President’s Message to Shareholders Dear Fellow Shareholders, 2018 Performance The last year has been a year of two distinctly different stories. While we made significant and positive developments at our Florence Copper project, these great achievements were unfortunately not reflected in our share price. The overall market, particularly for the mining and metals companies, remained very soft. Key indices in 2018 were all down between 9%-26% and the price of copper declined by 18% in the year. These market dynamics created challenging conditions for Taseko as well as our shareholders. I want to focus on the positive developments from 2018, which relate to areas of our business that we do have control over. Strong financial returns were generated from our Gibraltar Mine. Copper production fluctuated but we worked hard to control costs and maintain a healthy operating margin even though it was a lower production year. With higher copper pricing to start 2019, strengthening supply/demand fundamentals and reduced capital spending, we are optimistic that we can improve on last year’s financial performance. Gibraltar Mine Florence Copper Project, Production Test Facility Wellfield Florence Copper Project, Production Test Facility SX/EW Processing Plant 2018 Index Relative Performance Index Relative Performance 90 Dear Fellow Shareholders, The last year has been a year of two distinctive stories. While we made significant and positive developments at our Florence Copper project, these great achievements were unfortunately not reflected in our share price. The 110 overall market, particularly for the mining and metals companies, 100 remained very soft. Key indices in 2018 were all down between 9%- 90 26% and the price of copper declined by 18% in the year. These 80 market conditions created challenging conditions for Taseko as 70 well as our shareholders. Apr-18 Jan-18 Jul-18 Index Relative Performance 110 100 80 70 Jan-18 Apr-18 Jul-18 Oct-18 S&P/TSX Composite Index S&P/TSX Global Mining Index LME Copper Price Oct-18 S&P/TSX Small Cap Index S&P/TSX Global Base Metals Index Dear Fellow Shareholders, Florence Copper Project The last year has been a year of two distinctive stories. While we made Through most of 2018 we steadily advanced the significant and positive construction of our Florence Copper project test developments at our Florence facility, which was completed on time and on Copper project, these great budget in the third quarter. After final regulatory achievements were unfortunately authorizations and a short commissioning period, not reflected in our share price. The we commenced wellfield operations in the fourth overall market, particularly for the quarter. This was a long awaited and much mining and metals companies, anticipated milestone. remained very soft. Key indices in 2018 were all down between 9%- We have now been operating the test facility for about 26% and the price of copper five months and producing +99.9% copper cathode declined by 18% in the year. These for over a month. We are extremely pleased with market conditions created the overall performance of both the wellfield and challenging conditions for Taseko as the SX/EW plant. The most important aspect of the well as our shareholders. test facility is the wellfield which is demonstrating to all key stakeholders that we are safeguarding the environment. The many observation, monitoring and point of compliance wells have been providing us with data for six months now and confirm all permit requirements continue to be met. We are also gaining valuable information which will help us to make design and operational improvements to the commercial scale facility. Adjusted EBITDA Our other key focus is arranging construction financing for the commercial scale operation at Cash Flows from Operations Florence Copper. Our plan is to have a financing strategy in place by the end of 2019, and we are now engaged with potential lenders, streaming and royalty companies, and potential strategic partners. There will be many different options available to us and we are fully confident that we can come up with an Positive Growth for Taseko Earnings from Operations optimal financing package to maximize the returns for both the project and our shareholders. Our goal is With Gibraltar continuing to generate to start construction within a year from now and to healthy margins and cash flow, be commissioning the commercial scale facility before commercial production from Florence the end of 2021. Although this is an ambitious goal, Copper just a couple of years away we are confident in this timing based on how things and Yellowhead positioned behind it, have progressed in the last six months. Taseko’s pipeline of growth projects has never been stronger. Yellowhead Mining Acquisition Florence Copper Project production year. While Gibraltar has been Taseko’s In 2018 we acquired Yellowhead Mining. This cornerstone asset for 15 years and transaction, which closed earlier this year, was a low still has many years of production cost acquisition and we believe this project is far ahead, the future of the Company is more valuable with significantly more potential than now emerging. Florence will what was promoted in the past. We will spend the dramatically decrease our overall coming months addressing a number of key areas copper production costs and will in Yellowhead’s 2014 Feasibility Study where we increase our operating profit by believe the project’s economics can be improved. nearly 150%. Yellowhead will vault We have also initiated the environmental assessment your Company in the next few years review process. into a larger mid-tier copper producer. 