Top Picks 2007: Tom Bishop bets on copper gains for Taseko
Posted Dec 28th 2006 2:30PM by Steven Halpern
Filed under: Newsletters, Top Picks 2007
Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.
Taseko Mines Ltd. (ASE: TGB) is the favorite speculative play for 2007 from Tom Bishop, editor of BI Research. He notes, "After living hand to mouth for five or six years during lean copper and gold prices, Taseko bought the Gibraltar mine, which it picked up for a song when copper was down in the low $0.60/lb range.
"Today copper is around $3/lb, the mine is back into production and now its cash stash, including proceeds from a $30 million convertible, is steaming towards C$100 million. The company just added about 38% to its mineral reserves, which now stand at 256 million tons (equating to a 15-year mine life) grading 0.32% copper and 0.01% molybdenum.
Note the molybdenum alone adds over $20 million to revenues annually. The company is upgrading and expanding its Gibraltar mill/production facility, and will be moving to a higher grade softer ore part of the ore body in 2007. Therefore, with mill improvements I expect production to increase 20 to 30% this year and generate about $0.65 to $0.70 of cash flow, which is not bad for a company trading at $2.60.
"Taseko makes about $1.50 or more on every pound of copper it produces. In addition to investing in upgrading its mill, which has given it some production problems this year, and increasing its mill capacity by about 50% to 90 million pounds of copper per year by 2008, Taseko also owns 100% of the Prosperity bulk tonnage gold-copper project near Williams Lake, British Columbia -- on which feasibility level studies are well underway. Prosperity is huge, with about 6.8 million ounces of gold and 2.8 billion pounds of copper resources at last tally.
"And the company is bidding about C$47 million for BC Metals which could even get into production ahead of the giant Prosperity Mine. Given all the above, I can see a nice ramp-up of production from this year's 50 million pounds of copper out over the next few years. There is a lot to like here and I am hopeful the shares will finally get their due in 2007."