United. Committed. Open. Annual Report 2012 The Year in Review 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) May 2012 > Agreement reached with the Tsay Keh Dene to support the exploration program and environmental studies at Aley September 2012 > New Prosperity Environmental Impact Statement is submitted to Federal Review Panel established for the environmental assessment of the project October 2012 > Gibraltar receives the award for Metal Mine Reclamation from the British Columbia Technical and Research Committee on Reclamation December 2012 2012 Gross profi t of $51.7 million > Gibraltar Mine signs long-term labour agreement > > 2012 Production: 89.7 million pounds of copper and 1.3 million pounds of molybdenum (100% basis) March 2013 April 2013 > > Participation and Cooperation Agreement fi nalized between the Gibraltar Mine and the Williams Lake Indian Band Put options purchased for approximately 40% of Taseko’s share of production for Q1 2014 with a strike price of US$3.00 per pound > Q1 2013 production: 23.2 million pounds of copper and 355 thousand pounds of molybdenum (on a 100% basis) 2012 production (100% basis): 89.8 million lbs of copper 1.3 million lbs of molybdenum President’s Message to Shareholders Russell E. Hallbauer President and CEO Year in Review Built on a Solid Foundation 2012 was a busy year for Taseko and even though economic uncertainties persisted, we made steady progress on our business. The completion of Gibraltar Development Plan 3 (“GDP3”) on time and on budget was the pivotal success of the year. While mining companies worldwide were dealing with capital expenditure overruns, cost infl ation, and asset write downs, our Company was able to deliver an investment plan that will be the catalyst for increased production and lower operating costs for the years ahead, and will provide the foundation for future growth. Many of our shareholders have never had the opportunity to visit an open pit mine, never mind one the size of Gibraltar, which is now the fourth largest open pit copper mine in North America. Thus, it is very diffi cult to put into perspective the scale of a mine like Gibraltar. Below are a few statistics from the recently completed GDP3 construction project, which may help to put the project and Gibraltar into context. I urge you all to go to our website and look at the chronology of photos that will help you better understand your Company. > More than 1,000,000 total project man hours of work to complete GDP3 15,000 cubic yards of concrete 4,000 tons of steel 692 truckloads of material and equipment shipped to site 265,000 meters of cable – enough cable to circle the earth six and a half times 30,000 metres of pipe 1,715 vales > > > > > > During the 18-month construction period and the working of over one million man hours, there were zero Lost Time Injuries (LTI). LTI is industry wide metric used to measure safety performance. A great accomplishment for the construction teams. From a fi nancial perspective, we had a solid year. $18 million was spent on New Prosperity and Aley advancing these projects towards construction decisions. While earnings are an important aspect of our business we will not focus on maximizing near term earnings at the expense of value creating opportunities. We maintained a hedging strategy to ensure Gibraltar can remain cash fl ow positive in the event of a copper price collapse. Gross profi t for 2012, which is the ultimate driver of our business, was $51.7 million from the sale of 66 million pounds of copper and one million pounds of molybdenum. Our commitment to the growth and success of Gibraltar has laid the foundation for the Company. This commitment dates back to 1999, when the operation was fi rst purchased. Aft er being on care and maintenance for fi ve years, the mine restarted in 2004. Since then, with the commitment of the management team, all our dedicated employees and the world class engineering fi rms we work with, it has been transformed from an aging operation with a 40-month mine plan into a modern, world class, 165 million pound per year operation, with a 25 year mine life and 700 employees. A true testament to the foresight of the Company’s management team. The GDP3 project, completed in December 2012, was the construction of a standalone 30,000 ton per day concentrator, built alongside the existing 55,000 ton per day facility plus the construction of a new molybdenum plant. The new concentrator will increase annual copper production by roughly 50% and the new molybdenum plant will increase annual production to 2.5 million pounds. Additionally, signifi cant upgrades to the mine fl eet were made with the purchase