Mine Operator Locks In High Copper Prices for 2023

Taseko Mines Ltd.’s shares traded 10% higher after the mine developer and operator reported that last month prior to the recent downturn in raw copper prices it had secured contracts for H1/23 for an additional 30Mlb Cu at prices ranging from $3.75-4.20/lb

Mine developer Taseko Mines Ltd. (TKO:TSX; TGB:NYSE.MKT), which owns and operates mines in the U.S. and Canada that produce copper, molybdenum, gold, niobium, and silver, announced that it had secured favorably-priced copper collars for H1/23.

The company advised that the collars acquired call for contracts of 30 million pounds copper (30 Mlb Cu) at prices ranging from a minimum of $3.75 to a maximum of $4.72 per pound. The firm noted that it purchased the collars in mid-June when copper prices were averaging about $4.20 per pound. Since that time copper prices have dropped precipitously, at least in the short run, and today spot prices are trading around $3.55/lb.

Taseko Mines indicated additionally that it enters into these hedged pricing agreements as part of its copper price protection program. The firm mentioned that the recently purchased collars also extend copper price protection measures for the current year, which effectively guarantees contacts for H2/22 for 42 Mlb Cu at a minimum price of $4.00/lb.

The company commented that the securing of these contracts is expected to deliver additional cash flow of approximately CA$45 million over the next year.

Elders Tour at Gibraltar. Source: Taseko Mines

The company’s President and CEO Stuart McDonald remarked, “We have consistently used a price protection strategy for over ten years to protect our balance sheet from sudden downward moves in the copper price, like we have seen over the last month.”

“With this price protection in place, and with the improvements in head grades and copper production from Gibraltar that we expect in the second half of this year, our balance sheet will remain strong as we prepare for construction of our Florence Copper Project,” McDonald added.

Taseko Mines is headquartered in Vancouver, B.C., and operates several active mining operations in British Columbia and in Arizona in the U.S. The company is primarily focused on copper but also is engaged in the production of molybdenum, gold, niobium, and silver. The firm operates the Gibraltar Mine, which is the second-largest copper mine in Canada. The Gibraltar operation produces about 130 Mlb Cu and 2.5 Mlb Mo annually and employs a 700-person workforce.

Taseko Mines started the day with a market cap of around $278.4 million with approximately 286.3 million shares outstanding and a short interest of about 1.5%. TGB shares opened 9% higher today at $1.06 (+$0.873, +8.98%) over yesterday’s $0.9727 closing price. The stock has traded today between $1.05 and $1.09 per share and is currently trading at $1.07 (+$0.973, +10.00%).

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