Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Taseko Mines has completed a new development plan and updated study for its Yellowhead copper project, 150 km northeast of Kamloops, British Columbia, adding 100 million tonnes to reserves and improving the economics.
A new technical report pegs pre-production capital costs for an operation with a 25-year mine life at Yellowhead at C$1.3 billion. At an 8% discount rate, the project has a pre-tax net present value (NPV) of C$1.3 billion and an internal rate of return (IRR) of 18%.
The project contains updated reserves of 817 million tonnes grading 0.29% copper equivalent (or 0.28% copper, 0.03 g/t gold and 1.3 g/t silver). The study used a long-term metal price of $3.10 per lb. copper and a $0.80 exchange rate.
“The leverage this mine has to metal prices is huge”
Taseko CEO
In a release, Taseko CEO Russell Hallbauer noted that the updated report improves NPV by C$500 million over a 2014 feasibility study completed by the project’s previous owner, Yellowhead Mining.
“The optimizations and modifications we have made are not only beneficial to the economics of the project but will also improve it from an environmental assessment process standpoint,” Hallbauer said. “The leverage this mine has to metal prices is huge, and with only a 10% increase in these assumptions, the pre-tax NPV climbs to C$2 billion.”
The company now plans a 90,000 t/d operation, up from 70,000 t/d. The new technical report also features an improved water management plan that reduces stored water by 90%.
“While our primary and near-term focus will remain on the advancement of our Florence copper project through to production, we will continue to progress Yellowhead expeditiously as the timing will fit in ideally after Florence copper achieves commercial production,” Hallbauer said. “With the new technical report now complete, our efforts will focus on environmental assessment work, ongoing engagement with local communities.”
Taseko also owns the operating Gibraltar mine and is advancing the Florence copper project in Arizona. In December, it announced it was in talks with the Tsilhqot’in First Nation, mediated by the province, regarding its New Prosperity project in B.C.
Taseko acquired Yellowhead in 2014 in an all-stock transaction valued at C$13 million.
(This article first appeared in the Canadian Mining Journal)
