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« Hecla Mining Company | Main | Progress as of 04 July 2006 »
Tuesday
Jul042006

Taseko Mines Limited

Taseko Mines Limited



This is a diversion from the norm for us as this company generates its cash from Copper and Molybdenum mining. However there is a gold kicker to it, which adds some extra spice. Taseko Mines Limited is traded on the TSX as TKO and on the AMEX as TGB.

Taseko is part of the Hunter Dickinson group who has an enviable track record. The function of Hunter Dickinson is to provide a complete service that encompasses geology, finance, investment and guidance on government and regulatory affairs. We will probably cover Hunter Dickinson more fully in a future article.

Second quarter results for Taseko showed that they had generated an operating profit in the order of $7.4 million, mainly from their Gibraltar facility in British Columbia. The company intends to spend $62 million on an expansion programme at this mine in order to increase production from 70 million to 100 million pounds of copper per year. This tells us two things; firstly that they are solvent and have good cash flow and secondly that they have the funds to expand. The best mining story in the world cannot be a success without the funding to exploit the situation.

Taseko also owns a 100% interest in the Prosperity mine, which is also located in British Columbia, Canada. A lot of work has already been carried out in terms of exploration, planning, engineering, etc., with the indications that this is a large Copper and Gold deposit. By early 2007 an Environmental Impact Study, which is well on the way, will be more or less complete setting the stage for production.

Looking longer term they also have the Harmony project which is located on Graham Island, British Columbia, Canada. This has a large gold deposit with further investigation needed to establish the full extent of the total resources.

Geopolitically we consider Canada to be one of the safest places to conduct mining exploration.

Taseko has a market capitalisation of $288 million and a P/E ratio of 8.18. Its stock price has recently dropped in line with the market sell-off from approximately $3.90 to $2.10 per share and closed yesterday at $2.78. We are buyers at this price and expect this recovery to continue and to beat its previous highs in the next twelve months or so.

04 July 2006

Taseko Chart

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