Taseko Mines Ltd. Q2 FY2026 earnings call

Florence Copper Project

• First full quarter of production, with 5 million pounds of cathode produced; ramp-up progress is on track to meet full-year targets. Process circuits at the SXEW plant are stabilized and running smoothly with no major issues.
• Well field expansion is ongoing: the first batch of 20 new production wells was added in June and is now supplying additional copper to the plant. State regulators approved a second batch of wells, with 18 currently being integrated into the well field, and more wells to be added later in the quarter. Drilling is progressing well, with new wells planned to be added on a monthly cadence going forward.
• Expansion is moving into a thicker, higher-producing portion of the ore body, so new wells are expected to have higher output than earlier wells. The higher-producing zone will support production for 4-7 years, with mine planning balanced to maintain a consistent long-term copper production profile.
• Florence generated positive operating margins and $10 million in EBITDA in Q2, with operating costs tracking in line with plan. Sulfuric acid, the largest cost component, is locked in at a fixed price of US$270 per ton for 2026, which is favorable relative to current market conditions.

Gibraltar Mine

• Delivered a third consecutive quarter of 30 million pounds of copper production, with consistent grade, recoveries, and mill throughput over the past 9 months from ore extracted from lower benches of the connector pit.
• Cathode production was lower than expected in Q2 due to temporary electrical issues at the SXEW plant following an April restart; issues have been resolved, and production is expected to increase in coming quarters with the second leach pad now operational.
• Input cost pressures from fuel, explosives, and parts persist, but these are offset by high molybdenum prices (over $30 per pound recently) and declining smelter treatment and refining (TCRC) costs. Almost all 2027 tonnage is contracted at an average negative $140 per ton, an unprecedented low rate, and management will also receive additional payment for gold content in Gibraltar concentrate starting next year.
• Sustaining capital spending is elevated relative to historical levels ($48 million in H1 2026), driven by design changes to the tailings storage facility to optimize existing footprint and improve site water management; elevated spending is expected to continue.

Portfolio and Development Projects

• Permitting for the Yellowhead Copper project is advancing steadily: the BCEAO issued a positive readiness decision, moving the project into the next stage of environmental assessment. The British Columbia government has designated Yellowhead as a priority project, creating a supportive regulatory environment.
• The company continues to build on its prosperity agreement with the Tsilhqot'in National Government for the Harmony Gold project, and has extended its option agreement with JDS. At the Aley Niobium project, network and product marketing initiatives are ongoing, with updates expected in the coming weeks.

Financial and Hedging Strategy

• Average LME copper price was over $6 per pound in the quarter, with an additional ~$0.35 per pound arbitrage benefit from COMEX pricing, which applies to almost all Florence and Gibraltar cathode sales. Most copper sales will remain linked to COMEX pricing as long as no tariffs are imposed.
• The quarter recorded a $24 million realized loss on 2025 hedging positions (copper calls put in place to support Florence construction). Going forward, downside protection is prioritized: Q3 2026 has collars protecting a $4.75 minimum copper price with ceilings of $7.50 and $8.50 per pound; $4.75 put protection has already been purchased for Q4 2026, and the company plans to extend this downside protection into 2027, with no additional price ceilings expected after Q3.
• Growing liquidity from production has positioned the company to review and prioritize debt repayment strategies to deleverage its balance sheet.

Total company revenue for Q2 2026 was $331 million (all-time high), which included $26 million in molybdenum sales. Adjusted EBITDA for the quarter was $125 million, cash flow from operations was $183 million, net income was $22 million ($0.06 per share), and adjusted net income was $40 million ($0.11 per share). Total liquidity at quarter-end was $342 million, including $186 million in cash.

1. Florence: Produced just over 5 million pounds of copper cathode in Q2 2026 (first full production quarter since ramp-up began), with sales of 5.3 million pounds. Generated roughly $10 million in EBITDA, with site operating costs of US$24 million against ~US$30 million in revenue. C1 cost was US$4.72 per pound (elevated due to fixed costs during early ramp-up, expected to decline as production increases). Well field development costs were US$26 million in the quarter. It contributed ~3% of total quarterly copper sales volume and ~9% of total adjusted EBITDA.

