Good day, ladies and gentlemen, and welcome to the Taseko Mines 2012 Year-End Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Brian Bergot, Director of Investor Relations. Sir, you may begin.

Thank you, Kate. Good morning, ladies and gentlemen, and welcome to Taseko Mines 2012 Fourth Quarter and Annual Results Conference Call. My name is Brian Bergot, and I am the Director of Investor Relations for Taseko. With me today in Vancouver is Russ Hallbauer, President and CEO of Taseko; John McManus, Senior Vice President, Operations; and Peter Mitchell, Taseko’s Chief Financial Officer. After opening remarks by management, which will review 2012 business and operational results, we'll open up the phone lines to analysts and investors for a question-and-answer session. Accompanying management’s discussion will be presentation slides for our webcast participants. Alternatively, the presentation can be found in the Investor Relations section of our website. I would also like to remind our listeners that our comments and answers to your questions may contain forward-looking information. This information, by its nature, is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome. Please refer to the bottom of our latest news release for more information. I will now turn the call over to Russ for his remarks.

Thank you, Brian. Good morning, everyone. Thank you for joining us today to discuss our fourth quarter and year-end results and to provide you with an update on Gibraltar and the various activities that have been on the goal for the last quarter. Gross profit for the year was roughly $52 million from our sale of 66 million pounds of copper and 1 million pounds of molybdenum on our 75% ownership of Gibraltar's 90 million pounds of copper and 1.3 million pounds of molybdenum. Peter will speak more to the financials in his presentation. In reviewing 2012, concentrate production was affected as a result of lost production in Q1 related to water issues in our granite pit. Water affected ore release and ore fragmentation, which, in turn, hindered throughput through our SAG mill. Resolving the water incursion and getting new operational plan back on track and the operating issues resolved took us well into the second quarter. In the second half of the year, throughput increased. However, we were affected by lower mill availability and subsequent operating time as a consequence of our GDP3 tie in. These events are behind us now as operations are stable. We've gotten our GDP concentrator producing the hourly rates we expect, and now it's a question of methodically increasing our recovery rates and obtaining the mill availability targets as we're not hindered by GDP3 tie-ins, a much simpler task now than what was presented to us in early 2012. There's always commentary around concentrator efficiencies and design criteria in terms of throughput. And you see many new mining operations after running for a while moving to add secondary crushing systems between their primary crushers and the SAG mills to increase throughput after they have had trouble hitting projected milling rates. To be clear in…

Thanks, Russ. From a financial perspective for Taseko, the fourth quarter represented a continuation of the building theme in 2012 with the construction of GDP3 along with New Prosperity and Aley development, all impacting operating results and a transition in our balance sheet accounts with cash reductions offset by fixed asset increases. Revenue for 2012 was $253.6 million, which was comparable to the 2011 revenue of $251.9 million. Revenue in the fourth quarter was $62.9 million and comparable to the $60.5 million the same period last year. A reminder to listeners, revenue recognition is a function of copper shipments and can vary widely quarter-to-quarter depending on schedule. Copper concentrate inventory was 2.5 million pounds at year end, representing the lowest level for the 2012 recording periods. Copper prices closed the year within 2% of where they began in 2013, however, lower than 2011 on an average basis, which impacted revenues. Cost of sales and gross margin were impacted by increased labor cost, a 27% increase in headcount at Gibraltar from the end of 2011 to 2012 for the reasons that Russ highlighted. General and admin cost which for 2012 were $19.1 million, down from $21.1 million due to reductions in stock-based compensation. Exploration and evaluation expense of $17.8 million in 2012 as compared to $10.4 million in 2011, representing spending on the Aley project development and our EA for New Prosperity. Our accounting treatment continues to be to expense this work depending on 2012 with less than budgeted because of scheduling certain items, including road construction and metallurgical work. Other operating loss for 2012 was $30.5 million comprised most significantly of a $24.8 million unrealized loss and a $5 million realized loss on copper derivative instruments. Both are part of our copper price protection program. The unrealized portion of these…

Thanks, Peter. Operator, let's now open the lines to questions.

[Operator Instructions] Our first question comes from the line of Brett Levy with Jefferies & Company. Brett M. Levy - Jefferies & Company, Inc. Fixed Income Research: It seems like good things are on the way here. Can you talk a little bit about sort of your hedging strategy going forward?

