April 12, 2024

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Pacific Trader: Taseko Mines is trading up on the basics

2 min read

Copper and molybdenum output rose 34 percent at the Gibraltar Mine last year

The stock: With commodity prices going sideways, the only mining companies that are seeing share price gains these days are those that can point to their own performance improvements. Count sometimes maligned Taseko Mines (TSX:TKO) among that cohort. Since hitting a low of $1.46 a share in late October, it’s rebounded 62 percent to $2.36 as of Tuesday’s close (March 12).

The drivers: While most small and mid-cap miners focus on one or two minerals, Taseko has catholic tastes, producing and exploring for copper, molybdenum, gold and even niobium. If the Vancouver-based company has a theme, it’s geographical, as in British Columbia. As 87.5-percent owner and operator of the Gibraltar Mine near Williams Lake, the company is one of the province’s largest employers in the sector. Its development pipeline, moreover, includes the Yellowhead copper project near Vavenby, the Aley niobium project near Mackenzie and, most controversially, the New Prosperity gold-copper project in the Chilcotin, which was twice rejected by the federal government upon environmental review. Much as Taseko has support among job-hungry communities in the Cariboo, it made itself some implacable enemies among First Nations and the environmental community over that one.

But it is growing output at Gibraltar and a slated 2025 start-up at its Florence Copper operation in Arizona, which would be the world’s first greenfield in-situ copper recovery (a process that involves injecting brine into wells and extracting the metal from the fluid solution pumped out again), that has investors excited today. Revenue from Gibraltar, which Taseko acquired for a dollar in 1999 and is now projected to keep operating through 2044, rose 34 percent last year to $525 million and net income, to $83 million or 29 cents a share.

Word on the street: National Bank hiked its price target to $2.50 from $2.25 following the release of fourth-quarter and full-year results last week.

Coming and going: Vancouver-based Cannacord Genuity (TSX:CF) has arranged to borrow $110 million through the sale of convertible debentures, $80 million of which it plans to loan to senior employees for the purpose of buying common stock in the investment bank. Though the firm justified the move in terms of increasing alignment between management and investors, some speculate it seeks to revive by other means a management buyout that failed to garner sufficient support last year.

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