Taseko Mines, Ltd.

Hello everyone and welcome to Taseka Mines' 2024 4th Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To participate you will need to press star 1-1 on your telephone and then you will hear a message advising your hand is raised. To withdraw the question simply press star 1-1 again. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call over to the Vice President of Investor Relations, Brian Bergog. Please proceed.

Thank you Carmen. Welcome everyone and thank you for joining Taseka's 2024 4th Quarter Annual Results Conference Call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market closed and is available on our website at tasekamines.com and on CDAR+. I am joined today by the event giver by Taseka's President and CEO, Stuart MacDonald, Taseka's Chief Financial Officer, Bryce Hammond, and our Chief Operating Officer, Richard Trombley. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information and this information by its nature is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our 4th Quarter MDMA and the related newsrooms, as well as the risk factors particular to our company. These documents can be found on our website and also on CDAR+. I would also like to point out that we will use various non-GAAP measures during the call. You can find explanations and reconciliations regarding these measures in the related newsrooms. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks.

Thanks, and good morning everyone. Thanks for joining us for the 4th Quarter annual earnings conference call. As you can tell, I'm struggling with that voice. I'm going to give slightly abbreviated remarks today and call over to Richard to talk about our operations and projects in more detail. But just a couple reflections looking back on the last year. You know, we're very happy with the progress that we've made across our business. I think that your grocery was a busy and at times quite challenging year. We've had million disruptions. We've had major maintenance. We moved in and fit pressure. We had a labor strike for 18 days in June. And we overcame all of those challenges successfully. It showed a strong 4th Quarter and strong annual financial results. We've also increased strides of Florence. Construction is advancing smoothly and that's soon to become our second producing operation. And through all of that, we've also maintained a solid balance sheet. We opportunistically refinanced our bonds earlier in the year. And we ended 2024 with over $3.3 million of available equity. And that's after a significant capital expenditure at Florence during the year. Taking a closer look at our financial results, we generated $224 million of adjusted EBITDA and $233 million of cash flow from operations. Those results are notable improvements over 2023 as a result of a slightly higher copper price and also our increased state gingerbreads. As we stepped up to 100% in ownership in March last year, that was obviously a very accretive transaction for us. So before I lose my voice completely, I'm going to now pass the call to Richard Conbley.

Thanks, Stuart. Gibraltar produced 106 million pounds of copper and 1.4 million pounds of molybdenum in 2024. Scheduled project work and maintenance plus the unexpected labor strike resulted in lower mill operating hours for the year, amounting to roughly 15 million pounds of lost copper production. That is roughly equivalent to the shortfall from 2023 production levels. And we should be able to get those pounds back in 2025 with normalized mill availability. The operation finished the year with a solid quarter, producing 29 million pounds of copper in Q4 at a cash cost of $242 per pound. Mill throughput averaged 89,700 tons per day, exceeding the design capacity of 85,000 tons per day. And that was actually the best quarter in Gibraltar's history as we benefited from softer ore in the connector pit. Mill recoveries in the quarter were impacted from the transition ore, which has higher oxide content, as we continue to mine the upper benches of the connector pit. We expect to have mined our way through this material by the second half of this year. Molly production of nearly 600,000 pounds in Q4 was the highest quarter since 2021. The connector pit has better Molly grades than the Gibraltar pit, so we expect production to remain at the current levels for 2025. And combined with continued strong Molly prices will provide us with a valuable byproduct credit, which was 42 cents per pound in the fourth quarter. Going forward with no major mill downtime or planned in 2025, we expect we are looking to return to the life of mine average production levels. Our guidance is 120 to 130 million pounds for the year, but it is important to note that the production profile is weighted to the second half of the year. We expect roughly a 40-60 split between the first half and second. The first quarter will be the weakest quarter of the year as we initiate a new pushback in the connector pit, and during this period mined ore will be supplemented with low-grade stockpile ore. Head grades in the first quarter will be below 0.2 percent, and we expect to see some improvement in the second quarter. And then the second half of the year we should see head grades quite a bit higher than our 0.25 percent preserved grade. And actually higher than we have mined from a sustained basis in quite a few years. So we just need to get through the first quarter and then we'll see a steady ramp up of production. The SXCW plant at Gibraltar, which has been idle for nearly 10 years, is currently being refurbished and ready for restart. There was an oxide cap on the connector pit, and we have recharged the leach paths with this ore. We expect to restart the SXCW plant in the second quarter of this year, which will provide some incremental production on top of copper concentrate production. This year we would expect between three to four million pounds of capital production, and then going forward that should increase to four to six million pounds per year. So an important future revenue stream for us. On to Florence, where construction is progressing smoothly and on schedule. We provided a thorough construction update a few weeks ago so there isn't too much new information to provide today. Construction of surface infrastructure and well-filled drilling activities are continuing to advance smoothly on schedule and in line with our previous cost guidance. The overall project completion today is a little over 60 percent, and we're now about 10 months away from first production, which will be a very significant milestone for the company. Through the first year of construction, our capital spend related to commercial facility has been 155 million U.S. This quarter will be a peak construction spending, and then activity and spending will begin to slow down through the fourth quarter when we transition into operations. There will be a ramp up period for Florence, which will be most of 2026, and we anticipate producing 40 to 50 million pounds in 2026 and for 2027. Production levels should be up to 80 million pounds or higher. It is a very exciting time for us, but we still have a lot of work ahead of us. Fully executing at Florence means ramping up to 85 million pound annual production capacity. To finish off, I wanted to give a quick update on our longer term projects. Our Yellowhead project represents a major growth opportunity for Tosco's North American copper business, and we'll be advancing project permitting this year. It's an interesting time in Canada with the threat of U.S. tariffs, and here in B.C. the government is clearly focused on how to respond and bolster our economy. One of the initiatives that B.C. has underway is a focus on shortening permitting timelines. This is an initiative that could benefit Yellowhead and an opportunity that we are monitoring very closely. We're also aiming to publish an updated technical report for Yellowhead in the second quarter of this year. The current technical report is five years old now, and the metal price assumptions we use were $3.10 U.S. per pound copper, $1,350 per ounce gold, and $18 U.S. per ounce silver, which are well below current long term price estimates. So we will update metal prices and also update capital and operating costs in the new report. Another significant change is the new Canadian tax credit available for copper mine development, and this will be incorporated into the updated technical report as well, and we expect to have a very positive impact on the project economics. Finally, just a quick update on new prosperity. If you recall, we've been in a dialogue with the Chukot Nation and the B.C. Provincial Government. These discussions had made meaningful progress last summer but were paused due to the B.C. Provincial election in October. We have recently re-engaged and remain optimistic that we can reach a successful conclusion to that dialogue. And now I'll turn the call over to Bryce.

