Taseko Mines Stock

Thank you for standing by, and welcome to Trekor Metals Limited Q2 Earnings Conference Call. I'd like to remind everyone that this call is being recorded. [Operator Instructions] I would now like to turn the call over to Brian Bergot, Vice President, Investor Relations. Please go ahead.

Thank you, Joyce. Welcome, everyone, and thank you for joining Trekor's Second Quarter 2026 Conference Call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at trekormetals.com and on SEDAR+. I am joined today in Vancouver by Trekor's President and CEO, Stuart McDonald; Trekor's Chief Financial Officer, Bryce Hamming; and our COO, 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.

As such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our second quarter MD&A and the related news release as well as the risk factors particular to our company. These documents can be found on our website and also on SEDAR+. 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. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions. I'll now turn the call over to Stuart for his remarks.

Thank you, Brian, and welcome, everyone. Thanks for joining us today for the Trekor Metals second quarter earnings call. It was a solid quarter for the company, a steady operating performance at Gibraltar allowed us to capitalize on a great copper price. We've often talked about the leverage that we have to copper, and that was shown this quarter with very strong EBITDA and operating cash flows.

Bryce can provide some more specifics on the financials in a minute, but first, I'll start with a review of the operating highlights from the quarter. Starting with Florence as it was the first full production quarter for the new operation and we're very pleased with the progress on the ramp-up to date. We were able to produce just over 5 million pounds of cathode in the quarter at Florence.

The operating team there has done a great job of stabilizing all the key process circuits, balancing injection and recovery wells in the wellfield, solution flows from the wellfield to the SX/EW plant and all the way through to plating and harvesting of copper cathode. So the SX/EW plant is running smoothly with no significant issues.

On the wellfield, the team is continuing to adjust and optimize operations. But generally, the initial wells have achieved expectations in terms of flow rates and copper grades or specifically our PLS grade. So going forward, the key to the ramp-up is wellfield expansion. In June, we added the first group of 20 new production wells.

Those wells are now providing additional copper flows to the plant. We have another set of new wells, which were just approved by the state regulator, and 18 of those are being integrated into the wellfield this week with more to come later this month. Drilling is progressing well, and we should soon be into a more regular cadence where new wells are being added every month.

To be clear, when we talk about new wells, that includes recovery wells, injection wells and hydraulic control wells, and they can all be repurposed and used in different ways as the wellfield advances. In addition, the wellfield is expanding into an area of the deposit that is a thicker portion of the ore body, and we expect wells in that area to be higher producing. So not all wells will be equal.

We're still targeting 30 million to 35 million pounds of production for this year and still have the goal of running the plant at capacity by the end of the year, and that's a run rate of about 7 million pounds per month capacity. Operating costs at Florence are generally tracking in line with plan with no big surprises so far. Florence generated positive operating margins and contributed roughly $10 million of EBITDA in the second quarter. We also reported a C1 cost of USD 4.72 per pound, but it's still early in the ramp-up, and this is not indicative of where we will be in the future.

A high portion of our site operating costs are fixed. And as the ramp-up continues, those fixed costs will be spread over a much bigger production base, which will drive down the C1 cost significantly. Sulphuric acid is the largest component of Florence's cost structure. We have a fixed price contract for this year at USD 270 per tonne, and that's a good price considering what's happened in the acid market recently.

This fall, we will be engaging with suppliers to establish next year's pricing, and we can expect there will be some price escalation in 2027. But once ramped up, Florence's cost structure is so low that even with high acid prices, we still expect very strong margins. Turning to Gibraltar now, which had another quarter of strong operating performance. The mine produced 30 million pounds of copper, which is a third consecutive quarter at that level.

Grade recoveries and mill throughput have all been quite consistent over the last 9 months as ore release has been coming from the lower benches of the connector pit. We will be moving back into some of the more challenging ore later this year, which will impact recoveries, but still on track for our annual guidance of 110 million to 115 million pounds.

Gibraltar cathode production in the second quarter was a bit lower than expected as the SX/EW plant experienced some electrical issues after the restart in late April. We believe those have been addressed now, so we should see a good step-up in cathode production in the coming months with improved plant performance and the second leach pad now running. Total site costs at Gibraltar were in line with the previous quarter as cost pressures continue in the area of fuel, explosives and parts and equipment.

Timing of repairs and maintenance activity was also a factor as some mill maintenance activities were pulled forward into June. Offsetting some of the inflationary pressure is a strong molybdenum byproduct credit and moly prices have been back over $30 per pound recently. Smelter treatment and refining costs also continue to trend lower. We've now contracted almost all of the 2027 tonnage, and we're seeing an average TCE next year in the range of negative $140 a tonne.

