Building Value Through Operating and Developing Major ... · PDF fileThrough Operating and...
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Building Value Through
Operating and Developing
Major Mining Projects
December 2013
Forward Looking StatementSome of the statements contained in the following material are "forward‐looking statements". All statements in this release, other than statements of historical facts, that address estimated mineral resource and reserve quantities, grades and contained metal, and possible future mining, exploration and development activities, are forward‐looking statements. Although the Company believes the expectations expressed in such forward‐looking statements are based on reasonable assumptions, such statements should not be in any way construed as guarantees of future performance and actual results or developments may differ materially from those in the forward‐looking statements. Factors that could cause actual results to differ materially from those in forward‐looking statements include market prices for metals, the conclusions of detailed feasibility and technical analyses, lower than expected grades and quantities of resources, mining rates and recovery rates and the lack of availability of necessary capital, which may not be available to the Company on terms acceptable to it or at all. The Company is subject to the specific risks inherent in the mining business as well as general economic and business conditions. For more information on the Company, Investors should review the Company's annual Form 40‐F filing with the United States Securities Commission at www.sec.gov. and its Canadian securities filings that are available at www.sedar.com.
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The Taseko Advantage
Financial Strength
Recently CompletedMill Expansion (2013)
Stability
Average annual copper production (LOM) nearly doubled to 165 million lbsAnnual molybdenum production increasing to 2.5 million Three‐year payback with 35% IRR
C$80 million cash and equivalents at September 30/13YTD 2013 operating profit* of $52 million
Major Producing Copper Mine Provides Strong Cash Flow
Assets located in British Columbia; a low risk, low taxation jurisdictionExperienced, operations‐focused management teamH2 2013 hedged copper revenue minimum at US$2.75/lb; H1 2014 ‐ 13.5 million pounds of copper at US$3.00/lb
DiversifiedProject Pipeline
Project pipeline of 100% owned, near‐term gold, copper and niobium projects provide strong upside
Operating the second largest open pit copper mine in Canada and fourth largest in North AmericaIncreasing Production 4.1 billion lbs of recoverable copper and 60 million lbs of molybdenum25 year mine life
*Before depletion and amortization.
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Diversified Asset Base
Aley (Nb)Metallurgical testwork being completedFeasibility Study complete in 2013
Gibraltar (Cu‐Mo)World class, modernized, open pit mine165 M lbs annual production25 Year Mine life
New Prosperity (Cu‐Au)Canadian Environmental Assessment Panel Review Completed in October 2013Decision expected in Q1 2014
BritishColumbia
Gibraltar
New Prosperity
Vancouver
Williams Lake
Aley
Mackenzie
Harmony(Gold)
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Gibraltar Copper/Moly Mine
Location: 65 km north of Williams Lake, British Columbia
Ownership: 75%
Mineral Reserves:
4.1 billion pounds recoverable copper60 million pounds recoverable molybdenumReserves Update (Dec 2012: 770m tons at 0.34% copper equivalent*
Mine Type: Open‐pit, Copper‐Moly Porphyry, average annual copper production (LOM) 165 million lbs
Mine Life: 25 years
*Assumed metal prices of: Cu US$2.25/lb; Mo US$16.00/lb
Canada’s Second Largest Open‐Pit Copper Mine
Originally built in 1971 by Placer, Taseko purchased mine in 1999 while on care and maintenance. Restarted in 2004
Exploration drill program increased reserves and extended mine life
$700 million capital investment program commenced in 2006, completed in mid‐2013
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Gibraltar Copper/Moly MineGDP3 – Completed On Time and On Budget
50% capacity increase from construction of a new concentrator and molybdenum plantMine now feeds two independent copper concentrators, providing increased operational flexibility and synergiesSimple payback of three years, based on a C$1.50/lb margin 35% IRRLow capital intensity ‐ $10,800/ton of installed capacity (compared to $15,000+ for other comparable projects)