Certainly. We've been hedging since 2009, and our general philosophy has been to hedge our share of costs at Gibraltar just to cover the downside. So going into 2013, you can see that our hedge position -- our hedge book in the first half of the year is slightly higher than the back half of the year. That's something that we're looking at and also sort of monitoring as we complete the commissioning of GDP3 and ramp up our production. But it's something that we'll continue to hedge our share of operating costs and kind of a proactive part of the way we manage at Gibraltar. Brett M. Levy - Jefferies & Company, Inc. Fixed Income Research: And you go out about a year. In other words, you're not doing anything for '14 additionally...

We have done nothing for '14 as of yet, in terms of -- specifically, we buy puts, and the puts obviously, the time value of money is a factor. So managing the cost of those puts is very important. The further out the puts are, the more expensive they get. Brett M. Levy - Jefferies & Company, Inc. Fixed Income Research: And as you do your sort of own modeling forward here, where do you see troughs liquidity going to and at what point -- obviously, we can build our own models, but at this point, you feel like you have more than enough, I just want to get a sense sort of what timing and what sort of level you see trough liquidity being?

Are you talking about cash liquidity? Brett M. Levy - Jefferies & Company, Inc. Fixed Income Research: Yes.

Yes, no. We're in good shape. We finished the year with $135 million in cash, and we're virtually at what -- we've completed construction at GDP3. So we're really at a sort of transition point to getting GDP3 commissioned and starting to generate cash and building our cash position back up.

Our next question comes from the line of Steve Parsons with National Bank Financial.

A quick question on GDP3, wondering if you could provide a bit more color on the current status of the expansion and maybe detail your ramp up milestones that contributed to the -- that contribute to the previous production guidance for GDP3.

John?

Well, the status of the project is, is it's essentially complete. We're doing test runs of ore through all of the systems. The short runs, we run it for 15 or 20 minutes and then stop, check the alignment to the belts and the pumps and make sure that everything was running well. Our internal ramp-up schedule is to have it completely -- to target tonnage by the end of the third quarter. We think that this is probably going to be very achievable. There's nothing in this mill that we haven't already run in the other mill, other than the 20-foot ball mill, which is much simpler to run than 6 small ball mills. The mill itself, the flotation sections, the reagents, everything else is all and well-tested over the last 7 or 8 years at Gibraltar. We've got a trained workforce in place. We're ready to go. So I'm optimistic that we'll get it up quickly, but these things always take some time to work through the bugs. You have things that are installed that need to be checked. All of the operating systems and monitoring systems need to be run and checked. But I'm really proud of what the guys have done up there. It's amazing, actually.

And I think, Steve, if you look at what we provided you guys in terms of our projections, we said 12 million to 14 million tons would be produced in the first half of the year and 14 million to 15 million in the second half. And if you look at where we are right now, if you assume that we're doing x number of tons through GDP2 concentrator and you project 12 million tons for the first half of the year, that means we have to average right around 20,000 tons a day nominally through the GDP3 concentrator to hit the low end of that. So if John and his crew do 25, then we're going to be -- if they do 30,000 tons, we'll be up to 14 million tons, if we do 25,000 tons we'll be somewhere between 12 million tons -- so that's how we guided, and I think we're pretty comfortable with that. When these things -- when you fire -- when John and his guys start to fire them up, once they work through all these system issues, it's not like you're going to run this thing at 5,000 tons a day for 30 days. When you push the green button, I think, when we fired up GDP2, it went right up to 30,000 tons just like that, didn't it, John?

Yes. The problem isn't the throughput rate. It's the run time. It's how you get up to -- because these run -- this machine will run at 2,000 tons an hour right off the bat as long as we can run it and then it'll shut -- is the keeping it running. And that's what we're working through right now.

Fair enough. Can you just -- quick comment on how the mine is ready for feeding the mill out. And so those are fresh points. [ph Are you stocked? Do you have a stockpile ahead of the mill? Where are you at in that respect?

Well, what we've got is, we've got all the equipment into place. We're still bringing a few trucks in, but the mine itself is ready to go. Much better shape than we were last year, the water issues, we're way ahead of it this time. We've got new gear. We've got a whole new fleet of trucks, new shovel, drills. One more drill to come in. The mine plan, the ores is-- rather than trying to stockpile in front of the mill, we keep it in the pit to run it at the right time. So the mine planning is in very good shape. The other thing is to -- is that -- I call it concentrator #1 and concentrator #2. One is the old one and #2 is the new one. Concentrator #1 is running much better than it was last year. We've actually -- we've really dialed in the throughput on that. We can run it at a rate that we want. So having 2 mills mine where the mine plan is set up, water problem sort of could be an issue. We're ready to go. It's -- far better condition than we were in 2012 at this point in the year.

