Let's do our own PRNo reason why we can't do our own PR for this company. After all, we own it too. I took a little time to write this up. It honestly reflects my thinking on this company. I might start posting it other places. Feel free to copy and paste, and edit, and post as you see fit. Somebody has to get the word out. It might as well be us. With the effort that we spend talking among ourselves here, we might actually get a more reasonable valuation.
Ten Reasons Why I Bought Taseko Mines Stock and Five Big Risks
- Because the price of copper is going up. Both inflation and demand will inevitably contribute. The EV revolution will demand much more copper as will many other environmentally friendly technologies. You cannot go green without mining more copper. It’s just impossible.
- Because unlike other products, there is always a market for raw materials. The demand might rise and fall, but copper will never sit in factories unsold because a competitor came out with a better widget.
- Because the Gibralter mine becomes quite profitable with higher copper. It costs somewhere around $2 a pound average to mine copper at Gibralter. Gibralter is projected to produce 136 million pounds of copper a year for the next 20 years. Taseko owns 75% of the mine.
- Because the new Florence mine is environmentally friendly, inexpensive, and highly lucrative. This new technology allows the company to mine copper with wells rather than shafts or open pits and it eliminates the smelter process. They will be producing 99% pure copper cathode on site. No trucks, diesel fuel, shovels, blasting, cave-ins, or gaping holes in the earth’s surface. And when the mining is finished 25 years from now, the land will be available to be used for any purpose including farming and residential development. Even with the new financing in place, the cost of production at Florence is around $1.30 a pound. Florence will produce 80-100 million pounds of copper a year for the next 25 years.
- Because even the most conservative estimates for production once Florence is approved are HUGE. Annual profit is projected to be more than the present market cap. This stock is severely underpriced given projected production and profit margins.
- Because the cash and cash flow to build the Florence Project is already in hand.
- Because of the potential of the New Prosperity Mine Project. Since the rejection the project in 2014 its value has been completely priced out of the stock. But recently, Taseko, the First Nations, and the Province of BC are in secret negotiations that could bring on one of the largest gold and copper projects in North America. While there has been a blackout on information coming out of the talks, the tribe recently endorsed Taseko’s application for an extension permit on the property. That has to be a good sign.
- Because Taseko owns and is in the process of permitting the huge Yellowhead copper project that would add 60% more copper production plus gold and silver to the company.
- Because other properties provide for long-term growth. The other properties—Aley and Harmony—add value and potential future development and growth.
- Because Taseko combines all that is best about a raw materials stock and a growth stock in one company.
Five Big Risks
- Falling copper prices. If the price of copper drops significantly, everything changes.
- EPA permit denial for Florence. This is not likely, but it is not in hand yet. The test facility proved the science and the social license to mine is in hand. There is no longer any local opposition. In fact, the locals are overwhelmingly supportive.
- Talks with the FN on New Prosperity fall apart. This would not likely drop the price of the stock, but it would limit the long term story.
- Opposition to Yellowhead starts to happen or difficulties in permitting Yellowhead. There is no sign of this, but this process is in the early stages.
- Continuing poor corporate PR. Company management seems to be good at building mines, but poor with its PR and investor relations. Market value has consistently flown below what the fundamentals would justify. The company also diluted in November without adequately explaining the pricing and purpose to stockholders.
Disclaimer: I own a fairly large position for a retail investor in TGB (roughly 200,000 shares). If you decide to buy in and the stock goes up, I will make money. I am not a professional and I am not intending to give investing advice. I am simply explaining my own actions in a public forum. All the information here is publicly available. Do your own due diligence.