Taseko Mines Limited (TGB)

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Taseko Mines (TGB)

Q3 2013 Earnings Call

October 31, 2013 11:00 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

Stuart McDonald - Chief Financial Officer

John W. McManus - Senior Vice President of Operations

Analysts

Tom Meyer - CIBC World Markets Inc., Research Division

Garnet Salmon - Mackie Research Capital Corporation, Research Division

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

Mark Turner - Scotiabank Global Banking and Markets, Research Division

Adam Low - Raymond James Ltd., Research Division

Tom Bishop - BI Research

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Taseko Mines Third Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to hand the conference over to Mr. Brian Bergot, Investor Relations. Sir, you may begin.

Brian Bergot

Thank you, Sayeed. Good morning, ladies and gentlemen, and welcome to Taseko Mines Third Quarter 2013 Results Conference Call. My name is Brian Bergot, I'm the Director of Investor Relations for Taseko.

With me today in Vancouver is Russ Hallbauer, President and CEO of Taseko; John McManus, Senior Vice President, Operations; and Stuart McDonald, Taseko's Chief Financial Officer.

After opening remarks by management, which will review third 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. Thank you for joining us today to discuss our third quarter results. As illustrated in our review of operations in our MD&A, milled tons in Q3 increased to 6.8 million tons from the 5.8 million tons achieved in Q2 and a whopping 62% increase over that achieved last year in Q4 of 2012. These throughput numbers clearly illustrates we have our ramp up complete and now we can focus on fine-tuning our overall operations. As a result of the throughput increase is the mine produced roughly 36 million tons of copper in the quarter, a nearly 73% increase over that achieved in Q4 of 2012 with quarter-over-quarter increases of 30%. This has resulted in earnings from our mining operations of $19.5 million before depreciation. Stuart will talk about the financials later in the call. Going forward, we know where we need to focus our attention now and that is to have a more consistency and increase run time in our mills and attaining our 93% availability target. As we push tonnage of recoveries that lag somewhat, what we would expect, but that will be resolved as we move forward as our new concentrator personnel become more comfortable with the integration of the 2 systems and the grind we need to boost recoveries to predicted levels. We definitely have work to do in our moly plant, and that has been somewhat dictated by what has happened in the bulk copper circuit, but only just a matter of time and effort until we get moly recovery to design parameters. The concentrators are running at a combined rate of over 90,000 tons per day -- per calendar day -- excuse me, 92,000 tons per calendar day and has been for the past nearly 6 weeks. In October, the mills have processed nearly 2.8 million tons of ore. This throughput, while it's something we're extremely happy with, will create its own issues with upstream stripping requirements in our mining operations. As it stands now, we are right around our reserve grade strip ratio, however, we'll likely have to step on the gas if we want to keep ahead of our concentrator that continues to perform the way it has. We are doing our 2014 budget as we speak, and we will evaluate our go-forward options into 2014. Actually, it's a nice problem to have actually. Cost per pound going forward will decrease as we optimize the moly plant and produce more moly and increase availability on the mills attendant with those initiatives regarding truck productivity, drill blast activities, and other mine-related productivity improvement in mine-to-mill efforts.

First, we turn to Slide 4. You will see that the mill availability I've spoken both in the past increased by 3 points over that achieved in Q2, but we are still 5 points behind of Q1 performance and well below our budgeted level from 93.5%. Pushing tons will obviously affect recovery, but we managed to stay pretty consistent with 2 Q2 recoveries 85.9% versus 85.8% but again, we are striving for close to 89%. As discussed, gross moly production is up from 2012. But as you can see, recovery is well off, but we believe it's achievable.

Turning to Slide 5, pretty self-explanatory as I spoke about a minute ago. In terms of recovery and throughput, usually when you put recovery or push throughput, you'll suffer recovery. So we're pretty happy we've been able to push the tonnage to the levels we have and achieved similar recoveries as we have in Q2. This bodes well for us in dealing with the increased metric in the month ahead.

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