Taseko to add capacity at Gibraltar mine

Taseko Mines (TKO-T, TGB-X) wants to take advantage of robust copper prices and expand capacity at its 75%-owned Gibraltar mine in the Cariboo region of British Columbia and Williams Lake. 

The board has given its approval to start construction of a new concentrator in early spring and expects it will be commissioned in the fourth quarter of 2012.

The development plan involves building a 30,000-ton-per-day concentrator to complement the existing 55,000-ton-per-day facility that is operating now.

The additional capacity will increase Gibraltar’s annual copper production by roughly 60 million pounds to 180 million pounds, at a life-of-mine average grade.

A key component of the strategy is a new molybdenum recovery facility that will increase  molybdenum metal production by over one million pounds per year.

Capital costs are expected to be $235 million for the concentrator and molybdenum plant and about $90 million for mining equipment, on a 100%-basis.  

Taseko says that based on the assumption that strong metal prices will continue, the expansion project will have an internal rate of return of about 30% and a payback period of three years.

Taseko’s president and chief executive, Russell Hallbauer, noted in a press release that the project’s capital cost intensity of $7,800 per ton of daily mill capacity and $10,800 per ton including mine equipment “is one of the lowest of any project being developed globally.”

He added that Taseko will start a ten-hole drill program in the next few weeks to complement the increased throughput of the new concentrator. The program is designed to help convert part of the mine’s 500 million ton resource into reserves. Current  reserves stand at 445 million tons.

The expansion plan requires approval from Taseko’s 25% joint-venture partner, Cariboo Copper Corp., a consortium consisting of Japan’s Sojitz Corp., Furukawa Co. and Dowa Metals & Mining.

At presstime inToronto Taseko was trading at $6.02 per share and has traded in a52-week range of $3.27 per share (July 5 2010) and $7.27 per share (Oct. 14 2010). The company has 187.5 million shares outstanding.