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01/11 16:04
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows several concerns: increased operating costs at Florence, reliance on uncertain copper price protection, and lower than expected production guidance for 2025. The Q&A section highlighted management's reluctance to provide specific guidance and potential production impacts from plant downtime. Despite some positive developments like higher mining tonnages, the overall sentiment is negative due to financial misses and uncertainties, leading to a likely stock price decline in the short term.
Mining tonnages at Gibraltar 30 million tons for the quarter, 31% higher than Q1, marking the best mining quarter in the last 4 years. The increase was due to advancing into better ground in the Connector Pit.
Copper production 20 million pounds in Q2, same as the prior quarter. Copper grades were 0.20%, and recoveries were 63%. The production was steady as the company transitioned into better grades with less oxidation.
Total cash costs (C1) $3.14 per pound in Q2. Costs are expected to decline in the second half as production levels rise.
Copper cathode production at Gibraltar Production commenced in Q2 with the Gibraltar SX/EW plant restarted in late May. A transformer issue caused a temporary shutdown, with an expected downtime of 6-8 weeks, impacting less than 1 million pounds of production.
Sales and revenue 19 million pounds of copper sold at an average realized price of $4.32 per pound, generating $116 million in revenue. Lower sales and a stronger Canadian dollar contributed to the lower quarter-over-quarter revenue.
Net income $22 million or $0.07 per share, mainly driven by unrealized foreign exchange gain on U.S. dollar-denominated debt due to a strengthening Canadian dollar.
Adjusted earnings Net loss of $13 million or $0.04 loss per share, impacted by lower production and sales volumes and higher costs.
Adjusted EBITDA $17 million, impacted by lower production and sales volumes and higher costs associated with mid-grade stockpiles.
Construction costs at Florence $33 million incurred in Q2, with total construction costs to date at $239 million. The project is tracking towards a revised estimate of $265 million.
Cash balance $122 million at the end of Q2, including a $75 million payment from the BC government as part of the New Prosperity Agreement.
Copper cathode production: Production at Gibraltar in Q2 was steady at 20 million pounds, with improvements expected in H2 2025 due to better ore grades and recoveries. The Gibraltar SX/EW plant was restarted in late May, with steady operations until a transformer issue caused a temporary shutdown.
Florence Copper Project: Construction is over 90% complete, with commissioning activities starting soon. First copper cathode production is expected by the end of 2025. The project is tracking within budget, with $239 million incurred out of a total estimated $265 million.
U.S. copper market positioning: The Florence project will benefit from U.S. copper tariffs incentivizing domestic production. Florence is positioned to supply refined copper to the U.S. manufacturing base, with an NPV of $1.2-$1.3 billion at current copper prices.
Mining rates and production efficiency: Mining rates at Gibraltar improved significantly in Q2, with a 31% increase over Q1. Production efficiency is expected to improve further in H2 2025 due to better ore grades and reduced oxidation.
Cost management: C1 cash costs were $3.14 per pound in Q2, expected to decline in H2 2025 as production increases. Florence construction costs are tracking within the revised budget.
New Prosperity Agreement: Taseko received $75 million from the BC government for a 22.5% equity interest in the New Prosperity project, with future development contingent on Tsilhqot'in Nation consent.
Yellowhead Project: An updated technical study shows improved economics, with an NPV of CAD 2 billion and a 25-year mine life. The project is advancing through environmental assessments and permitting.
Transformer issue at Gibraltar SX/EW plant: A transformer issue caused the plant to shut down, leading to an expected downtime of 6 to 8 weeks. This will result in a production impact of less than 1 million pounds of copper.
Challenging conditions in the Connector Pit: Earlier in the year, mining rates were impacted by challenging conditions in the upper benches of the Connector Pit, though improvements have been noted recently.
Copper price volatility due to U.S. tariffs: The announcement of U.S. copper tariffs has caused significant volatility in the COMEX copper price, impacting market stability and financial planning.
