2. Taseko Mines Limited (NYSE:TGB)
Number of Hedge Fund Investors in Q1 2024: 8
Analyst Average Share Price Target: $3.36
Upside: 52.04%
Taseko Mines Limited (NYSE:TGB) is another Canadian copper producer. The firm’s claim to fame comes from its Gibraltar mine, which it claims is the second largest open pit copper mine in Canada. Its other two copper projects are the Yellowhead mine in Canada and the Florence property in the US. Taseko Mines Limited (NYSE:TGB) is priming itself for future growth, and in March 2024, it acquired an additional 12.5% in the Gibraltar property to own 100% of the site at a price of $117 million to be paid over the next decade. Similarly, the firm kicked off the construction of commercial production facilities at the Florence site this year, and it expects to start copper output from the site in Q4 2025. Through Florence, Taseko Mines Limited (NYSE:TGB) expects to have an annual production capacity of a whopping 85 million pounds and a mine life of 22 years. However, financing for growth isn’t cheap and it necessitates a look at Taseko Mines Limited (NYSE:TGB)’s balance sheet. It has C$1.3 billion in total liabilities and a debt to equity ratio of 1.13 hinting that future debt financing without retiring existing debt might prove to be troublesome. This means that along with copper production and project timeline execution, Taseko Mines Limited (NYSE:TGB)’s share performance is also dependent on its ability to raise capital and manage its debt.
Taseko Mines Limited (NYSE:TGB)’s management remains upbeat though, as it shared during the Q1 2024 earnings call:
We’ve completed a number of key financings in recent months, and we consider the Florence project to now be fully funded.
The remaining project costs can be funded by our available liquidity through the remaining installments coming from Mitsui and of course, cash flow from Gibraltar. Our hedging program has also been extended recently to secure a minimum copper price of $4 a pound for 2025, and that gives us additional protection through the Florence construction period as well. Last but not least, I wanted to make a few comments on our bond refinancing that was just completed in April. We’re very happy with the results and believe it was a significant derisking event for the Company. It was something we wanted to complete this year and bond market conditions were such that it made sense to move forward with the refinancing immediately following our — the announcement of our Gibraltar transaction.
Upsizing the senior notes from $400 million to $500 million provides additional proceeds that can replace more costly bank debt alternatives at Florence, and pushing out the maturity date from early 2026 out to 2030 gives us plenty of time to generate cash flow from Florence and Gibraltar so we can look to delever our balance sheet in the future. And with that, I’ll pass the call over to Bryce.
