Hudbay Minerals Inc. press release

Taseko Reports $63 Million of Adjusted EBITDA for Third Quarter 2023

2023-11-01

TSX - Toronto Stock Exchange · Copper · Molybdenum · Gold · Silver · Sulfur · Zinc · Canada · Corporate Finance

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 87.5% 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 , Nov. 1, 2023 /CNW/ - Taseko Mines Limited (TSX: TKO) (NYSE American: TGB) ( LSE: TKO) ("Taseko" or the "Company") reports third quarter 2023 Adjusted EBITDA* of $63 million and Earnings from mining operations before depletion and amortization* of $65 million . Adjusted net earnings* for the quarter were $20 million , or $0.07 per share.

Gibraltar produced 35 million pounds of copper and 369 thousand pounds of molybdenum in the third quarter, 26% and 60% higher than the second quarter, respectively. Improved production was a result of higher grades, throughput and recoveries. Higher production, of both copper and molybdenum, drove Total operating costs (C1)* down 17% to US$2.20 per pound.

Adjusted EBITDA* increased by 182% over the prior quarter despite third quarter sales volumes being impacted by a port workers strike in July. The excess inventory at the end of the third quarter is expected to be shipped and sold in the fourth quarter.

Stuart McDonald , President and CEO of Taseko, commented "In the third quarter a major milestone was achieved at our Florence Copper project; receipt of the final Underground Injection Control permit from the US Environmental Protection Agency ("EPA"). This week the EPA confirmed that no appeals or objections have been received and that the permit is now effective. This is a great result and evidence of the quality and integrity of the project.

We are now preparing for construction and site preparation will begin later in the fourth quarter. Florence financing discussions are well advanced and the additional financings are expected to close in early 2024, and then wellfield drilling will commence."

Mr. McDonald continued, "We are pleased with Gibraltar's performance in the third quarter. Copper head grade increased to 0.26% in the period as the lower benches of the Gibraltar pit provided the higher grades and more consistent mineralized zones we expected. Mill performance was also strong as copper recoveries averaged 85% and the softer ore in the Gibraltar pit helped to achieve a throughput rate over 87,000 tons per day, 10% higher than the first half of 2023. The Gibraltar pit will continue to be our main source of ore through the middle of 2024, providing us with predictable and consistent mill feed. The operation remains on track to meet the original 2023 production guidance of 115 million pounds of copper (+/-5%)."

We continue to have our copper put protection in place US$3.75 per pound until the end of the year, and we now have a minimum price of US$3.25 per pound protected for the first quarter of 2024." concluded Mr. McDonald.

Third Quarter Review

In September, the U.S. Environmental Protection Agency ("EPA") issued the Final Underground Injection Control ("UIC") permit for the Florence Copper Project and the permit became effective on October 31, 2023 . The Company now has all key permits in place to commence construction of the commercial production facility at Florence ; Third quarter earnings from mining operations before depletion and amortization* was $65.4 million , Adjusted EBITDA* was $62.7 million , and cash flows from operations were $27.0 million ; GAAP net income was $0.9 million (nil per share) and Adjusted net income* was $19.7 million ( $0.07 per share) after normalizing for unrealized foreign exchange and derivative losses; Gibraltar produced 35.4 million pounds of copper for the quarter, a 26% improvement over the prior quarter as a result of higher grades, improved recoveries and increased mill throughput; Copper head grades in the quarter improved to 0.26% as mining progressed deeper into the Gibraltar pit and the lower benches provided the expected improvement in ore grade and quality; Molybdenum grades also increased in the period, resulting in a 60% increase in quarterly molybdenum production; Gibraltar sold 32.1 million pounds of copper in the third quarter (100% basis). The B.C. port workers labour strike in early July caused shipping delays and a build-up of Gibraltar copper concentrate inventory. As a result, third quarter sales volumes lagged production by three million pounds, and the excess inventory is expected to be shipped and sold in the fourth quarter; Total site costs* in the third quarter were $102.0 million on a 100% basis, $3.4 million lower than the previous quarter due to lower explosive and grinding media use, contractor services, and repairs and maintenance costs. C1 costs were US$2.20 per pound in the quarter; On October 25, 2023 , the Company received the first US$20 million tranche of its US$25 million equipment loan commitment from Bank of America for Florence Copper; and The Company had a closing cash balance of $82 million at September 30, 2023 .

