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Why Taseko Mines Got Drilled By 7% Today

By Howard Smith – Oct 27, 2020 at 12:12PM

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The copper producer has been on a tear this year, along with the price of the metal.

What happened

Shares of copper miner Taseko Mines (TGB -1.77%) are down 7% as of 11:30 a.m. EDT, after dropping more than 11% at the market open. After a huge run in the stock price over the past six months, some investors are taking profits today. 

So what

The miner announced third-quarter earnings last night in which it reiterated that there have been no interruptions to the operation from the COVID-19 pandemic. But with the price of copper up 30% since late April, and company shares more than tripling in that time, some investors are taking profits on earnings news. 

An aerial view of an open pit mine

Image source: Getty Images.

The copper miner reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $31.5 million and cash flow from operations of $31 million in its third quarter. That's more than double the cash flow compared with the year-ago period, and quadruple the adjusted EBITDA.

But those gains came from the rising price of the commodity, not an increase in production. Production itself was down about 12% compared with the 2019 third quarter. The jump in copper prices has also helped the miner shore up its balance sheet over the last year, allowing it to end the quarter with $73 million in cash, up from $42 million on Sept. 30, 2019.

Now what 

Benefits from the increasing price in copper aren't a surprise for investors. The company is expanding its operations beyond British Columbia with its Florence Copper Project in Arizona. 

Taseko still requires two more permits to begin construction on the project it says has a 20-year mine life. Though shares react mostly to the price of copper itself, interested investors should keep an eye on the last of the needed permits on the Florence project for another share price catalyst. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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