2018 Performance I want to focus on the positive developments from 2018, which relate to areas of our business that we do have control over. Strong financial returns were generated from our Gibraltar Mine. Copper production fluctuated but we worked hard to control costs and maintain a healthy operating margin even though it was a planned lower Copper Production 125 million pounds Adjusted EBITDA Earnings from Operations $94 million $98 million production year. Growing Production = Increasing Operating Margin* $112 million $700 With higher copper pricing to start 2019, strengthening supply/demand fundamentals and reduced capital spending, we are optimistic that we can improve on last year’s financial performance. Growing Production = Increasing Operating Margin* With higher copper pricing to start 2019, strengthening supply/demand fundamentals and reduced 300 capital spending, we are optimistic that we can improve on last year’s financial performance. Through most of 2018 we steadily advanced the construction of our Florence Copper project test facility, which was completed on time and on budget in the third quarter. After final regulatory authorizations $500 Through most of 2018 we steadily advanced the construction of our Florence Copper project test facility, which was completed on time and on budget in the third quarter. After final regulatory authorizations 200 S&P/TSX Composite Index S&P/TSX Global Mining Index LME Copper Price S&P/TSX Small Cap Index S&P/TSX Global Base Metals Index 2018 Performance Copper Production 125 million pounds Cash Flows from Operations 2018 Performance $94 million I want to focus on the positive developments from 2018, which relate to areas of our business that we do have control over. $98 million $112 million Strong financial returns were generated from our Gibraltar Mine. Copper production fluctuated but we worked hard to control costs and maintain a healthy operating margin even 400 though it was a planned lower $600 Gibraltar (75%) Florence Copper Project Florence Yellowhead Operating Margin $400 $300 ) s n o i l l i i m $ C ( * n g r a M g n i t a r e p O $200 $100 $0 2019 2020 2021 2022 2023 2024 2025 *Based on US $3.00/lb copper, long-term/published CI costs & foreign exchange rate of C$/US$ 0.80 150 100 50 0 350 250 i l l i m ) s n o s b l ( n o i t c u d o r P r e p p o C We continue to work very hard to create long-term returns for you, our shareholders. Your patience and support is very much appreciated by myself and all Taseko employees. We are all looking forward to an improved share price in the months ahead. Russell E. Hallbauer President & CEO Safety and Environment Positive Growth for Taseko Just as important as any development milestone or financial achievement, is the health and safety of our employees and the protection of the environment. I am very pleased to tell you that 2018 was our best year ever at Gibraltar for safety, and for the fourth time in the last five years Gibraltar has won the John Ash Award for having the lowest injury frequency rate for the largest mines in the province, those that log a minimum of 1,000,000 worker hours per year. We recorded zero Lost Time Incidents and had only five medical aids for the year. On the environmental side we also had a good year with no permit or material regulatory non-compliances for the year. Even though we are happy with the results from 2018, we will strive to improve our performance in these areas. With Gibraltar continuing to generate healthy margins and cash flow, commercial production from Florence Copper just a couple of years away and Yellowhead positioned behind it, Taseko’s pipeline of growth projects has never been stronger. While Gibraltar has been Taseko’s cornerstone asset for 15 years and still has many years of production ahead, the future of the Company is now emerging. Florence will dramatically decrease our overall copper production costs and will increase our operating profit by nearly 150%. Yellowhead will vault your Company in the next few years into a larger mid-tier copper producer. We continue to work very hard to create long-term returns for you, our shareholders. Your patience and support is very much appreciated by myself and all Taseko employees. We are all looking forward to an improved share price in the months ahead. Russell E. Hallbauer President & CEO Florence Copper Project Gibraltar Mine employees