United.
Committed.
Open.
Annual Report 2011
The Year in Review
February 2011
> Gibraltar Development Plan 3 (GDP3) approved by the
Taseko Board; annual copper and molybdenum production
to increase to 180 million lbs and 3 million lbs, respectively
April 2011
>
Issues Senior Notes for total proceeds of US$200 million; due
in 2019 and have an annual interest rate of 7.75%
May 2011
> Gibraltar’s Proven and Probable Reserves increase by 80%,
to 802 million tons (0.20% COG)
> GDP3 construction commences
June 2011
>
Purchase put options on ~90% of the Company’s 2012
copper production, ensuring a minimum selling price of
US$3.50 per pound
November 2011
> New Prosperity enters into Federal Environmental
Assessment process
January 2012
>
>
2011 gross profi t of $86.3 million and net earnings of $27.0
million
2011 production: 82.9 million lbs of copper and 1.3 million lbs
of molybdenum (100% basis)
February 2012
> Company commences a normal course issuer bid for up to
10 million common shares, which is approximately 5.1% of
the Company’s issued shares
March 2012
> Aley resources increased and upgraded to a Measured
and Indicated Resource of 286 million tonnes with an
average grade of 0.37% Nb2O5 (0.20% COG)
April 2012
> Q1 2012 production: 20.8 million lbs of copper and 438,000
lbs of molybdenum (100% basis)
May 2012
> Agreement reached with Tsay Keh Dene to support the
exploration program and environmental studies at Aley
2011 production: 83 million lbs
of copper and 1.3 million lbs
of molybdenum (100% basis)
President’s Message
to Shareholders
Year in Review
2011 was a building year for Taseko where we advanced our
three key assets: Gibraltar production steadily increased and
we commenced Gibraltar Development Plan 3 to increase
capacity to 85,000 tons per day; New Prosperity re-entered
the environmental assessment process aft er a year of
additional engineering studies; and, at Aley, we completed
a major drilling and exploration program. These initiatives
are the cornerstone of ongoing growth for the Company
and the subsequent increase in shareholder value.
Employee health and safety is a core focus of management.
At Gibraltar, our eff orts to improve in these areas are
refl ected in our 2011 safety performance. The combined
medical aid and lost time injury frequency rate has steadily
improved since restarting the mine and in 2011 was reduced
by nearly 40% over 2010.
Financially, 2011 was another strong year for Taseko. Gross
profi t for the year was $86.3 million, with net earnings of $27.0
million ($0.14 per share) from the sale of our share of 82.9 million
pounds of copper and 1.3 million pounds of molybdenum.
Additionally, we took advantage of a window in the high
yield debt market to issue $200 million of eight year senior
notes and ended the year with over $275 million cash.
Gibraltar Production
2011 Copper and molybdenum production at Gibraltar
was 82.9 million pounds and 1.3 million pounds, respectively.
Copper production was slightly lower than the previous year
as a result of mining lower grade ore and the loss of milling
capacity associated with de-bottlenecking the SAG direct
feed system. Molybdenum production, however, increased
by over 40%, as compared to the prior year, as a result of
signifi cant improvements in molybdenum metal recovery.
Russell E. Hallbauer
President and CEO
industry norm. We have just completed a cost review with our
lead engineering fi rm and the project remains on budget.
As of today, GDP3 construction is nearly 40% complete and
approximately 75% of the originally budgeted $325 million
is now committed. The project is on time and expected to
begin commissioning in December this year.
GDP3 will have a substantial impact on Gibraltar’s production
levels. The project includes the construction of a standalone
30,000 ton per day concentrator, built alongside the existing
55,000 ton per day facility. The additional capacity provided
by GDP3 will increase Gibraltar’s annual copper production
capacity by a further 60 million pounds, to 180 million
pounds, at the life of mine average grade. Included in GDP3
will be the construction of a new molybdenum plant which
will nearly triple annual production to three million pounds.
New Prosperity
Taseko’s wholly-owned New Prosperity Gold-Copper Project
provides long-term value for the Company.
for
stakeholders,
the Company’s
We are actively working on this project, which holds exciting
potential
including
shareholders and local communities. In November 2011,
the project entered into a new federal review process
that will examine Taseko’s revised plans. These revised
plans address the environmental concerns identifi ed in the
original environmental assessment process, and importantly,
includes the preservation of Fish Lake.
The process, being led by the Canadian Environmental
Assessment Agency, will use information gathered in the
previous review and is expected to be completed in
November 2012.
