Hudbay Minerals Inc. press release
TASEKO REPORTS AN 85% INCREASE IN ADJUSTED EBITDA* FOR 2021
TSX - Toronto Stock Exchange · Copper · Molybdenum · Gold · Silver · Sulfur · Zinc · Canada
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| 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 , Feb. 22, 2022 /CNW/ - Taseko Mines Limited (TSX: TKO) (NYSE American: TGB) (LSE: TKO) ("Taseko" or the "Company") reports Adjusted EBITDA* of $201 million for the full-year 2021, an 85% increase over 2020. Revenues for the year were $433 million and Adjusted net income* for the year was $45 million , or $0.16 per share. In the fourth quarter 2021, Taseko generated Adjusted EBITDA* of $53 million , $103 million of Revenue and Adjusted net income* of $13 million , or $0.05 per share.
Stuart McDonald , President and CEO of Taseko, stated, "Realized copper sales of 105 million pounds for the year, buoyed by a strong average copper price of over US$4.20 per pound, generated the best financial results in our Company's history. This was accomplished despite the lagging copper sales in the fourth quarter as a result of major disruption to transportation infrastructure in southern BC from severe rainstorms in November, which limited our ability to ship copper concentrate and realize sales."
"At Florence Copper, based on our ongoing dialogue with the US Environmental Protection Agency, we continue to expect the draft Underground Injection Control ("UIC") permit to be publicly issued very soon, and then a 45-day public comment period will commence. The UIC is the final permit needed to construct and operate the commercial production facility, which will be a major new source of low-carbon copper supply for the US market. The detailed engineering program for the commercial facility is complete and we're well advanced with procurement of key, long-lead items, which will ensure a rapid and smooth transition into construction."
Mr. McDonald added, "Operationally, Gibraltar production in the fourth quarter was impacted by lower grades and recoveries due to severe winter weather as well as oxidization and pyrite content in the upper benches of the Gibraltar pit. Mill operations are being optimized for the new mineralization, and ore quality will improve as mining progresses deeper into the Gibraltar pit this year. For 2022, we expect copper production of 115 million pounds (+/- 5%), with production weighted to the back half of the year and the first quarter being the lowest production quarter, similar to 2021. Next year mining operations will transition to higher grade zones, and copper production is planned to trend back toward the life of mine average of 130 million pounds. A new Gibraltar reserve update is expected to be completed in the second quarter."
Mr. McDonald concluded, "Our balance sheet remains healthy with nearly $300 million of available liquidity, including cash on hand and the new US$50 million credit facility that was closed in October. In addition, we recently took advantage of a strengthened copper price to extend our price protection strategy - we now have more than 90% of our 2022 production secured at a minimum price of US$4.00 per pound. With our strong financial position and robust copper markets, its ideal timing to be advancing our Florence Copper project to commercial production."
2021 Annual Review
Earnings from mining operations before depletion and amortization* was $230.4 million , Adjusted EBITDA* was $200.7 million , and cash flows from operations was $174.8 million ; Adjusted net income* was $44.7 million ( $0.16 per share) and GAAP Net income was $36.5 million ( $0.13 per share) for the year; Total operating costs (C1)* for the year were US$1.90 per pound produced; The Gibraltar mine produced 112.3 million pounds of copper and 2.0 million pounds of molybdenum in 2021. Copper recoveries were 82.4% and copper head grades were 0.23%; Gibraltar sold 104.9 million pounds of copper for the year (100% basis) which contributed to record revenue for Taseko of $433.3 million and an increase of 26% over 2020. Average realized copper prices were US$4.31 per pound for year, compared to the LME average price of US$4.23 per pound; The Company has approximately $300 million of available liquidity at December 31, 2021 , including a cash balance of $237 million and a new US$50 million revolving credit facility with National Bank of Canada which closed in early October; Development costs incurred for Florence Copper were $57.9 million in the year and included, detailed engineering and design of the commercial facility, initial deposits for major processing equipment for the SX/EW plant and ongoing site operating costs. These activities will allow the Florence project team to efficiently advance into construction upon receipt of the Underground Injection Control ("UIC") permit; and In December 2021 , the Company completed its review of the draft UIC permit and no significant issues were identified. The EPA continues to advance their review process and the public comment period on the draft UIC permit is expected to commence shortly after the draft UIC permit is publicly issued.
