At current copper prices, miner Taseko may choose to develop the $230-million commercial production facility at its Florence project, in Arizona, without a joint venture (JV) partner, CEO Russell Hallbauer said on Wednesday.
The company already has most of the required construction funding for the project in hand and with stronger operating cash flows expected from its operating Gibraltar mine, in British Columbia, it may retain 100% ownership of Florence.
“At current copper prices, we are forecasting operating margins of over $200-million for the remainder of 2021, which would put us in a position to fully fund construction of the commercial facility at Florence without a JV partner, if we choose to do,” Hallbauer said.
Copper prices have recovered swiftly since March last year, and are testing decade-high levels owing to recovery in Chinese and the rest of world demand, coupled with continued supply and political disruptions. The metal currently trades at about $4.5/lb, compared with the average LME copper price of $3.86/lb in the first quarter and $2.80/lb in 2020.
Taseko will be able to start construction once it receives the underground injection control permit for Florence. This is currently expected to happen in the third quarter.
“While this permitting process has moved more slowly than expected, we know that it is moving forward and we are closing in on having a fully permitted and financed top-tier copper project,” said president Stuart McDonald.
Taseko has operated a production test facility for the last two years at Florence, demonstrating that the in-situ copper recovery process can produce high-quality cathode while operating within permit conditions.
Florence will produce an average of 85-million pounds of copper over a 21-year mine life, at a total operating (C1) cost of $0.90/lb. At a copper price of $3/lb, Florence will generate an aftertax internal rate of return of 37%, an aftertax net present value of $680-million, at a 7.5% discount, and has a payback period of 2.5 years.
Meanwhile, Taseko reported that it produced 22.2-million pounds of copper in the first quarter, with output impacted by lower mined ore grades from the Pollyana pit. Molybdenum production was 530 000 lb in the first quarter. C1 cash costs were $2.23/lb in the quarter.
Gibraltar produced 123-million pounds in 2020 and is expected to produce 125-million pounds on a 100% basis in 2021.