Taseko raises additional US$100M for Florence copper project

Taseko Mines (TSX: TKO; NYSE: TGB) has secured two additional financing deals together worth US$100 million for its Florence copper mine under construction south of Phoenix, Ariz.

Tarus Mining Royalty Fund will contribute US$50 million toward a royalty, which will consist of 1.95% of the gross revenue from the sale of all copper from Florence for the life of mine, Taseko said in a news release on Monday. 

Société Générale will provide a US$50 million senior secured debt facility. It will run for five years from the date of closing, with no scheduled principal repayments until the maturity date when any outstanding amounts will be repayable. The facility will have a first lien charge over the Florence assets and an unsecured guarantee from Taseko until completion.

Taseko President and CEO Stuart McDonald said in the release the royalty and facility payments complement the commitments from Mitsui and Bank of America made last year.

“A total of US$175 million from these four well-regarded industry participants is a strong endorsement of Florence Copper’s technical merits, attractive economics, and favorable environmental attributes,” he said. 

BMO Capital Markets metals and mining analyst Rene Cartier said in a note on Monday that the financing options sought by Taseko are generally in line with expectations, adding that the announcement is another de-risking event before construction begins and supports Taseko’s efforts to work towards producer status. 

Cartier gave Taseko shares an outperform rating and a target price of $2.75. Its shares traded at $1.82 on Monday afternoon in Toronto, valuing the company at $525.4 million. They traded in a 52-week range of $1.45 and $2.53. 

The financing news comes less than one week after the company said it had received the final underground injection control (UIC) permit for the project from the U.S. Environmental Protection Agency, giving Taseko a “clear line of vision to commercial production,” said McDonald.

Previous owners spent US$135 million at Florence, and Taseko has spent a further US$165 million since 2014. All the major infrastructure including power, transportation, road and rail are in place. The project is built with in-situ recovery (ISR) rather than conventional open pit or underground methods. First copper will be produced late next year or in early 2025.

The NI 43-101 report of March 2023 detailed a 22-year mine life with an annual production capacity of 85 million lb. of copper. When the report was written, there remained US$232 million remaining to be spent to reach commercial production. Life of mine operating costs will be US11¢ per lb. of copper produced.

Florence hosts total proven and probable reserves of 290.2 million tonnes grading 0.36% copper. The reserves are contained within the measured and indicated resources of 329.2 million tonnes grading 0.35% copper. An inferred resource of 38.1 million tonnes at 0.32% copper has also been outlined.