Taseko Mines Limited announces first quarter earnings of $5.7 million, or $0.03 per share. Adjusted earnings1 were $10.8 million, or $0.06 per share, a 48% increase over the $7.3 million reported in the first quarter of 2010.
Highlights:
Adjusted net earnings1 for the first quarter were $10.8 million, an increase over adjusted net earnings of $7.3 million for the prior-year period. The increase in adjusted net earnings reflects higher cash margins realized on copper sales due to higher market copper prices, offset by the reduced ownership in Gibraltar. Adjusted EPS for the first quarter 2011 was $0.06 compared to $0.04 for the first quarter 2010.
Operating profit1 was $18.6 million in the first quarter 2011 compared to $24.6 million in the first quarter 2010.
Cash margins continue to benefit from higher copper prices, increasing 34% to US$2.21 per pound from US$1.64 per pound in the prior year period. This corresponds with a 51% gross margin in the first quarter of 2011 versus 50% in the first quarter of 2010.
Gibraltar's copper production and sales volumes for first quarter 2011 were 19.2 million pounds and 17.0 million pounds, respectively. In first quarter 2010, copper production and sales volumes were 23.2 million pounds and 20.5 million pounds, respectively.
During the quarter Taseko Mines announced plans to proceed with a $325-million expansion at Gibraltar. Gibraltar Development Plan 3 ("GDP3") will increase annual production capacity to 180 million pounds of copper.
In April, Taseko Mines completed a public offering of US$200 million aggregate principal amount of senior notes. We intend to use the proceeds primarily to fund GDP3.
In May, Taseko Mines announced an 80% increase in mineral reserves at the Gibraltar mine, adding approximately 1.8 billion pounds of recoverable copper to the previous reserve of 2.5 billion pounds for a total of 4.3 billion recoverable pounds of copper.
1 Adjusted net earnings, operating profit and cash margins are non-GAAP financial performance measures. See pages 15-18 of the MD&A.
Russell Hallbauer, President and CEO of Taseko, remarked "Cash margins continue to be a focus for the Company as we balance stripping requirements with metal production. The site's primary focus has been completion of the SAG mill direct feed system which is now operational and we expect to see increasing mill throughput in the coming months. Unit operating cash costs for the quarter have increased as a result of increased strip ratio, a stronger Canadian dollar, higher consumable costs including diesel, steel, and reagents as well as lower metal production. This is partially offset by significantly improved molybdenum production."
The Gibraltar mine’s first quarter 2011 copper production was 19.3 million pounds, down 17% compared first quarter 2010. First quarter 2011 copper production was hampered by harsh winter conditions in January and February, an unscheduled four-day maintenance down and lower head grade. The Gibraltar concentrator, however, continued to perform well on copper recovery.
Molybdenum production during first quarter 2011 was 316.5 thousand pounds, up 63% compared to the prior-year quarter, largely due to a 71% increase in molybdenum recovery. The recovery increase was a result of operational and technical improvements to the molybdenum separation circuit.
In first quarter 2011, operating cash costs per pound of copper produced averaged US$2.08, a 48% increase over the US$1.41 averaged during first quarter 2010. Operating cash costs were adversely impacted in first quarter 2011 by the higher strip ratio, a reduction in copper production, the strengthened Canadian dollar compared to the US dollar, and increased mining consumables costs. Offsite costs for treatment and refining and transportation increased to US$0.37 per pound of copper produced in first quarter 2011, compared to US$0.34 per pound in the prior-year quarter. These cost increases were partially mitigated by a 77% increase in by-product credits during the first quarter 2011 to US$0.35 per pound of copper produced. By-product credits are comprised of molybdenum and silver sales during the quarter, divided by the total pounds of copper produced during the same period.
To read the full 2011 first quarter results, click here
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