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

Highlights

| Operating Data (Gibraltar – 100% basis) | Three months ended September 30, | Nine months ended

September 30, | | | | | | | 2023 | 2022 | Change | 2023 | 2022 | Change | | Tons mined (millions) | 16.5 | 23.2 | (6.7) | 64.0 | 65.7 | (1.7) | | Tons milled (millions) | 8.0 | 8.2 | (0.2) | 22.4 | 23.0 | (0.6) | | Production (million pounds Cu) | 35.4 | 28.3 | 7.1 | 88.5 | 70.3 | 18.2 | | Sales (million pounds Cu) | 32.1 | 26.7 | 5.4 | 84.8 | 75.8 | 9.0 |

| Financial Data | Three months ended September 30, | Nine months ended

September 30, | | | | | | (Cdn$ in thousands, except for per share amounts) | 2023 | 2022 | Change | 2023 | 2022 | Change | | Revenues | 143,835 | 89,714 | 54,121 | 371,278 | 290,991 | 80,287 | | Earnings from mining operations before depletion and amortization * | 65,445 | 18,570 | 46,875 | 134,248 | 68,564 | 65,684 | | Cash flows provided by operations | 26,989 | 12,115 | 14,874 | 88,257 | 82,212 | 6,045 | | Adjusted EBITDA * | 62,695 | 34,031 | 28,664 | 120,972 | 73,854 | 47,118 | | Net income (loss) (GAAP) | 871 | (23,517) | 24,388 | 15,301 | (23,696) | 38,997 | | Per share – basic ("EPS") | - | (0.08) | 0.08 | 0.05 | (0.08) | 0.13 | | Adjusted net income (loss) * | 19,659 | 4,513 | 15,146 | 20,371 | (5,423) | 25,794 | | Per share – basic ("adjusted EPS") * | 0.07 | 0.02 | 0.05 | 0.07 | (0.02) | 0.09 |

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

Review of Operations

Gibraltar mine

| Operating data (100% basis) | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | | Tons mined (millions) | 16.5 | 23.4 | 24.1 | 22.9 | 23.2 | | Tons milled (millions) | 8.0 | 7.2 | 7.1 | 7.3 | 8.2 | | Strip ratio | 0.4 | 1.5 | 1.9 | 1.1 | 1.5 | | Site operating cost per ton milled (Cdn$)* | $12.39 | $13.17 | $13.54 | $13.88 | $11.33 | | Copper concentrate | | | | | | | Head grade (%) | 0.26 | 0.24 | 0.22 | 0.22 | 0.22 | | Copper recovery (%) | 85.0 | 81.9 | 80.7 | 83.4 | 77.1 | | Production (million pounds Cu) | 35.4 | 28.2 | 24.9 | 26.7 | 28.3 | | Sales (million pounds Cu) | 32.1 | 26.1 | 26.6 | 25.5 | 26.7 | | Inventory (million pounds Cu) | 8.8 | 5.6 | 3.7 | 5.4 | 4.2 | | Molybdenum concentrate | | | | | | | Production (thousand pounds Mo) | 369 | 230 | 234 | 359 | 324 | | Sales (thousand pounds Mo) | 370 | 231 | 225 | 402 | 289 | | Per unit data (US$ per pound produced) * | | | | | | | Site operating costs * | $2.10 | $2.43 | $2.94 | $2.79 | $2.52 | | By-product credits * | (0.23) | (0.13) | (0.37) | (0.40) | (0.15) | | Site operating costs, net of by-product credits * | $1.87 | $2.30 | $2.57 | $2.39 | $2.37 | | Off-property costs | 0.33 | 0.36 | 0.37 | 0.36 | 0.35 | | Total operating costs (C1) * | $2.20 | $2.66 | $2.94 | $2.75 | $2.72 |

Operations Analysis

Third Quarter Review

Gibraltar produced 35.4 million pounds of copper for the third quarter, a 26% increase over the second quarter due to higher mill throughput, ore grade and recoveries. The lower benches of the Gibraltar pit are providing the expected higher grades and more consistent mineralized zones. Mill throughput was 8.0 million tons for the period averaging 87,000 tons per day, which is above nameplate capacity and 10% higher than the average throughput in the first half of the year.