of a new Caterpillar shovel, 18 haul trucks and two production drills. In 2012, copper and molybdenum production at Gibraltar was 89.7 million pounds and 1.3 million pounds, respectively. Copper production was slightly lower than expected due to the impact of GDP3 construction activities. However, since the new mill was handed over to operations on March 28th, 2013, following a planned 10 week commissioning schedule, production has been steadily increasing to design capacity. I’d like to personally thank the GDP3 construction team and the engineering and construction companies for all their eff orts over the past 18 months. It is because of their teamwork that we have met our goal of steadily growing the Company. Building Blocks to Further Success With Gibraltar as Taseko’s cornerstone, New Prosperity and Aley are the building blocks to further growth. Taseko’s wholly-owned New Prosperity Gold-Copper Project will generate long-term value for the Company. We are actively working on this project and continue to advance through the Federal Environmental Assessment (EA) process. The new project design, which addresses the environmental concerns identifi ed in the original environmental assessment process, and importantly, includes the preservation of Fish Lake, entered into the EA Panel Review process in November 2011. Initiatives implemented in 2012 were driven to create organic growth and deliver shareholder value The Company anticipates the next step of the process, the public panel hearings, to commence in mid-2013. Following the hearings, the Panel will prepare a report that will provide the basis for the Federal Government’s decision on the granting of the Environmental Assessment Certifi cate. successful, as Gibraltar was recognized with the Award for Metal Mining Reclamation from British Columbia Technical and Research Committee on Reclamation in September 2012. This award is the result of the Company’s forward looking approach to reclamation and responsible mining. Advancing Taseko’s 100% owned Aley Niobium Project, located in northern British Columbia, was another key objective in 2012. Signifi cant progress was made on the Aley metallurgical testwork in 2012 and we were able to fi nalize the process fl owsheet. This was not an easy task given the extremely limited technical information includes construction on niobium production. Other work engineering and environmental studies. The completion of a NI 43-101 compliant reserve is a major milestone for 2013. 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 0.37% Nb205 (at a 0.2% Nb205 cutoff ) and contains 739 million kilograms of niobium. Both projects continue to hold exciting potential for our various stakeholders, included shareholders and the local communities. Our Commitment In addition to our commitment of advancing of our Company’s assets, we are also committed to our workforce, the environment, and the communities in which we operate, including First Nations. Employees Safety is an important priority at Taseko and we work hard to ensure that a culture of safety permeates the workplace. The combined medical aid and LTI frequency rate has steadily improved since restarting the mine and in 2012 was reduced by nearly 40% over 2011. A long-term labour agreement was signed in December with Gibraltar’s unionized employees. The agreement, in place until May 31, 2016, provides a fair deal for our unionized employees and also long-term, stable labour costs. First Nations We have always had good working relationships with many local First Nations, but within the last year we have made eff orts to formalize these partnerships. In May 2012, the Company signed an agreement with the Tsay Keh Dene to support the exploration program and environmental studies for the development of Aley. In addition, in April 2013, a Participation and Cooperation Agreement was fi nalized between Gibraltar and the Williams Lake Indian Band. Both agreements are extensive in nature and will provide education and training opportunities, as well as economic development initiatives. These agreements refl ect our Company’s commitment to work together with First Nations communities in a mutually benefi cial manner. We are aligned with the local communities in our interest to ensure the Company continues to generate local value and opportunity through environmentally sound mining practices. Th e Road Ahead I am very excited about the near-term prospects for Taseko. Aft er seven years of continuous investment at Gibraltar, we are now ready to demonstrate the quality of this asset. Construction is offi cially complete and the facility is in fantastic shape to produce record levels