Thank you, Richard and Stuart. Maybe I'll start and reflect further on the 2024 year and then cover some of our quarterly financial highlights. For the year, we had sales of 108 million pounds of copper, which generated revenues of 608 million, which is the highest the CECO has ever reported, and that can be attributed to our growth in Gibraltar, to now only 100% of it, coupled with a healthy average copper price of $417 a pound in the year. We posted a gap net loss of 13 million for the 2024 year, or 5 cents loss per share. However, on an adjusted basis, we had 57 million of net income, or 19 cents per share, which was a 4 cents per share increase over the prior year. A couple of items to note. The weaker Canadian dollar has created an unrealized loss on our U.S. dollar denominated bonds and other debt. That totalled 52 million Canadians for the year. We adjust for that in our adjusted earnings. The offset to that, of course, is our investment of our U.S. dollars into Florence, and those are tax moves, both through foreign currency translation and OCI. So there's kind of an accounting mismatch. So we normalize for that, and given the weakness in the Canadian dollar, this move was more significant in the year. 19 million of our costs were expensed for site care and maintenance due to the labor strike. We had 2.5 million in June, as well as the completion of our primary crusher relocation project. That project totalled 16 million. That included costs of demolition of the relocation outlays for the physical move, and then there was a non-cash write-off of some conveyor equipment. That was in the fourth quarter, which was made redundant with the crusher move. So these capital project costs are all expensed under IFRS, and we adjusted for those earnings as well. Total site costs at Gibraltar, they totaled $414 million in the year. That's on a 100% basis. We do provide a note on that in our MD&A. That was actually $17 million lower than 2023 due to the lower input costs. Notably, diesel prices were lower than the prior year, and the impact of our labor strike in June, that reduced our site operating costs in the second quarter. Capitalized stripping costs, they were $32 million in the year, and that was $23 million less than last year. We do expect capitalized stripping costs to increase in 2025, and that's associated with the connector pit pushback that Richard mentioned that's occurring in the first half of this year. So we'll have capitalized stripping more in line with 2023 run rates of around $40-50 million, with most of that in the first half of the year. Costs on a per pound basis, they were $266 per pound US, and that was higher in 2023, and that was due to the lower production levels we saw in 2024 with our mill downtime, but we also had less capitalized strip. That was offset, of course, by improved MOLI byproduct credit and then lower off property costs, lower input costs. And as we've mentioned, there will be significantly more MOLI production in 2025 in the connector pit, which will help keep our C1 costs down. In the second half of 2024, we started to benefit from new sales contracts we signed at Gibraltar. Those had notably lower TCRC charges. For the year, TCRC is accounted for nine cents per pound of off property costs, and with new off-date contracts covering 2025 and 2026, we expect our average TCRC to be actually slightly below zero for those years going forward. For the quarter, we achieved $56 million in adjusted EBITDA, and that was on 27 million pounds of sales. Production finished the year strong, and we ended with a bit more inventory. That increased to 4 million pounds at the end of the year. Adjusted earnings was $10.5 million, or three cents per share. At Florence, the project is progressing on plan as we've highlighted, and we'll hit peak construction spending this quarter, Q1 of 2025. Gap was spent with $58 million U.S. in the fourth quarter, and our total spend to date on the Florence commercial facilities, U.S., $155 million. We expect to incur about $20 million U.S. per month through this first quarter, and then we'll begin to taper. We ended the year with $173 million of cash, and we have our $110 million revolving credit facility that's currently undrawn. And so that gives us our total liquidity of approximately $330 million Canadian. And finally, as a reminder, given the volatility in the markets, notably in copper price as well, we do have copper price protection in place for 2025. It's a minimum price of $4 per pound. These are collar contracts, so they have a ceiling price, and that ceiling price average is $520 per pound. So those collars and price protection should provide stable operating margins for Gibraltar and feeder progresses. And of course, always look to extend copper price protection into 2026 if the markets are favorable and they continue on the current positive trends. So with that, operator, I'll hand it back to you and open the phone lines for questions.