Our next question comes from the line of Samar Sidhu with Scotiabank.

I just have a few questions here. The first one is on the Q4 cash cost. In your MD&A, you have a chart that compares Q3 cash cost with Q4, and there is another category in there which has gone up $0.05 this quarter. Can you just provide some more color on to what's in this other category?

It would be an accumulation of small items, basically all the throw-ins end up in that category. I can get you a specific description of it.

But all the labor cost increase, that's all captured in the labor category, which falls for $0.05?

Yes.

Okay. And my second question is on the impairment charge of $1.3 million in this quarter, which was for some plant and equipment becoming redundant with GDP3 coming online. Can you give us some more details on what that plant and equipment was? Was that...

Every year, we go through an analysis of equipment that -- ensuring that it's in use, that it's appropriate to continue to depreciate it. And that $1.3 million again would represent an assortment of mobile equipment and other things that are no longer in use and, yes, relative to the size of the property, plant and equipment asset base that we have, it's extremely immaterial.

Okay. And my last question is on the CapEx spend. What are you guys expecting to spend in Q1 and Q2 this year? And how much remaining capital is left to be spent on GDP3?

GDP3 is essentially done, but this is Q1, so there will be some expenditure.

Yes, we generally haven't given guidance on a quarter-by-quarter basis as to what our CapEx is going to be.

Our next question comes from the line of Tom Bishop with BI Research.

The net operating cost has gone up steadily lately and up to $2.44 in Q4, and I realized that was due to some unusual items, low throughput and labor, and all that. But for one, how much of that labor, that large labor increase is due to training staff at GDP3? And how much was -- I mean, I would assume the labor agreement wouldn't go into effect maybe until Q1. But, I mean, why is that such a big number?

It's not labor agreement, Tom. As Russ describes it, the additional people we've had in Q2 and Q3, sorry, Q3 and Q4. We brought an additional 130 people on staff and -- in order to get ready for GDP3 to come up and that period is about a $0.30 per pound when you roll in wages and benefits plus all of the gear that they need. And every person who's being trained needs a trainer. So it's an expensive thing to have to do, but if you're not ready [indiscernible].

There's a lot of background noise there, but so all those trainees ended up in the cash cost of production, the operating cash cost of production?

Yes, they did.

Okay. And by the way, what is the difference between the cash cost of production and the operating cash cost of production? I mean, what other things come into that second number that it's larger?

Operating cash, I think, we have depreciation in that number as well.

There might be some operating leases in there, too.

Leases as well. That's in there as well.

If you lease equipment, that's not in the cash cost of production?

In the -- no, it's not.

There is operating leases and capital lease. The capital lease component's in the second one.

Oh, I see, okay. And is also in there just more general G&A?

No.

No. That's not?

No.

Okay. All right. Now my biggest question is, once the smoke clears, say later in the second half of 2013, what sort of more normal cost of production can we expect now that we don't have all this other extraneous stuff? Going on in a more normal expected level of production, what sort of cost per pound?

Tom, we kind of figured it'll be somewhere between $1.50 and $1.70 a pound, SAG cost, depending on where the Canadian U.S. dollar sort of sells out at.

Wow, that would be a breath of fresh air. Also how does the...

On that SAG cost, Tom, we still have off-property costs.

Okay. So that's plus the refining...

Yes, $0.35 to $0.40 cents on off-site costs. So somewhere around the $2 range, give or take.

Okay, well, that would be good.

Yes, that's why we spent all this money on GDP3.

Okay, good, and one of the advantages that I recall from GDP3 is that you'll be able to, if you're getting some different kinds of ore out of the pit, you can send one to one plant, one in a different kind to the other plant. You said one time, you had 2 main kinds of ore, but 7 altogether?

Yes, that's right.

That should be an advantage, too.

Tom, if you look at it sort of holistically, we actually have one mine feeding 2 different concentrators. So that's going to give us a lot flexibility doing all kinds of things for John's and Dave's operating crews. So we're not going to be one mine feeding one concentrator. So it's almost like we've got 2 separate mines here.

