The Micro-Cap Miner With the Rock of Gibraltar

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

It feels good to root for the little guy.

In a reversal of fortunes for the mining industry so fearsome that global behemoths were reduced to rubble, it's comforting to know that a micro-cap contender can still find its way through.

Taseko Mines (AMEX: TGB  ) released earnings this week that portray an agile miner responding deftly to shifting realities in both credit markets and the global demand for copper. Under these tough conditions, the company's $32.6 million operating loss for the quarter comes as no surprise, and included a $17.7 million negative impact from copper pricing adjustments. Fools may recall that Yamana Gold (NYSE: AUY  ) , which also produces significant quantities of copper, took a $74 million hit from similar adjustments during the period.

Helping to absorb this operational shortfall, Taseko announced an offering Friday of 13.8 to 15.9 million shares to raise at least $16 million for general purposes. Together with a $30 million loan facility acquired last month, I believe that Taseko stands in a stable position given the dramatic reductions in mining costs reported for recent months. While mega-miners like Rio Tinto (NYSE: RTP  ) and Freeport-McMoRan (NYSE: FCX  ) reduce copper output to stabilize prices, little Taseko keeps growing into its big shoes.

Losses were bound to result when Taseko's copper production costs touched $2 per pound last quarter while copper prices collapsed as low as $1.25, but since that time the company has curtailed capital expenditures and quickly brought costs down to $1.13 per pound during February. For 2009, Taseko projects copper costs to average $1.15, placing operations well within the comfort zone of profitability now that copper has stabilized from its lowest levels. The commodity-savvy management at Joy Global (Nasdaq: JOYG  ) considers 15% of global copper production unprofitable at prices near $1.50 per pound. For a company as small as Taseko to achieve this competitive a cost structure is rather remarkable in this Fool's view.

A second path to prosperity
Prudently, Taseko has deferred the Phase III expansion of the Gibraltar mine until market conditions improve. While the company focuses intently on Phase II, prosperity awaits. In addition to 2 billion pounds of copper, Taseko's Prosperity project contains 4.7 million ounces of proven and probable gold reserves … or more than one-fourth the entire stash of Agnico-Eagle Mines (NYSE: AEM  ) . Pending the requisite environmental permits, this micro-cap miner's path to prosperity appears to be lined with solid gold.

Further Foolishness:

With more than 1,100 recommendations from our talented community of investors, five-star micro-cap miner Taseko Mines has been a popular choice among CAPS members for quite a while. Why not share your own thoughts with the growing community of Fools?

Fool contributor Christopher Barker is the commodore of copper and the Colonel Klink of zinc. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Agnico-Eagle Mines, Freeport-McMoRan, Taseko Mines, and Yamana Gold. The Motley Fool's disclosure policy is worth way more than $1.50 per pound.

Read/Post Comments (0) | Recommend This Article (35)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 862486, ~/Articles/ArticleHandler.aspx, 10/21/2016 3:00:40 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,155.81 -6.54 -0.04%
S&P 500 2,141.26 -0.08 0.00%
NASD 5,255.74 13.91 0.27%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 2:43 PM
TGB $0.44 Down -0.01 -2.89%
Taseko Mines CAPS Rating: ****
AEM $49.01 Down -0.17 -0.34%
Agnico-Eagle Mines CAPS Rating: **
AUY $3.81 Down -0.08 -2.06%
Yamana Gold CAPS Rating: ***
FCX $10.02 Down -0.19 -1.86%
Freeport-McMoRan C… CAPS Rating: ****
JOY $27.88 Up +0.01 +0.02%
Joy Global CAPS Rating: ***
RTP.DL $0.00 Down +0.00 +0.00%
Rio Tinto plc (ADR… CAPS Rating: ****