That's an amazing rate that we've never seen before. And with our contracted terms for next year, we also expect to get paid for the gold content in Gib concentrate, which is a small but further additional benefit. Sustaining capital expenditures at Gibraltar were about $48 million in the first half of 2026. That's higher than we've seen in the past, and we expect that elevated spending level to continue.

The main driver of the increased spend has been implementing design changes at the tailings storage facility to better utilize the TSF's existing footprint and also for improvements to site water management. Lastly, a comment on our Yellowhead copper project, our longer-term development project. The permitting continues to steadily advance and we've had a few notable milestones recently.

Last week, the BC EAO issued a positive readiness decision and the project is now moving into the next stages of the EA process. The BC government recently highlighted Yellowhead as one of its priority projects. So we believe it's a supportive environment right now, and we'll keep moving the project forward. There are very few copper development projects of this scale in North America, and we continue to believe Yellowhead will be a very valuable asset for us. We're also continuing to work on other opportunities in our portfolio.

In July, we were invited by the Tsilhqot National government into their community for a ceremony to recognize the new Prosperity agreement that we signed a year ago, and that's a relationship that we continue to build on. For the Harmony Gold project, we just extended our option agreement with JDS.

And at our Aley Niobium Project, we continue to advance network and product marketing initiatives, and we'll be able to share some additional updates on that work in the coming weeks. So there's lots happening and lots of opportunities to unlock value that are still in front of us. And I'll leave it at that for now and turn the call over to Bryce for his commentary on the financials.

Thank you, Stuart. It was a very good quarter for Trekor in terms of financial performance, supported by a strong average LME copper price over $6 a pound. We are seeing an arb on the COMEX copper pricing again, which is approximately $0.35 per pound higher than LME. As a reminder, this year, most of Florence's sales are COMEX-based pricing as is our cathode at Gibraltar. Sales in the quarter were 32 million pounds from Gibraltar and 5.3 million pounds from Florence.

The sale of 37 million pounds of copper generated revenue of $331 million, which is the highest ever for Trekor. It also includes $26 million from moly sales. Moly prices today are $33 per pound, so moly is helping to buffer some of the inflation pressures we are seeing in diesel and explosives at Gibraltar. Cash flow from operations was $183 million, and adjusted EBITDA for the quarter was $125 million.

Adjusted EBITDA reflects a realized loss on our hedging derivative position of $24 million in the quarter for our $5.40 copper collars that we had in place for last year to support our construction ramp-up at Florence into 2026. Going forward, for Q3, we have collars with a ceiling price of $7.50 and $8.50 per pound to protect a $4.75 minimum copper price. Beyond Q3, we don't expect to have of any additional ceiling price limits.

But we'll continue with our long-standing practice of protecting the downside with purchasing out of the money put options. We have recently acquired straightforward options, that's put protection at $4.75 for Q4, and we'll look to extend those -- that put protection into 2027 as these higher copper prices prevail in the current market.

Net income for the quarter was $22 million or $0.06 per share, and adjusted net income was $40 million or $0.11 per share after backing out unrealized losses and accretion. Total site costs at Gibraltar for the quarter were $146 million slightly higher than the previous quarter. This amount includes $28 million of capitalized stripping costs for the connector pit.

We had a higher strip ratio in the quarter, which was 3.3:1, which contributed to this higher stripping rate. At Florence, we provided some more details on its cost this quarter in the MD&A and show the contribution of Florence in our operating segment note, which is in Note 22, and we'll do so going forward.

Site operating costs at Florence were USD 24 million compared to approximately $30 million in revenue. And then like Q1, we didn't capitalize any of these site operating costs in the quarter. While Florence did generate some EBITDA in the period, as Stuart indicated, at these copper prices, we are still funding a portion of the wellfield development.

Our total wellfield development costs were USD 26 million in the quarter. Total liquidity at the end of June increased by $20 million to $342 million, and it includes $186 million of cash, growing production from Florence as well as no expected ceiling on our realized copper price going forward. Will further improve our liquidity in future quarters. We are beginning to review and prioritize debt repayment strategies as we look to delever in the quarters ahead, given this copper backdrop, coupled with our 2 producing assets.

And with that, I'll turn it back to the operator to open the lines for questions. Thank you.

[Operator Instructions] Your first question comes from the line of Craig Hutchison from TD Cowen.