I did have another question about the capitalization of costs for Aley and New Prosperity. You can capitalize them once you have a feasibility study, is that the rule? Or what's the rule on that? Because I was surprised to see that anything related to New -- to Aley was being capitalized.

Nothing related to Aley has been capitalized at this point. And under IFRS, there's not -- as they say, a completely bright line. It's a function of -- in our case, we believe that getting permits is critical in terms of determining at the point at which the expenditures are reasonably assured of having an extended value to the company. But given history, et cetera, without a permit, obviously, a feasibility study is critical as well. Those are all the considerations that go into determining when we start capitalizing.

We're very...

Okay. So everything related to Aley is getting expensed right now. And with regards to New Prosperity, which has a feasibility study and a lot of design, I assume, in it already -- I mean, I assumed a lot that is getting capitalized, no?

None, 0.

Tom, we're taking a very conservative approach to capitalization. So there's some -- about 60% of mining companies do it a different way. We take a conservative approach.

Yes, I mean, obviously, the risk is you go down the path of capitalizing and then some adverse information comes out from a permitting perspective or something, then we have to take a giant charge against our income, which is not something we'd like to do.

Yes.

So what was the hit from Aley and New Prosperity in 2012? Do you know?

Yes, just under $20 million, just under $20 million. I think $18.7 million, Tom.

$17.8 million, $17.8 million in 2012, $10.4 million in 2011.

That's right. I saw that number but I didn't know for sure that, that was all expense. So that's quite a monkey you've had on your back there on the income statement.

Our next question comes from the line of David Olkovetsky with Jefferies. David Olkovetsky - Jefferies & Company, Inc. Fixed Income Research: Just one quick question. I think it was already answered but I just want to confirm. You said that once GDP3 is fully operational, I guess, sometime in Q3, that your cash cost will decline to $1.50 to $1.70. I just want to confirm that, that's what you were saying.

Yes, and that's -- that's dependent on the Canadian U.S. dollar and a few other things. But we think that could be achievable. David Olkovetsky - Jefferies & Company, Inc. Fixed Income Research: Okay. And as it relates to Aley, can you give me a sense what the cash costs there would be or maybe provide a margin relative to, say, niobium price of $40 per kg?

Pretty good. We're looking...

It's a bit early, perhaps...

But I think our margin -- we're generally hardwired around $10 per pound margin. David Olkovetsky - Jefferies & Company, Inc. Fixed Income Research: $10 per pound margin. Okay, got you

Yes. Don't hold us to that, but that's -- but we think if everything works out the way -- but that's going to have some influence on operating costs. We dictate about -- but we think that's kind of in the ballpark. David Olkovetsky - Jefferies & Company, Inc. Fixed Income Research: And what's the end capital intensity of that project?

We haven't finalized that yet.

Yes. We haven't finished the flow sheet yet, so...

Just speculation.

We've got good mineral deposit at the moment, and we're working through the engineering to see what -- -- if it's an ore deposit we think it is. But it's too soon.

So again, we talked about this earlier like the issue I raised about people not doing the proper front-end engineering work and then screwing up their flow sheet. We won't do that. So we won't be pushed by release of premature information until we have the technical work done to say that we can do certain things. So for us, the big driver now is to make sure that we can get the recoveries like we spoke about earlier, that we produce the concentrate, we're going to produce metal here. We're going to do tests on producing metal. The big deal is to push up the recoveries by doing further investigative work, and then once we have those recoveries we can finalize our flow sheet. We know we have an economic project, and then we can finalize the all-in capital costs.

One of the things of the project like this, there's no rule of thumb. We can't open the textbook and say well, what does a niobium plant look like. So we've got to develop the whole thing on the bench first, and we've made great progress and great strides.

Yes, we're probably 80% there now.

Our final question comes from the line of Aleem Ladak with PI Financial Corporation.

I apologize I joined the call late. So this may have already been answered but when do you guys expect commercial production at GDP3?

Commercial production will be very soon I think, but because we are running rocks through it right now, I mean, we're checking -- it's the final checks we're on. Full production, we've got scheduled for the end of Q3.

Full production at the end of Q3.

I'm not showing any further questions at this time. I'd like to turn the call back over to management for closing remarks.

Okay, everyone. Thanks very much. Look forward to talking to you next quarter. Spring is coming. So we should all be happy. Okay, bye-bye.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.