Hudbay Minerals Inc. press release

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

2023-05-03

TSX - Toronto Stock Exchange · Copper · Molybdenum · Gold · Silver · Sulfur · Zinc · Canada · Corporate Finance

Canada NewsWire

| This release should be read with the Company's Financial Statements and Management Discussion & Analysis ("MD&A"), available at www.tasekomines.com and filed on www.sedar.com . Except where otherwise noted, all currency amounts are stated in Canadian dollars. Taseko's 87.5% owned Gibraltar Mine is located north of the City of Williams Lake in south-central British Columbia. Production and sales volumes stated in this release are on a 100% basis unless otherwise indicated. |

VANCOUVER, BC , May 3, 2023 /CNW/ - Taseko Mines Limited (TSX: TKO) (NYSE American: TGB) (LSE: TKO) ("Taseko" or the "Company") reports first quarter 2023 Adjusted EBITDA* 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 $0.02 per share.

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Stuart McDonald , President and CEO of Taseko, stated, "An average realized copper price of US$4.02 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 thousand pounds of molybdenum. Copper head grades for the period were on plan, averaging 0.22%, 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 #1 to minimize concentrator downtime."

Mr. McDonald added, "In the first quarter, we increased our effective interest in Gibraltar to 87.5%, after acquiring a 12.5% stake from one of our joint venture partners. The transaction closed in mid-March and provides immediate 17% 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 de-risked in recent years and has an after-tax Net Present Value (8%) of US$930 million using a long-term copper price of US$3.75 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 US$3.85 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 US$3.75 per pound for most of Gibraltar's production for the balance of 2023. Our original production guidance of 115 million pounds (+/-5%) for 2023 remains unchanged," concluded Mr. McDonald.

| *Non-GAAP performance measure. See end of news release NI 43-101 Technical Report, Florence Copper Project, Pinal County, Arizona" dated March 30, 2023. The report has been prepared for Taseko Mines Limited, a producing issuer, under the supervision of Richard Tremblay, P.Eng., MBA, Richard Weymark, P.Eng., MBA, and Robert Rotzinger, P.Eng. Mr. Tremblay is employed by the Company as Sr. Vice President Operations, Mr. Weymark is Vice President Engineering and Robert Rotzinger is Vice President Capital Projects. All three are "Qualified Persons" as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects ("NI 43–101"). |

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 US$930 million (at an 8% discount rate) with an internal rate of return of 47% and a 2.6 year payback period; First quarter earnings from mining operations before depletion and amortization* was $41.1 million , Adjusted EBITDA* was $36.1 million , and cash flows from operations was $28.0 million ; GAAP net income was $4.4 million ( $0.02 per share) and Adjusted net income* was $5.1 million ( $0.02 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%, similar to recent quarters and in line with management's expectation; Gibraltar sold 26.6 million pounds of copper in the quarter (100% basis) which contributed to revenue for Taseko of $115.5 million . The average realized copper price was US$4.02 per pound for the first quarter, compared to the LME average price of US$4.05 per pound; Total site costs* in the first quarter was $112.8 million on a 100% 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% interest in the Gibraltar mine from Sojitz Corporation ("Sojitz") and now holds an effective 87.5% 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 US$80 million , subject to credit approval and other conditions; and The Company had a closing cash balance of $102 million at March 31, 2023 .

HIGHLIGHTS

| Operating Data (Gibraltar - 100% basis) | Three months ended March 31, | | | | | | 2023 | 2022 | Change | | | Tons mined (millions) | 24.1 | 20.3 | 3.8 | | | Tons milled (millions) | 7.1 | 7.0 | 0.1 | | | Production (million pounds Cu) | 24.9 | 21.4 | 3.5 | | | Sales (million pounds Cu) | 26.6 | 27.4 | (0.8) | | | | | | | |

| Financial Data | Three months ended March 31, | | | | (Cdn$ in thousands, except for per share amounts) | 2023 | 2022 | Change | | Revenues | 115,519 | 118,333 | (2,814) | | Earnings from mining operations before depletion and amortization* | 41,139 | 42,773 | (1,634) | | Cash flows provided by operations | 27,999 | 51,753 | (23,754) | | Adjusted EBITDA * | 36,059 | 38,139 | (2,080) | | Adjusted net income * | 5,088 | 6,162 | (1,074) | | Per share - basic ("Adjusted EPS") * | 0.02 | 0.02 | - | | Net income (GAAP) | 4,439 | 5,095 | (656) | | Per share - basic ("EPS") | 0.02 | 0.02 | - |

