Taseko Mines Limited (TGB)

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Taseko Mines (TGB)

Q2 2013 Earnings Call

August 08, 2013 10:00 am ET

Executives

Brian Bergot - Director of Investor Relations

Russell Edward Hallbauer - Chief Executive Officer, President, Director, Chairman of Executive Committee and Chairman of Investment Committee

Analysts

Brett M. Levy - Jefferies LLC, Fixed Income Research

Steve Parsons - National Bank Financial, Inc., Research Division

Mark Turner - Scotiabank Global Banking and Markets, Research Division

Tom Bishop - BI Research

Adam Low - Raymond James Ltd., Research Division

Christopher Chang - Laurentian Bank Securities, Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Taseko Mines Second Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I'd now like to turn the conference over to your host, Mr. Brian Bergot, Director of Investor Relations. Please go ahead.

Brian Bergot

Thank you, Allie. Good morning, ladies and gentlemen, and welcome to Taseko Mines Second Quarter 2013 Results Conference Call. My name is Brian Bergot, and I am the Director of Investor Relations for Taseko. With me today in Vancouver is Russel Hallbauer, President and CEO of Taseko. After Russ' opening remarks, which will be a review of second quarter business and operational results, we will open the phone lines to analysts and investors for a question-and-answer session. Accompanying the management’s discussion will be presentation slides for our webcast participants. Alternatively, the presentation can be found in the Investor Relations section of our website.

I would also like to remind our listeners that our comments and answers to your questions may contain forward-looking information. This information, by its nature, is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome. Please refer to the bottom of our latest news release for more information.

I will now turn the call over to Russ for his remarks.

Russell Edward Hallbauer

Thank you, Brian. Good morning, everyone. I'd like to thank you for joining us today. Hopefully, everyone is having a great summer, as we certainly are here in Vancouver. We just set a record for the most consecutive days without rain since records have been kept. So that's a pretty important milestone for Vancouverites. So rays of sunshines in an otherwise pretty dreary capital market for metal producers and explorationists.

As illustrated in our review of operations in our MD&A, milled tones for Q2 increased to 5.8 million tons, up from the 4.3 million in the first quarter, a 1.5 million ton uptick. While profit production increased to 28 million-ton per pounds, we're still well short of expected mill operating availability and projected recoveries. But we are pleased with how the new integrated facility is now performing.

As a result of the improved performance, our site operating cost declined from that of the previous 2 quarters and we expect that we will continue to reduce those costs, as recovery rates and mill availabilities improve and the copper head grade returns to life of mine average.

With $28 million of cash flow from operations for this quarter, Taseko was a bright spot on the mid-tier copper production landscape. Our cash on the balance sheet continues to grow as a result of this quarter's performance, and we currently stand with $93 million on the books. This is also after a $21 million having been prepaid to BC Hydro for the hook up for our power facility for GDP 3. We will recoup 100% of those funds over the next 2 years.

As Brian mentioned, there are only 2 of us on the call today, as our senior folks are in Williams Lake participating in the New Prosperity panel hearings. As well, we announced last week the appointment of our way CFO, Stuart McDonald, but he won't be joining us until September 1. So all of these folks will be back for the third quarter conference call.

As we indicated in our Q1 presentation, we are getting Gibraltar set up for a long and sustained run, and I think we're starting to see the results. As we review our slide presentation over the next 10 minutes or so, I think you will all appreciate that we have achieved a step change in mill throughput, which has reflected in copper production and copper production costs. And while this quarter showed improved results, we expect these to get even better.

We are confident in our ability to build up the recent operational accomplishments as we head into the second half of the year. This is illustrated by the fact that we have milled 2.3 million tons in July, producing over 12 million pounds of copper metal.

If you turn to the first slide, Slide 4 of our presentation, comparing Q2 to Q1. Some important indicators pop out with respect to tons milled. We milled 35% more tonnage in Q2, with 9% less mill availability. While copper recovery increased from the 84.8% achieved in Q1, to 85.8%, it's still well below what we believe is an achievable target of at least 89%.

Similarly, while we work on mill recovery improvements on the copper side, we also have a long way to go on improving the new moly circuit from its present operating recovery rate of 26.4% achieved this quarter, to the desired rate of 50%. Both recoveries in the copper and moly circuit are a focus of our operational teams, and we expect them to have design parameters by the end of the year. And that is why we firmly believe we are only starting to see how well Gibraltar can perform going forward.

Read the rest of this transcript for free on seekingalpha.com