Taseko(TGB) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2022 decreased compared to Q1 2022, primarily due to lower sales volumes and a $5.5 million downward provisional pricing adjustment related to falling copper prices [23][24] - The company reported a GAAP loss of $0.02 per share for Q2, with an adjusted net loss of $0.06 per share after accounting for unrealized gains and losses [26][30] - Total site costs increased by approximately $11 million compared to the same quarter last year, driven mainly by higher fuel costs [25] Business Line Data and Key Metrics Changes - Copper production for the quarter was 21 million pounds, about 5 million pounds below the planned target, attributed to lower ore grades and mining dilution [12][13] - The company expects significant improvements in copper production in the second half of the year, with July production already on plan at 9.5 million pounds [13][18] Market Data and Key Metrics Changes - The copper price dropped by about $1 during the quarter, but the company managed to minimize exposure through fixed pricing strategies [24][31] - Current copper prices are around $3.60, which is still considered healthy despite a 25% drop from earlier highs [31] Company Strategy and Development Direction - The company remains focused on the Florence Copper project, emphasizing its small environmental footprint and the need for domestic copper supply [11][21] - The permitting process for the Florence project is ongoing, with expectations for a draft permit to be issued soon, followed by a public comment period [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the year, anticipating improved ore grades and production rates as mining progresses deeper into the Gibraltar Pit [12][17] - The company believes that medium to long-term fundamentals for copper remain intact, driven by the transition to a green economy and challenges in bringing new mines into production [33][34] Other Important Information - The company has a cash balance of CAD176 million and a $50 million line of credit, indicating a strong financial position [30] - Capital expenditures for the Florence project are expected to be around $20 million for the remainder of the year, with additional smaller costs to maintain site operations [27][56] Q&A Session Summary Question: Regarding Gibraltar's grades in July - Management confirmed that grades in July were 20% higher than in the previous quarter and indicated that grades will trend back up towards reserve levels [37][40] Question: On total tons mined in the first half of the year - The lower tons mined were attributed to longer haul distances, but an increase is expected in the second half as mining progresses [41] Question: Financing needs for Florence - Management does not foresee the need for substantial financing of $100 million to $200 million, indicating comfort with the current balance sheet [44] Question: EPA comment period duration - Previous comment periods were brief, with only one comment received, and management is confident in addressing any potential concerns [48][49] Question: Impact of lower copper prices on cash flow - Management stated that input costs typically decrease alongside copper prices, mitigating potential cash flow issues [50] Question: Absenteeism and hiring impacts on costs - Management does not expect increased costs from hiring, as these are already accounted for in the operating model [51] Question: Capital spending for Florence and Gibraltar - Management confirmed expected capital spending of $20 million for Florence and additional $10 million for the Gibraltar crusher move in the second half of the year [56]