Taseko more than doubles value of Yellowhead project near Gibraltar

[Ben Graham]

Taseko Mines (TSX: TKO; NYSE-A: TGB; LSE: TKO) has released an updated technical report for the Yellowhead project in British Columbia that confirms its potential to become a Tier 1 copper asset similar to its Gibraltar mine nearby.

The report, published in compliance with NI 43-101 standards, envisions the Yellowhead as a 90,000-tonne-per-day open pit mine that would run for 25 years, producing 178 million lb. of copper annually at cash costs of $1.90 per lb. Over the first five years, average production could reach 206 million lb. at $1.62 per pound.

The mine’s after-tax net present value, using an 8% discount rate and metals prices of $4.25/lb. copper, $2,400/oz. gold and $28.00/oz. silver., is pegged at C$2 billion, with an internal rate of return of 21%. The initial capital cost is also estimated at C$2 billion, with a payback period of 3.3 years.

Stuart McDonald, CEO of Taseko, says the new technical report “establishes Yellowhead as a world-class copper project in a tier one jurisdiction,” with potential to become one of the largest on the continent.

The economics mark a significant improvement on the previous technical report published in 2020, which showed a C$700 million after-tax NPV and 14% IRR. The new report took into account updated capital and operating cost estimates, while maintaining the same reserve estimate of 817 million tonnes grading 0.29% copper equivalent.

Taseko Mines opened Thursday’s session 3.2% higher at C$4.77 per share, for a market capitalization of C$1.5 billion.

Similar to Gibraltar

The report release comes days after Taseko commenced its environmental assessment process by filing the project description with both British Columbia’s Environmental Assessment Office and the Impact Assessment Agency of Canada.

The Yellowhead project is located approximately 150 km north of Kamloops, BC, within the territory of the Simpcw First Nation. Since acquiring the property in 2019, Taseko said it has worked closely with Simpcw leadership to better understand community priorities and interests and to inform the Yellowhead project description.

“It’s been just six years since we acquired Yellowhead for C$16 million, and we’ve added an incredible amount of value to the project since then,” McDonald said in a press release. “Over the next few years, in parallel with the permitting process, we will also be advancing engineering, community engagement, copper offtake discussions, and project financing initiatives.”

Taseko’s foundational asset, the Gibraltar mine, lies about 300 km to the northwest, and as such, the Yellowhead project would benefit from existing transportation infrastructure.

On its website, the company said the two projects share similar characteristics. For comparison, Gibraltar runs at 85,000 tpd with an estimated average copper production of 130 million lb. annually.