Taseko swings back into the black as higher copper, molybdenum prices lift Q1 earnings

VANCOUVER (miningweekly.com) – Base metals producer Taseko Mines has reported stronger-than-expected earnings for the first quarter ended March 31, as higher copper prices and a sharp recovery in the price for molybdenum dovetailed into higher sales volumes.

The Vancouver-based company reported net income of C$16.5-million, or C$0.07 a share, for the quarter, compared with a net loss of C$1.5-million, or C$0.01 a share, for the same period in 2016. Taseko attributed the change in net earnings mainly to higher copper prices, higher copper sales volume, lower production costs, as well as revenue from the sale of molybdenum concentrate.

Earnings from mining operations before depletion and amortisation were C$53.4-million for the three months, compared with a loss of C$300 000 for the same prior period in 2016. The increase in earnings from mining operations was a result of higher copper and molybdenum revenues and lower production costs.

Removing special items, Taseko reported adjusted net earnings of C$0.07 a share, beating the average analyst forecast calling for earnings of C$0.05 a share.

Revenues for the period increased by C$46.2-million, or 80%, year-on-year, compared with the same period in 2016, mainly owing to a 33% increase in copper sales volumes and higher realised copper prices. The increase in the US dollar realised price of copper was partially offset by the impact of the stronger Canadian dollar.

Quarterly copper output at Gibraltar was 41.3-million pounds and molybdenum production was 900 000 lbs.

Taseko said that the molybdenum circuit that was idled in the third quarter of 2015 and restarted in September last year contributed molybdenum revenue of C$7.4-million in the first quarter. The molybdenum plant continues to operate at design capacity, and molybdenum prices have recently increased to nearly $9/lb, from about $7.50/lb in the fourth quarter of 2016.

Meanwhile, total operating costs were down another 10% in the first quarter to $1.33/lb, boosted by better-than-expected grade and strong molybdenum output and sales, combined with consistent site spending, which were the major contributors to the low cost per pound.

A reduction in site operating costs was due to increased costs being allocated to capitalised stripping owing to the waste stripping activity in the Granite and Pollyanna pits at the flagship Gibraltar mine, in British Columbia.

At March 31, 2017, Taseko had cash and equivalents of C$149.3-million - a C$60.3-million increase over December 31, because of the cash proceeds received from the recent silver stream transaction with Osisko Gold Royalties and positive cash flows from mining operations. The company advised that it is maintaining a strategy of retaining a significant cash balance to reflect the volatile and capital intensive nature of the copper mining business.

Taseko’s TSX-listed shares traded in a volatile band Thursday, losing as much as 8.44% to C$1.41 a share.