Copper head grades of 0.26% were higher than recent quarters as ore quality improved in the lower benches of the Gibraltar pit, in line with management expectations. Copper recoveries in the third quarter were 85.0%, improved over previous quarters with the increasing head grades.

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

Operations Analysis - Continued

A total of 16.5 million tons were mined in the third quarter which was lower than recent quarters due to longer haul distances from the lower benches of the Gibraltar pit. Total site costs* at Gibraltar of $102.0 million were $3.4 million lower than the previous quarter. Ore stockpiles increased by 2.9 million tons in the third quarter.

Molybdenum generated a by-product credit of US$0.23 per pound of copper produced in the third quarter. Molybdenum production increased by 60% over the second quarter due to the higher grade and consistency in mill operations. The molybdenum price increased from the second quarter's average price of US$21.30 per pound to an average of US$23.76 per pound.

Off-property costs per pound produced* were US$0.33 which is lower than the recent quarters as copper sales lagged production.

Total operating costs per pound produced (C1)* were US$2.20 for the third quarter, compared to US$2.72 in the same period in 2022 mainly attributed to the higher production and with other key variances summarized in the bridge graph below:

[](https://mma.prnewswire.com/media/2264094/Taseko_Mines_Limited_Taseko_Reports63_Million_of_Adjusted_EBIT.html)

Gibraltar Outlook

Mining is well established in the lower benches of the Gibraltar pit and the operation remains on track to meet the original production guidance of 115 million pounds of copper (+/-5%). The Gibraltar pit will continue to be the main source of mill feed through to the middle of 2024. The excess inventory at the end of the third quarter of 2023 as a result of the B.C. port workers strike is expected to be shipped and sold before the end of this year.

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

Gibraltar Outlook - Continued

Mill 2 is scheduled to be down for two weeks in the first quarter of 2024 for a component replacement. The in-pit crusher for Mill 1 is planned to be relocated in the second quarter of 2024 with an estimated remaining cost of $9 million . The approximate three-week downtime associated with the crusher move will align with a maintenance shutdown that is required for Mill 1. No other significant capital projects are planned for Gibraltar in 2024.

Our copper hedge protection continues to provide stable operating margins at the Gibraltar mine amidst copper price volatility. Copper prices in the third quarter averaged US$3.79 per pound, compared to the year-to-date average of US$3.89 and the 2022 average of US$3.99 per pound. The Company currently has copper price collar contracts in place that secure a minimum copper price of US$3.75 per pound for 21 million pounds of copper for the fourth quarter and copper price put contracts in place that secure a minimum copper price of US$3.25 per pound for 21 million pounds of copper during the first quarter of 2024.

Florence Copper

On September 14, 2023 , the Company received the final UIC permit from the EPA, and the UIC permit became effective on October 31 , 2023. The Company now has all the key permits in place and is preparing to commence construction of the commercial production facility. The next steps include procurement of materials and supplies and finalizing agreements with key contractors, including the general contractor for the solvent extraction and electrowinning ("SX/EW") plant and the drilling contractors for the wellfield development. Site preparation and clearing for the initial wellfield, plant and infrastructure will commence in the fourth quarter and the Company has started the hiring of additional management and site personnel positions for the construction and operations teams.

Detailed engineering and design for the commercial production facility is substantially completed and procurement activities are well advanced. Major processing equipment associated with the SX/EW plant has been procured and delivered to the Florence site. The Company incurred $45.0 million of capital expenditures at the Florence project in the first nine months of 2023.