Fourth Quarter Review
Fourth quarter earnings from mining operations before depletion and amortization* was $61.9 million , Adjusted EBITDA* was $53.0 million , Adjusted net income* was $13.3 million ( $0.05 per share) and GAAP Net income was $11.8 million ( $0.04 per share); Total operating costs (C1)* for the quarter were US$1.94 per pound produced; The Gibraltar mine produced 28.8 million pounds of copper and 450 thousand pounds of molybdenum in the fourth quarter. Copper recoveries were 80.4% and copper head grades were 0.24%;
*Non-GAAP performance measure. See end of news release
Gibraltar sold 23.8 million pounds of copper in the quarter (100% basis). Due to extreme flooding in southwest British Columbia in November which washed out highways and rail infrastructure, transportation options were impacted which resulted in a build-up of copper concentrate inventory to 9.9 million pounds at year end. Concentrate inventory should return to more normal levels by the end of the first quarter of 2022; Average realized copper prices were US$4.37 per pound in the quarter, which contributed $103.0 million of revenue for Taseko; Cashflow from operations was $37.2 million which was impacted by $20.5 million in non-cash working capital attributed to the higher year-end inventory. Capital expenditures of $35.2 million included Florence spend of $14.8 million in the quarter; The Company has recently extended its copper price protection and now has more than 90% of its attributable production secured for 2022 year at a minimum copper price of US$4.00 per pound. Fourth quarter Adjusted net income and Adjusted EBITDA were impacted by a $6.4 million realized derivative loss ( $0.02 per share) related to copper put options that expired in the quarter; and In November 2021 , Gibraltar's unionized workforce ratified a new, long-term collective bargaining agreement which will be in place until May 31, 2024 .
HIGHLIGHTS
| Operating Data (Gibraltar - 100% basis) | Three months ended December 31, | Year ended December 31, | | | | | | | 2021 | 2020 | Change | 2021 | 2020 | Change | | Tons mined (millions) | 23.3 | 26.4 | (3.1) | 105.4 | 98.7 | 6.7 | | Tons milled (millions) | 7.4 | 7.5 | (0.1) | 29.2 | 30.1 | (0.9) | | Production (million pounds Cu) | 28.8 | 25.0 | 3.8 | 112.3 | 123.0 | (10.7) | | Sales (million pounds Cu) | 23.8 | 25.0 | (1.2) | 104.9 | 124.0 | (19.1) |
| Financial Data | Three months ended December 31, | Year ended December 31, | | | | | | (Cdn$ in thousands, except for per share amounts) | 2021 | 2020 | Change | 2021 | 2020 | Change | | Revenues | 102,972 | 87,398 | 15,574 | 433,278 | 343,267 | 90,011 | | Earnings from mining operations before depletion and amortization * | 61,916 | 27,062 | 34,854 | 230,392 | 119,026 | 111,366 | | Cash flows provided by operations | 37,231 | 20,424 | 16,807 | 174,769 | 106,195 | 68,574 | | Adjusted EBITDA * | 52,988 | 20,478 | 32,510 | 200,733 | 108,229 | 92,504 | | Adjusted net income (loss) * | 13,312 | (7,473) | 20,785 | 44,745 | (26,539) | 71,284 | | Per share - basic ("Adjusted EPS") * | 0.05 | (0.03) | 0.08 | 0.16 | (0.11) | 0.27 | | Net income (loss) (GAAP) | 11,762 | 5,694 | 6,068 | 36,472 | (23,524) | 59,996 | | Per share - basic ("EPS") | 0.04 | 0.02 | 0.02 | 0.13 | (0.09) | 0.22 |
| *Non-GAAP performance measure. See end of news release |
REVIEW OF OPERATIONS
Gibraltar mine (75% Owned)
