Teseco Mines (TGB) Q3 2025: Florence Capex 99% Complete, Copper Ramp Drives 50% Revenue Surge
Florence’s construction is essentially finished, positioning Teseco for its first U.S. copper output early next year. Gibraltar’s higher grades and improved recoveries drove a sharp operational rebound, while Florence’s commissioning and regulatory milestones signal a new phase for the business model. Investors now face a pivotal inflection as ramp-up execution, U.S. copper market pricing, and sustaining capital at Florence shape Teseco’s 2026 cash flow profile.
Summary
- Florence Commissioning Progress: Capital spend nearly complete, with first copper expected early 2026.
- Gibraltar Recovery: Higher ore grades and stable throughput drove a sharp operational and financial rebound.
- Balance Sheet Reset: Recent equity raise and debt paydown provide runway for Florence ramp and Yellowhead progress.
Performance Analysis
Teseco’s Q3 marked a decisive operational inflection as Gibraltar’s mining shifted into higher-grade benches, yielding a material step-up in both copper and molybdenum output. Copper production rose to just under 28 million pounds, with mill recoveries climbing to 77 percent, reflecting a favorable ore mix and stable plant throughput. Molybdenum, a copper byproduct, also saw a production surge, highlighting the leverage to ore grade improvement.
Financially, revenue jumped 50 percent quarter-over-quarter, supported by higher sales volumes and robust copper pricing near $4.50 per pound (in line with LME, London Metal Exchange, averages). Adjusted EBITDA reached $62 million, a significant sequential gain, though site costs rose due to expensing of SXEW (solvent extraction electrowinning, a copper refining process) and persistent maintenance inflation. Capitalized stripping expenses declined, reflecting improved ore access and a lower strip ratio in the connector pit. The company reported positive adjusted net income, but GAAP results were impacted by non-cash FX and derivative losses.
- Grade-Driven Upside: Higher-grade benches at Gibraltar translated directly to improved copper and molybdenum output and mill recoveries.
- Cost Headwinds: Maintenance inflation and SXEW expensing pressured site costs, partially offsetting margin gains from pricing and volume.
- Liquidity Strengthened: Equity raise and debt repayment reset the balance sheet ahead of Florence’s ramp and Yellowhead spend.
The quarter’s financial momentum is underpinned by both operational improvement at Gibraltar and the near-completion of Florence, setting up a multi-asset cash flow inflection for 2026.
Executive Commentary
"In just 18 months since we broke ground to Florence, our team has been able to deliver this major capital project on time and in line with our previous cost estimates. So it's really a great achievement, and the project is now into the commissioning phase."
Stuart MacDonald, President & CEO
"With capital spending at Florence largely behind us now, and improving production at Gibraltar, and coupled with this cash injection from this financing, our liquidity outlook is robust. We're well positioned to support the ramp-up at Florence and advance our work at Yellowhead."
Bryce Hamming, Chief Financial Officer
Strategic Positioning
1. Florence: U.S. Copper Supply Optionality
Florence’s successful construction and commissioning mark Teseco’s entry into U.S. refined copper supply, a structurally advantaged position as potential tariffs and domestic demand trends evolve. The project’s completion, on time and near budget, underscores execution strength. With regulatory approvals secured and commissioning underway, the focus shifts to wellfield ramp-up, acidification, and integration of additional wells—each a gating item for 2026 production ramp and cash flow generation.
2. Gibraltar: Operational Resilience and Cost Control
Gibraltar’s performance rebounded on higher grades and improved recoveries, but persistent maintenance cost inflation and SXEW expense highlight ongoing cost management challenges. The mine’s ability to deliver steady throughput and respond to orebody variability remains central to Teseco’s near-term cash generation, acting as a funding bridge for Florence and Yellowhead.
3. Capital Allocation and Balance Sheet Reset
The October equity raise and $75 million revolver repayment materially de-risk near-term liquidity, ensuring Florence ramp-up and Yellowhead permitting are not capital constrained. The move signals a shift from construction to operational discipline, with a focus on sustaining capital at Florence (wellfield drilling) and prudent Yellowhead advancement.
4. U.S. Copper Market Dynamics
Speculative trading and tariff uncertainty are distorting U.S. copper pricing, with COMEX premiums over LME not fully realized in physical markets. Teseco’s Florence output will test these market dynamics as sales commence, and management is monitoring both realized pricing and potential policy shifts closely.
Key Considerations
Teseco’s Q3 signals a transition from capital project delivery to operational ramp-up across both legacy and growth assets. The company’s ability to convert Florence’s technical completion into commercial output, while managing Gibraltar’s cost base and advancing Yellowhead, will define its multi-year trajectory.
Key Considerations:
- Florence Ramp Execution: Timely integration of new wells and wellfield optimization will drive copper output and cost structure in 2026.
- Gibraltar Cost Control: Maintenance inflation and SXEW expensing require ongoing discipline to avoid margin erosion as grades normalize.
- U.S. Copper Price Realization: Physical market discounts to COMEX and tariff policy risk may affect Florence’s realized margins.
- Yellowhead Permitting Progress: Early community feedback is positive, but environmental and regulatory timelines remain a gating factor for long-term growth.
Risks
Florence’s ramp-up carries material execution risk, particularly in wellfield development, commissioning, and achieving steady-state flows. U.S. copper market volatility, including potential tariffs and disconnects between quoted and realized prices, could impact Florence economics. Persistent maintenance inflation at Gibraltar, combined with any operational setbacks, would pressure cash flow and funding for growth projects. Regulatory and permitting delays at Yellowhead remain a long-tail risk to Teseco’s growth pipeline.
Forward Outlook
For Q4 2025, Teseco expects:
- Continued strong copper production at Gibraltar, with October output already at a two-year high.
- Florence to produce its first copper cathode early in the new year, with ramp-up accelerating through 2026.
For full-year 2026, management will provide formal guidance in early 2026, but signaled:
- Less quarterly volatility and more consistent operational performance, with Florence’s ramp and Gibraltar’s steady grades driving multi-asset cash flow.
Management emphasized Florence’s operational milestones as key value drivers:
- Wellfield development pace and integration of new wells will dictate 2026 copper output.
- Ongoing monitoring of U.S. copper pricing and tariff policy will shape realized economics.
Takeaways
Teseco’s Q3 marks a strategic pivot from project delivery to operational execution, with Florence and Gibraltar forming the backbone of its near-term cash flow story.
- Florence’s commissioning and first copper will define Teseco’s U.S. growth narrative, but sustained execution in wellfield development is critical for full ramp.
- Gibraltar’s operational rebound provides funding stability, yet cost vigilance is needed as inflationary pressures persist.
- Investors should watch Florence’s realized pricing and Yellowhead’s permitting pace, as both will shape Teseco’s multi-year growth and risk profile.
Conclusion
Teseco enters 2026 with Florence’s capital phase nearly complete and Gibraltar’s output rebounding, but the transition to multi-asset cash generation now hinges on ramp execution, U.S. copper market dynamics, and disciplined capital allocation. The coming quarters will test Teseco’s ability to deliver on its operational and strategic ambitions.
Industry Read-Through
Teseco’s Florence progress highlights the strategic value of onshore copper supply in the U.S., especially as tariff risk and speculative trading distort traditional pricing benchmarks. The disconnect between COMEX and physical market realizations is a warning for other U.S.-focused copper entrants. Cost inflation at legacy mines and the capital intensity of ISR (in-situ recovery, a copper extraction method) ramp-ups will remain central themes for the sector, with permitting and community engagement shaping the timeline for new supply. Producers with balance sheet flexibility and project execution discipline are best positioned as policy and market volatility persist.