As one of the lowest-GHG sources of new US copper production, Florence Copper is expected to herald a new era of American mining in support of net-zero. It is one of very few construction-ready, fully permitted copper projects in North America.
Taseko finds additional early-stage funding to achieve production
When it reaches full production, Taseko Mines’ Florence Copper project, located near Florence, Arizona, will be one of the greenest and lowest cost sources of copper for U.S. domestic consumption. The project will use an in-situ copper recovery method to extract copper in solution with far less disturbed land. That also translates into dramatically lower carbon emissions, and lower water and energy consumption compared to conventional open-pit copper mines. The operation is expected to produce 85 million lb/y of LME Grade A copper cathode, which is now defined as a critical material by the Department of Energy, to the U.S. domestic market.
Florence Copper made advancements on several fronts during 2023, including the receipt of the final Underground Injection Control (UIC) permit from the U.S. Environmental Protection Agency (EPA). The EPA received no appeals or objections and the UIC permit became effective on October 31, 2023. The company also found an additional $100 million in funding based on royalty and debt agreements. With financing and permitting in place, site preparation and clearing for the initial wellfield, plant and infrastructure began in Q4 2023. The hope is that wellfield drilling will commence in Q1 2024.
“Successful completion of the UIC permitting process was a result of Taseko’s long-term development approach, and the quality and environmental integrity of the project,” said Stuart McDonald, president and CEO of Taseko. “Taseko is now in a unique position, with one of the very few fully permitted mining projects in North America. With the final permit in hand, we have a clear line of vision to commercial production and are that much closer to realizing the full value of Florence Copper.”
During commercial operations, Florence Copper will support ~170 high paying direct jobs on site, as well as an additional 75 indirect jobs in Florence and 480 throughout Pinal County, with an estimated economic contribution of $3.4 billion to the State of Arizona over the life of the project.
Advancing Toward Production
The next steps for Florence Copper include procurement of materials and supplies and finalizing agreements with key contractors, including the general contractor for the solvent extraction/electrowinning (SX/EW) plant and the drilling contractors for wellfield development. The company has also been hiring additional management and site personnel for the construction and operations teams.
Detailed engineering and design for the commercial production facility is substantially completed and procurement activities are well advanced. Major processing equipment associated with the SX/EW plant has been purchased and delivered to the site. Through the first nine months of 2023, Taseko invested C$45 million ($33.6 million) in Florence Copper.
The company has also secured project level financing to fund construction activities. During October, Taseko closed the first $20 million tranche of its $25 million equipment loan commitment from Bank of America for Florence Copper. The company’s financial adviser, Endeavour Financial, secured commitments of approximately $100 million in royalties and debt for Florence Copper, in addition to the commitments already received from Mitsui and Bank of America.
In March 2023, the company filed an NI 43-101 Technical Report for Florence Copper with updated capital and operating costs for the commercial production facility and the report also refined the operating models based on the results from the Production Test Facility (PTF).
Some of the highlights from the technical report include a net present value of $930 million with an internal rate of return of 47% (after-tax) and a payback period of 2.6 years. Operating costs are projected to be $1.11/lb of copper. Over the course of the $232 million project’s 22-year life, it’s expected to produce a total of 1.5 billion lb of copper.
Taseko in recent years has completed extensive technical work that helped de-risk the project significantly. The PTF operated successfully over an 18-month period and provided a valuable opportunity to test operational controls and strategies which will be applied in future commercial operations. In addition, a more sophisticated leaching model has been developed and calibrated to the PTF wellfield performance. This detailed modeling data, along with updated costing, has been used to update assumptions for the ramp up and operation of the commercial wellfield and processing facility.
Additional Funding
In November, Taseko Mines Ltd. announced two additional financing transactions, totaling $100 million for Florence Copper. The company said it has been notified by Taurus Mining Royalty Fund L.P. that it had obtained investment committee approval for a $50 million royalty, and Societe Generale had received credit approval for a $50 million senior secured debt facility. Upon closing and satisfaction of conditions precedent, proceeds from these project level financings will be available to Florence Copper to fund the construction and development of its commercial production facility.
“The Taurus royalty and the project loan facility from Societe Generale complement the previously announced commitments from Mitsui and Bank of America,” McDonald said. “A total of $175 million from these four well-regarded industry participants is a strong endorsement of Florence Copper’s technical merits, attractive economics, and favorable environmental attributes.
The $50 million Tuarus royalty is for 1.95% of the gross revenue from the sale of all copper from Florence Copper for the life of mine. It is payable upon the satisfaction of customary conditions precedent for closing.
The $50 million facility from Societe Generale is subject to completion of definitive documentation and the satisfaction of conditions precedent. The facility also contains a $25 million uncommitted accordion feature which can be exercised by the company in the future to increase its size to $75 million if needed, subject to additional credit approval at that time. The maturity date of the Florence debt facility will be five years from the date of closing, with no scheduled principal repayments until the maturity date when any outstanding amounts will be repayable. It will have a first lien charge over the assets of Florence and an unsecured guarantee from the company until completion.
