Taseko Mines - Low-Cost Copper Producer Well-Positioned for Growth

• Taseko Mines (TKO, TGB) is a low-cost copper producer based in Vancouver, Canada, with both conventional and ISR mining operations.
• Their most promising development-stage project is the Florence Copper Project in Arizona, which they plan to advance towards production in the upcoming years.
• Taseko Mines has a strong, experienced management team, and they have been consistent in their strategy to develop projects from early stages, like they did with Gibraltar.
• Florence Copper Project is the company's future focus, using a low-cost and environmentally beneficial ISR method to produce copper at about $1.10 per pound.
• To finance the Florence project, Taseko Mines is considering selling a minority stake in the project to a JV partner, among other financing options

Taseko Mines is a Canada-based copper producer focused on operating and developing low-cost copper assets in stable mining jurisdictions like Canada and the U.S. The company currently operates one producing copper mine, Gibraltar, located in British Columbia. Taseko's key growth project is its Florence Copper project in Arizona, which is moving towards commercial production in the next couple of years using an in situ copper recovery mining method.

Gibraltar Mine - Steady Low-Cost Copper Production

Taseko's 100% owned Gibraltar mine has been operating since 2004, when the current management team restarted the previously shuttered mine. Gibraltar is a large-scale open-pit copper mine with over 20 years of reserves remaining and a total contained copper of 3.2 billion pounds. The mine has an average copper grade of 0.25% and achieves low operating costs of approximately C$10-11 per ton milled through very efficient mining methods. This allows Gibraltar to generate steady operating margins even during down cycles in the copper price.

Gibraltar has produced 130 million pounds of copper per year on average over the past decade. The mine has continued operating profitably through multiple copper price cycles, demonstrating resilience across a range of pricing environments. Looking ahead, Taseko Mines expects copper production and costs at Gibraltar to remain relatively steady, with no major fluctuations in ore grades expected over the next several years. The mine provides a solid base of low-cost copper production and operating cash flows to support Taseko's growth initiatives.

Key Growth Project - Florence Copper In-Situ Operation

Taseko's key growth asset is its Florence Copper Project, located in central Arizona about 65 miles southeast of Phoenix. Florence Copper is an in situ copper recovery project, which uses a different mining method than the traditional open pit mining done at Gibraltar.

In situ mining involves drilling injection and recovery wells into the copper oxide ore body, then circulating specialized leach solutions through the ore to dissolve and extract the copper. The copper-bearing solution is then pumped to a solvent extraction and electrowinning (SX/EW) plant on site which produces nearly pure copper cathode sheets. This method avoids the need for large-scale mining equipment, crushing, and milling, resulting in low operating costs, small surface footprint, and low capital intensity compared to conventional mining. In situ mining is common in uranium production but Florence would be one of the first commercial-scale in situ copper mines.

Taseko acquired the Florence Copper project in 2014 and has advanced it to the brink of commercial production. The company completed a feasibility study in 2017 that outlined excellent project economics, including:

• Initial capital cost: $230 million
• Life of mine: 20 years
• Annual copper production: 85 million lbs.
• Cash costs: $1.10/lb copper
• NPV (8% discount rate): $680 million
• IRR: 40%

These economics are underpinned by Florence's low operating costs achievable through ISR mining. At $1.10/lb, Florence would rank in the lowest quartile of global copper mine costs, competitive with the largest mines in Chile.

Successful Proof-of-Concept Test Facility

A key de-risking step for Florence has been the operation of a Production Test Facility (PTF) since late 2018. The PTF has allowed Taseko Mines to demonstrate Florence's in situ copper extraction and processing methods at a commercial scale prior to committing full capital for a larger buildout.

The PTF has performed very well, giving Taseko Mines valuable operating experience with the in situ process. The test facility has achieved copper recoveries in line with the feasibility study and confirmed Florence can economically produce quality copper cathode using in situ mining. To date, the PTF has successfully produced over 3 million pounds of copper cathode.

Permitting & Financing Progress for Commercial Production

With the successful PTF results, Taseko Mines is now focused on advancing Florence to full commercial production. This requires two main steps - securing final permits and arranging construction financing estimated at $230 million.

On the permitting side, Taseko Mines is in the process of amending two key environmental permits required to transition the project from the test facility to commercial operations. The company expects to receive these final approvals in the coming months.

