Taseko posts $24.4 million in earnings

Vancouver — Strong copper and molybdenum prices propelled Taseko Mines (TKO-V, TGB-X) to after-tax earnings of $24.4 million (or 23 per share) in fiscal 2005.

The company’s sole producer, the open-pit Gibraltar mine located near Williams Lake in south-central British Columbia, posted revenues of $71.9 million for copper output, realizing an average of US$1.48 per lb. for the metal, and an additional $15.7 million from molybdenum sales that averaged US$31 per lb.

Gibraltar, which is operated through a joint-venture agreement with Ledcor CMI, restarted production in late 2004.

Mining during 2005 continued solely from the stage 4 extension stepback at the Pollyanna pit, where 11.2 million tonnes averaging 0.31% copper and 0.017% MoS2, slightly above forecast grades, were mined with a stripping ratio of 2.31:1.

Metal recoveries fell short of forecast levels at 76.2% for copper and 23.1% for molybdenum, 5% and 35% below expected returns, respectively. Taseko explained the lower copper recovery as a result of ore variability and elevated secondary mineralization levels; moly production was down due to delays in the startup of the new circuit. Accordingly, overall production came in at 54.8 million lbs. copper, 7% below forecast, and 427,000 lbs. molybdenum, 20% lower than expected.

Copper production costs were pegged at US87 per lb., net of molybdenum credits. Treatment and transportation costs came in at US28 per lb. for a total cash cost of US$1.15 per lb.

Geological and economic review of the deposit has expanded previously defined pits in the mining plan, increasing proven and probable reserves by 30% to 176 million tonnes grading 0.31% copper and 0.01% molybdenum using a 0.2% copper cutoff. In addition, Gibraltar holds measured and indicated resources of 557 million tonnes of 0.28% copper and 0.008% molybdenum.

Taseko is also updating a feasibility study on building a copper refinery at Gibraltar. The previously visited proposal would see a hydrometallurgical copper refinery built, potentially producing cathode copper on-site and reducing concentrate shipment costs. Savings have been estimated at about US20 per lb. of copper produced.

The company forecasts 2006 production at 60.1 million lbs. copper and 874,000 lbs. molybdenum.

Gibraltar was originally built by Placer Development, a predecessor to Placer Dome (PDG-T, PDG-N), in 1971. The mine operated for 27 years, the last two under Boliden Westmin, before closing in 1998 due to low copper prices. Placer initially mined higher-grade sections of the deposit allowing it to pay back development costs rapidly, in less than three years. Historical production, until 1998, was almost 1.9 billion lbs. copper, 20 million lbs. molybdenum plus 85 million lbs. cathode copper from 305 million tonnes of ore milled.

Taseko posts a $145-million market capitalization based on its 103.5 million shares outstanding and recent $1.40-per-share trading level.