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