REVIEW OF OPERATIONS

Gibraltar mine

| Operating data (100% basis) | | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | | Tons mined (millions) | | 24.1 | 22.9 | 23.2 | 22.3 | 20.3 | | Tons milled (millions) | | 7.1 | 7.3 | 8.2 | 7.7 | 7.0 | | Strip ratio | | 1.9 | 1.1 | 1.5 | 2.8 | 2.6 | | Site operating cost per ton milled (Cdn$)* | | $13.54 | $13.88 | $11.33 | $11.13 | $11.33 | | Copper concentrate | | | | | | | | Head grade (%) | | 0.22 | 0.22 | 0.22 | 0.17 | 0.19 | | Copper recovery (%) | | 80.7 | 83.4 | 77.1 | 77.3 | 80.2 | | Production (million pounds Cu) | | 24.9 | 26.7 | 28.3 | 20.7 | 21.4 | | Sales (million pounds Cu) | | 26.6 | 25.5 | 26.7 | 21.7 | 27.4 | | Inventory (million pounds Cu) | | 3.7 | 5.4 | 4.2 | 2.7 | 4.0 | | Molybdenum concentrate | | | | | | | | Production (thousand pounds Mo) | | 234 | 359 | 324 | 199 | 236 | | Sales (thousand pounds Mo) | | 225 | 402 | 289 | 210 | 229 | | Per unit data (US$ per pound produced) * | | | | | | | | Site operating costs * | | $2.82 | $2.79 | $2.52 | $3.25 | $2.95 | | By-product credits * | | (0.37) | (0.40) | (0.15) | (0.15) | (0.18) | | Site operating costs, net of by-product credits * | | $2.45 | $2.39 | $2.37 | $3.10 | $2.77 | | Off-property costs | | 0.37 | 0.36 | 0.35 | 0.37 | 0.36 | | Total operating costs (C1) * | | $2.82 | $2.75 | $2.72 | $3.47 | $3.13 |

OPERATIONS ANALYSIS

First Quarter Review

Gibraltar produced 24.9 million pounds of copper for the quarter, a 7% 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% below plan for the period.

Copper head grades of 0.22% were in line with recent quarters and management expectations. Copper recoveries in the first quarter were 80.7% 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 0.4 million tons in the first quarter and 0.8 million 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 thousand pounds in the first quarter. At an average molybdenum price of US$32.79 per pound and with inclusion of the impact of favorable provisional price adjustments, molybdenum generated a by-product credit of US$0.37 per pound of copper produced in the first quarter.

Off-property costs per pound produced* were US$0.37 and were generally in line with recent quarters.

Total operating costs per pound produced (C1)* were US$2.82 for the quarter, compared to US$3.13 in the same period in 2022 with key variances summarized in the bridge graph below:

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 #1 SAG mill.

The technical information contained in this MD&A related to the Gibraltar mine has been reviewed and approved by Richard Weymark , P.Eng., MBA, VP Engineering, who is a Qualified Person in accordance with the requirements of NI 43-101.

Gibraltar is expected to produce 115 million pounds of copper (+/-5%) in 2023 on a 100% basis.

Strong metal prices combined with our copper hedge protection continues to provide stable operating margins at the Gibraltar mine. Copper prices in the first quarter averaged US$4.05 per pound which is slightly higher than the 2022 average of US$3.99 per pound. Molybdenum prices are currently US$20.88 per pound, which is 11% higher than the average price in 2022. The Company currently has copper price collar contracts in place that secure a minimum copper price of US$3.75 per pound for 52 million pounds of copper until December 31, 2023 .

ACQUISITION OF ADDITIONAL 12.5% INTEREST IN GIBRALTAR

On March 15, 2023 , the Company completed the acquisition of an additional 12.5% interest in the Gibraltar mine from Sojitz. Gibraltar is operated through a joint venture which is owned 75% by Taseko and 25% by Cariboo Copper Corporation ("Cariboo"). Under the terms of the agreement, Taseko has acquired Sojitz's 50% interest in Cariboo and now holds an effective 87.5% interest in the Gibraltar mine. The other 50% of Cariboo is held equally by Dowa Metals & Mining Co., Ltd. ("Dowa") and Furukawa Co. Ltd. ("Furukawa").

The acquisition price consists of a minimum amount of $60 million payable over a five-year period and potential contingent payments depending on Gibraltar mine copper revenues and copper prices over the next five years. An initial $10 million has been paid to Sojitz on closing and the remaining minimum amount will be paid in $10 million annual instalments over the next five years. There is no interest payable on the minimum amounts and the amounts payable to Sojitz are secured against shareholder loans owing from Cariboo to Taseko.

The contingent payments are payable annually for five years only if the average LME copper price exceeds US$3.50 per pound in a year. The payments will be calculated by multiplying Gibraltar mine copper revenues by a price factor, which is based on a sliding scale ranging from 0.38% at US$3.50 per pound copper to a maximum of 2.13% at US$5.00 per pound copper or above. Total contingent payments cannot exceed $57 million over the five-year period, limiting the acquisition cost to a maximum of $117 million .

Taseko will become a party to the existing Cariboo shareholders agreement with Dowa and Furukawa. There will be no change to the offtake contracts established in 2010 and Dowa and Furukawa will continue to receive 30% of Gibraltar's copper concentrate offtake. There will be no impact to the operation of the Gibraltar Joint Venture.

