Mr. Stuart McDonald reports

TASEKO REPORTS $36 MILLION OF ADJUSTED EBITDA FOR FIRST QUARTER 2023

Taseko Mines Ltd. had first quarter 2023 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $36-million, earnings from mining operations before depletion of $41-million, and cash flows provided by operations of $28-million. Adjusted net income was $5-million, or two cents per share.

Stuart McDonald, president and chief executive officer of Taseko, stated: "An average realized copper price of $4.02 (U.S.) per pound in the first quarter helped to drive our strong financial performance. Production in the first quarter was 25 million pounds of copper and 234,000 pounds of molybdenum. Copper head grades for the period were on plan, averaging 0.22 per cent, but production was slightly below plan due to unexpected mill downtime and operational issues with the primary crushers. Mining advanced deeper into the Gibraltar pit which is the sole source of mill feed this year, and waste stripping ramped up in the new Connector pit. Initial tons of oxide ore were also mined from the Connector pit and have been placed on leach pads for future production when the Gibraltar SX/EW plant restarts.

"We have decided to defer the in-pit crusher move until the spring of 2024, to coincide with planned work on SAG mill No. 1 to minimize concentrator downtime."

Mr. McDonald added: "In the first quarter, we increased our effective interest in Gibraltar to 87.5 per cent, after acquiring a 12.5-per-cent stake from one of our joint venture partners. The transaction closed in mid-March and provides immediate 17-per-cent growth in our attributable copper production. Additionally, the five-year deferred payment structure allows Taseko to focus our financial resources on the construction of the commercial facility at Florence.

"In March, we filed a new technical report for the Florence copper project. The report includes updated capital cost estimates based on detailed engineering and recent contractor and vendor quotations. Operating and sustaining capital costs have also been updated, and refinements have been made to the operating models based on the production test facility (PTF) results. The project has been significantly derisked in recent years and has an after-tax net present value (8 per cent) of $930-million (U.S.) using a long-term copper price of $3.75 (U.S.) per pound. The EPA permitting process continues to advance and we expect a favourable outcome in the coming months. We are ready to start construction of the commercial production facility as soon as the final underground injection control permit is issued," continued Mr. McDonald.

"Considering global economic uncertainties, copper markets remain remarkably stable and continue to support a healthy price of about $3.85 (U.S.) per pound. Demand for our product remains strong and the long-term supply/demand fundamentals appear to be favourable. In the short-term, we continue to maintain our price protection strategy, which provides a minimum copper price of $3.75 (U.S.) per pound for most of Gibraltar's production for the balance of 2023. Our original production guidance of 115 million pounds (plus/minus 5 per cent) for 2023 remains unchanged," concluded Mr. McDonald.

First quarter review

• In March, 2023, the company announced the results of recent technical work and updated economics for the Florence copper project. Including updated modelling, capital expenditures and operating costs, the Florence copper project now has an after-tax net present value of $930-million (U.S.) (at an 8-per-cent discount rate) with an internal rate of return of 47 per cent and a 2.6-year payback period.
• First quarter earnings from mining operations before depletion and amortization were $41.1-million, adjusted EBITDA was $36.1-million and cash flows from operations was $28.0-million.
• GAAP (generally accepted accounting principles) net income was $4.4-million (two cents per share) and adjusted net income was $5.1-million (two cents per share).
• Gibraltar produced 24.9 million pounds of copper for the quarter which was slightly below expectations due to unplanned mill downtime that was necessary to address crusher maintenance and other operational issues.
• Copper head grades in the quarter were 0.22 per cent, similar to recent quarters and in line with management's expectation.
• Gibraltar sold 26.6 million pounds of copper in the quarter (100-per-cent basis) which contributed to revenue for Taseko of $115.5-million. The average realized copper price was $4.02 (U.S.) per pound for the first quarter, compared with the LME average price of $4.05 (U.S.) per pound.
• Total site costs in the first quarter was $112.8-million on a 100-per-cent basis, $6.6-million higher than the previous quarter due to greater diesel consumption from the higher mining rates and additional costs incurred for mill maintenance.
• On March 15, 2023, the company completed its acquisition of an additional 12.5-per-cent interest in the Gibraltar mine from Sojitz Corp. and now holds an effective 87.5-per-cent interest in the Gibraltar mine.
• In February, 2023, the company entered into an agreement to extend the maturity date of its revolving credit facility by an additional year to July, 2026. In addition to the one-year extension, the lender has also agreed to an accordion feature, which will allow the amount of the credit facility to be increased to $80-million (U.S.), subject to credit approval and other conditions.
• The company had a closing cash balance of $102-million at March 31, 2023.

Operations analysis

First quarter review

Gibraltar produced 24.9 million pounds of copper for the quarter, a 7-per-cent decrease over the fourth quarter. Copper production in the quarter was impacted by low mill availabilities due to poor crusher performance and extended mill shutdowns to troubleshoot mechanical issues. As a result, mill throughput was approximately 12-per-cent below plan for the period.

Copper head grades of 0.22 per cent were in line with recent quarters and management expectations. Copper recoveries in the first quarter were 80.7 per cent and while above the average achieved for 2022, were impacted by operating variability in the concentrators.

Mine operations went as planned in the quarter and a total of 24.1 million tons were mined. The ore stockpiles increased by 400,000 tons in the first quarter and 800,000 tons of oxide ore from the Connector pit was placed on the heap leach pads. This oxide ore will be processed in future years when Gibraltar's solvent extraction and electrowinning (SX/EW) plant is restarted.

Total site costs at Gibraltar of $112.8-million were $6.6-million higher than last quarter due to greater diesel fuel consumption from the higher mining rates and increased mill maintenance costs incurred to address mechanical issues.

Molybdenum production was 234,000 pounds in the first quarter. At an average molybdenum price of $32.79 (U.S.) per pound and with inclusion of the impact of favourable provisional price adjustments, molybdenum generated a byproduct credit of 37 U.S. cents per pound of copper produced in the first quarter.

Off-property costs per pound produced were 37 U.S. cents and were generally in line with recent quarters.

Total operating costs per pound produced (C1) were $2.82 (U.S.) for the quarter, compared with $3.13 (U.S.) in the same period in 2022.

Gibraltar outlook

The Gibraltar pit will continue to be the sole source of mill feed in 2023 and the quarterly production profile is expected to be less variable than 2022 due to improving quality and consistency of ore as mining progresses deeper into the pit. Waste stripping will continue in the new Connector pit and initial mill feed from this pit is planned for 2024. The in-pit crusher that currently sits over the Connector ore zone was planned to be relocated in the third quarter of this year, but will now be deferred to spring of 2024. This results in increased mill production in the current year, and allows the timing of the crusher move to align with a maintenance shutdown that is required for the mill No. 1 SAG mill.

The technical information contained in this MD&A (management's discussion and analysis) related to the Gibraltar mine has been reviewed and approved by Richard Weymark, PEng, MBA, vice-president of engineering, who is a qualified person in accordance with the requirements of National Instrument 43-101.

Gibraltar is expected to produce 115 million pounds of copper (plus/minus 5 per cent) in 2023 on a 100-per-cent basis.

We seek Safe Harbor.