TGB - Earnings call transcript Q2 2022

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Operator

Good morning. My name is Sarah and I will be your conference operator today. At this time, I would like to welcome everyone to Taseko’s Second Quarter 2022 Earnings and Production Conference Call.

As a reminder, today’s conference will be recorded. [Operator Instructions] At this time, I would now like to turn your conference over to Mr. Bergot.

your begin now may conference, sir. You

Brian Bergot

yesterday Sarah. Taseko’s second you, announcing our financial was website Welcome available and The everyone joining for our issued results operational you at thank and market quarter on release close is and news Thank after XXXX tasekomines.com. call. conference

call, CFO, today be Taseko’s VP Tremblay. Richard of and call Stuart is and Stuart to CEO, so our unavailable traveling the the the On financial is McDonald; provide with on Operations, Bryce me review. President second and Senior will Hamming, our quarter

remarks As from our usual, uncertainties that before subject the by and will we materially management, the our information, cause that may information. would get answers remind is outcome into by to forward-looking risks your to nature, differ questions opening actual contain to like and comments stated to I outcome. listeners This its

For second would related will call. further read risk non-GAAP risks to note to various these as I well to cautionary that factors out that uncertainties, point the MD&A like use you measures encourage the particular quarter our and I information during release as on company. accompanies also and our the we news the

his these regarding now turn to the release. open in the question-and-answer I will You analysts a remarks. session. for explanations and phone and remarks, call we can find to reconciliations the news lines opening related measures After will investors Stuart for over

Stuart McDonald

will by for we financial Brian on with us before turn introductory for you, then some and everyone. remarks for join some Richard then highlights quarter. today. over And start operations well. would Thank that fact, Okay. And are Florence keenly announcement and on make to morning up specifics now. I are to had we the with topic we it the will as as conclude focused Thanks hopeful, taking And good I have time off and it that the open we shareholders we know it’s we a in Q&A. today for an update are permitting will

June were And permit and late we informed commence X. been in pushed XX. draft to us That then told the then EPA last to that the and slipped to issue week, the late July week in August were aiming fact, they another comment mid-July. to the dates period public have In UIC August

disturbance, news this And imminent. continues it’s to the of at smallest and clear world. project has any needs the that it’s U.S. timing has internal final that and your of today emissions, the taken So, it And projects by EPA’s consumption copper the in no the complete GHG and you off approvals are no the in of EPA. definitely one is EPA length process, terms we is but with project all week. Florence run. Florence issues time to environmental be certainly good water We is We long their in understand start to reliance the of will look pay the time needs this dispute domestic There taking the supply optimistic is foreign and expect disappointing, when frustration while supply. reduce surface like Copper the the that that share the raised documents the there footprints energy on extra remain

going we So it. to are get ready on

challenging copper and grade was There the in expected the results. therefore, operations didn’t our Now that Gibraltar quarter reflected no Mining Gibraltar, quarter the the is upper financials. a second is than turning planned. production to Pit lower which denying benches at it from was of produce

irregular dilution. further planned Simply not patchy mine by As boundaries. we designed shovels mining impacted lower large zones grade discussed, complex have our to with ore more and are already previously put, zones are small, ore these was upper the

waste to million of for So Lower higher we of ended quarter. pounds end with leads along the we lower copper the up with our about and up the grade That’s XX recoveries ore. mill million below percentage pounds plan. production to a taking X

significant year the in Gibraltar plan expecting as copper of fact, early at the the half pounds. improvements deeper to quarter million on ore X.X And of third into we already July mine the seeing second we We Pit improves. the quality see in that production are improvement for are in month and with

call over a operations and more update that I for things of a now Florence pass sign be should come. the project. fulsome on to So, will Gibraltar to Richard the

Richard Tremblay

but about year. Thanks, half Stuart. what’s quarter, ahead the Good operations for morning, everyone. second talk the a more about in little second the more I will of

mentioned, Stuart in our we mine. definitely challenges the had As

complex grade While a the lower closer the have and quarter geological in things or of to towards the the related found we previous similar additional exasperated all patchy We ore had higher that pits the there gaps the our issues ore second some from evident in were which drilling quarter. and surface Gibraltar grade mineralization deposit, the with not to were which in profile bottom the and mine modeling. unexpected gaps

