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Taseko (TGB) Inks Deal to Buy Balance Stake in Gibraltar Mine

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Taseko Mines Limited (TGB - Free Report) announced that it entered an agreement to acquire the remaining 12.5% interest in the Gibraltar Mine from Dowa Metals & Mining Co., Ltd. and Furukawa Co., Ltd. This acquisition is expected to boost TGB’s attributable copper production by 14% and provide immediate cash flow advantages.

This acquisition involves an initial CAD$5 million ($3.7 million) payment to Dowa and Furukawa shortly following closing. The remaining cash consideration will be made in annual payments starting in March 2026.  The acquisition price has been set at a minimum of CAD$117 ($86 million) million, payable over a period of ten years, and potential contingent payments depending on copper prices and Gibraltar's cash flow.

Total consideration is capped at CAD$142 million ($104 million), limiting the contingent consideration to a maximum of $25 million. Taseko also has the option to settle the entire amount at any time before 2029 by paying CAD$117 million in total.

In March 2023, Taseko had increased its stake to 87.5% in the Gibraltar copper-molybdenum mine. Located in south-central British Columbia, Gibraltar boasts state-of-the-art facilities with a daily processing capacity of 85,000 tons. It is currently the second-largest open-pit copper mine in Canada and the largest employer in the Cariboo region. Gibraltar mine has an expected average annual copper production of 130 million pounds over the life of the mine.

Taseko recently reported solid fourth-quarter and 2023 results. Adjusted earnings per share were 6 cents in the fourth quarter, which marked a solid improvement from adjusted earnings of 1 cent per share in the year-ago quarter, aided by the solid performance of the Gibraltar mine. In 2023, adjusted earnings per share were 11 cents compared with 1 cent in 2022.  

The upbeat results reflected higher copper sales and an increase in the company’s effective interest in the Gibraltar Mine from 75% to 87.5%.  The mine produced 123 million pounds of copper in 2023 and sold 120.7 million pounds of copper. Annual production improved 26% year over year and also surpassed the company’s guidance. The increased production was credited to enhanced ore grades and recoveries, with the lower benches of the Gibraltar pit delivering the anticipated higher grades and more uniformly mineralized zones.

In 2024, the Gibraltar Mine is expected to continue to benefit from the Gibraltar pit ore, which will be the main source of mill feed for the first half of 2024, before the transition to the connector pit.  In January, TGB had a mill downtime in concentrator #2 for a planned major component replacement, which has been duly completed.

In the second quarter of 2024, the company anticipates concentrator #1 to be shut down for an estimated three weeks for the in-pit crusher relocation and other mill maintenance. Taking into account the additional downtime this year, the Gibraltar mine is expected to produce approximately 115 million pounds of copper.

Price Performance

Shares of Taseko have gained 40.8% in a year compared with the industry’s 4.1% growth.


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Zacks Rank & Stocks to Consider

Taseko currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the basic materials space are Ecolab Inc. (ECL - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Hawkins, Inc. (HWKN - Free Report) . ECL and CRS currently sport a Zacks Rank #1 (Strong Buy), and HWKN carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ecolab’s 2024 earnings is pegged at $6.39 per share, indicating an increase of 22.7% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.7%. ECL shares have gained 45% in a year.

The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $3.96 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 52% in a year.

The Zacks Consensus Estimate for Hawkins’ fiscal 2024 earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The consensus estimate for HWKN’s current-year earnings has been revised 4.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 30.6%. The company’s shares have rallied 70% in the past year.

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