Just the first question is on Gibraltar. Just in terms of the cadence for the back half of this year. You mentioned that you're moving up in the benches and get back into more difficult ore, I guess, the transitional ore where we have some oxides and recoveries fall off. But a question just around like grades and throughput. Obviously, grades have been quite strong first half of this year. Do they fall with the move into the upper portions of the pit? And then my second question is around throughput. You've been trending a fair bit below design here. Is the expectation that throughput increases in the second half of this year? -- is the ore softer in these upper benches?

Craig, it's Stuart here. I'll start. And yes, in terms of the production outlook for second half, as I said, moving into some transitional ore, that's more a fourth quarter thing that we're seeing right now. And yes, that will include some reduction in grade as well as part of that. And we'll be -- I don't think we'll be dropping off quite as much as we experienced that in the first half last year, but certainly, there'll be -- I expect lower grades and slightly lower recoveries in the last few months of the year. And I forgot the second part of your question.

Beside, it really comes down to watching how the mills are performing overall and taking advantages where it's possible to turn up the throughput and get more tons through while not giving up significant drops in recovery or challenges meeting the grind size that we're targeting. .

Okay. Great. And then from a cathode perspective, with the SX/EW plant back up and running, like can we expect sort of a similar cadence we've seen in the past quarters or just under 1 million pounds per quarter type thing?

Craig, Richard again. It will actually with the second leach [ dum ] brought online now, which we did back in April, we'll see production kind of tweak up from that. So envisioning stronger performance here in the second half of the year.

Okay. That's good to hear. And then in your comments, you mentioned about the [ CCRCs ] next year, I think, around negative $140 a ton. Have you guys locked that in already? Or are you still kind of waiting to lock in next year's CCRCs?

That's our contracted rate. That's kind of a weighted average of several contracts that we have got in place. So yes, it's firm. Yes, it's quite -- it's pretty amazing. It's actually a different type of byproduct credit really. It's quite a change from where we were 5 or 10 years ago.

That's great to hear. Maybe one last question for me. Just on Florence, you mentioned the plans to start contracting for next year on Sulphuric acid later this fall. But just can you like tell us what the spot prices are right now in that region? And do you have a sort of fixed amount you want to contract for next year? Are you going to kind of maybe do a blend of kind of term contracting and spot contracting?

Yes. On the sulphuric acid front, we're really just starting to engage in kind of more formal discussions with suppliers and exploring all like a number of different scenarios or a number of different options, and I think that's probably all I can say at this point.

And Stuart here. I would add on the spot pricing. What we're seeing and learning, I guess, in the market is that there's not a lot of trade or volume that happens at spot prices, right? Most of the big suppliers and buyers are buying on long-term contracts. So I'm not sure how much -- how much to read into spot prices. But certainly, as I indicated, we expect some escalation next year given what's happened.

[Operator Instructions] Our next question comes from the line of Dalton Baretto from Canaccord Genuity.

I'm glad Craig wants some questions from me there. Just staying on that asset theme, can you provide some sensitivity around the C1 cost at Florence relative to asset prices?

Sure. I mean we're going to use when we ramp up, we'll be in the range of, I think, 220,000 tonnes -- 220,000, 240,000 tonnes a year of asset. So you can do the math on there, what $100 a tonne would be USD 24 million. So that gives you a rough sensitivity. And those -- that would be after ramp-up, right, when we're running at full run rates.

That's right. So yes, steady state. That's usually helpful. And then you mentioned that you guys are transitioning the wellfield now into a higher grade portion of the ore body. How long do you think you'll stay in that portion of the ore body for? And how sort of homogenous is the mine plan over the next couple of years?

The wells that we put in, in this higher thicker grade zone will likely last for 4 to 7 years, depending on how hard we run them in the overall mine planning. And this is -- as the wellfield expands out, we get into areas -- we have areas that are thicker and there are other areas that are thinner, and that's adjusted for or incorporated in the mine plan. So part of our mine planning exercise is to kind of balance out how the development advances and ensure we have that consistent copper production profile over the long term is really kind of the work that goes on at Florence.

[Operator Instructions] Our next question comes from the line of Duncan Hay from Panmure Liberium.

Another question on Florence, just on the wellfield rollout and the capital cost there. So USD 26 million in Q2. Is that -- that presumably will drop off as you reach sort of steady state. But what do you think for Q3 and Q4? And what will it -- what do you think it's going to be on a sort of longer-term rolling basis?