34’ SAG Mill 20’ Ball Mill 160m3 Float Circuit
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Gibraltar Copper/Moly MineIncreasing Production Led by Continuous Investment
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25
50
75
100
H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 H1 12 H2 12 H1 13 Q3 13 October
Daily M
ill Throu
ghpu
t (00
0s Ton
s)
Capacity per Calendar Day
Tons Per Operating Day
Tons Per Calendar Day
$76 million25%
$325 million+55%
$224 million+20%
101,000 / Operating Day
91,500 / Calendar Day
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Taseko’s Growth Strategy
Use free cash flow generated by Gibraltar to advance near‐term projects:
Disciplined Investments in Diversified Project Pipeline
• 13.3 Million ounces of Gold• 5.3 billion pounds of Copper• ~540,000 ounces gold eq. annual production• Located in British Columbia• Construction ready in 2015, pending federal
government approval
$2.3 billion NPV
• 2nd largest niobium deposit in the world• 739 million kilograms contained niobium• Estimated 12 million pounds of annual
niobium production• Located in British Columbia• Environmental assessment underway
$350+ million annual revenue
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New Prosperity
* Based on 6 months production** Based on long‐term Au price US$1000/oz, Cu Price US$2.75/lb
Yr 1* Yr 2 Yr 3 Yr 4 Yr 5 Average
Gold (ounces) 160,000 300,000 325,000 275,000 305,000 300,000
Copper (thousands, pounds) 75,000 130,000 130,000 120,000 120,000 130,000
Location: 125 km south west of Williams Lake, British Columbia
Ownership: 100%
Mineral Reserves:7.7 million ounces recoverable gold3.6 billion pounds recoverable copper
Mine Type: Open‐pit, 70,000 tpd mill throughput
Mine Life: +20 years
Life of mine average annual production ~540,000 gold eq. ozs**
5‐year production profile
One of the Largest Gold/Copper Porphyries in the World
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New Prosperity
Economics
Revised Economic Study completed in January 2011Preliminary capital cost estimate of C$1 billion (excluding mining equipment)Operating cost of C$8.35 per tonne milledTotal cash costs of negative US$125/oz au, net of BPCs at US$2.50 cu
Net Present Value (5% discount rate)
@ Long term pricing* – $2.3 billion@ Current spot pricing – $3.8 billion
*Forward Cu Curve first 3 years, $2.75/lb LT, $1,200/oz Au
Robust Economics
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New ProsperityEnvironmental Assessment Review
Taseko submitted Environmental Impact Statement (EIS) on September 20, 2012EIS determined sufficient on June 20, 2013Panel Hearings held July 22 – August 23, 2013Panel Report issued on October 31, 2013Taseko commences federal judicial review on December 2, 2013
Next steps:
Federal government decision (expected in Q1 2014)
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New ProsperityOctober 31 Panel Report
Panel relied on a Natural Resource Canada (NRCAN) assessment of the plan that was NOT Taseko’s plan.
Natural Resources Canada based their opinion on the wrong TSF design, not on the TSF design proposed by Taseko for New Prosperity.The Panel then relied on these flawed opinions and errors to arrive at flawed findings of significant environmental effect — on fish and fish habitat, wetlands and aboriginal interest in the Fish Lake area.Taseko was subsequently asked by the CEAA to provide further specific information on the matter.
Taseko provided the correct information to the Minister of Environment (November 8) and CEAA (November 15) to ensure that New Prosperity is evaluated in a fair and transparent manner.
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New ProsperityThe Mistake and the Reality
NRCAN assumed there was no low permeability basin liner for the TSF and that seepage would therefore readily leak into more pervious overburden and fractured bedrock.The New Prosperity TSF not only includes a continuous low permeability liner, but that the liner would meet a hydraulic conductivity design specification to restrict seepage losses consistent with the results of seepage modeling.
The Issue Seepage rates and water quality are two determinants in predicting significance of environmental impacts on fish and fish habitat, wetlands and aboriginal interest in the Fish Lake area.The Panel relied on the faulty opinions of NRCAN (seepage rates based on the wrong design) in concluding significant environmental effects.