Thank

you.

Thank you so much. And as a reminder to our audience, to ask a question, simply press star 1-1 on your telephone and wait for your name to be announced. To withdraw yourself from the queue, press star 1-1 again. Please stand by while we compile the Q&A roster. That is star 1-1. Okay, we do have a question. One moment, please. Come from the line of Alex Bidwani with Canaco. Please proceed.

Hi guys, and thanks for taking my questions. Just a couple. The first one is, I just wanted to know what was behind the highest sustaining cap expender Gibraltar in the fourth quarter, and what do you think for FY25? And then the second piece was just around Florence. So have you put in place any contracts for the acquisition of acid so that you're ready to acidify the fields when the drilling is complete in the second quarter?

Yeah, I'll take the first half of that question, Alex. It's just regarding the sustaining capital. Really nothing of note. Sometimes it's really just due to the timing of certain repairs, maintenance, and replacements of engines and other components on our mobile fleet at Gibraltar. So I wouldn't highlight really anything that specific there. In the capital projects, we do separate from sustaining capital our capital project costs, and we did have some write-off of equipment that I mentioned for about $4 million. I think going forward we expect it to be in the more ordinary sort of levels, and that's sort of 20 to 30 million interest sustaining capital. And again, most of that's focused around maintenance of the mine fleet. Right, thanks for that.

And securing future assets applying with that RFP. That's the process we're undertaking.

Okay, fantastic. Thanks, Richard. Just one more. How's it been looking so far this quarter in terms of throughput at Gibraltar? Are you still seeing it pretty high because of the soft connector fit?

Yeah, the Gibraltar throughput is to be strong. Connector is softer as we highlighted in Q4, and we'll continue to see that here in this year. But as we highlighted, production is weighted to the second half of the year, and Q1 will be our worst quarter due to the fact we're supplementing ore feed with stockpile material.

Yeah, I think that's been well-flagged. Okay, thanks guys. Appreciate it. Yeah, thank you.

Thank you. And as a reminder, that is star 1-1 to get in the queue. Our next question is from Duncan Hay with Panmoor Liberum. Please proceed.

Yeah, thank you. A couple of questions. First one, just on the well costs, I saw the...yeah, you updated on the number of wells you put in at Florence. Just how the costs were tracking and the sort of the rate

and

how that was looking versus your forecast going forward. And then the second one, I missed the end of Alex's question, so he may have asked this, but just about acid, what the situation was going to be for acid and securing that and how pricing was looking in the region as well. Thank you.

Yeah, regarding the drilling, drilling performance, you know, it continues to be a strong area of focus for the site team and continue to look for opportunities to keep improving overall performance. And we've been quite happy with how things have been progressing and continue to see opportunities for improvement and continue to refine kind of the efficiency and cost associated with putting in wells. And we're also quite pleased with how that's performing and that will serve as well on a long-term basis. Regarding acid...

Sorry, just so you get on to the acid, is the plan still to sort of transition to doing that in-house eventually, the drilling?

Yeah, you know, eventually it would be something we would look at, look and assess about bringing in-house. But, you know, for the near term here, we definitely would remain utilizing external parties to provide the drilling activity. And we have a strong owners team that we've recruited and put in place through the construction here, which will stay on into operations. Because I describe drilling at Florence really as the mining activity at a conventional site. So we need to have a strong management team overseeing the drilling activity. But we will be relying on third parties in the near term here. Okay, thanks.

Thank you. As I see no further questions in queue, I will turn it back to management for final remarks.

Okay, thanks everyone. And we look forward to speaking again at the end of our first quarter and reviewing our programs.

And with that, we conclude today's program. You may now disconnect.