| Operating data (100% basis) | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | YE 2021 | YE 2020 | | Tons mined (millions) | 23.3 | 25.2 | 24.9 | 32.0 | 26.4 | 105.4 | 98.7 | | Tons milled (millions) | 7.4 | 7.4 | 7.2 | 7.2 | 7.5 | 29.2 | 30.1 | | Strip ratio | 2.2 | 1.3 | 2.3 | 6.0 | 1.9 | 2.5 | 2.0 | | Site operating cost per ton milled (Cdn$)* | $9.94 | $8.99 | $9.16 | $8.73 | $11.67 | $9.21 | $9.59 | | Copper concentrate | | | | | | | | | Head grade (%) | 0.24 | 0.28 | 0.22 | 0.19 | 0.20 | 0.23 | 0.24 | | Copper recovery (%) | 80.4 | 84.2 | 83.3 | 81.5 | 83.3 | 82.4 | 84.3 | | Production (million pounds Cu) | 28.8 | 34.5 | 26.8 | 22.2 | 25.0 | 112.3 | 123.0 | | Sales (million pounds Cu) | 23.8 | 32.4 | 26.7 | 22.0 | 25.0 | 104.9 | 124.0 | | Inventory (million pounds Cu) | 9.9 | 4.9 | 3.5 | 3.6 | 3.4 | 9.9 | 3.4 | | Molybdenum concentrate | | | | | | | | | Production (thousand pounds Mo) | 450 | 571 | 402 | 530 | 549 | 1,954 | 2,269 | | Sales (thousand pounds Mo) | 491 | 502 | 455 | 552 | 487 | 2,000 | 2,239 | | Per unit data (US$ per pound produced) * | | | | | | | | | Site operating costs * | $2.02 | $1.53 | $2.02 | $2.23 | $2.67 | $1.91 | $1.75 | | By-product credits * | (0.30) | (0.25) | (0.25) | (0.27) | (0.14) | (0.27) | (0.13) | | Site operating costs, net of by-product credits * | $1.72 | $1.28 | $1.77 | $1.96 | $2.53 | $1.64 | $1.62 | | Off-property costs | 0.22 | 0.29 | 0.25 | 0.27 | 0.29 | 0.26 | 0.30 | | Total operating costs (C1) * | $1.94 | $1.57 | $2.02 | $2.23 | $2.82 | $1.90 | $1.92 |
Full Year Results
Gibraltar produced 112.3 million pounds of copper in 2021 compared to 123.0 million in 2020. Copper grade for the year averaged 0.23% copper, compared to 0.24% in 2020. Copper recoveries for 2021 was 82.4%, compared to 84.3% in 2020.
A total of 105.4 million tons were mined in the year in line with the mine plan and a 7% increase over the prior year period. The strip ratio increased primarily as a result of the waste mining transitioning into the Pollyanna pit in the first quarter of 2021 and lower mining rates in 2020 in response to the onset of COVID-19. Pollyanna ore was the primary mill feed in 2021, and waste stripping activities began in the Gibraltar pit in 2021 with first ore being mined in the fourth quarter.
Total site spending (including capitalized stripping of $59.9 million on a 75% basis) was 9% higher than the prior year due to higher mining rates in 2021. Sustaining capital expenditures at Gibraltar (75% basis) were $27.9 million for the year, compared to $20.3 million for the prior year due to greater scheduled component replacements in 2021 for the mining fleet.
*Non-GAAP performance measure. See end of news release
REVIEW OF OPERATIONS - CONTINUED
Molybdenum production was 2.0 million pounds in the year compared to 2.3 million pounds in the prior year. Molybdenum prices also strengthened in 2021 with an average molybdenum price of US$15.94 per pound, an increase of 84% compared to the 2020 average price of US$8.68 per pound. By-product credits per pound of copper produced was US$0.27 in the year compared to US$0.13 in the prior year.
Off-property costs per pound produced* were US$0 .26 for the year, which is US$0.04 lower than the prior year, as the Company benefited by a 4% reduction in the benchmark treatment and refining charges ("TCRC") in 2021 and realized lower TCRCs for spot tenders that were delivered at some of the lowest levels ever seen by the Gibraltar mine due to tight copper market conditions.
Total operating costs per pound produced (C1)* were US$1.90 for the year, a slight decrease compared to the prior year. The decrease in the C1* costs was primarily due to the higher by-product credits and lower off-property costs, partially offset by the increase in site costs and the impact of decreased copper production.
Fourth Quarter Results
Copper production in the fourth quarter was 28.8 million pounds and was impacted by lower grades and recoveries from ore mined in the upper benches of the Gibraltar pit. Increased oxidization and pyrite content in this ore has resulted in lower recoveries which management believes is a short-term issue that will be resolved. Ore quality is expected to improve as mining progresses deeper into the Gibraltar pit. In December, heavy snowfall and temperatures as low as minus 35 degrees Celsius also impacted mine equipment and mill availabilities, resulting in decreased mill throughput and a need to draw ore from lower grade stockpiles.
