TGB Q2 2024: Sees 110–115M lb Output, Low-Cost $2/Lb Production
- Improving Recoveries: Management expects copper recoveries to improve as operations transition from the transitional oxide ore in the connector pit to the heart of the ore zones, which could boost overall production efficiency.
- Restoration of Throughput: The company is on track to achieve full design capacity with throughput around 85,000 tonnes per day and consistent copper grades, setting the stage for higher production in the back half of the year.
- SX/EW Restart Economics: The economic restart of the SX/EW facility has been triggered by sufficient built-up oxide ore stockpiles, with cash costs estimated at around $2 per pound, indicating potential for additional low-cost copper production.
- Lower Copper Recoveries: Management noted that recoveries have been trending lower due to transitional, more oxidized ore from the connector pit. If this lower recovery trend continues, it could negatively impact overall operating efficiency and margins.
- Labor Disruption Risks: The recent 18-day strike that halted operations demonstrates vulnerability to labor-related interruptions. Any recurrence of such disruptions could further reduce production levels and increase operating costs.
- SX/EW Restart Dependency: The restart of the SX/EW plant is contingent on maintaining a sufficient ore stockpile from the connector pit. Should the ore stockpile or its quality fall short of expectations, the economics of the SX/EW restart might be adversely affected.
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Production Guidance
Q: What assumptions drive production guidance?
A: Management expects 110–115M pounds for the year, supported by ramping throughput near or above 85,000 tonnes/day and steady copper grades. -
SX/EW Costs
Q: What are the anticipated SX/EW cash costs?
A: The restarted SX/EW plant is expected to achieve cash costs around $2 per pound, consistent with the overall operation’s cost structure. -
US Tax Credit
Q: What tax credit magnitude is expected?
A: They project a conservative credit of about $20M based on current spend, with potential upside up to 5× that, pending further guidance. -
SX/EW Restart
Q: What triggered the SX/EW restart?
A: The restart was prompted by enough oxide ore stockpiled from the connector pit, making the restart economically viable. -
Recovery Trends
Q: How will copper recoveries progress?
A: Although recoveries were depressed by transitional ore, improvements are expected as mining moves into the core ore zones. -
Wage & Inventory
Q: What’s the update on wages and finished inventory?
A: The new three-year agreement covers about 550 union employees, and finished goods inventory levels are projected to remain stable.
Research analysts covering TASEKO MINES.