Good morning. My name is Miranda and I will be your conference operator today. At this time, I would like to welcome everyone to Taseko 2022 Q1 Earnings and Production Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Bergot, you may now begin your conference.

Thank you, Miranda. Welcome everyone. And thank you for joining Taseko’s first quarter 2022 conference call. The news release announcing our financial and operational results was issued yesterday after market close and is available on our website, tasekomines.com. On the call with me today is Taseko’s President and CEO, Stuart McDonald; Taseko’s Chief Financial Officer, Bryce Hamming; and our Senior VP of Operations, Richard Tremblay. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will 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. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our first quarter MD&A and the related news release, as well as the risk factors particular to our company. I would also like to point out that we will use various non-GAAP measures during the call. You can find explanations and reconciliations regarding these measures in the related news release. After opening remarks, we will open phone lines to analysts and investors for a question-and-answer session. I’ll now turn the call over to Stuart for his remarks.

Okay. Thank you, Brian. Good morning, everyone. Thanks for joining us today to review our first quarter 2022 financial and operating results. And it continues to be a great environment for copper miners and even with the pullback in copper prices over the last week or so. We remain very optimistic about the year ahead. So in the first quarter, we actually had our highest ever realized selling price of $4.59 per pound of copper and that strong pricing combined with our 75% share of Gibraltar sales volumes resulted in $38 million of adjusted EBITDA and $52 million of cash flow from operations. Sales volumes exceeded production by 6 million pounds as we were able to move the excess inventory that was carried over from the last year. So it was a lower production quarter, which we anticipated and signaled on the last call. And that was mainly due to lower copper grades. We've recently transitioned mining operations to the Gibraltar pit, which will be the primary source of ore for the remainder of this year. As is always the case at Gibraltar, the upper zones of the deposit are lower grade with smaller disjointed zones of ore and that's where we were in the first quarter. As mining advances to deeper benches, the grade and ore quality will gradually improve. We expect to see much stronger production in the second half of the year. Mill throughput was a real focus for the site operating team in the first quarter. The carryover of weather impacts from Q4 meant that we had a slow start to the year in January and February. And for the first quarter, mill throughput averaged 78,000 tons a day, which is below the design capacity of 85,000. But with the weather issues behind, as in a…

Thanks, Stuart and good morning, everyone. I will discuss in further detail the financial results for the first quarter earnings released yesterday. We realized sales of 27 million pounds at Gibraltar at a record copper price of $4.59 per pound and with an average FX rate of 1.27x, this resulted in total revenue of $118 million. This is the second highest quarterly revenue we have achieved at Gibraltar since it’s restart 18 years ago. This contributed to adjusted EBITDA of $38 million and earnings from mine operations of $43 million. Our operating margins relative to our other recent quarters in 2021 were impacted by increased site costs. As Stuart mentioned, we did see the total site cost increased by approximately $7 million relative to Q4 and Q1 2021, which was substantially related to diesel costs for the mining fleet and the rising oil price. And to a lesser extent, some other site costs like grinding media, which is driven by steel prices. But a similar increase of $6 million in cost of sales was simply IFRS accounting related as we had significantly less mining costs allocated to capitalized stripping and deferred on the balance sheet this quarter compared to Q1 last year, as we finished mining in the current phase of Pollyanna, that difference in capitalized stripping quarter-over-quarter was a difference of $0.30 a pound. It’s probably worth noting that we’ve included a new table in our MD&A to show total site costs, including capitalized stripping to compare our total site operating spend more easily quarter-over-quarter. We expect total quarterly site operating costs, including capitalized stripping of approximately $75 million per quarter for our share or 75% share to be consistent for the remainder of the year, assuming that diesel prices remain at these current elevated levels. We also have…

Thank you. [Operator Instructions] First question will be coming from Ed Brooker with Barclays. Please go ahead.

Hey everybody. Thanks for taking the questions this morning. So I know you may not be able to give us this, but I just wanted to ask what is the reason that the EPA is giving you for taking – well, taking you longer than I guess I expected to get the UIC draft? Previously it was COVID kind of holding them up and there was a backlog for them. But I imagine that would’ve been worked through and we would’ve been able to get that draft and go into the comment period. So just wanted to get your thoughts on that and then kind of your best case scenario timeline?

Yes. Good morning, Ed, it’s Richard Tremblay. Really the message from EPA continues to be the same. There’s nothing specific that’s causing them to not get into the public comment period. It’s just going through their administrative processes and getting the final kind of things arranged to be able to launch into the public comment period. So, unfortunately, yes, there’s no – nothing specific that they’re providing or pointing to talk about everything from manpower levels and stuff like that. Being a bit of a challenge for them, but those are kind of normal things that occur. Just the process is going quite slow, but is advancing. And in terms of, the timing I would continue to expect very soon, any moment now to get notification on exactly when the public comment period will start, which they’ve committed to giving us.

Got it. That’s helpful. And then excited to see your ESG report come out too. I saw some news reports that Florence received some – I think it was nominations for some environmental awards in Arizona. I just want to get your thoughts on kind of the disconnect between that getting nominations for environmental awards versus some of the doubters that have issues with the mining practices being hazardous.

It’s Stuart McDonald here. I can take that one. Really in our view there aren’t many doubters left. If you look back at the history going back 10 years, perhaps there was some questions about the project and some opposition from the town council. Really over the last 10 or 12 years, we’ve worked through that. The test facility that we operated for two years has obviously been a big contributor to that. And if you look back in 2020, when we went through our state APP permitting process, we had a public hearing and a public comment period. And it was overwhelmingly positive commentary. I think there was only one negative comment at the whole hearing. So we’re very happy with the support we have for the project, the environmental award is reflective of the good work that we’re doing at the site. And so, yes, we just look forward to getting the permit and getting going on the project.

