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Taseko Mines' Q1 2018 Financial Results: The Wildfires Cause Trouble Even After 9 Months

May 02, 2018 11:22 PM ETTaseko Mines Limited (TGB), TKO:CA5 Comments


  • Taseko's Q1 2018 results are poor, due to the impacts of last summer's wildfires.
  • The Gibraltar mine had to process some oxidized stockpiled material, which led not only to lower head grades but also recoveries.
  • Over the remainder of this year, the production should grow back to the normal levels.
  • The construction of the Florence project test production facility is on time and on budget, with first copper production expected in December.
  • An updated technical report with improved economics for the Aley Niobium project should be released soon.

Taseko Mines (NYSE:TGB) released its Q1 2018 financial results. The majority of the investors are probably not too happy about the reported numbers. Taseko generated revenues of only $64 million, which is almost 40% less compared to Q1 2017. Also, the earnings from mining operations recorded a significant decline, from $43.85 million to -$1.24 million. The adjusted EBITDA declined from $47.93 million to $7.54 million and net income from $16.48 million to -$18.48 million. As stated in the news release, the poor results are a consequence of the wildfires that impacted operations at Taseko's 75%-owned Gibraltar mine last summer. According to Russell Hallbauer, Taseko's CEO:

As disclosed in our year-end report, production in early 2018 continued to be impacted by waste stripping shortfalls from 2017, where we effectively lost two months of waste stripping. With our stripping schedule compromised, our new pushback was delayed and only lower grade ore was available to process.

In Q1, the head grade was only 0.2%. It is significantly less compared to Q1 2017, when the copper grade stood at 0.33%. According to the company, although lower grades were projected also in the mine plan, the wildfires caused that Taseko had to process also some lower grade material from its stockpiles. Processing of the oxidized ore from stockpiles had a negative impact also on the recoveries, that declined to 75.7%. It is a notable decline when compared to Q1 2017 and the 85.9% recoveries. However, it is expected that the copper grade should climb back up to the 0.26% level for the remainder of this year. Also, the recoveries are expected to return to normal levels.

Source: own processing, using data of Taseko Mines

The steep decline in grades and recoveries had a strong impact on the production volumes. Only 22.9 million lb copper and

This article was written by

Peter Arendas profile picture

I am an associate professor at the University of Economics in Bratislava, Department of Banking and International Finance. My dissertation was focused on commodity markets and my habilitation was focused on the calendar anomalies. I have more than 15 years of investing experience. My investments mostly focus on small- and mid-cap companies in the resource sector. Since May 2019, I have been preparing regular monthly reports focused on the precious metals royalty & streaming industry. Based on positive feedbacks and numerous inquiries, I decided to launch a Marketplace Service named "Royalty & Streaming Corner", which provides an in-depth analysis of this exciting market segment, as well as investment ideas from the mining industry.

Analyst’s Disclosure: I am/we are long TGB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (5)

Or the consequences of having Russ as your CEO
And globally exspecting a rise or decline by opening?
Very poor results and a terrible copper grade (albeit for a reason, per management). Logic says decline, but when was the market ever influenced by logic? And what's to stop these fires re-occurring on a regular basis?
Peter Arendas profile picture
The poor results were expected, as also the Q4 financial results news release stated that Q1 will be affected by the wildfires. The question is whether the market expected the results to be that bad.
Value Digger profile picture
Peter Arendas,

I believe TGB is too dependent on copper, which is a headwind for many mining investors. TGB has to diversify its portfolio by acquiring gold or silver or zinc assets. Gold, silver and zinc has higher upside potential than copper, in my opinion. Copper has limited upside from the current price level while the potential downside is significant.

TGB's niobium project is promising but CapEx is extremely high, which is another headwind.

As such, I will avoid TGB. I focus on cheaper mining stocks with bigger upside potential than TGB.
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