Taseko Mines Ltd (TGB) 2025 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Taseko Mines 2025 Third quarter earnings conference call. (Operator Instruction).

I would now like to turn the conference over to Brian Bergot.

Thank you, (Inaudible). Welcome everyone and thank you for joining Tas'seko Third quarter 2025 conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at tesecomines.com and on Cedar Plus.

With me in Vancouver today is Taseko's President and CEO Stuart McDonald, Taseko's Chief Financial Officer Bryce Hamming, and our COO Richard Tremblay.

As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information, and this information by its nature is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our third quarter MD&A and the related news release, as well as the risk factors particular to our company. These documents can be found on our website and also on CEA.

I would also like to point out that we will use various non-GAAP measures during the call. You can find explanations and reconciliations regarding these measures in the related news release. And finally, all dollar amounts we will discuss today are in CAD unless otherwise specified.

Following opening remarks, we'll open the phone lines to analysts and investors for questions. I will now turn the caller to Stuart for his remarks.

Great, thanks, Brian. Good morning, everyone.

Thank you for joining our call today to discuss the third quarter financial and operating results.

As usual, I'll provide some commentary focusing on the operational results, and then Bryce will get into the financial performance for the quarter.

As outlined in our release yesterday, third quarter results were definitely an improvement over the previous two quarters, both operationally and financially.

Mining in the connector pit had presented more challenges in the early part of this year than we'd anticipated, but on the positive side, the higher mining rates in the last two quarters have opened up higher grade benches that we've been anticipating.

In the third quarter, grades increased to 0.22%, which is up from 0.19% in the first quarter and 0.20 in the second quarter. This higher grade ore and less transitional oxide material both benefited mill recoveries, which increased to 77% in the third quarter.

Mill throughput has been very steady this year, consistently operating at around design capacity.

So overall copper production in the third quarter was just under 28 million pounds, and that includes 900,000 pounds of cathode production from Gibraltar's SXEW operation.

Molybdenum production in the quarter was 560,000 pounds, which is also a big increase from prior quarters due to higher molly grades, which typically track upper grades.

Costs in the quarter were $287 US per pound, an improvement over the prior quarter.

Total site cost in the quarter was $7 million higher than the previous quarter, mainly due to SXEW costs now being expensed, as well as increased maintenance costs.

Maintenance costs, including parts and major components, is one area where we continue to see steady inflation.

And all of that translated into $62 million of adjusted EBITDA for the third quarter.

Looking ahead, we expect to finish the year with a strong fourth quarter.

Gibraltar produced 11 million pounds of copper in October, which was the mine's highest production month in two years, so the quarter's off to a good start.

We will provide formal guidance for 2026 in the new year as we normally do, but generally we're looking for a more consistent year next year with less quarterly volatility.

Now shifting over to Florence, where we've achieved a number of major milestones recently and the operation is now well on its way to producing first copper.

In September, our general contractor achieved substantial completion of the SXEW plant and plant area.

This is a huge accomplishment for the project team.

In just 18 months since we broke ground to Florence, our team has been able to deliver this major capital project on time and in line with our previous cost estimates.

So it's really a great achievement, and the project is now into the commissioning phase.

In mid October we received the final regulatory approvals we required to commence well field operations.

We then initiated a short commissioning period which included pumping water from the aquifer to establish hydraulic control in the well field.

A number of normal co commissioning issues were identified and resolved, and in early early November, sorry, about a week ago, we began acidifying the commercial well field.

Overall we're a few weeks behind our original plan, but we're very happy with the well field performance so far.

As initial flow rates in the oil field are in line with and even exceeding our expectations.

So it's early obviously, but the operation is off to a good start.

About half of the well field is being acidified now, and the second half will start up in the next week or so.

And in the weeks ahead, we expect to see the grade of copper in solution or PLS grade from the well field start to increase to a point where we can turn on the SXEW plant and start plating copper cathode.

Commissioning of the plant area is advancing in parallel with initial well field operations, and we expect to be producing copper early in the new year.

An important aspect of the production ramp ups in 2026 will be our ability to develop and integrate additional wells into the operation.

