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A key component of Taseko's growth strategy is the expansion and modernization of its 75% owned Gibraltar mine. The goal is to create an operation with a mid-tier cost profile that is able to generate positive cash flow at all points of the copper price cycle.
Mine Expansion
Gibraltar is undergoing a major, multi-phase expansion and modernization program. Over the last two years, approximately $250 million has been invested at Gibraltar in both mining equipment and concentrator upgrades. By the end of 2010, Gibraltar's annual production capacity will increase to 115 million pounds of copper and 1.4 million pounds of molybdenum.
The Phase I & II expansion and modernization programs included the addition of a new 34 foot semi-autogenous grinding (SAG) mill, a complete replacement of the original flotation recovery system as well as a number of downstream upgrades and modifications.
Phase I was completed, on time and on budget, in early 2008 and the new equipment is being commissioned with ramp up continuing through 2009. During the ramp up, production levels are expected to steadily increase with expected annualized capacity reaching 100 million pounds of copper. Total cost for the Phase I expansion was $76 million.Phase II modifications will allow the new SAG mill to process up to its designed capacity of 55,000 tons per day (tpd) by increasing capacity in other circuits of the concentrator. The expansion project will include the addition of an upgraded tailings pumping system, increased regrind capacity, cleaner flotation cells, pressure filters and driers. Phase II is targeted for completion in early 2010. Commissioning and ramp up of Phase II is expected to take place in 2010 until annualized production rates of 115 million pounds of copper are achieved. As of mid 2009, approximately $20 million was left to spend on Phase II.
Extending Mine Life
Over the past three years, Taseko has spent in excess of $20 million to expand Gibraltar's reserves and resources. When Gibraltar was restarted in 2004, the proven and probable reserves were 149 million tons and the mine life was 12 years. Today, the mine life is 25+ years following the most recent reserve update in December 2008.
Gibraltar Reserves and Resources at December 31, 2008
| Category (at 0.20% Cu Cut-off) |
Size (Million Tons) |
Grade | Recoverable Metal | Contained Metal | |
|---|---|---|---|---|---|
| Cu (%) | Mo (%) | Cu (Billions lbs) | Cu (Billions lbs) | ||
| Proven & Probable Reserves | 472 | 0.315 | 0.008 | 2.7 | 3.0 |
| Measured & Indicated Resources | 959 | 0.298 | 0.008 | - | 5.7 |
Operations
The following table is a summary of the operating statistics for Gibraltar Mine:
| Q1 2009 |
Fiscal 20081 |
Fiscal 2007 |
|
| Total tons mined (millions)² | 6.9 | 51.8 | 35.4 |
| Tons of ore milled (millions) | 3.2 | 13.6 | 9.5 |
| Stripping ratio | 1.0 | 2.7 | 2.6 |
| Copper grade (%) | 0.368 | 0.351 | 0.328 |
| Molybdenum grade (%Mo) | 0.010 | 0.009 | 0.011 |
| Copper recovery (%) | 82.3 | 75.8 | 77.5 |
| Molybdenum recovery (%) | 30.8 | 31.8 | 29.6 |
| Copper production (millions lb) | 19.9 | 76.9 | 51.8 |
| Molybdenum production (thousands lb) | 187 | 840 | 580 |
| Copper production costs, net of by product credits³, per lb of copper | US$0.90 | US$1.87 | US$1.03 |
| Off property costs for transport, treatment (smelting & refining) & sales per lb of copper | US$0.28 | US$0.43 | US$0.35 |
| Total cash costs of production per lb of copper | US$1.18 | US$2.30 | US$1.38 |
1 Fiscal 2008 relates to the 15 months ending December 31, 2008.Site Statistics2 Total tons mined includes sulphide ore, oxide ore, low grade stockpile material, overburden, and waste rock which were moved from within pit limit to outside pit limit during the period.
3 The by-product credit is based on pounds of molybdenum and ounces of silver sold. Unit costs were lower in fiscal 2005 because molybdenum prices and pounds of copper produced were higher.
4 Cash costs of production is a non-GAAP measure. This non-GAAP measure is intended to provide additional information to investor and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Cash costs of production is a common performance measure in the copper industry and includes direct cost of operations and related costs through to refined metal.
The Gibraltar mine site covers approximately 109 square kilometres and consists primarily of 251 mineral claims and 30 mining leases. The property hosts resources and reserves in seven separate mineralized zones which has supported mining for most of the past 30 years.
Gibraltar is located in an area with well-developed infrastructure. The property is accessible by a combination of highways and paved roads, and it is close to a rail network that provides service for shipment of copper concentrates through the Pacific Ocean port of North Vancouver. The mine is a 45-minute drive from local communities that provide goods, services and personnel.
Forward Looking Statements
The above information includes certain statements that may be deemed "forward-looking statements". Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the risks inherent in the Company's business, Investors should review the Company's annual Form 20-F filing with the United States Securities and Exchange Commission and its home jurisdiction filings that are available at www.sedar.com.