of copper in 2013. The path to an EA decision on New Prosperity has been a long one but we remain confi dent that 2013 will have many positive developments as we move toward the construction of one of Canada’s largest gold-copper mines. I would like to thank all our stakeholders for persevering through these challenging economic times and for their continued support of Taseko and its management team. Environmental Recognition g Kind regards, As stewards of the environment, we are proud of our reputation as a responsible mining company. At Gibraltar, 2011 marked the beginning of several large-scale reclamation and research projects that will be carried out throughout the life of the mine. This proactive approach proved Russell E. Hallbauer President and Chief Executive Offi cer Mineral Reserves & Resources Gibraltar Mineral Reserves @ 0.20% Cu Cut-Off (December 2012) Size (M Tonnes) Grade Cu (%) Grade Mo (%) Recoverable Metal Cu (B lbs) Contained Metal Cu (B lbs) P&P Reserves M&I Resources 770 919 0.301 0.301 0.008 0.008 4.1 - 4.6 5.5 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$2.25lb for copper and US$14.00/lb for molybdenum and a foreign exchange of US$0.85/C$1.00. Reserves and Resources were updated as of December 31, 2012. New Prosperity Mineral Reserves @ C$5.50 NSR/t Cut-Off 1 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 Total 830 181 1,011 0.41 0.40 0.41 0.23 0.30 0.24 7.7 - - 3.6 - - 11.0 2.3 13.3 4.2 1.1 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. 1 A technical report has been 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$2.00/tonne. A 45° pit wall slope was generated to constrain the resource within the block model. Th e resource estimate was prepared by Ronald G. Simpson, P.Geo. with Geosim Services Inc., a Qualifi ed Person independent of Taseko. Two-Year Financial Highlights Consolidated Balance Sheets (Cdn$ in thousands) As at December 31, 2012 2011 ASSETS Current Assets Cash and Equivalents $ 134,995 $ 277,792 Accounts Receivable Other Financial Assets Inventories Current Tax Receivables Prepaids Other Financial Assets Property, Plant and Equipment Intangible Assets Prepaids Other Receivable LIABILITIES Current Liabilities 28,966 29,865 27,556 2,309 5,123 39,909 86,147 23,290 7,437 2,348 228,814 436,923 102,737 631,997 5,438 4,500 12,961 111,641 440,565 5,438 165 - $ 986,447 $ 994,732 Accounts Payable and Accrued Liabilities $ 42,938 $ 33,005 Current Portion of Long-term Debt Interest Payable Other Financial Liabilities Long-Term Debt Other Financial Liabilities Provision for Environmental Rehabilitation Deferred Tax Liabilities EQUITY Share Capital Contributed Surplus Accumulated Other Comprehensive Income (Loss) Retained Earnings 18,067 3,213 10,995 75,213 234,793 35,162 106,517 71,480 13,753 3,284 10,972 61,014 218,502 46,286 96,022 76,091 $ 523,165 $ 497,915 368,128 37,487 (5,365) 63,032 463,282 378,393 33,040 (1,398) 86,782 496,817 $ 986,447 $ 994,732 Consolidated Statements of Comprehensive Income (Loss) (Cdn$ in thousands, except share and per share amounts) Year ended December 31, 2012 2011 Revenue $ 253,607 $ 251,866 Cost of Sales Gross Profi t (201,911) (165,565) 51,696 86,301 General and Administrative Exploration and Evaluation Other Operating Income (Expenses) Loss on Contribution to Joint Venture Finance Expenses Finance Income Foreign exchange Loss (Loss) Earnings Before Income Taxes (19,084) (17,807) (30,541) - (21,100) (10,411) 5,175 (3,987) $ (15,736) $ 55,978 (14,912) 12,092 (701) (18,556) (22,492) 17,270 (6,489) 50,756 Income Tax Recovery (Expense) 2,891 (23,782) Net (Loss) Earnings for the Year $ (15,665) $ 26,974 Other Comprehensive Loss Unrealized Gain (Loss) on Available-for-sale Financial Assets, Net of Tax Realized Gains on Available-for-sale Financial Assets, Net of Tax (2,726)) (2,401) (1,241) (5,246) Total Comprehensive Loss for the Year $ (3,967) $ (7,647) Total Other Comprehensive Income (Loss) for the Year $ (19,632) $ 19,327 Adjusted Net Earnings $ 1,854 $ 17,783 Earnings (Loss) Per Share Basic Diluted ((0.08) (0.08) $0.14 $0.14 Weighted-Average Shares Outstanding Basic Diluted 192,599 192,599 193,213 197,748 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 6, 2013 Terminal City Club, Vancouver, BC Canada Shares Listed TSX: TKO NYSE MKT: TGB Senior Offi cers Russell Hallbauer President, CEO and Director Ron Thiessen Chairman John McManus Senior Vice President, Operations Brian Battison Vice President, Corporate Aff airs Scott Jones Vice President, Engineering Dave Rouleau Vice President, Operations Rob Rotzinger Vice President, Capital Projects Authentically Ambitious
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