I would say -- Duncan, it's Stuart here. Certainly, Q2 was high. I think we had some catching up to do on the drilling because we got off to a bit of a slow start in the early months of the year. And I think now, certainly in the second half, we expect to be into a more regular cadence. I think it remains to be seen exactly where the drilling settles out. That really is a factor, as Richard mentioned, a factor of our mine plan and how many wells do we need to have open to be feeding the plant with 85 million pounds of copper.

I think there's a little bit of unknown still on that, but -- and I think upside potentially in what we've disclosed in the technical reports. So I don't want to put too fine of a point on it for forecasting drilling costs in the second half, but I do think that they will be a little bit lower than what you saw in Q2.

Okay. Great. And just on what you said about COMEX, I missed that. So all your Gibraltar cathodes you're selling are linked to the COMEX price and then Florence as well for this year. But is that -- that's going to be the case presumably going forward, is it?

Yes. Duncan, it's Bryce. Yes, that's right. We have the ability to elect that annually each year to lock in the COMEX price for the majority, like 80% of our production at Florence. And so long as there's no tariff, Gibraltar will realize the COMEX price. And it will have only LME if there is a tariff that's put in place.

That does conclude our question-and-answer session. I will now turn the call back over to Brian for closing remarks. .

Okay. Thanks, everyone. It's Stuart here. And thanks again for joining our call, and we'll talk to you next quarter. .

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Hello, and welcome to the Taseko Mines 2026 First Quarter Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to our Vice President of Investor Relations, Brian Bergot. Please go ahead.

Thank you, Dustin. Welcome, everyone, and thank you for joining Taseko's First Quarter 2026 Conference Call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at tasekomines.com and on SEDAR+. I am joined today in Vancouver by Taseko's President and CEO, Stuart McDonald; Taseko's Chief Financial Officer, Bryce Hamming; and our COO, 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, and this information, by its nature, is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today. 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. These documents can be found on our website and also on SEDAR+.

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. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks.

Thank you, Brian, and welcome, everyone, to our first quarter earnings call. As usual, I'll start with an overview of our recent operating results, and Bryce can then review the financial performance. It was an exciting quarter for us, obviously, with the start-up at Florence and first copper from that new operation. But I'll start today with our Gibraltar mine, which had another solid quarter, and steady production that we saw in the second half last year continued into the first quarter. The mine produced 30 million pounds of copper and just over 700,000 pounds of molybdenum, which was generally in line with our expectations.

Head grade of 0.25% was slightly above our life of mine reserve grade and copper recoveries of 83% also benefited from the higher quality ore from the lower benches of the connector pit. Mill throughput was slightly lower this quarter as we focused on optimizing copper recoveries from the higher grade ore, and we also had some unplanned mill downtime. But overall, it was a good production quarter at Gibraltar.

We will see some operating cost increases in the period as Gibraltar's C1 cash costs increased to USD 2.63 per pound produced. That's about 6% higher than the previous quarter and was impacted by inflation in a few areas, most notably diesel prices and explosives. With the situation in the Middle East, diesel prices have increased about CAD 0.50 per liter compared to last year, those are Canadian cents, which represents USD 0.15 per pound of copper at Gibraltar.

We're also seeing higher costs for explosives as the market for ammonium nitrate has been affected by a plant outage in the U.S. And repairs and maintenance was also higher this quarter, although that was more of a timing issue for some key repairs, and we don't expect that level of spend to continue for the rest of this year.

Offsetting those factors was a strong quarter for molybdenum production, which continues to provide a meaningful byproduct credit, and we expect similar moly grades for the remainder of this year. And Gibraltar's SX/EW plant also contributed 733,000 pounds of copper cathode production in Q1, and we were able to keep that plant running through the winter months, which was a positive.

We stopped leaching operations at Gibraltar in April, to complete the tie-in of a second leach pad, and that should support higher cathode production going forward.

Turning to Florence now, and it was a major milestone that we achieved in late February with first copper cathode production. This is a testament to the perseverance and technical expertise that our project team has demonstrated over the last decade to bring this project through the PTF test program, permitting through a well-executed capital project and now finally, into commercial production.

In Q4, we started injection of solutions into the well field and the initial flow rates were higher than expected. This allowed for faster acidification of the ore body and solution grades increased faster than planned, reaching targeted levels in January. The commissioning of the SX/EW plant was completed in mid-February, that was a few weeks behind schedule, and by that time, we had built up an inventory of copper in solution, and we harvested 1.5 million pounds of cathode over the remainder of Q1.