up designed doesn’t from zones, more these mine for we purpose, to of so size than average end ended we waste of lot resulted mixes difficult are ore at from run the grade waste for this was actual in by to waste not but with or to the the grade. to waste, a it lower – small it equipment plan which shovels up is the which for is for where the had gaps for the of separate mine our Blasting compounded grade the mill This lower boundaries MineSense X.XX% zones are quarter. we we very and take was this we those So, X.XX%, ideal quarter makes technology X.XX%, would. ore Even which sending small Gibraltar. the compared otherwise at our ore large the using,

the of the though half More deal with importantly is year. back will we how in this

deeper larger and ore become have itself is consistent. where issue more naturally into dig the the Gibraltar First, as zones we Pit, resolving the

also the I and for higher quarter XX% in is the coming a few over mine is of tell drilling with have What you amount were and done We infill continuity confirm coming months up grade plan last head further grades expected that pulling June the than July the ore benches. to the significant drilling months progresses. the grades can as increases

of particularly we the in issue have Another equipment increased absenteeism had operators. from to the half first in overcome year the workforce, is mine

and than will to then the lower utilization get and rates deeper us few into lagged. progress up, of been over have we our hiring therefore, the mining truck new employees allow and the which grade accelerate months, Our have But to up pit back mined tons training rates ramped higher have release last budget ore.

well for back I confident mine year. half set up is So, the the the very of feel

Our XXX of production plus copper pounds or million minus guidance still X% holds.

that Although we design in to end based a the result of did results, at This day. quarter rate direct looking tons ore or the improve second soft per at more of of now Gibraltar Pit. are be with from Mill on the lower our the XX,XXX is range. performance quarter increased throughput mill processing

the for to upside continue opportunities the of year. We mill second throughput over half see

the day. per is the and recoveries. July, throughput for finding sweet copper averaged fact, challenge spot, tons month XX,XXX pushing with balancing The of In we tons

to Our mill optimize a operations is working performance. currently a team with third-party system on

update, process some comments include already Now, Stuart Florence UIC of gave public but the permitting hearing. draft about turning a the issuance mark The a I can make additional permit period, the a to XX-day will public ahead. will comment start and of which

comment permit state period draft at mid-August happen issues the in September. XXXX. hearing to process EPA So end is wrap assuming the will very similar the in up then would the and public by regulator mid-September the followed public of and that The in

here, ensures that move awards commercial facility allows starting forward active we which contracts required. with began in Florence largely comment of last well not idea site will received. until the construction of to EPA’s as the year. received. Meanwhile, moving site optimistic better we I depend that components will not the procurement, but like drilling take Regardless, that respond to hand. We from and then the And also the still have the will and Following initial as have such know we it the field, operate in as process those the comment time period, a is it how comments. to get public up EPA on the number the see a taken about permit final expect for arriving confident to and will we step us once the permit are are We of it’s effective of wraps comments thorough a extents have while contract number an will the environment do process long some need forward. period result key an comments to protection the look will we more

Our the engineering capital we basis. engaged items see costs team daily is fluctuating on remaining a for vendors also with and

So, get of we realizing construction. cost update closer until exceptional to we exciting company as get a closer Florence. the starting we It’s to estimate for won’t time capital our the value very

to turn will I Now, Stuart. things back over

Stuart McDonald

And Okay. as Brian as mentioned earlier, Thanks, is traveling Bryce Richard. mentioned today. Bryce – or

few pricing, the from of down and sales matters that’s volumes. first get but we for the due because to Q&A. before the a mainly to cover financial lower was me second partly let quarter So, quarter lower Revenue

over additional from of Actually, pricing X the $X through exposure recent negative the price of boosted million the us That’s And adjustments our worked period. prior to year. because has the million downturn. for fixing lower quarter. the recall, revenues do at most provisional were period this the price been drop in very prices some context Also well you carried adjustments, related producers quite and copper banks. copper pounds of we’ve that this around and If pricing first which was the quarter price minimizing that time small in in downward of an quarter, other of reducing dropping the We in shipment. strategy QP the this by that customers $X.X sales are over financials directly by copper with copper last our by than

hedging the $X.XX of for a Prices of – have our which in per year. cost about have liter year. costs, between of up this at includes and quarter total short-term We the rest and trend fuel site currently and total CADX.XX quarter at hope a the million liter our per price is than fuel effectively averaged QX. higher same continues. that that diesel in around driver main side, $X.XX is do first that last site as The QX place, highs over downward our liter, and CADX.XX we cost about since the higher capital increase in the costs strip, slightly prices down caps strategy and landing come On $XX

grinding of consumables. significant generally, exception So the in our we’re not impacts media, other seeing we’re diesel. site covered on And with inflation

think team done our of and a job difficult managing I has suppliers through good a environment. with working

of production of into with decline in unit pound the big copper options. rest half this copper will loss ahead, potentially we million of year. range for generated of copper $X.XX drop on $XX a this year, see gain Looking cost a a second increasing down per GAAP had in We a pound our share. price per for the The our QX unrealized $X.XX the

