Taseko shrugs (January 11, 2011)

Taseko Mines’ (TKO-T, TGB-X) may have been knocked down by the Federal government’s ruling against its Prosperity mine, but that doesn’t mean the company has been knocked-out.

The government turned down the project in November but since then Taseko has begun to outline a significant niobium zone and is pressing ahead with a revised proposal on Prosperity.

And while fighting the feds while outlining a niobium deposit may seem like a Herculian task, the market is signaling its belief that the company may well be getting up off the mat and steadying itself for another round.

Taseko’s stock fell by as much as 40% after the news of the government decision was released, reaching a low of $4.13 on November 16. Since then, however, the company’s shares have moved every so gradually upwards and on Jan. 11 in Toronto they jumped 17% in a single day to close at $5.87 on 3.8 million shares traded.

Much of the renewed optimism can be traced to the company’s successful niobium results at its Aley project near Mackenzie B.C.

Assays for 21 of 23 holes are in and Taseko says the amount of near surface and continuous mineralization encountered indicates the “strong potential for development of a major niobium deposit and mine operation.”

Stellar niobium grades were hit across an area over 900 metres east-west and 350 metres north-south, with some intercepts being over 200 metres in length.

Highlights from the program include 207.3 metres grading 0.66% niobium; 141.7 metres grading 0.82% niobium; and 144.1 meters grading 0.57% niobium and

Those results come from three separate holes but the company still has to determine true widths.

The growing demand for for the metal which is used as a part of a “super” alloy for specialty steels, has Taseko’s president and chief executive Russell Hallbauer looking to accelerated work on the project as it continues to press on Prosperity.

In a press release issued on Jan. 5, Hallbauer admitted the company’s disappointment in the government’s November decision, but said it accepted the ruling and is “working to address the concerns raised by the many levels of government involved.”

“We expect to submit a revised proposal to federal authorities which should address the impact that the Prosperity mine would have on Fish Lake,” Hallbauer said.

Still the nature of that process is unclear at this point. Taseko already went through extensive environmental reviews both provincially and federally, and if it had to start from ground zero, the process would be long and onerous.

Another road block is a continued chill in relations with the First Nations.

Tsilhqot’in National Government tribal chair and Tl’etinqox chief Joe Alphonse told a local paper that while the initial issue with the company was the draining of Fish Lake, relations between the First Nations and Taseko deteriorated from there.

“Fish Lake is part of the issue but a huge, huge part of the issue is you have to work with First Nations people in today’s day and age and if you’re not willing to do that, so be it. You’ve got a tough lesson.” Alphonse was quoted as saying.