Taseko Mines Ltd T.TKO

Alternate Symbol(s): TGB

Metals & Mining Copper

Taseko Mines Limited is a Canada-based copper focused mining company. The Company's principal assets are the 100% owned Gibraltar mine (Gibraltar), which is located in central British Columbia and is one of the largest copper mines in North America and the Florence Copper project, which is under construction. The Company also owns the Yellowhead copper, New Prosperity gold-copper, and Aley niobium projects. The Florence Copper project is located south of Phoenix in the community of Florence, Arizona. The Yellowhead Project is located in the Thompson-Nicola region of British Columbia, approximately 150 kilometers (km) northeast of Kamloops near the town of Vavenby. The Aley niobium project is located in northeast British Columbia. The New Prosperity property is located in south-central British Columbia and hosts one of the most significant copper and gold deposits in Canada. It is also located in an area of cultural significance to the Tsilhqot'in Nation, known as Teztan Biny and Nabas.

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Taseko Mines Ltd

Bullboard Posts

Post by gheetsmithon Mar 30, 2017 10:47pm

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Post# 26056051

Mine Production Flat

The disruptions have helped to put us in a deficit situtation.
If we get a couple more solid quarters under our belt we should see the share price gain another buck. Should be good for copper prices over the next couple of years.......got to make hay while the sun shines.

By Shuli Ren

UBS thinks copper prices can hit $3 per pound this year, a good 14% above the spot price of $2.63 per pound and 18% above street estimate of $2.54 per pound.

Copper demand in China will grow by 6.1% this year thanks to the booming property market. In the first two months of 2017, property sales jumped 25% from a year ago. Analyst Daniel Morgan wrote:

We estimate the property sector accounts for ~23% of China’s copper demand. So incorporating better assumed property activity has lifted our China copper demand forecasts to +6.1% (from +4.8%) & lifted our assumed copper deficit for 2017e to ~700kt (from 550kt). Property momentum will also likely sustain fit-out demand in the appliances & vehicle subsectors (~25% of demand). Appliance production has been healthy, with A/C production running at +13%y/y for 2016H2, while vehicle sales for Jan&Feb-17 are +9%y/y.

Meanwhile, on the supply side, there are plenty of disruptions. UBS wrote:

We model a 5% disruption allowance on mine supply in line with historical averages (but the range is 3-8%). This equates to factoring in around 1Mtpa of production to be lost in 2017e or 250kt/qtr. Disruption is forecast to equal new supply growth such that mine supply overall is flat.

As of now it appears 2017Q1 has been a very disrupted quarter with major mine outages of Escondida (1.2Mtpa; out since 9-Feb-17 due to strike),Grasberg (~500ktpa; concentrate shipments ceased 12-Jan-17 due to export permits) & Cerro Verde (~500ktpa; a strike is looming now). These together, we estimate has cause a ~250kt of lost production to date in 2017Q1.

Export shipments from Chile are ~200kt lower in Jan&Feb-17 than pcp. Escondida only accounts for ~60kt of lost production so far, so lower production here could be a combination of other mines. Note Grasberg is an Indonesian mine & Cerro Verde is in Peru.

There has also been bad weather in Peru which has taken out a major rail-line which initial reports suggest will take 15-days to fix. Volcan, a zinc/silver miner has issued a force majeure notice to customers. We have heard but not confirmed that a major copper mine is also impacted.

As a result, UBS sees a supply deficit from 2017 to 2019. (See chart)

: UBS sees copper supply deficit over the next three years; UBS

Given its bullish commodity outlook, it should be no surprise that UBS likes copper miners’ stocks too. The bank has a buy rating on Southern Copper (SCCO). Grupo Mexico(GMEXICOB.Mexico), Oz Minerals (OZL.Australia), KAZ Minerals (KAZ.UK) and Glencore(805.Hong Kong/GLEN.UK).