2. Gibraltar: Produced 30 million pounds of copper in Q2 2026 (third consecutive quarter at this production level), with sales of 32 million pounds. Total site costs were $146 million, including $28 million in capitalized stripping costs for the connector pit (strip ratio of 3.3-to-1). Sustaining capital expenditures totaled $48 million in the first half of 2026. Molybdenum byproduct credits offset inflationary input cost pressures. It contributed ~86% of total quarterly copper sales volume and ~92% of total adjusted EBITDA.

3. Development Projects (Yellowhead, Harmony, Aley Niobium): No current revenue contribution, as these are pre-production/development stage assets.

• Florence is still targeting full-year 2026 production of 30 to 35 million pounds of copper, with the plant expected to reach full capacity (a 7 million pounds per month run rate) by the end of 2026. C1 costs are expected to decline significantly as ramp-up progresses and fixed costs are spread over a larger production base, and the project will maintain strong margins even with expected sulfuric acid price escalation in 2027.
• Gibraltar is still on track to meet full-year 2026 production guidance of 110 to 115 million pounds of copper. Lower grades and slightly lower recoveries are expected in Q4 2026 as the mine transitions to more challenging transitional ore, but the decline is expected to be less severe than the drop seen in H1 2025. Cathode production is expected to increase in H2 2026 following resolution of SXEW plant issues and the activation of the second leach pad.

• Production at Gibraltar faces expected headwinds in Q4 2026 from transitioning to more challenging transitional ore, which will reduce grades and recoveries relative to recent consistent performance.
• Sustained inflationary pressure on key input costs including fuel, explosives, parts, and equipment continues to pressure operating costs at Gibraltar.
• Florence is expected to see sulfuric acid price escalation in 2026 when new contracts are negotiated, though management notes the project's low long-term cost structure will maintain strong margins even after this increase.
• Well field ramp-up at Florence still has some uncertainty around the total number of wells needed to support full capacity production, which could impact capital spending levels relative to initial guidance.
• COMEX price pricing benefits for Taseko's cathode sales are dependent on the continued absence of US tariffs on copper; tariffs would shift pricing to lower LME levels, reducing revenue.

Q: Craig Hutchison (TD Cowen) asked for an outlook on Gibraltar's grades, throughput, and cathode production in H2 2026, following the announced transition to more challenging ore, and confirmation of the negative $140 per ton 2027 TCRC rate. He also asked for details on Florence's 2027 sulfuric acid contracting plans. / A: Management confirmed lower grades and slightly lower recoveries are expected in Q4 2026, but the impact will be milder than prior transitions. Mill throughput will be increased only if it does not cause significant drops in recovery or product quality. Cathode production will be higher in H2 2026 after the SXEW electrical issues are resolved and the second leach pad is fully operational. The negative $140 per ton TCRC rate is already locked in via multiple weighted contracts. For 2027 sulfuric acid, management is still exploring all contracting structures (term vs spot) and noted that spot sulfuric acid has very low trading volume in the region, making spot prices less meaningful. Expected price escalation is already factored into long-term margin outlooks.

Q: Dalton Baretto (Canaccord Genuity) asked for a sensitivity estimate of Florence C1 costs to sulfuric acid price changes after ramp-up. / A: Management confirmed that at full steady-state production, Florence will require approximately 240,000 tonnes of sulfuric acid per year. A $100 per ton increase in acid price would increase total annual acid costs by roughly US$24 million, which gives a clear linear sensitivity for per-pound C1 costs.

Q: Duncan Hay (Panmure Liberum) asked for an outlook on Florence well field capital spending in H2 2026 and longer-term, after Q2 2026 spending hit US$26 million. / A: Management noted that Q2 2026 spending was elevated due to catching up on delayed drilling from early 2026. Spending is expected to decrease to a more regular cadence in H2 2026, coming in lower than the Q2 level. There is still some uncertainty around the ultimate long-term drilling spend, as it depends on the final number of wells needed to support full 85 million pound annual production, but management noted there is potential upside relative to prior technical report estimates.