Tuesday Morning news: Taseko, Roxgold, and Endeavour Mining

POSTED ON May 05, 2015 BY James Fraser
CATEGORY Endeavour Mining, Roxgold, Stories, Taseko,

Gibraltar mine of Taseko (Image: Taseko)

A nice little bump in gold this morning to 1197 in early trading. Here are my favourite news releases out this morning with some additional comments on each.

Taseko - (TKO:TSX) - Taseko a copper/moly producer located in British Colombia is out with a new 43-101 updated mine plan at its flagship Gibraltar mine (75% owned). Taseko stock has been crushed from a high of $7 to the current $1.11 in the last five years on declining metal prices and permitting issues with the New Prosperity project but looks to be bottoming.

The big highlight of the new mine plan is that it will reduce the strip ratio by 50%. Average strip ratio decreased to 1.9:1 from 4.3:1 which should significantly reduce costs.

A new resource of 3.3 billion recoverable pounds of copper and 62 million pounds of molybdenum lead to a 24 year mine life. Average annual production is expected to be 138 million pounds of copper and 2.6 million pounds of molybdenum.

Russell Hallbauer, President and CEO of Taseko, stated, "After a year of operating an upgraded and modernized Gibraltar at capacity, we have gained a thorough understanding of Gibraltar's cost structure and capabilities, both in the mine and mill. While our milling costs have declined due to technology enhancements, mining costs have increased from historical levels due to fuel, labour, parts as well as haul distance. The new mine plan takes these factors into account and focusses on reducing tons mined and maximizing profitability on a cost per ton milled basis. The lower strip ratio results in a significant decrease in mining costs and total cost per ton milled, compared to operating at a 0.20% copper cut-off, more than offsetting the reduced average copper grade. To put this in perspective, every point of strip ratio is equal to approximately 31 million tons of waste that does not need to be mined annually, and at $1.85 per ton mined, amounts to roughly $57 million of annual savings. While optimized mine scheduling isn't yet finalized, we expect cost per ton milled (including mining costs, milling costs and site G&A) in the new mine plan to remain at a level similar to today, approximately C$10.00."

The mine plan looks robust to me and at current metal prices and the exchange rate could generate $100 million in annual operating profit. If this can be achieved TKO is a cheap stock with the current market cap being $241 million this morning.

TKO also offers significant leverage to the copper price with a 10% increase in metal prices lifting cash flow by 50%.

Q1 2015 will results will be out on May 14th and I will be on the call to get the latest to find out if Taseko is worth buying at these levels.

May 14, 2015
8am Pacific | 11am Eastern
Webcast Link

Read: Taseko releases NI 43-101 Gibraltar mine plan

Roxgold - (ROG:TSXV) - Roxgold is out with some impressive drill assays from the QV1 target at Bagassi South. The QV1 target is ~1.8 km from the 55 zone where mine construction has commenced and production is expected in Q2 2016.

Highlights:

23.6 grams per tonne gold over 10.9 metres and a second interval of 8.2 grams per tonne gold over 6.0 metres in diamond drill hole YRM-15-DD-BGS-083;
7.5 grams per tonne gold over 10.6 metres, including 22.2 grams per tonne gold over 3.2 metres in diamond drill hole YRM-15-DD-BGS-084;
10.4 grams per tonne gold over 19.4 metres, including 25.1 grams per tonne gold over 7.1 metres in diamond drill hole YRM-15-DD-BGS-085.

"These latest results from Bagassi South indicate mineralization along plunge for an additional 200 metres from our previous drilling," commented John Dorward, Roxgold's president and chief executive officer. "We are encouraged by what we have seen in this program to date, as the grade and width of what we intersected has exceeded our initial expectations."

Further updates on regional exploration and infill drilling at the 55 zone are expected in the next couple weeks.

I like Roxgold as a development company as the 155 zone (under construction) has uber high grade which leads to some of the best economics I have seen. The one item to watch for investors is the election in Burkina Faso in October.

Read: Roxgold Discovers New Mineralized Domain in Latest Drilling at Bagassi South Including 23.6 gpt Gold over 10.9 Metres

Endeavour Mining - (EDV:TSX) - Endeavour is out with 1st quarter results with after tax net earnings of $13 million. A very solid quarter out of Endeavour Mining generating free cash flow of $9.3 million and delivering on all five key objectives for 2015.

EdDV has ~$36.4 million in cash after making a $20 million dollar debt payment yesterday. The debt drawn on the revolving credit facility is now $280 million.

Neil Woodyer, CEO, stated

"For 2015 we have five key objectives: 1) Produce 475,000 to 500,000 ounces; 2) Maintain AISC/oz in the mid-$900s; 3) To be profitable; 4) Use free cash flow to reduce debt; 5) Extend mine life through exploration success.

During the first quarter of 2015 we made strong progress on all five objectives. We are on track with objectives 1, 2 and 3 with first quarter production of 124,000 ounces at an AISC/oz of $946 which resulted in a profitable quarter with net income of $13 million."

I like EVD has a intermediate producer (500,000 a year) but I am not an investor until I continue to see several quarters of free cash flow to help bring down the high debt level.

Haywood has a target of $1.30 EDV shares (high risk).

Read: Endeavour Mining Q1 2015 AISC/oz of $946, Profit of $13m and $20m Debt Payment in April

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This is not investment advice. All facts are to be checked and verified by reader. As always please do your own due diligence.

James Fraser

Mr. Fraser joined CEO.ca in October 2014. He is passionate about the mining industry. His passion led to co-authoring the e-book "Mining Stocks Investor Guide: A Guide to Investing in Mining Companies." He has a finance background and has completed his Canadian Securities Course (CSC) and Conduct and Practices Handbook (CPH). When Fraser is not "digging" up the latest mining stock, he can be found enjoying a wide variety of sports or travelling the world. More →

Twitter: @miningstocks

james@miningstocksguide.com

James Fraser

Twitter: @miningstocks

james@miningstocksguide.com

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