We're now preparing to restart drilling activity with two drills planned to start up here in November and an additional two drills will be added early next year.

The operating team in Florence continues to grow. Recruiting has gone very well, and we're up to about 140 employees on site now.

Needless to say, it's a very busy and exciting time for all of them.

It's great timing to be starting up a major new supply of refined copper inside the US.

Obviously copper markets and pricing remains very strong.

And there's some interesting dynamics in the US capital market.

Although there are no US import tariffs on refined copper right now, the possibility of tariffs in the future has led to some speculative trading activity and growing capital inventories inside the US The (Inaudible) price has continued to trade at a premium to the LME recently at about 44% premium or roughly $0.20 a pound.

However, our understanding is that the quoted COMEX price may not reflect what can actually be realized in the physical market, and cap sales in the US may be at a higher discount than higher than normal discounts that you might normally see to the price, although we're still seeing a premium to LE pricing.

This is a situation we're going to continue to monitor as we start cathode sales from Florence in the next few months.

The US government has stated that it plans to revisit tariffs in the middle of next year with the potential for a 15% tariff on cap ow at the end of 2026, increasing to 30% potentially at the end of 2027.

So in the longer-term this shows the strategic value of Florence, which will become one of the few US based suppliers of refined copper.

Before I pass the call over to Bryce, I wanted to say a few words about our recent equity offering that was completed in October.

Now the proceeds of that race have significantly strengthened our balance sheet.

We've now repaid the $75 million that was drawn on our revolving credit facility, and the remaining funds provide additional working capital support ahead of the Florence ramp up next year.

We're also planning additional spending at Yellowhead next year on environmental and engineering work to support the environmental assessment process.

In the third quarter, we held open houses in the local communities and initial feedback has been quite positive.

So Yellowhead project permitting is off to a good start, and we continue to view Yellowhead as an important longer-term growth project for us.

And with that, I'll turn it over to Bryce.

Thanks Stuart. Good morning everyone and thanks for joining us today. Total copper sales for the quarter were 26 million pounds, which includes 900,000 pounds of cat food.

This was slightly below production due to shipment timing at the end of the quarter.

We achieved a strong average realized copper price in the quarter just shy of 450 per pound US in line with the LME average, and this is still continued to strengthen since the quarter end.

This, strong copper price translated into total revenue of 174 million, which includes 14 million from Molly sales.

The combination of higher sales volume and strong pricing drove a 50% increase in revenue quarter over quarter.

On an adjusted basis, we reported net income of 6 million or $0.02 per share.

For GAAP purposes, we reported a net loss of $28 million or $0.09 per share, and that was primarily due to unrealized foreign exchange losses on our US dollar denominated debt and an unrealized derivative loss related to our copper collars we have in place.

Adjusted EBITDA came in at $62 million a significant increase over prior quarters driven by the higher sales and stronger copper price.

Capitalized stripping for the quarter was only 6 million and it was substantially lower than the previous two quarters, and that reflects our progress deeper into the connector pit where the strip ratio has declined and access to ore has improved.

Turning to Florence, we spent US dollars $27 million on the commercial facility this quarter and that brings our total capital spend since the start of construction to $267 million US.

We achieved substantial completion with our contractor in Q3, and we only have a few million more on this capital project to finish the year. This is within a few percentage points of our original construction budget.

Since the start of 2024, and it's a testament to the execution of our capital projects team.

Operating costs at Florence were 8 million in the quarter, and these will increase as we continue hiring full-time staff and ramp up our well field operations and that will include the procurement and consumption of asset going forward now that our operations are underway.

We ended the quarter with 91 million cash in October. We closed an equity financing for $173 million US and we used 75% of that to pay down our revolver.

And with capital spending at Florence largely behind us now and improving production at Gibraltar and coupled with this cash injection from this financing, our liquidity outlook is robust.

We're well positioned to support the ramp up at Florence and advance our work at Yellowhead.

That concludes my remarks, and I'll now turn it back to the operator to begin the Q&A session.

(Operator Instruction). Duncan Hay, Panmure Liberum.

