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Taseko Mines Ltd. Message Board

  • patience_always_wins patience_always_wins May 6, 2005 11:15 AM Flag

    Highlights from BI Research

    Highlights from the May 3 BI Reseach TGB update:

    On financing�
    He doesn�t think financing will be done near term. The Company estimates that it would finance the copper refinery 75% with debt and 25%. . These percentages were also mentioned in a recent Raymond James recommendation of Taseko (dated 4/29). Note that interest payments during construction are capitalized, not expensed. The Province, which wants the jobs and commerce, may help with financing as well, presumably at a favorable interest rate.

    He believes if copper averages $1.42 and the Moly price averages $28 this year, the company will earn $30 to $35 million in cash profit for the YEAR ahead. That itself would go a long way to paying for this. Furthermore, it is not unreasonable to think that during the next TWO years the Company could pay for half the project, or more, this way. That said, Raymond James just projected C$59 million cash profit for calendar 2005 ($48 million US). Actually taking 2005 and 2006 together and conservatively projecting a decline in commodity prices in 2006, the total cash earnings for the 2005 and 2006 in the report were projected at C$89 million. The cost of the refinery is estimated to be $110 million US, (engineering is currently in progress). So frankly the need for further significant equity financing is not at all clear to me.

    On the companies PR effort�
    The Company has had three analysts/investor press tours of the property in the past week or so which included potential financers of the refinery, and the Finance Minister for BC. So that is a serious PR effort underway now. And when earnings come out by mid-May, they will be accompanied by projections for the next 2 quarters which should help a lot here. If Raymond James and I are correct, the numbers will be very good and could get the stock price going and then the company will really have something to base a further promotional effort on.

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    • BI is certainly persuasive. But ordinarily lenders will want a borrower to have solid liquidity befire lending out something close to a year's worth of sales. So TGB needs cash above and beyond the 25% equity portion of the project.

      Given its history, the prospect of an offering will continue to hold down the stock price (even if its been overdone at this pont.)


      • 1 Reply to xochimilco_cv
      • Thanks for the BI tid bits.

        I agree with xoch about the equity offering perception. I think the company should come out with a strong statement that no equity offerings will done for at least a year. It would be a nice hook to keep them honest and to remove the negative stigma assoicated with their past offerings. I really think that the Feb offering is what broke the stock price down to present levels.

        FYI: RNO (RNG.TO) came out with a nice release a few days ago. They are now shipping nickel and copper for revenue. More tweaks are required to their Aguablanca mine to get full production. I think by the end of June they will be there. RNO will be a bigger cash cow than Taskeko. I own both, however, my ownership in Rio Narcea is warrants. Since the press release, RNO has put in a very nice reversal.

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