Taseko Mines Limited Q1 2023 Earnings Call

Which were readying for construction and we expect will provide additional production growth for us in 2025.

At the end of March with all the New 43 101 Technical report for the Florence project. It had been six years since the previous technical report and a lot of work has gone into the projects since then.

The test facility, which operated for 18 months has provided our technical teams with a huge amount of data, which has been used to refine operating models.

Detailed engineering has been substantially completed which has allowed us to advance discussions with key contractors and obtain vendor quotes.

And that recent cost information was included in the updated cash flow and economics.

But we've been in an inflationary environment for the last couple of years and we wanted to wait until we were close to the construction start date to update the capex.

The result of all this work is a significantly derisk project that continues to have robust economics.

We estimate that we have about $230 million of Capex.

Remaining to be spent.

And the project NPV is $930 million U S with a 47% IRR after tax so it really is a unique opportunity that we have in front of us here.

The permitting process is advancing on the final permit needed before we can begin construction.

We talk regularly with EPA and continue to receive positive positive messages about their progress.

And continue to expect the final UIC permit.

To be issued in the next few months.

So it is a waiting game, but we know we're close to the end and I believe patients is going to be rewarded as that permitting milestone as a key catalyst for us.

Meanwhile, as we wait for the EPA to wrap up their process. Our project team continues to prepare for the construction phase.

Although spending and commitments related to the project have dropped off significantly as long lead items are already procured and much of that equipment is already on site.

One final topic before I pass it over to price last night, we announced an at the money or an ATM equity offering for up to $50 million U S.

This facility will allow to CECO to issue new equity from time to time at our discretion, if and when we feel it's appropriate.

We don't have any immediate plans to use it but we view it as a prudent tool to have in place as we head into the Florence Capital project later this year.

In addition, we continue to evaluate a number of other Florence financing options, including royalties and a project level loan.

So we're pretty excited about what's in store here in the next few months, it's an exciting time for <unk> as we get closer to commercial production of Florence.

With that I'll turn it over to Bryce for some additional commentary on the quarter.

And then we will open up the lines for questions.

Alright.

Thank you Stuart good morning, everyone.

Provide a few more details on our financial results for the quarter.

Copper sales in the first quarter were 27 million pounds on a 100% basis 2 million pounds higher than production as we were able to ship additional tons and lower inventory at quarter end. The average realized copper price for the quarter was $4 <unk> per pound, which was a 10% increase over the fourth quarter. This resulted in a one.

$16 million of revenues in the first quarter.

Total site costs in the quarter were higher by $7 million over the fourth quarter. The biggest variance of the increase came from higher diesel costs diesel prices are declining they're currently about 40.

Per liter lower than last year, so that will help on our 2023 costs going forward compared to 2022, if oil prices remain low. We did also have increased maintenance costs in the middle in Q1. Some other one off mining cost increases for explosives and tires and there were also some costs associated with clearing the TSS.

Pipeline swallowing that frees up in December and January .

Given this we should see total site costs decreasing in the quarters ahead compared to Q1.

The increased mining rates with focus on stripping the connector pet also resulted in higher capitalized stripping for the period and the first quarter $13 million of stripping costs were capitalized compared to $4 million in the fourth quarter.

All the tons in the connector pit that we've been mining our waste with the exception of about 800000 tonnes of oxide ore that were mined and placed on the leach pads.

Byproduct credits from Molly <unk>.

<unk> continued to benefit from the recent moly price strength the average price of moly in the quarter was $33 per pound, which resulted in a byproduct credit of 37 cents per pound produced in recent weeks the price Mali has subsided.

Still at a sustainable level of about $21 per pound.

<unk> costs in Q1 of $2 82 per pound were slightly higher but generally in line with the fourth quarter. The unit cost increase is attributed to the minor decrease in production and the higher one off costs I mentioned earlier.

Given less volatility in the foreign exchange rate and copper prices, our GAAP earnings in the first quarter of $4 4 million or <unk> <unk> per share was similar to our adjusted earnings of $5 1 million.

With softer copper prices in the last few days, it's good to emphasize we have price protection in place for the balance of 2023, we have copper price production of $3 75 per pound for 52 million pounds of production.

Capital spending in the first quarter was $25 million at Gibraltar and $10 million at Florence at Gibraltar work on the Crusher move was restarted in the first quarter with about $7 million being spent with the crusher being deferred to next year now we will see some deferral of the Capex for Jim into 2024, which we estimate could be up to $10 million of <unk>.

