Copper bulls – seemingly rarer by the day – have another pure-play option in London. Taseko Mines (TKO) has crossed the pond from the Toronto Stock Exchange in the hopes of financing its new Florence mine in Arizona.
Taseko is already a producer through its Gibraltar copper mine in Canada, which is forecast to produce just under 60,000 tonnes (t) of the red metal in 2019.
There is a twist in the story, however. The Florence project has a “unique” deposit, according to president Stuart McDonald. It will not be mined through openpit or underground extraction but using a field of wells, into which a solution of 0.5 per cent sulphuric acid is pumped. The orebody is fragmented in such a way it can then be pumped above ground and then processed in a standard plant. Once built, the project would produce around 40,000t of copper a year. This will be the first major copper operation to use the method.
Because of that, Taseko has been running a pilot plant to prove the wellfield concept, which is more common in the uranium sector, and Mr McDonald said this had worked to plan. Florence still needs $227m in financing to be built, however. The company has a two-pronged approach to this, which Mr McDonald said would reduce the risk of dilution for shareholders. Mining projects are usually funded through a debt/equity mix. “We would like to sell 10-20 per cent of the project to joint-venture partner and use that capital towards the buildout,” he said.
This is the same model Taseko used to build the Gibraltar mine, which is now 75 per cent-owned. But even if the company manages to get 10-20 per cent of the project’s net present value of $667m, this would leave another $100m at least to finance. This is where the London listing comes in. “We've seen this kind of trend [of capital moving away from mining] to other sectors, like high-tech or cryptocurrencies or cannabis,” Mr McDonald said.
The Gibraltar mine’s 2018 production of 57,000t put it above Atalaya Mining (ATYM) and Central Asia Metals (CAML) at 45,000t and 12,000t, plus zinc and lead, respectively, in terms of output. Taseko’s cash profits were $112m in 2018, although there has been a decline so far in 2019, with the nine-month figure down 44 per cent on last year.