The Company realized 23.8 million pounds of copper sales in the fourth quarter which was lower than copper production of 28.8 million pounds. Major disruption to the highway and rail infrastructure in southwest British Columbia from severe rainstorms and flooding in November prevented significant production from being delivered to the port for shipping. Copper concentrate inventories ended the year at 9.9 million pounds.
A total of 23.3 million tons were mined in the fourth quarter. The strip ratio increased over the prior quarter due to mining activities transitioning into the higher strip ratio Gibraltar pit. The mill feed in the fourth quarter came primarily from Pollyanna but also included ore from the Gibraltar pit.
Total site spending (including capitalized stripping of $12.7 million on a 75% basis) was 7% higher than the prior quarter and included retroactive payments from the newly ratified collective bargaining agreement. Sustaining capital expenditures at Gibraltar of $6.5 million on a 75% basis included component replacements for the mining fleet, including scheduled work on the shovels.
Molybdenum production was 450 thousand pounds in the fourth quarter and at an average molybdenum price of US$18.89 per pound, generated a notable by-product credit per pound of copper produced of US$0.30 in the fourth quarter.
*Non-GAAP performance measure. See end of news release
REVIEW OF OPERATIONS - CONTINUED
Off-property costs per pound produced* were US$0 .22 for the fourth quarter which benefitted from lower copper pounds sold. The Company also realized lower TCRC in the fourth quarter as two spot tenders were delivered at much lower TCRC rates than the annual benchmark rate, which reflects the tight physical market for copper concentrate from overseas smelters.
Total operating costs per pound produced (C1)* were US$1.94 for the quarter and increased due to the decreased copper production and higher site costs in the fourth quarter compared to the third quarter.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Nothing is more important to Taseko than the safety, health and well-being of our workers and their families. 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 April 2021 , Taseko published its second Environmental, Social, and Governance ("ESG") report, which includes an examination of the Company's sustainability performance for 2020. The report is available on the Company's website at www.tasekomines.com/esg .
In this report, Taseko has reported Scope 1 and 2 greenhouse gas emissions for the Gibraltar mine which show that the mine ranks in the first quartile of all copper mines globally. When commercial operations at Florence Copper commences, the Company's combined greenhouse gas emissions intensity will drop even lower, to an estimated 1.53 tonnes of CO2 per tonne of copper equivalent, based on an independent analysis by Skarn Associates.
Gibraltar's 2021 ESG report will be published in the second quarter of 2022.
GIBRALTAR OUTLOOK
Gibraltar is expected to produce 115 million pounds (+/- 5%) of copper in 2022 on a 100% basis, with production weighted to the back half of the year and the first quarter being the lowest production quarter, similar to 2021. The expected sales of excess copper concentrate inventory carried over from 2021 will bolster earnings in the first quarter of 2022.
Strong metal prices and US dollar combined with our copper hedge protection continues to provide tailwinds for a strong financial performance and operating margins at the Gibraltar mine over the coming year. Copper prices in 2021 averaged US$4.23 per pound and are currently around US$4.50 and molybdenum prices are currently US$18.78 per pound, 18% higher than the average price in 2021.
The copper price outlook for 2022 remains quite favorable with limited exchange inventories and ongoing supply constraints failing to keep up to demand. Many governments are focusing on increased infrastructure investment to stimulate economic recovery after the pandemic, including green initiatives, which will require new primary supplies of copper. Although some analysts predict a balanced copper market by 2023 based on known projects currently under development, most industry analysts are projecting ongoing supply constraints and deficits, which should support higher copper prices in the years to come.
*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 copper price volatility. This strategy provides security over the Company's cash flow as it prepares for construction of Florence Copper while providing significant upside should copper prices continue at these levels or increase further. In particular, the Company has secured more than 90% of attributable production with copper collars which protect a minimum copper price of US$4.00 per pound for 2022.
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.
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 UIC permit 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. Based on ongoing dialogue with the EPA, the Company continues to expect the draft UIC permit to be publicly issued very soon, and then a 45-day public comment period will commence.