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Aley Niobium Project
Location: Northern British Columbia
Ownership: 100%
Mine Type: Open Pit, 10,000 tpd mill throughput
Mine Life: +20 years
Accretive Development Opportunity
Project Highlights739 million kilograms of contained niobium*2nd largest niobium deposit in the worldOpen pit, bulk mining methodsEstimated annual production of 12 million lbs of niobium, generating revenue of ~$350‐$400 million
$25 million spent (expensed) from 2011‐2013Road constructionMetallurgical testworkEngineering on minesite components, tailings storage facility and transmission lineEnvironment baseline studies
* 285 million tonne M&I resource grading 0.37% Nb2O5 (at a 0.20% Nb2O5 cut‐off)
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Aley Niobium ProjectNiobium
Niobium Benefits in Steel
Specifically used in manufacturing high strength, low alloy steelsGreen technologies, turbines, aerospace, automobile steels, oil and gas
Global annual consumption of ferro‐niobium is 210 million lbs/yearGrowing at 5‐7% per year
Current pricing of FeNb is $40/kg3 producers worldwide: CBMM, Brazil; Anglo American, Brazil; IAMGOLD, Canada
$9 of Niobium used in a Car
100 kg Weight Reduction 5% Fuel Efficiency Improvement
= =
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Highly Levered to Copper
*Source: Dundee Capital Markets, August 8, 2013
“Taseko is the most copper‐levered stock in our universe. For a $0.25/lb increase in our long‐term price of $2.75/lb, TKO exhibits a 23% increase in LOM EBITDA. While TKO remains best‐suited to benefit from appreciating copper prices, the company is also protected on the downside with its low‐cost hedging strategy.”
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Significant Intrinsic Value
Asset Valuation ($m)Mineral AssetsGibraltar – After Tax (75%) $ 1,000 Prosperity – After Tax (100%) $ 2,320 Aley (100%) $ 270 Harmony (100%) $ 195 Mineral Assets Total $ 3,785 Financial AssetsCash & Cash Equivalents $ 80 Long-term Debt $ (252)Financial Assets Total $ (172)TOTAL NET ASSET VALUE $ 3,613
Shares outstanding (millions) 192.8NAV/ share ($C/share) $ 18.74
Valuation Metric Assumptions:> Gibraltar: discount rate of 8%, after completion of GDP3; Forward Cu Curve first 5 years, $2.75/lb LT> New Prosperity: discount rate of 5%; Forward Cu Curve first 3 years, $2.75/lb LT, US$1,200/oz Au> Aley: US$1.14 kg/Nb, in situ value> Harmony: US$50/Au. oz, in situ value
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Appendix
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Gibraltar ‐ One Mine, Two Concentrators
54”x74”PrimaryCrusher
34’SAG Mill
20’Ball Mill Rougher Flotation – OK160 Cells
Mo Separation
Regrind –Tower Mill
34’SAG Mill
Bal
l Mill
Bal
l Mill
Bal
l Mill
Bal
l Mill
Bal
l Mill
Bal
l Mill
Distributor
Cleaner Cells – OK20 Cells
Mo Separation
Regrind –Tower Mill
60”x89”PrimaryCrusher
Rougher Flotation – OK160 Cells
Cleaner Cells – OK20 Cells
Concentrator #155,000 tpd
Concentrator #230,000 tpd
Copper Concentrate
Molybdenum Concentrate
Copper Concentrate
Molybdenum Concentrate
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Gibraltar Copper/Moly MineParticipation & Cooperation Agreement with Williams Lake Indian Band
The purpose of the agreement is to enhance understanding, communication and cooperation between the parties
Aligned interests will ensure Gibraltar continues to generate local value and opportunity
Agreement includes education and economic development initiatives
Provides employment and training opportunities for Williams Lake Indian Band members
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Aley Niobium ProjectExploration Agreement with Tsay Keh Dene
Foundation for long term cooperation and mutual benefit for Tsay Keh Dene and Taseko
Agreement supports Taseko’s exploration program
Provides employment and training opportunities for Tsay Keh Dene members
Environmental protection through cooperative design and environmental management monitoring programs
Provides a framework and commitment to develop a Comprehensive Cooperation and Benefit Agreement for development of mine
Enhance operating margins with profit improvement program
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New ProsperityRevised Project Layout (January 2011)
Tailings Facility
Fish Lake
Open Pit
Ore Stockpile
Plant SiteOverburden and Rock Stockpile
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Key Accomplishments
Apr 2013 First concentrate produced from Gibraltar concentrator #2
Apr 2013 Taseko signs Participation and Cooperation agreement with Williams Lake Indian Band
Dec 2012 Gibraltar Mine signs long‐term labour agreement
Nov 2012 2012 Q3 gross profit of $12 million
Oct 2012 Gibraltar receives the award for Metal Mine Reclamation from the British Columbia Technical and Research Committee on Reclamation
Sept 2012 New Prosperity Environmental Impact Statement is submitted to Federal Review Panel established for the environmental assessment of the project
May 2012 Agreement reached with the Tsay Keh Dene to support the exploration program and environmental studies at Aley
Mar 2012 Aley resources increased and upgraded to a Measured and Indicated Resource of 286 million tonnes with an average grade of 0.37% Nb2O5 (0.20% COG)
Dec 2011 2011 gross profit of $86.3 million from production of 82.9 million lbs of copper and 1.3 million lbs of molybdenum
Nov 2011 New Prosperity enters into Federal Environmental Assessment process
May 2011 Gibraltar’s reserves increase by 80%, to 802m tons
April 2011 Issues Senior Notes for total proceeds of US$200m; due in 2019 and have an annual interest rate of 7.75%.