For financing, Taseko is currently engaged in discussions with potential strategic partners interested in acquiring a minority stake in the Florence Copper project. The company believes bringing in a partner with potential off-take interest could fund a substantial portion of the required capital through a direct investment into the project entity. Taseko is targeting raising $100-125 million in this manner. The balance could potentially be funded with some additional project debt along with a smaller equity financing at the corporate level.

With permits and financing in place in early 2022, Taseko Mines anticipates starting construction of the commercial-scale Florence Copper mine by mid-2022. First copper production would then commence roughly 18 months later by the end of 2023.

Florence to Increase Copper Production by 85%

The startup of Florence Copper will significantly increase Taseko's copper production and lower its costs. At commercial capacity, Florence is expected to produce 85 million lbs. of copper per year. Combined with continued steady output from Gibraltar, this will boost Taseko's total copper production by 85% versus current levels.

And with Florence's low operating costs, Taseko's overall costs will decrease markedly. This production growth at lower costs will transform Taseko's fundamentals and cash flow generation potential. For investors, Florence Copper offers substantial copper leverage along with near-term high-impact production growth.

Additional Growth Potential from the Development Pipeline

Beyond Florence, Taseko Mines also has a pipeline of earlier-stage development projects to fuel potential future growth. The company's strategy has focused on acquiring and advancing copper projects with low upfront costs. This development portfolio provides additional upside for shareholders.

One key asset is Taseko's 100% owned Yellowhead copper project, located approximately 250 km north of Kamloops, BC. Yellowhead contains 817 million tonnes of reserves grading 0.29% copper and 0.19 g/t gold. The large-scale proposed open pit mine has undergone extensive technical and environmental studies in the past. While not currently advancing Yellowhead, the company sees it as a valuable option for the future.

Taseko Mines also owns the New Prosperity gold-copper project in BC. However, the project was previously rejected for permitting due to opposition from local First Nations groups. Due to these challenges, Taseko has no near-term plans to advance New Prosperity and its value to shareholders is limited at this time. The company's focus remains squarely on bringing Florence Copper into production in Arizona.

Investment Thesis - Leverage & Growth in Top Mining Jurisdictions

For investors, Taseko Mines offers an intriguing copper investment opportunity combining elements of leverage to the copper price along with near-term high-impact production growth. The keystone Gibraltar mine gives leverage and cash flow exposure to copper. The advanced Florence Copper project then provides transformative low-cost production growth in the next 2 years as copper demand is expected to surge.

Importantly, Taseko's assets are located in mining-friendly jurisdictions in the U.S. and Canada with low political risk profiles. Gibraltar and Florence require modest sustaining capital going forward, allowing the company's growing operating cash flows to be reinvested to create shareholder value both organically and through M&A activity.

With cash costs at Florence projected to be in the lowest global quartile for copper mines, Taseko's production profile appears well-positioned to generate strong shareholder returns in the coming copper upcycle. Near-term catalysts around permitting, financing and development of Florence Copper will demonstrate the value of Taseko's growth story to investors in the months ahead.‍

Leverage to Copper Prices‍

Taseko's existing Gibraltar copper mine provides leverage to rising copper prices. Gibraltar has low cash costs of production, so any increase in the copper price translates directly into higher profit margins and cash flow for Taseko Mines. With copper demand expected to grow on global electrification and supply constraints, exposure to copper through Gibraltar could benefit investors.

Near-Term Production Growth

The company's Florence Copper Project in Arizona is slated to begin commercial production in 2022, increasing Taseko's total copper output by 85% in the next 2-3 years. This represents a substantial near-term production growth profile that is rare among copper mining companies. The increased cash flows will benefit investors.

Very Low Production Costs

Florence Copper is projected to produce copper at an all-in sustaining-cost (AISC) of just $1.10 per pound, which would put it in the lowest quartile globally for copper miners. Low costs mean the mine can generate strong margins even if copper prices decline from current levels. This operating advantage protects cash flows in downside scenarios.

Top Mining Jurisdictions

Taseko's assets are located in Canada and the United States, which are mining-friendly jurisdictions with low political risk, stable fiscal regimes, and strong mining infrastructure. This provides security around the company's operations and any future expansions.

Strong Management Team

The company has an experienced management team with a proven track record operating mines successfully in British Columbia. Their operational expertise reduces execution risk as Taseko Mines develops Florence Copper into its next core copper asset.

Taseko Mines offers investors exposure to rising copper prices coupled with transformative near-term low-cost production growth in top mining jurisdictions under stable management. This combination of attributes makes Taseko Mines an appealing investment in the copper mining space.