FLORENCE COPPER

The Company is awaiting the issuance of the final Underground Injection Control ("UIC") permit from the U.S. Environmental Protection Agency ("EPA"), which is the final permitting step required prior to construction commencing on the commercial production facility. The EPA is currently addressing comments that were received during the public comment period, which was held in the fall of 2022. Public comments submitted to the EPA have demonstrated strong support for the Florence Copper project among local residents, business organizations, community leaders and state-wide organizations.

In December 2022 , the Company signed agreements with Mitsui & Co. (U.S.A.) Inc. ("Mitsui") to form a strategic partnership to develop Florence Copper. Mitsui has committed to an initial investment of US$50 million which is conditional on receipt of the final UIC permit, with proceeds to be used for construction of the commercial production facility. The initial investment will be in the form of a copper stream agreement on 2.67% of the copper produced at Florence Copper. In addition, Mitsui has the option to invest an additional US$50 million (for a total investment of US$100 million ) for a 10% equity interest in Florence Copper.

Detailed engineering and design for the commercial production facility is substantially completed and procurement activities are well advanced. The Company has purchased the major processing equipment associated with the SX/EW plant and the equipment has now been delivered to the Florence site. The Company is well positioned to transition into construction once the final UIC permit is received. The Company incurred $9.9 million of capital expenditures at the Florence project in the first quarter of 2023.

In March 2023 , the Company announced the results of recent technical work and updated economics for the Florence Copper project. The Company has filed a new technical report entitled "NI 43-101 Technical Report – Florence Copper Project, Pinal County, Arizona " dated March 30, 2023 (the "Technical Report") on SEDAR. The Technical Report was prepared in accordance with NI 43-101 and incorporates updated capital and operating costs for the commercial production facility and refinements made to the operating models, based on the Production Test Facility ("PTF") results.

The technical work completed by Taseko in recent years has been extensive and has de-risked the project significantly. The PTF operated successfully over an 18-month period and provided a valuable opportunity to test operational controls and strategies which will be applied in future commercial operations. In addition, a more sophisticated leaching model has been developed and calibrated to the PTF wellfield performance. This detailed modeling data, along with updated costing, has been used to update assumptions for the ramp up and operation of the commercial wellfield and processing facility.

Florence Copper Project Highlights:

Net present value of US$930 million (after-tax at an 8% discount rate) Internal rate of return of 47% (after-tax) Payback period of 2.6 years Operating costs (C1) of US$1.11 per pound of copper Annual production capacity of 85 million pounds of LME grade A cathode copper 22 year mine life Total life of mine production of 1.5 billion pounds of copper Total estimated initial capital cost of US$232 million remaining Long-term copper price of US$3.75 per pound

The technical information contained in this MD&A related to the Florence Copper Project has been prepared by Richard Weymark , P.Eng., MBA, VP Engineering, Rob Rotzinger , P.Eng., VP Capital Projects, and Richard Tremblay , P.Eng., MBA, Senior VP Operations, who are Qualified Persons in accordance with the requirements of NI 43-101.

LONG-TERM GROWTH STRATEGY

Taseko's strategy has been to grow the Company by acquiring and developing a pipeline of complementary projects focused on copper in stable mining jurisdictions. We continue to believe this will generate long-term returns for shareholders. Our other development projects are located in British Columbia.

Yellowhead Copper Project

Yellowhead Mining Inc. ("Yellowhead") has an 817 million tonnes reserve and a 25-year mine life with a pre-tax net present value of $1.3 billion at an 8% discount rate using a US$3.10 per pound copper price based on the Company's 2020 NI 43-101 technical report. Capital costs of the project are estimated at $1.3 billion over a 2-year construction period. Over the first 5 years of operation, the copper equivalent grade will average 0.35% producing an average of 200 million pounds of copper per year at an average C1* cost, net of by-product credit, of US$1.67 per pound of copper. The Yellowhead copper project contains valuable precious metal by-products with 440,000 ounces of gold and 19 million ounces of silver with a life of mine value of over $1 billion at current prices.

The Company is preparing to advance into the environmental assessment process and is undertaking some additional engineering work in conjunction with ongoing engagement with local communities including First Nations. The Company is also collecting baseline data and modeling which will be used to support the environmental assessment and permitting of the project.

The technical information contained in this MD&A related to the Yellowhead Copper Project has been prepared by Richard Weymark , P.Eng., MBA, VP Engineering, who is a Qualified Person in accordance with the requirements of NI 43-101.

New Prosperity Gold-Copper Project

In late 2019, the Tŝilhqot'in Nation, as represented by Tŝilhqot'in National Government, and Taseko entered into a confidential dialogue, with the involvement of the Province of British Columbia , in order to obtain a long-term resolution of the conflict regarding Taseko's proposed copper-gold mine previously known as New Prosperity, acknowledging Taseko's commercial interests and the Tŝilhqot'in Nation's opposition to the project.