Yeah, hi, Stuart, just a quick one on the well field drilling. What's the, can you talk through the benefits of accelerating that and bringing that forward? I mean, presumably.

You're constrained by capacity in the plant, but, yeah, what sort of, flexibility or comfort does that give you?

Well, I think initially in the ramp up period, the key for us is going to be opening up additional wells. The constraint is going to be not the plant, but the amount of solution flows that we can get off the well field. So it'll be key to be advancing that forward.

So we've got two drills starting up here in November, an additional two early in the new year, and.

In Q2 and Q3 next year we'll see those additional wells start to come online and, contribute to contribute to the ramp up. So no, it's a big part of the plan. I think it's always been part of the plan, but yeah, glad that you know we're, we've got.

A solid balance sheet and we can move forward confidently with that work now.

So you could see, I mean, you're going to put guidance out in the new year, but that, if you look at what what you were thinking, say six months ago, you could have more production next year, given the, given this, given the position you're in.

Well, yeah. We'll see. I mean we're not giving, we're actually not going to give production guidance today obviously the technical report is out there and that had some assumptions about drilling as well, but no, we're optimistic certainly what we see today, the early results from the well field are positive, but it's early days and yeah we're we're keep pushing forward and obviously first copper is going to be important, a big milestone for us, early next year.

Yeah, okay, thanks.

(Operator Instruction), (Inaudible).

Hi, good morning, guys. Thanks for taking my impression.

I realize you guys aren't going to provide guidance for next year until I guess early next year, but just curious how you guys think about.

The kind of milestones for declaring commercial production, obviously ISRs are relatively new for most people just how do you guys think about that?

In terms of production rate you need to get to to declare commercial production, is it for 60% of design, or is there some kind of metric that you guys look at to to determine that?

Yeah, Craig, we're not thinking about it in that way, I know that's a conventional way it's been done in the past for concentrators, it's going to be a steady ramp up of production, through 2026, and, yeah, as I said, the key is going to be bringing on new wells, but we should see sequential growth.

Each quarter in in the copper production, I don't know Bryce, you want to make a couple of comments about.

The accounting that we see, I guess the rules have changed in in recent years.

Yeah, I think the real focus will be on our obviously our C1 cost we're going to be looking at what point that our production, generates operating cash flow, operating profit.

And with this with this project given the nature of the operating costs that happens relatively quick from what we're seeing like we could see that by by mid year and then I think as as we continue to the ramp up it's really about free cash flow and. And making enough money there to to pay for the ongoing sustaining capital with the well field development and that we see sort of you know later later by the end of next year and then onwards of course so those are kind of the the two key milestones I think first is operating profit operating cash flow and the second really being, generating free cash flow and so that's what we're really kind of targeting as we think about that ramp up into commercial operations.

Okay, so I guess until you reach your mid next year, do we assume some of the costs will be capitalized, or, the moment you guys are producing sellable cathode, you'll start booking revenues right away and just in terms of kind of accounting, do we think about revenues next year?

Yeah, on the accounting side, these standards changed a few years ago. We now recognize revenue, once it's, sold. So even the first pounds of capital will be sold, from a capital perspective they'll probably be some of the, until the plan's fully up and running, there'll be some of the plan costs which get capitalized until it's. It's sort of available for its, it's full intended use, but the key I think with this operation, as we've looked at it is the well field development cost. So that's the drilling and development of the wells, that is capitalized, so there will be, significant ongoing sustaining capital, that's, put to the balance sheet and then advertised over the life of the well.

Okay, great. Let me ask one last question for me just in terms of the overall capital. Is it you effectively now complete the initial capital spend at this point, or is there still some lingering costs into into Q4?

Effectively, the work is complete. There, there'll be a few.

Costs commissioning costs that that kind of trickling in in Q4, I think we still probably have some some some of the cost and payables right that'll come through the cash flow but effectively the the construction pieces is complete.

Yeah, okay, great, thanks guys.

(Operator Instruction).

Okay, thanks everyone, for joining and yeah if if there are other questions feel free to reach out to any of us and otherwise we will talk to you next quarter. Thanks again.