01 1.92 2.06
Adjusted net income (loss)
Adjusted net income (loss) remove the effect of the following transactions from
net income as reported under IFRS:
* Unrealized foreign currency gains/losses; and
* Unrealized gain/loss on copper put and fuel call options.
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.
Three months Year ended
ended December 31,
December 31,
(Cdn$ in thousands, except per share 2020 2019 2020 2019
amounts)
Net income (loss) 5,694 (9,931) (23,524) (53,382)
Unrealized foreign exchange gain (13,595) (5,850) (4,345) (15,228)
Unrealized (gain) loss on copper put and 586 (518) 1,822 -
fuel call options
Estimated tax effect of adjustments (158) 140 (492) -
Adjusted net loss (7,473) (16,159) (26,539) (68,610)
Adjusted EPS (0.03) (0.07) (0.11) (0.28)
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 copper put and fuel call options; and
* Amortization of share-based compensation expense.
Three months Year ended
ended December 31,
December 31,
(Cdn$ in thousands) 2020 2019 2020 2019
Net income (loss) 5,694 (9,931) (23,524) (53,382)
Add:
Depletion and amortization 18,747 31,380 95,301 109,756
Finance expense 10,575 10,109 43,010 40,324
Finance income (47) (113) (249) (1,202)
Income tax recovery (2,724) (7,543) (9,096) (32,337)
Unrealized foreign exchange gain (13,595) (5,850) (4,345) (15,228)
Unrealized (gain) loss on copper put and 586 (518) 1,822 -
fuel call options
Amortization of share-based compensation 1,242 712 5,310 3,126
expense
Adjusted EBITDA 20,478 18,246 108,229 51,057
Earnings (loss) from mining operations before depletion and amortization
Earnings 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 Year ended
ended December 31,
December 31,
(Cdn$ in thousands) 2020 2019 2020 2019
Earnings (loss) from mining operations 8,315 (7,459) 23,725 (39,143)
Add:
Depletion and amortization 18,747 31,380 95,301 109,756
Earnings from mining operations before 27,062 23,921 119,026 70,613
depletion and amortization
Site operating costs per ton milled
Three months Year ended
ended December 31,
December 31,
(Cdn$ in thousands, except per ton milled 2020 2019 2020 2019
amounts)
Site operating costs (included in cost of 65,287 61,219 216,415 244,611
sales)
Tons milled (thousands) (75% basis) 5,594 5,855 22,559 22,405
Site operating costs per ton milled $11.67 $10.46 $9.59 $10.92
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.
For further information on Taseko, please see the Company's website at
www.tasekomines.com or contact: Brian Bergot, Vice President, Investor
Relations - 778-373-4554, toll free 1-800-667-2114
END
(END) Dow Jones Newswires
February 25, 2021 02:00 ET (07:00 GMT)
Taseko Mines (LSE:TKO)
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