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Share Structure
Cash on Hand: C$80 million (September 30, 2013)
Listed: TSX; TKO / NYSE MKT; TGB
Indices:S&P/TSX Composite : S&P/TSX Small CapS&P/TSX Global Mining : S&P/TSX Global Base Metals
Shares Outstanding: 192.8 million
Market Capitalization: ~$400 million
52 Week High/Low: C$3.48/C$1.88; US$3.53/US$1.80
Analyst Coverage:
Scotia Capital, Raymond James, National Bank, CIBC, Canaccord, Jennings Capital, Paradigm, TD Newcrest, Cowen, PI Financial, Laurentian Bank, Desjardins, GMP, Dundee
Target Range: $2.50- $9.00
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Experienced Management TeamRussell Hallbauer, P. Eng ‐ President & CEO and Director – Mr. Hallbauer is a professional engineer with over 35 years of mining experience. He has a strong background in open pit and underground mining, overseeing operating joint ventures and revitalizing mines to profitability.
John McManus, P. Eng ‐ Senior Vice President, Operations – Mr. McManus is a professional engineer who has worked in the BC mining industry for over 30 years. He has extensive experience in mine operation, mine engineering and environmental management.
Stuart McDonald – CFO – Mr. McDonald is a financial executive with over 19 years of professional experience in mining finance, corporate development, treasury management, and financial reporting. He has held a number of senior financial positionsin the mining industry including Chief Financial Officer of Quadra FNX Mining Ltd.
Ron Thiessen, CA ‐ Chairman – Mr. Thiessen is an accredited public accountant in Canada. For over 25 years, he has concentrated on the development of venture capital financing for emerging public and private companies. He is a corporate officer and director of several publicly traded exploration and development companies.
Brian Battison ‐ Vice President, Corporate Affairs – Mr. Battison is a public affairs specialist with over 25 years of experience in policy development, issue management and communication in both the private and public sectors. He has been a senior political and policy advisor in BC and has served as Interim President & CEO of the Mining Association of BC.
Scott Jones, P. Eng ‐ Vice President, Engineering – Mr. Jones has over 25 years of experience in the mining industry, including property valuations, mining feasibility studies and technical engineering support as well as 10 years in open pit operations and exploration in BC and the Yukon.
Dave Rouleau, Eng ‐ Vice President, Operations – Mr. Rouleau has over two decades of experience in the mining and oil and gas industries. He has extensive experience in mine operations and engineering in British Columbia and Alberta.
Robert Rotzinger, P. Eng – Vice President, Capital Projects – Robert is a mechanical engineer and has worked at the Gibraltar Mine since 1994 where he has taken on increasingly senior positions. He has been tasked with the management of diverse engineering, environmental, metallurgical and mining initiatives, such as the Phase I and Phase II Gibraltar Expansions and the GDP3 Project.
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Experienced Management Team
Brian Bergot ‐ Director, Investor Relations – Mr. Bergot has over 20 years of experience in the natural resources sector, holding a number of corporate and operational roles, the last ten years of which have been focused in the investor relations field.
Tom Broddy ‐Manager, Engineering – Tom is a mining engineer with more than 19 years of experience in the mining industry. Prior to joining Taseko in 2006, he was Manager of Container Operations at Centerm container terminal in the Port of Vancouver. He spent 16 years at the Bullmoose and Quintette coal mines and has experience in mine engineering, blasting, pit operations and terminal management.