The Company is also advancing Florence project level financing to fund construction activities. On October 25, 2023 , the Company closed the first US$20 million tranche of its US$25 million equipment loan commitment from Bank of America. The Company's financial adviser, Endeavour Financial, has been leading the origination of additional finance commitments for Florence Copper. Discussions are well advanced and the Company is targeting additional funding commitments of approximately US$100 million in royalties and debt at Florence Copper, in addition to the commitments already received from Mitsui and Bank of America.

In March 2023 , the Company announced the results of recent technical work and updated economics for the Florence Copper project. The Company has filed a new technical report entitled "NI 43-101 Technical Report Florence Copper Project, Pinal County, Arizona " dated March 30, 2023 (the "Technical Report") on SEDAR. The Technical Report was prepared in accordance with NI 43-101 and incorporates updated capital and operating costs for the commercial production facility and refinements made to the operating models, based on the Production Test Facility ("PTF") results.

Florence Copper - Continued

The technical work completed by Taseko in recent years has been extensive and has de-risked the project significantly. The PTF operated successfully over an 18-month period and provided a valuable opportunity to test operational controls and strategies which will be applied in future commercial operations. In addition, a more sophisticated leaching model has been developed and calibrated to the PTF wellfield performance. This detailed modeling data, along with updated costing, has been used to update assumptions for the ramp up and operation of the commercial wellfield and processing facility.

Florence Copper Project Highlights:

Net present value of US$930 million (after-tax at an 8% discount rate) Internal rate of return of 47% (after-tax) Payback period of 2.6 years Operating costs (C1) of US$1.11 per pound of copper Annual production capacity of 85 million pounds of LME grade A cathode copper 22 year mine life Total life of mine production of 1.5 billion pounds of copper Total estimated initial capital cost of US$232 million remaining Long-term copper price of US$3.75 per pound

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 preparing to advance 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.

Long-term Growth Strategy - Continued

New Prosperity Gold-Copper Project

In late 2019, the Tŝilhqot'in Nation, as represented by Tŝilhqot'in National Government, and Taseko entered into a confidential dialogue, with the involvement of the Province of British Columbia , in order to obtain a long-term resolution of the conflict regarding Taseko's proposed copper-gold mine previously known as New Prosperity, acknowledging Taseko's commercial interests and the Tŝilhqot'in Nation's opposition to the project.

This dialogue has been supported by the parties' agreement, beginning December 2019 , to a series of one-year standstills on certain outstanding litigation and regulatory matters relating to Taseko's tenures and the area in the vicinity of Teẑtan Biny (Fish Lake). The standstill agreement was most recently extended for a fourth one-year term in December 2022 , with the goal of providing time and opportunity for the Tŝilhqot'in Nation and Taseko to negotiate a final resolution.

The dialogue process has made tangible progress in the past 12 months but is not complete. In agreeing to extend the standstill through 2023, the Tŝilhqot'in Nation and Taseko acknowledge the constructive nature of discussions to date, and the future opportunity to conclude a long-term and mutually acceptable resolution of the conflict that also makes an important contribution to the goals of reconciliation in Canada .

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 has also initiated lab testwork on flowsheet development to produce niobium oxide from floatation concentrate at Aley to supply the growing market for niobium-based batteries.

| The Company will host a telephone conference call and live webcast on Thursday, November 2, 2023 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.

To join the conference call without operator assistance, you may pre-register at https://bit.ly/Taseko-Q3-rapidconnect to receive an instant automated call back just prior to the start of the conference call. Otherwise, the conference call may be accessed by dialing 888-390-0546 toll free, 416-764-8688 in Canada, or online at tasekomines.com/investors/events.

The conference call will be archived for later playback until November 16, 2023 and can be accessed by dialing 888-390-0541 toll free, 416-764-8677 in Canada, or online at tasekomines.com/investors/events/ and using the entry code 154098#. |

Stuart McDonald President & CEO

Non-GAPP 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.