Capital spending.

Being deferred.

We ended the quarter with $102 million of cash and we had approximately $150 million of available liquidity at March 31.

I will close with emphasizing our significant transaction this quarter, which was the incremental 12, 5% interest in Gibraltar, we acquired from <unk> on March 15th So the first quarter results reflect only a small small portion.

Or an adjustment for this additional ownership for the last 15 days of the quarter. We will continue to proportionately consolidate this 12, 5%.

Ownership into our earnings going forward, alongside or 75% interest future quarters will be reported on a full 87, 5% basis.

So everything else equal our historical Gibraltar financial performance can be grossed up 17% to be comparable on a like for like basis with our future quarters.

As disclosed in our notes to the financials, including this pro forma earnings from January one from caribou from the additional 12, 5% interest in Jim we now own that would've resulted in revenue of $131 million for the quarter and net income was $6 5 million would've increased our EBITDA by about $5 million for the period on a pro forma.

Basis.

With that I'll turn it over to the operator for questions. Thank you.

Thank you ladies and gentlemen.

Now begin the question and answer session.

As I mentioned before so you have a question. Please press star one.

If you want to withdraw your question. Please first start to.

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Steve.

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One moment. Please for your first question.

Yes.

Your first question comes from.

Alex Bernie from Canaccord Genuity. Please go ahead.

Hi, guys just a couple of questions for me. The first one is regarding dilution. So there's still seems to be a way to go to get the <unk>.

<unk> back to the reserve grade How's the progress going on this front and how comfortable are you now that we're a third of the way into the second quarter.

And then the second question is regarding the sustainability of producing above the nameplate capacity of the plant how many quarters do you think that that can continue for.

Assuming that you've gone through April .

That 80 85000 tonnes per day level.

Yes, good morning, Richard drama here regarding the dilution.

Yes, we're comfortable where through the issues that kind of plagued us in 2022.

The site team has done a lot of technical work.

Is <unk>.

Adjusted operating kind of practices and policies to ensure we're properly properly, reflecting what we're going to be milling. So comfortable with that and then regarding your second question on throughput.

The crusher issues that impacted us in Q1 have been resolved and do feel confident and expect throughput to be at or above design capacity for the remainder of the year.

Okay. That's great. Thank you Richard.

Thank you.

As a reminder show when you have a question. Please press star one.

Your next question comes from Alex <unk> from Stifel. Please go ahead.

Hey, good morning, guys.

My question is just on the oxide ore that youre talking about mining here.

Is this or that is currently classified as waste I'm just trying to think of from a from a cost perspective, let me know if this is already captured in your and your stripping costs or how do we.

Global thinking about this and just if you can provide some sort of quantum of potential production in the future that you might see from that.

Hi, Hi, Alex it's Stuart here.

Oxide, we knew we know there is oxide ore on the top of the connector pit.

It's been part of the long term mine plan that we would be.

Mining that ore and.

And restarting restart.

Restarting the plant either next year or the year. After so definitely part of the part of the plan yes.

Yes, I don't know Richard if that was a surprise to get into it a little bit earlier than you expected I was pretty much in line with plan.

It's pretty much in line with the plan that's correct yes.

Okay. So these are I mean, I guess these are tons that are maybe there are tons youre chasing these tons are there you need to buy them any ways to get to the sulfide Ernie is the better way of thinking about it right.

All right, yes, we need to mind down through it it's a new mining zones to where we're <unk>.

Mining down through the off side and we will get.

Next year, we'll actually see.

Start to get sulphide ore and mill feed out of the connector business.

Tom.

Okay and can you can you remind me how much capacity there.

CW plant has and what.

What sort of production you might get some of these tons.

Yes in terms of annual production from the Sx EW plant.

Estimating in the 5 million pounds a year range.

Okay.

I'm guessing that would continue to probably just really only for a few years a couple of years anyways.

Until you go to another phase, where you may you may encounter more oxides again.

Yes, that's correct, we would continue to run the Sx EW plant as long as it's economic.

We have enough fresh ore oxide or go into the stockpile to keep producing.

Producing a suitable grade to feed the plant.

Okay. That's it for me thanks.

Thank you.

Mr. <unk> there are no further questions at this time you May proceed.

Okay. Thank you very much everyone for joining and we will talk to you next quarter. Thanks.

Ladies and gentlemen. This concludes your question Chris call for today, we thank you for participating and ask that you. Please disconnect your lines. Thank you.

Okay.

Okay.

With regard.