Taseko's Florence Copper Production Start Meets Strong 2025 Results, But Valuation and Leverage Risks Loom Large

What happened

Taseko announced robust 2025 financials, including $230 million Adjusted EBITDA and the commencement of copper production at Florence Copper, marking a key operational milestone. Despite these positives, the company reported a net loss of $30 million, underscoring persistent profitability issues that adjusted metrics mask. The DeepValue report highlights Taseko's stretched valuation at 22x EV/EBITDA and 5.6x P/B, with net-debt/EBITDA at 3.61x, signaling high financial risk if execution falters. Florence's production start is critical for deleveraging, but it must ramp quickly to over 40 Mlb annually by late 2026 to justify current prices and avoid equity dilution. Overall, this news validates the base scenario of gradual progress but does not mitigate the core investment concerns around leverage and expensive equity.

Implication

Taseko's Florence Copper production commencement and strong 2025 Adjusted EBITDA provide near-term momentum, but the net loss and elevated leverage of 3.61x net-debt/EBITDA keep downside risks acute. Investors must closely monitor Florence's ramp metrics in the coming quarters for sustained output above 40 Mlb annually and cost adherence to avoid balance sheet stress. With copper prices near record levels, any normalization could compress margins and delay deleveraging, potentially forcing dilutive equity issuance given the 8.25% debt burden. The stock's rich valuation at 22x EV/EBITDA offers limited upside unless Florence exceeds expectations, while execution hiccups could drive a sharp re-rating toward the bear case of $4.50. Thus, reducing exposure at current levels or awaiting clearer evidence of net debt reduction remains prudent, aligning with the DeepValue 'POTENTIAL SELL' rating.

Thesis delta

The news confirms Florence Copper's production start, meeting a key milestone in the DeepValue base case and slightly de-risking the operational outlook. However, the persistent net loss and lack of immediate deleveraging data do not alter the core thesis that Taseko is overvalued with high financial risk, keeping the 'POTENTIAL SELL' recommendation unchanged. Investors should still require visible progress on net debt reduction and sustained Florence output before reconsidering the stance.