Taseko Mines - Leverage to Rising Copper Prices in Tier-1 Jurisdictions

• Copper is deemed essential for global net-zero objectives and the electrification of everything. Taseko's production profile is especially promising in this context, with few companies matching its potential.
• The company focuses on low-cost assets in top-tier jurisdictions like Canada and the US, emphasizing margin over grade. Taseko's Gibraltar mine is one of the most efficient copper mines, and the upcoming Florence project in Arizona is expected to significantly boost copper production while maintaining low costs.
• Taseko employs an in-situ copper recovery method at its Florence project, which extracts copper without traditional mining techniques. This method produces refined copper on-site, offers environmental benefits, and is cost-effective.
• Taseko formed a strategic partnership with Mitsui & Co for the Florence project. With increasing demand for copper due to electrification and energy transition, the company foresees promising prospects.

Positioned for Copper Bull Market with Near-Term Production Growth

Taseko Mines Limited (TSX: TKO; NYSE American: TGB) is a Canadian mining company focused on developing copper production assets in stable jurisdictions like Canada and the United States. With copper demand set to surge from electrification and renewable energy initiatives, Taseko offers investors leveraged exposure to rising copper prices over the coming years.

Taseko President and CEO Stuart McDonald has nearly 20 years of experience in the mining industry, including senior roles at Quadra Mining and Taseko. Under his leadership, Taseko has built a pipeline of copper projects and is poised for significant production growth in the next 2-3 years.

Taseko’s Flagship Gibraltar Mine

Taseko’s flagship asset is the Gibraltar open pit copper mine located in British Columbia, Canada. Gibraltar is the second largest open pit copper mine in Canada and fourth largest in North America. The large-scale, low-grade operation has proven Taseko’s ability to operate efficiently, with competitive milling costs of just $12-13 per ton. By focusing on operational efficiency, Gibraltar has generated steady EBITDA, averaging around $200 million per year.

Gibraltar is expected to produce 120-130 million pounds of copper in 2023. The mine’s low-cost production and location in Canada offer a stable base of cash flow as Taseko advances its pipeline of growth projects.

Near-Term Growth from Florence Copper Project

Taseko’s key near-term growth asset is the Florence Copper Project located in Arizona, USA. Florence will be Taseko’s second operating mine, using an innovative in situ copper recovery (ISCR) process. This method involves injecting solutions underground to dissolve copper and recover it without conventional open pit or underground mining. Florence is expected to produce 85 million pounds of copper annually at a low operating cost of $1.10-1.13 per pound.

Florence is shovel-ready pending one final regulatory permit, which Taseko expects to receive in the coming weeks or months. Once approved, it will take approximately 2 years to construct with first copper production expected in early 2025. This will boost Taseko’s total production by 85 million pounds, representing over 60% growth from Gibraltar alone.

The ISCR mining method at Florence provides several advantages:

• Extremely low production costs around $1.10 per pound
• Lower carbon emissions intensity
• Reduced environmental footprint without tailings or waste rock
• On-site production of pure copper cathode ready for market

Strategic Partnership Validates Florence Copper Value

In December 2022, Taseko announced a $100 million strategic investment agreement for Florence Copper with Mitsui & Co., one of Japan’s largest trading companies. Mitsui’s initial $50 million contribution provides funding for Florence’s construction costs. They also have an option to invest another $50 million for a 10% ownership stake in the project.

This deal with Mitsui highlights the technical validation and underlying value of Florence Copper. Mitsui’s willingness to pay up to $100 million for a 10% interest implies a total value of over $1 billion for the project. With Taseko’s current market valuation around $500 million, successful execution at Florence represents major upside for investors.

Significant Leverage to Copper Price

Taseko estimates that at its existing copper production rate, a $0.10 per pound increase in copper price would directly translate to $10-12 million in additional earnings. As an example, if copper prices averaged $5.00 per pound compared to $4.00, Taseko’s earnings could increase by over $50 million per year. With Florence Copper coming online, Taseko's production will increase by 85 million pounds, resulting in even greater sensitivity to copper prices.

This demonstrates the powerful leverage Taseko offers to a rising copper price environment. With most analysts now forecasting long-term copper prices above $4.00 per pound, Taseko is in an ideal position to benefit. The company expects to become one of the lowest-cost and most profitable copper producers in North America.

The Investment Thesis for Taseko Mines

With copper demand growth accelerating but mine supply lagging, Taseko Mines offers a timely way to invest in the copper bull market. The company expects to increase copper production by over 60% in the next 2-3 years from its low-cost Florence Copper Project. Florence’s innovative ISCR mining method provides strategic advantages both economically and environmentally.

Trading at just 2x EBITDA, Taseko Mines appears significantly undervalued relative to the free cash flow generation potential of its pipeline of assets. Successful on-time execution of Florence Copper could drive a major re-rating as the company transitions to 200+ million pounds of annual copper production by 2025. Taseko Mines represents a unique copper investment opportunity, leveraged to benefit from surging copper demand in the coming decade.

While broader market conditions may put pressure on Taseko's share price in the near-term, the company's strong fundamentals and exposure to rising copper prices make it an attractive longer-term investment. With the Florence Copper project expected to begin production in 2025, Taseko offers a multi-year runway of growth ahead. The strategic partnership with Mitsui validates the technical and economic viability of Florence Copper. Even if copper prices see some pullback in 2023, the structural demand drivers from electrification and renewable energy remain intact. Taseko is poised to increase copper production by 60% in the next few years, meaning any recovery in copper prices will have outsized benefits.

The company's proven operational track record at Gibraltar also provides confidence in its ability to execute. For investors with a 2-3 year time horizon, Taseko Mines offers leveraged upside potential as it expands into a top mid-tier copper producer.