Dependence on U.S. copper market incentives: The company's Florence project is heavily reliant on U.S. policies incentivizing domestic copper production, which could pose risks if policies change.
New Prosperity project uncertainty: The New Prosperity project is subject to the consent of the Tsilhqot'in Nation for future development, creating uncertainty about its long-term viability.
Yellowhead project permitting and engineering challenges: The Yellowhead project faces years of permitting and engineering work, which could delay its development and increase costs.
Increased operating costs at Florence: Operating costs at Florence are rising as the company builds out its operations team and prepares for commissioning and ramp-up.
Copper price protection strategy: The company is reliant on its copper price protection strategy to mitigate market volatility, but extending this protection into 2026 remains uncertain.
Gibraltar Production Outlook: The company expects a strong rebound in production in Q3 2025 and even better production in Q4 2025, continuing into 2026. Copper grades and recoveries are expected to improve significantly in the second half of 2025. Molybdenum grades and recoveries are also expected to improve during this period. Total cash costs are anticipated to decline in the second half of 2025 as production levels rise.
Florence Project Progress: The Florence project is over 90% complete and is advancing smoothly on schedule. The initial injection of solutions is targeted for September 2025, with first copper cathode production expected before the end of 2025. The project is tracking within the updated CapEx guidance, with only about 10% of the total capital outstanding. The company is preparing detailed operating plans for ramp-up in 2026, aiming for a design capacity of 85 million pounds per year.
Copper Market and Tariffs: The U.S. copper market is expected to remain a net importer of cathode in the coming years. The Florence project is positioned to benefit from its geographic advantage in delivering refined metal to the growing U.S. manufacturing base. At a copper price of USD 3.75 per pound, Florence has an after-tax NPV of USD 930 million, which increases to USD 1.2 billion to USD 1.3 billion at current prices of around USD 4.40 per pound.
Yellowhead Project: The Yellowhead project has an updated technical report with improved economics, including an NPV of CAD 2 billion and an after-tax IRR of 21% at a copper price of USD 4.25 per pound. The project is advancing through the permitting process, with several years of permitting and engineering work ahead.
New Prosperity Agreement: The agreement provides a pathway for potential future development of the New Prosperity copper-gold deposit, contingent on the consent of the Tsilhqot'in Nation. Taseko retains 77.5% ownership of the mineral rights and sees potential for significant value realization in the future.
The selected topic was not discussed during the call.
The earnings call reveals strong financial performance with increased production and revenue, despite some challenges like maintenance cost inflation and unresolved foreign exchange losses. The Florence project is nearly complete, with positive future outlooks for copper grades and production. The Q&A section highlights a cautious yet optimistic sentiment from analysts, particularly regarding wellfield drilling acceleration and production ramp-up. The absence of guidance may cause some uncertainty, but overall, the strategic initiatives and financial improvements support a positive sentiment.
The earnings call summary shows several concerns: increased operating costs at Florence, reliance on uncertain copper price protection, and lower than expected production guidance for 2025. The Q&A section highlighted management's reluctance to provide specific guidance and potential production impacts from plant downtime. Despite some positive developments like higher mining tonnages, the overall sentiment is negative due to financial misses and uncertainties, leading to a likely stock price decline in the short term.
The earnings call highlighted production challenges and lower-than-expected copper recoveries, impacting financial performance. While there is a positive outlook on future revenue and operational efficiency, current financial results show a significant net loss and reduced EBITDA. The Q&A revealed ongoing issues with production and vague responses on tariff impacts. Despite a strong cash position and price protection strategy, the negative financial results and production challenges outweigh the positives, leading to a negative sentiment.
The earnings call summary highlights strong financial performance with increased revenue, net income, and EPS. Operational challenges were addressed, and there is optimism for future revenue growth. The share buyback program is a positive signal for shareholder returns. Despite some risks, the overall sentiment leans positive due to strong financial metrics, operational improvements, and strategic initiatives. The Q&A revealed no major concerns, and the buyback program supports a positive outlook, leading to a prediction of a 2% to 8% stock price increase.
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