Gibraltar Development Plan 3 (GDP3)
Aley
A common theme in the mining industry over the past
number of years has been capital cost overruns. It is true that
it is much more expensive to build a mine today than, say, 10
years ago, but we believe capital costs increases of 20%, 40%
and even much higher, are largely a function of improper
cost management. These cost escalations should not be the
The advancement of Taseko’s 100% owned Aley Niobium
Project, located in northern British Columbia, has been given
a high priority over the past year.
In March 2012, we announced a 170% resource increase
and upgrade at Aley. The new Measured and Indicated
Resource is 286 million tonnes with an average grade of
Initiatives implemented in
2011 were driven to create
organic growth and deliver
shareholder value
0.37% Nb205 (at a 0.2% Nb205 cutoff ) and contains 739 million
kilograms of niobium. The confi rmation of a Measured and
Indicated resource provides additional confi dence that the
deposit will support a long life, low cost mine.
Planned activities in 2012 include the construction of an
access road, further metallurgical test work and completion
of a feasibility study. We expect to make an investment
decision in early 2013.
Market Review
The market price for copper is the primary driver of the
Company’s profi tability and our ability to generate operating
cash fl ow. During 2011, the average price of copper was
roughly US$4.00 per pound, which is nearly 20% higher than
the average price in 2010. Although copper pricing was
strong in 2011, it remained volatile and declined in the last few
months of the year, before rebounding again in early 2012.
We believe it is prudent fi nancial management to ensure a
minimum revenue stream. In order to minimize the impact
of the copper price volatility, we implemented a hedging
strategy in 2009 using put options to secure a minimum price.
For 2012, put options were purchased for approximately 90%
of our share of copper production, creating a US$3.50 per
pound fl oor for the year.
Looking into 2012
Taseko’s management team looks forward to unlocking
shareholder value in 2012. Our near-term organic growth
at Gibraltar is driven by a fully-funded mine development
program, which will nearly double annual copper production
and provide a three year payback and a 35% internal rate
of return. In addition, we have a diversifi ed 100% owned
gold, copper and niobium project pipeline providing the
Company with strong mid-term growth potential.
I would like to thank all of our employees for their continued
hard work and commitment in 2011. It is their dedication that
has brought the Company to the position it is at today. In
addition, we have the opportunity to work with world class
suppliers and partners. Together, the Board and Management
of your Company look forward to 2012 as we continue to
grow the Company and unlock shareholder value.
Kind regards,
Russell E. Hallbauer
President and Chief Executive Offi cer
Mineral Reserves & Resources
Gibraltar
Mineral Reserves @ 0.20% Cu Cut-Off (May 2011)
Size (M
Tonnes)
Grade
Cu (%)
Grade
Mo (%)
Recoverable Metal
Cu (B lbs)
Contained Metal
Cu (B lbs)
P&P Reserves
M&I Resources
802
950
0.30
0.30
0.008
0.008
4.3
-
4.8
5.7
Th e resource and reserve estimation was completed by Gibraltar mine staff under the supervision of Scott Jones, P.Eng., Vice President,
Engineering and a Qualifi ed Person under National Instrument 43-101. Mr. Jones has verifi ed the methods used to determine grade
and tonnage in the geological model, reviewed the long range mine plan, and directed the updated economic evaluation. Th e estimates
used long term metal prices of US$2.25/lb for copper and US$14.00/lb for molybdenum and a foreign exchange of US$0.85/C$1.00.
Mr. Jones has reviewed this release. A technical report will be fi led on www.sedar.com.
New Prosperity
Mineral Reserves @ C$5.50 NSR/t Cut-Off (November 2009)
Size (M
Tonnes)
Grade
Au (g/t)
Grade
Cu (%)
Recoverable
Metal
Au (M oz)
Recoverable
Metal
Cu (B lb)
Contained
Metal
Au (M oz)
Contained
Metal
Cu (B lb)
P&P Reserves
M&I Resources
830
1,011
0.41
0.41
0.23
0.24
7.7
-
3.6
-
11.0
13.3
4.2
5.3
Th e mineral resource and reserve estimations were completed by Taseko staff under the supervision of Scott Jones, P.Eng., Vice-President, Engineering
and a Qualifi ed Person under National Instrument 43-101. Mr. Jones has verifi ed the methods used to determine grade and tonnage in the geological
model, reviewed the long range mine plan, and directed the updated economic evaluation. Th e estimates for the reserves used long term metal prices
of US$1.65/lb for copper and US$650/oz for gold and a foreign exchange of C$0.82 per US dollar. A technical report was fi led on www.sedar.com.
