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Taseko Mines: Solid Margins At Current Copper Prices


  • Q4 2017 production results were weak due to wildfire disruptions.  This is expected to affect Q1 2018 results as well.
  • Full-year copper grade should be around life of mine average.
  • At the life of mine average copper grade, Gibraltar could produce 131 million pounds of copper (100% basis).
  • Operating cost including capitalized stripping is approximately $1.99 USD per pound at that copper grade.
  • Taseko is worth an estimated $1.18 to $1.59 USD per share for Gibraltar itself, with additional potential from Florence Copper.

Taseko Mines (NYSE:TGB) has seen its share price dip recently as copper prices have fallen a bit, but it should still be able to generate solid margins at Gibraltar once the copper grade returns to regular levels. Taseko's current share price is probably in the fair range for Gibraltar alone, but it has a chance to increase its value with an operational Florence Copper Project.

Notes On Q4 2017

Taseko's Q4 2017 production results were unexpectedly weak as the disruption to the mine plan caused by the Q3 2017 wildfires resulted in Taseko accessing a higher proportion of lower grade ore. This resulted in a low copper grade of 0.209% for Q4 2017 and only 25.5 million pounds of copper production. The low copper grade and low production levels also resulted in a significant jump in operating costs per pound of copper produced.

The drop in production was surprising since Taseko mentioned higher expectations in its Q3 2017 conference call. At that time Taseko expected to sell approximately 40 million pounds of copper in Q4 2017 while drawing down its elevated inventory levels. Taseko did reduce its copper inventory to 2.7 million pounds, which was its lowest inventory level since Q2 2016, but only sold 32 million pounds of copper in Q4 2017 due to the weak production levels. Taseko would have likely needed to produce around 32.5 million to 33.5 million pounds of copper during Q4 2017 to sell around 40 million pounds of copper during the quarter.

2018 Outlook

While Q4 2017's production was disappointing (and Q1 2018 is expected to be similarly affected by the mine plan disruption), Taseko's longer term outlook appears to be better. Operating costs (including capitalized stripping) remain fairly constant, which should translate into solid full-year results for Taseko when combined with the

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This article was written by

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Elephant Analytics has 15 years of analytical experience and unique skills in numerical analysis and practical mathematics. He is currently ranked in the top 2% of analysts by TipRanks.
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Comments (1)

I'm beginning to wonder if $$ can be made in the Miners. When things go well they spend like drunken sailers and when there is some headwinds it's all Katy bar the door!
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