Taseko advances Fish Lake project

With more than $7 million in working capital and no debt, Taseko Mines (VSE) is forging ahead with development of its Fish Lake deposit, southwest of Williams Lake, B.C.

At the recent annual meeting in Vancouver, Secretary Douglas Forster said he hopes potential buyers will be attracted by a planned feasibility. The company also plans to apply for production permits.

Since no additional funding is required for the studies, Forester does not anticipate further dilution of shares from the current fully diluted 10.68 million.

Under an option deal with Cominco (TSE), Taseko is to manage the project until May 31, 1995, at which time it will revert to Cominco with Taseko retaining a 20% net profits interest.

If a sale can be arranged before the deadline, Cominco will receive 40% of the proceeds to a maximum of $48 million.

Given Taseko’s current market price of about $12.50 per share and its 10.68 million fully diluted shares, the underlying value of Fish Lake is quoted at about $182 million.

When asked, at the annual meeting, whether there are any potential buyers, Chairman Robert Hunter said a number of major companies have their eyes on the project. The company has also heard from Pacific Rim smelter groups interested in securing concentrate supplies.

Forster expects more interest from potential buyers once the feasibility is finished.

A recent estimate by California-based Mineral Resources Development puts preliminary minable reserves at about 895 million tons grading 0.24% copper and 0.013 oz. gold per ton with an overall strip ratio of about 2.11-to-1. Additional metallurgical tests have improved projected concentrate grades to 26% from less than 22% copper, Forester said.

The testing used a 5-ton sample extracted through HQ core drilling from three different horizons in the deposit, including surface to about 650 ft., 650 ft. to 1,300 ft., and 1,300 ft. to 2,000 ft.

Previous testing used a one-ton drill core sample which, because it had been stored for more than a year, was weathered and oxidized. The sample was, therefore, not representative of the deposit, Forester said. Recoveries based on a head grade of 0.23% copper and 0.014 oz. gold average about 88% for copper and 74% for gold. The annual projected output of a 66,000-ton-per-day operation is about 95 million lb. of copper and 254,000 oz. of gold.

The preliminary capital cost for such a project would be in the order of $440 million, Forester said.