We significant an result and a $X.XX crusher two our the at rate, share. Spending third in of decline the mainly for our will Florence per the balance the on on capital the at loss including net in crusher spending The adjusting loss second dollar unrealized cash which in the saw drawdown also these FX in continue debt. move of was on Gibraltar. project was in $XX projects, quarter. a After adjusted resulted items, million Canadian ForEx quarter

securing interest be to year, upcoming last CapEx in Most project, also that We million be it’s was I don’t an million bond in all about on inflationary but we’d incurred procurement and remainder equipment in we committed about to. much was we $XX that complete will year. will we’ve we year have by the making positioned until I further this think committed Florence June of at commercial payment $XX in clear commitments of expect At well, money we’re environment of of facility spent any not this last purchases there additional that our in Overall, as significant new to saved the QX has to been that have CapEx become the and the XX, permitting. significant our Project project committed advanced $XX August. yet. costs. late very million,

if notably the small in The still process financial changed project Taseko, the ready and copper financing, months, construction necessary a so in is including the balance million quite do will We be last small our a a or of move things have we line for to very of financing we in with we From that a small $XX into a once credit, project-level our few will to is we’re package place of permitting CADXXX price. couple have most project number begin position. remains equipment cash perspective, complete. million Florence of But financing, is royalty need critical facility. options available before financing construction. a we unencumbered, a ensure and deal do the a debt growth strong

sitting has $X.XX about year, earlier is the at still highs its around by the consensus level fallen very from While of the right around in XX% long-term copper price the new healthy a and price price. current

made now. a transaction, price we a right Through the us year $X.XX of a our of dropped, This a copper $X.XX production down is price us our pound. on hedge middle with for drop, pound netted collar of million protection for combined our repricing of stability price decision considerable minimum payout the position through puts half the contracts, our July to $X weeks year. to with Given next strategy A second of the this most ago few portion protected copper the of of by to per cash. $XX the about collar when copper contracts, we’ve providing price monetize

would prices that that have protection Effectively, and upside. for capture cash hand, will we the year. copper the have if options the just we And to also have additional price out place. the recover, So advanced of in paid we downside continue in balance we cash copper

continue weighed medium green accelerated fundamentals a market new and The around the the intact. with other indicate social timelines for Just now. political and economy, Development have a to risks to concerns mines permitting long-term on few in and Obviously, the closing supply to the new believe key into to challenges economy bring remarks every jurisdictions copper copper but deficit many is we about commodity, production, global mines transition increasing horizon. the remain copper a on high remain world. combined lengthen still

Thanks. will of the well-positioned, operator, open we remain producer. continue goal lines Taseko for to that believe multi-asset on is North a with We we that, copper And and up focused building our American now long-term questions. can

Operator

Hutchison, Thank Craig we first will take you. our [Operator Instructions] from And caller TD Securities.

Craig Hutchison

low to My is guys. in quarter. respect they Hi, previous Gibraltar. that July, good with were see you morning, encouraging the I were grades to in first the than Obviously, said question second think the XX% to higher question not of hit reserve To a guidance, or expectation what will you is is for that And half? your grade? maybe at need the here be end your above

Richard Tremblay

morning, good Craig, Hi, here. Richard

reserve the grade. back So towards trend grade the will up

will the we’ve ore The other or softer how and the and to factor July opportunity the is half that upside really that the throughput carry of year. second in seen the through

Craig Hutchison

Okay.

Stuart McDonald

a tons roughly, – were for we rough XX,XXX I day, think July.

you indication mine of what of So gives is capable that the of. kind an

Craig Hutchison

of mine kind just a where terms mined more year. the then you year, trickier the average up in half? function Is creep first a selectivity. sort this And second total plan, can the just the had of to half we here are expect of in that And number ore, lower the you tons in in than bit last of of fair Okay. that

Richard Tremblay

function The mined tons haul distance. is the of more a

Pit, out So to waste out we crushers. of and over have to haul with dumps the Gibraltar mining the a the longer

fleet. in with So productivities the able we’re that’s the to truck reflected achieve

not come to remainder advances mined year, saw dump kind just So back the through of different again, the on levels of based XXXX, as distances. development stages of in the return we will the the haul we but tons the a up mine will bit see –

Craig Hutchison

Are there any need Or... trucks you guys add? to

Richard Tremblay

add to trucks. have Don’t

will to of We are I time that be three update trialing going believe coming was trucks beginning the Cat XXX last be frame. QX in.