Aley
Mineral Reserves @ 0.20% Nb2O5 Cut-Off (March 2012)
Size (M Tons)
Grade
Nb2O5 (%)
Contained Metal
Nb (M kgs)
M&I Resources
286
0.37
739
Th e 0.20% Nb2O5 cut-off assumes a niobium price of US$50/kilogram and a 50% process recovery rate. G & A,
processing and ore mining costs were assumed to be US$30/tonne milled plus waste mining costs of US$2.00/tonne. A
45° pit wall slope was generated to constrain the resource within the block model. Th e resource estimate was prepared
by Ronald G. Simpson, P.Geo. with Geosim Services Inc., a Qualifi ed Person independent of Taseko. A technical
report will be fi led on www.sedar.com.
Two-Year Financial Highlights
Consolidated Balance Sheets
(Cdn$ in thousands)
As at December 31,
2011
2010
ASSETS
Current Assets
Cash and Equivalents
$ 277,792
$ 211,793
Accounts Receivable
Other Financial Assets
Inventories
Current Tax Receivables
Prepaids
Other Financial Assets
Property, Plant and Equipment
Intangible Assets
Prepaids
LIABILITIES
Current Liabilities
39,909
86,147
23,290
7,437
2,348
21,918
26,202
21,286
-
534
436,923
281,733
111,641
440,565
5,438
165
93,825
341,098
5,438
-
$ 994,732
$ 722,094
Accounts Payable and Accrued Liabilities
$ 36,289
$ 23,796
Current Portion of Long-term Debt
Other Financial Liabilities
Current Tax Liabilities
Deferred Revenue - Royalty Obligation
Long-Term Debt
Other Financial Liabilities
Provision for Environmental Rehabilitation
Deferred Tax Liabilities
Deferred Revenue - Royalty Obligation
13,753
10,797
-
175
61,014
218,502
45,980
96,022
76,091
306
10,315
7,248
24,528
175
66,062
28,018
54,144
53,129
59,518
481
EQUITY
Share Capital
Contributed Surplus
Accumulated Other Comprehensive
Income (Loss)
Retained Earnings
$ 497,915
$ 261,352
378,393
33,040
(1,398)
86,782
496,817
365,553
26,193
6,249
62,747
460,742
$ 994,732
$ 722,094
Consolidated Statements of Comprehensive Income
(Cdn$ in thousands, except per share amounts)
Year ended December 31,
2011
2010
Revenue
$ 251,866
$ 278,460
Cost of Sales
(165,565)
(157,759)
Gross Profi t
$ 86,301
$ 120,701
General and Administrative
Exploration and Evaluation
Other Operating Income (Expenses)
Gain (Loss) on Contribution to Joint Venture
Finance Expenses
Finance Income
Earnings before Income Taxes
(21,100)
(10,411)
5,175
(3,987)
(19,057)
(10,090)
(2,675)
98,157
$ 55,978
$ 187,036
(22,492)
17,270
50,756
(10,747)
19,572
195,861
Income Tax Expense
(23,782)
(46,504)
Net Earnings for the Year
$ 26,974
$ 149,357
Other Comprehensive Income (Loss)
Unrealized Gain (Loss) on Available-for-sale
Financial Assets, Net of Tax
Realized Gains on Available-for-sale
Financial Assets, Net of Tax
Total Comprehensive Income
(Loss) for the Year
(2,401)
5,249
(5,246)
(3,576)
$ (7,647)
$ 1,673
Total Other Comprehensive Income for the Year
$ 19,327
$ 151,030
Earnings Per Share
Basic
Diluted
$0.14
$0.14
$0.80
$0.74
Weighted-Average Shares Outstanding
Basic
Diluted
193,213
197,748
186,103
203,006
Corporate Information
Head Offi ce
15th Floor - 1040 West Georgia St.
Vancouver, BC V6E 4H1
Toll Free: (877) 441-4533
Main Phone: (778) 373-4533
Facsimile: (778) 373-4534
Website
tasekomines.com
Email
investor@tasekomines.com
Transfer Agent
Computershare Investor Services Inc.
Toll Free: (800) 564-6253
Annual General Meeting
June 1st, 2012
Terminal City Club, Vancouver, BC Canada
Shares Listed
TSX: TKO NYSE Amex: TGB
Senior Offi cers
Russell Hallbauer
President, CEO and Director
John McManus
Senior Vice President, Operations
Peter Mitchell
CFO
Brian Battison
Vice President, Corporate Aff airs
Scott Jones
Vice President, Engineering
Dave Rouleau
Vice President, Operations
For Further
Information
Contact:
Investor Relations
15th Floor, 1040 West Georgia St.
Vancouver, BC V6E 4H1
778.373.4533 T
877.441.4533 TF
investor@tasekomines.com E
TSX: TKO / NYSE Amex: TGB
tasekomines.com