Greg Yelland, P. Eng ‐ Chief Engineer – Greg is a Mining Engineer with over 30 years experience in the Mining Industry, primarily in the area of mine engineering and mine operations. He has worked and consulted on projects and operations in South Africa, Zambia, United States and Canada. He has experience in underground gold , chrome and platinum mines as well as open pit copper, cobalt, coal and industrial minerals.
Andy Yu ‐ Corporate Controller – Andy Yu is a Chartered Accountant, a Certified Public Accountant, and an EMBA Candidate (Simon Fraser University) with more than ten years of experience in the mining industry. He has been with Taseko since 2009 in various finance roles such as the Manager of Financial Reporting and the Manager of Financial Planning and Analysis. Prior to joining Taseko, he was the Manager of Financial Reporting at Hunter Dickinson Inc., and an Audit Manager at PwC .
Keith Merriam, P. Eng ‐Manager, Process Engineering – Keith is a P.Eng. and an Extractive Metallurgist with over 15 years experience in the Mining Industry, primarily in the area of Mineral Processing. He has worked primarily in technical, commissioning and operational roles, gaining experience in a variety of areas and taking on increasing levels of responsibility.
Katherine Gizikoff ‐ Director, Government and Environmental Affairs – Katherine is a professional agrologist with 28 years experience at coal and metal mines in Western Canada. Prior to joining Taseko in 2007, Katherine was consulting, providing environmental management, reclamation, research, and permitting services for the mining industry in BC. Katherine has extensive experience with government‐industry committees, facilitation, community liaison and consultation.
Tomas Alba ‐Manager, Marketing and Logistics – Tomas is an Industrial Engineer with a graduate degree in Transport and Maritime Studies with more than 20 years of experience in the mining industry. Prior to joining Taseko in June 2011, he was Marketing and Logistics Manager at Farallon Mining. He also spent more than 10 years working for Carbocol, Colombian coal mining industry, where he held progressively responsible roles up to and including Director of General Sales.
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Reserves & ResourcesMineral Reserves @ C$5.50 NSR/t Cut-Off1
Size M Tonnes
Grade Recoverable Metal
Contained Metal
Au (g/t)
Cu (%)
Au (M oz)
Cu (B lb)
Au (M oz)
Cu (B lb)
P&P reserves 830 0.41 0.23 7.7 3.6 11.0 4.2
M&I Resources 181 0.40 0.30 - - 2.3 1.1
Total 1,011 0.41 0.24 - - 13.3 5.3
Category (at 0.20% Cu Cut-off)
Size(M
Tons)Grade
Recoverable Metal
Contained Metal
Cu (%) Mo (%) Cu (B lbs) Cu (B lbs)
P&P Reserves 770 0.301 0.008 4.1 4.6
M&I Resources 919 0.301 0.008 - 5.5
Category (at 0.20% Nb205 Cut-off)
Size(M
Tonnes)Grade
Contained Metal
Nb205 (%) Nb (M kgs)
M&I Resources 285 0.37 739
New ProsperityThe mineral resource and reserve estimations were completed by Taseko staff under the supervision of Scott Jones, P.Eng., Vice-President, Engineering and a Qualified Person under National Instrument 43-101. Mr Jones has verified the methods used to determine grade and tonnage in the geological model, reviewed the long range mine plan, and directed the updated economic evaluation. The estimates for the reserves used long term metal prices of US$1.65/lb for copper and US$650/oz for gold and a foreign exchange of C$0.82 per US dollar.
GibraltarThe resource and reserve estimation was completed by Gibraltar mine staff under the supervision of Scott Jones, P.Eng., Vice President, Engineering and a Qualified Person under National Instrument 43-101. Mr Jones has verified the methods used to determine grade and tonnage in the geological model, reviewed the long range mine plan, and directed the updated economic evaluation. The estimates used long term metal prices of US$2.25lb for copper and US$14.00/lb for molybdenum and a foreign exchange of US$0.85/C$1.00. Reserves and Resources were updated as of Dec 31/12.
AleyThe 0.20% Nb2O5 cut-off assumes a niobium price of US$50/kilogram and a 50% process recovery rate. G & A, processing and ore mining costs were assumed to be US$30/tonne milled plus waste mining costs of US$2.00/tonne. A 45° pit wall slope was generated to constrain the resource within the block model.The resource estimate was prepared by Ronald G. Simpson, P.Geo. with Geosim Services Inc., a Qualified Person independent of Taseko.
Note: A technical reports have been filed on www.sedar.com.