10/31/2012 05:12 EDT | Updated 12/31/2012 05:12 EST

Taseko Mines swings to $3.9M third-quarter loss as revenues fall, capex triples

VANCOUVER - Taseko Mines Ltd. (TSX: TKO) reports it swung to a third-quarter loss as revenues fell 28 per cent and capital spending more than tripled.

The Vancouver-based miner reported Wednesday a quarterly loss of $3.9 million, or two cents per share, compared to a profit of $30 million, or 15 cents per share in the same quarter of 2011.

Revenues fell to $61 million from $84 million in the year-earlier as its copper sales volumes fell 26 per cent year-over-year and average copper prices fell slightly.

Taseko said sales volumes were down as mill throughput and production fell due to "significant" planned down time associated with development at its 75 per cent owned Gibraltar copper and molybdenum mine in British Columbia.

The Phase 3 expansion, termed GDP3, which began in spring 2011 and is on track for completion by the end of this year, is projected to increase Taseko's share of copper production to 140 million pounds per year.

The company said it also faced a 13 per cent increase in per unit cost of sales. The Gibraltar expansion has also impacted operating costs, most notably labour costs. Most of the required labour force to operate the Gibraltar concentrator has already been hired, it said.

Taseko said commissioning of the molybdenum plant at Gibraltar is expected to begin in November and the main concentrator in December 2012.

During the third quarter, capital expenditures more than tripled to $56.9 million from $16.3 million in the 2011 quarter as the company ramped up spending at Gibraltar and its New Prosperity and Aley projects.

But the company said it expects earnings to improve next year as it reduces its spending at its projects.

"With the ramp up of GDP2 effectively behind us and commissioning of GDP3 expected to commence later this quarter, we are in an enviable position heading into next year," said Russell Hallbauer, president and CEO of Taseko in a statement.

"2013 will be a year of significant growth with the potential to nearly double our revenue with a commensurate increase in free cash flow and earnings. At the same time, exploration and evaluation expenditures will be approximately one half of 2012 levels as the majority of our project work is complete."

The company said in September that it has formally submitted an environmental impact statement for its $1.1-billion New Prosperity project in B.C. in a renewed bid to build the mine that was rejected in 2010.

Taseko is looking to build an open pit gold-copper mine approximately 125 kilometres southwest of Williams Lake, B.C.

The company said it would spend an extra $300 million to address concerns and promised to save Fish Lake, which band members say is culturally significant to them. Taseko's original proposal involved draining Fish Lake and using it for a tailings pond.

In May, Taseko signed a deal with the Tsay Keh Dene native band in connection to the development of its Aley niobium project in northeastern British Columbia.

Niobium is used in the production of high strength, light-weight, and corrosion resistant steel.

Shares in the company, which reported results after trading ended, dropped two cents to close at $2.73 Wednesday on the Toronto Stock Exchange.