Thanks. And then one more for me and congrats, on the extension of Gibraltar. So with the improved mine life, and then the increased NPV, does that affect your plans at all, probably not for Florence in the short term, but maybe longer-term thoughts on Yellowhead and your confidence in or maybe the funding of that project.

Sorry, Ed. I didn’t quite understand the question there, you were referring to the Gibraltar reserve or the funding at the Yellowhead?

Just Gibraltar reserve and the improvement of the mine life, increasing the NPV over time and just thoughts on how you’re looking at funding on over or on Yellowhead in that context?

Yes. I mean, I think, what we have at Gibraltar and what we’ve shown over time is just the value of a long life asset, right? And if you look back at the history, when we restarted it, we had a four or five-year reserve when we did. And that was in 2005, when we did the GDP extension in about 10 years ago, GDP3 extension we had to vote, I think we had to close a 15 or a 20 year mine life. And then today, with 10 years later, we still have a 23-year mine life. So, the value of long life assets is great, that NPV does not depreciate. It’s still there. And actually with copper prices as you see it’s growing in value over time and not depreciating. So yes, so Gibraltar is a great asset and we think Yellowhead has that potential as well. We’ve got some work to do on permitting. But it’s a valuable asset as well. And these are rare. These are unique assets that can be built. And we think Yellowhead is a type of project that needs to get built and financed to fill the supply gap in copper in the coming years. So when we get Gibraltar and Florence running, I think that the company is going to be in a very different place financially and we will be in a good position to take on a project like Yellowhead potentially. And certainly JV partners will be interested in that type of asset as well. And that’s an option for funding as well. So – but we’ve got a few years before we have to make any decisions on that one.

Got it. Thank you.

Your next question will be coming from Alex Terentiew with Stifel. Please go ahead.

Hey, good morning guys. A couple questions just on Florence first. I appreciate that you’re going to give us an update on CapEx when you move forward with that project. But now that you’re spending some money on it, can you to the extent you can – how are costs looking relative to the prior expectations? And the second question on the spending there is, I think I can take the spending as your confidence that you will get the UIC draft and whole process going forward. But I guess the question is, should there be material delays of any sort, is there any sort of recourse or refund effectively that you can use to kind of recoup some of the capital that you’ve been spending?

Sure. Yes, Ed, sorry, Alex, it’s Stuart here. And thanks for the question. It’s – yes, I mean, most of the spending that we’ve done and most of the commitments we’ve made relate to major components for our SX/EW plant. We’ve committed, as I said, in the notes there, we’ve committed up about 60 million U.S. in total, and that would be the vast bulk of it. So that’s equipment that is on route now to our site in Arizona. And it’s going to be ready when we get into construction. It’s specialized equipment. I mean, I assume it might have some sale value, but it has been designed for our plants specifically. And what comes out of the detailed engineering work that we’ve done. Yes. So it’s – you’re right, as you said, it’s a sign of, I believe, we wouldn’t be spending that money and our Board wouldn’t have approved those expenditures unless we were very confident that we’re going to get the permit and move forward. So yes, we’re ready to get going.

Okay. And then just on cost, I mean, how they’re tracking so far.

Yes. The cost piece, of the money that we have committed, we’re essentially on – it’s essentially on budget. It’s essentially in line with the 27 with the numbers in the 2017 feasibility study. So, we haven’t seen any inflation on those pieces. But as I said, in my comments, we are expecting some inflation on the pieces that we haven’t committed to yet. And that relates to some of the labor market in Arizona, which is pretty hot contractors and things like that are in high demand and well drilling costs as well, where we expect to see higher numbers. But yes, as we get closer, we can give some more specifics on that.

Okay, great. And then maybe just one question for Gibraltar, I understand moly – or sorry, copper grades for low but did that impact moly grades as well? I mean, I guess the question is, can we get back to the 500,000 pounds or so of moly per quarter that you saw in the past? Is that a reasonable number to expect going forward?

Yes, so the moly grade in the Gibraltar pit is lower – is a little bit lower, essentially Gibraltar as you move to the West side of the property, the moly grade is – goes a bit lower than the East side of the property. So we’ll see similar grades that we saw this past quarter with maybe some slight improvements as we mine through the – into the deeper zones into Gibraltar pit.

Okay. That’s it for me. Thank you.

[Operator Instructions] Your next question is going to be coming from Craig Hutchison from TD Securities. Please go ahead.

Hey, good morning guys. Actually questions on moly as well. So just if we kind of model the same grades as Q1, are we assuming production is sort of in the order of 1 million pounds this year, or is that a fair estimate?

No, we’ll see production less than 2021, but probably more in the mid range of 1.5 million to 2 million pound range.

Okay. And then just a follow-up question on grades themselves, copper grades at Gibraltar, can we expect you guys to shift back towards reserve grades in Q2, or is that more likely going to happen in kind of Q3 or Q4?

Yes, it’s going to be more second half of the year. We’ll see grades kind of return more towards the reserve levels in Q3, Q4. Q2, we’ll see some improvements, but not back to the reserve grade levels.

And you guys fairly confident just given the fact your milling softer or that you can be operating at design rate for sort of the balance of the year?

Yes, we – as Stuart mentioned in his comments, we’re quite pleased with the throughputs we’ve been able to run at and still maintain the optimum mill performance and don’t see any reason that’s going to change.

Okay, perfect. Thanks, guys.

There are no further questions at this time. Please go ahead.

Okay. Thanks everyone for dialing in and for your questions. And we will talk to you next quarter in early August. So thanks again. Bye now.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.