Craig Hutchison

first you much given thoughts Okay. financing am mentioned last Florence, mean, correctly? not in million sort obviously of substantial just possibility a on mean, kind a the half the that one just weaker-than-expected $XXX on year, $XXX Maybe I is financing, thinking But you million I more or this about that I of small more order here to real just need there quick of financing. your requirements. question something modeling

Stuart McDonald

Craig that’s moved. going is No, Gibraltar Stuart lot improve right which way Obviously, will it’s here, parts way. the have it of generation. not improve, now. to the by a prices this, is course. – we’re Copper seeing speaking of cash flow moving our production There on

We as XXXX input. which But at of Gibraltar key timelines – generation a the be out to yet. will business at are cash got And a our haven’t little obviously, Florence, slipped our have rest at well bit. permitting

looking right we don’t any I have there, we of in balance lots financings equipment with said I pretty add no, financing or maybe have to if think So, sheet of need notes in magnitude, $XX $XX range the And a as comfortable do now. royalty at small options of to the are that million my we million.

that’s closer it become picture the as obviously, about to construction that we more we we thinking So, right clearer. how But now. and start will will get get visibility date, are

Craig Hutchison

Good Thanks. guys. Okay luck.

Stuart McDonald

Thanks Craig.

Operator

move will you. with Ed next, to And Thank on we Barclays. Brucker

Ed Brucker

for this question guys. morning. Hi my Thanks taking

of you get comment previous EPA the for I a those? during on wanted to XXXX you And time? period and how do then you this just took get to expect are just or that get one, the timeframe negative – overcome kind can confident then EPA, And First those comments? comments sense the post through come you long those to the what

Richard Tremblay

Yes, Richard here.

the the permit, regarding the we the hand process period. have dealing received of comments public mentioned opponent process, what for essentially XXXX now. permit withdrew as actually far process, we by that which other concern process, ABQ that a comment in was raised my APP they require, before dealt state As XX-day with, their the previous got that with our was I And one in There through by was comments and comment proceeding one them. process that

run of as in comments of terms the of the have it’s nature your long any As not we validity more on we ability previous could And modeled depend the the and new facility far raised. receive system we aspects, whereas part performs To-date, test and they our on will seen the to grounded the or raised and concerns were said how have production to operate as around other the question issues of concerns and it technical uncertainty them. going demonstrated how operate. now, take, really we

So, it to have makes potential bit a concerns from the field the on deal for to less with quite regulators components. or unknown

Ed Brucker

thinking the then the levels? guess Got flows it. And you back the to on my hedged, then of is going When at lower context price pocket Gibraltar. have but cost copper are And in just what I squeeze next does what start generally do lower. copper get mean to number cash if out – and it I difficult? that know I price gave. question, at you you your $X.XX copper in

Stuart McDonald

Yes. It fuel I a typically drop mean, And And Stuart speaking see. that in have that’s copper for the going prices also and will experiencing expected that and half are what Gibraltar, the does other cost all the the you inputs. we to see I reflect follows you here, $X.XX the input drop, industry, if which higher could guess fuel year. now. dramatically, a were steel we across typical pound at level is that past and seen costs of costs, CX our back forward,

copper also drop, as drop. prices input So, costs

way are issues kind get we margin fine. up or just be from We and long cash will to any at a we our Gibraltar. grade yes, issues of So, got flow

Ed Brucker

hire the just My year bring the you of been to to building? In it. on costs having absenteeisms. as doing, high keep more have do last people, people, you the that more Got people question, you into expect hirings throughout kind train more

Richard Tremblay

a it I Well, operating those baked rear does associated cause that. training ways level. already bit and given we individual don’t And and at ensues. its ramp-up model systems the is at of is we do a operating Where performance. There operator training trained people to the tracking Richard process the those operator of for our better in that processes it’s expect with are our and it looking so operating and the of is items here. getting an head something Yes. just into way deployment cost, we increase that’s qualified have and that, costs

It’s something actually team with of site nature is have the based cyclical on had that to our the that. industry. So, in very deal past focused we the on

those training the and evolved dusting really and to processes get can equipment speed a up in it’s off operated of at. very we program qualified the know at getting and So, place kind operating to well people they be levels

now. the guess – into the getting that’s level the have we hiring doing we probably if kind that of are biggest of So, I one, right risk

Ed Brucker

Great. the Thanks time. for

Richard Tremblay

Thanks.

Operator

you. Thank

will on we Next, move to with Alex Stifel. Terentiew

Alex Terentiew

morning A Good of questions Hi. for everybody. you. couple

just you First, just – maybe some wanted to if me give could for I clarify color. me,

million you to of the about $XX said rest still think Florence, be year. capital spending over the incurred I

Any well? there now. Do through Thank So, want that you just But know your just getting you. others XXXX, can kind bit just related indication kind be you that. strip to can you at of then carrying financing. more flow and Capitalized give see relates us of haven’t give the the question, to clarity year? kind mean is into reserve throughputs yet. I helpful. a grades next I color kind and year are generate us of spend and obviously, flow. are anticipate if second know And be anticipating? Gibraltar, there? maybe to capital ore cash grade you on I both also of rest confirm of you what the can maintained again, would to these And cash given the an kind guidance softer and to, XXXX, I for of as my for ability you then

Stuart McDonald

speaking Stuart Yes, Alex. sure here. Okay,

correct. to are this are CapEx, million roughly of Florence the costs project second you we half yes, on what capital In year. $XX spend expecting in terms of Florence is

we much We in have keeps an – top amount on the that of that, there. ongoing smaller place have team site

QX, was or can that with that’s expect I slow winter, as and $XX second project it will capital continue on a million move guess But then to season – will one Gib we the get capital, crusher And on And move. in into project more no is construction progress end. that – the next in first half of capital we kind CADX I down – maybe in the That CADX but rates. that think right seeing year. There spend million strip, that’s are Yes. the the you will will million will there up come historical along wrap another an then quarter. to crusher could the Florence. now year. the be we work is half And of

other So major requirements Gibraltar. said, at that, – but capital than no as I

to ahead XXXX. Looking

guidance out yet. we put As haven’t noted, you

like kind will budgeting our We of now. XXXX, average and on and a are year back certainly, higher it it’s XXX planning that than looking pounds. mine towards mine But of of working life million be right speaking, generally trending production

it think year more will can But year guidance. sure. – as target. here, for a the we some as be And next So, will that towards end year the be towards a it’s get precise stronger moving moving it of I we give

Alex Terentiew

X Is think or ballpark, called of X the years. be? will Okay. And strip for – next report, X.X% ratio stripping sorry, in that years X of the from the around again, ratio, kind where I years just you tech think last

Richard Tremblay

Yes.

that’s of in ratio will strip the where in Sorry, X.X% range years. is it – next be the couple yes, the

Alex Terentiew

for That’s you. Okay. Great. it Thank Alright. me.

Operator

Thank you.

Gooden with on move to Gordon. will Panmure we Next, Edward

Edward Gooden

Thanks. Hi guys.

What have what’s on percentage the diesel total at that the diesel on total question then cost Gibraltar? a for to mentioned? diesel, does also on cost And hedge the you Thanks. cost incurred costs. Just contribution the

Stuart McDonald

I we a of million a mean that, That’s XXX% Yes. round – mean basis. use on maybe below I mine. number. that’s a but liters diesel we Sure. generally year the at slightly XX about

As I liter, the CADX.XX cost price a mentioned, average a includes in and QX, site. was that to delivery

math the CADXX kind million costs of head, percentage the have the basis. off something of diesel don’t that’s that U.S. but sorry, hedge. idea. that’s about the But – my is million, buy So, XXX% we of on question Gulf a like then I I CADXX other you annual there. hedging an gives we Coast forget the was diesel. What on do call And on options top

pay we a – premium. that So,

I contract paid think for at around purchase and that about diesel $X.XX the for price $X.XX we second that caps half our that liter. to of $XXX,XXX the and effectively a year, between

So, we the actually, QX $X.XX, cost now diesel we off. have come so our seen capped is at positive, price that the around we is – which have And is really effectively around currently, have price level. the price lower, price right a

Edward Gooden

great. That’s much. very Okay. Thanks

Operator

to Thank no you. or And there any over back conference would are remarks. further closing additional questions. I management for like to turn this

Stuart McDonald

further. for everyone anything we don’t have joining much very Thanks and Okay.

So, let’s summer. call rest the of enjoy the everyone your and end here

talk Thanks. you will QX. after to We

Operator

teleconference. Thank your you. do And that does We participation. conclude appreciate today’s

You may now disconnect.

Taseko Mines Limited (TGB) 9 Aug 222022 Q2 Earnings call transcript