In recent weeks, our operating team has done an excellent job of stabilizing the whole circuit from well field through to cathode production. We now have approximately 90 production wells producing copper at a consistent daily rate in the range of 55,000 to 60,000 pounds a day. This is in line with our expectations for the initial wells at this stage and represents another significant derisking step for the project.

Now our focus is on ramping up, which means expanding the well field to increase flow rates and copper production. We currently have 5 drill rigs operating. And after a slow start, we have seen drilling productivities improve in the last few weeks. This month, an additional 20 production wells will come online. Then later in the summer, an additional group of 26 new wells will begin producing. And then further groups of wells will be added every month for the remainder of the year.

As the well field expands, we will see higher solution flows and PLS grade which will allow us to achieve the 30 million to 35 million pound target for the year. It's important to note that production will not be perfectly correlated with the number of wells as each ore block has a slightly different ramp-up profile and the new wells added to the perimeter of the well field will improve the performance of the existing inner wells. We continue to expect 30 million to 35 million pounds of copper production from Florence this year, with production weighted to the second half as new wells are put into production. And our target is still to achieve 80 million to 85 million pounds of copper production next year in 2027, which is a steady state capacity of Florence.

Lastly, I can give a quick update on Yellowhead. Our project team remains quite busy advancing the environmental assessment work. And following on from the community open houses that we hosted last fall, we're now incorporating feedback from stakeholders to complete the detailed project description. We expect to file that this summer, which will lead towards a readiness decision and the next phase of work.

Also, just last week, the government of British Columbia announced the addition of new major projects to its priority projects list, and Yellowhead copper was included. This is a clear message that the province recognizes the value of our Yellowhead project, and we're continuing to work closely with the Simpcw First Nation, Province of BC and the Government of Canada to move the permitting process forward as efficiently as possible. With that, I'll now turn the call over to Bryce.

Thank you, Stuart. Good morning, everyone. Overall, despite some cost inflation at Gibraltar, the strong production and sales translated to another strong financial performance in the quarter. As Stuart mentioned, Gibraltar copper sales were 27 million pounds in the quarter, and lower than the 30 million pounds that we produce due to shipment timing. This included 938,000 pounds of cathode sales. So with this buildup of concentrate inventory is expected to be sold in the second quarter. Moly sales were 708,000 pounds and benefited from higher moly grade in the connector pit. Together, copper and moly sales generated $237 million of revenue in the quarter, which is the highest quarterly revenue generation for the company to date.

Moly revenues were more than double the same period in 2025, benefiting from the higher production levels and roughly 25% higher moly price. And today, it's over $28 per pound. Total site costs in the first quarter were $142 million, which includes $15 million of capitalized stripping costs. This is 13% higher than Q4 last year includes the cost inflation that we talked about.

For the quarter, Taseko generated $94 million of adjusted EBITDA, $115 million of earnings from mining operations and $94 million in cash flow from operations. Net income in the quarter was $17 million or $0.05 per share, and on an adjusted basis, was $28 million or $0.08 per share after removal of unrealized fair value adjustments.

Financial performance and adjusted earnings was impacted by the copper collars we currently have in place. We put these collars in place last year to support our project finance and our ramp-up of Florence copper. These collars reduced our effective selling price to USD 5.40 per pound in the current quarter as compared to the LME, which averaged around $5.83 in the quarter.

As a reminder, these collars roll off at the end of June with 27 million pounds remaining for the second quarter, at which point we'll begin realizing the full LME price up to a much higher level of USD 7.50 and USD 8.50 per pound. And there's no limit after Q3 at the moment.

It's also worth noting that as Florence begins to generate free cash flow later this year, we will likely revert to our previous practice of just purchasing out-of-the-money copper price puts with shorter time horizons, say, a quarter or 2 out, which is to protect against shorter-term copper price volatility. And that lower strike will have a modest payment of premium to provide that downside protection. And that strategy of purchasing copper puts outright doesn't limit our copper price upside now that we're getting to the end of our development and ramp-up of Florence.

Florence Copper reported sales of 600,000 pounds of cathode in the quarter with the balance of production of 900,000 pounds in finished inventory. We also had 600,000 pounds of copper in solution as what we call work in progress inventory. Direct costs associated with the cathode production at Florence in the quarter was $10 million, which is split across these inventory amounts. So our operating segment note, refer to Note 22 in our financials now shows our revenue and cost of production at Florence and it showed $4.5 million for the quarter. So no initial profit was recognized on our first sales of Florence cathode.

In the first quarter, we capitalized $21 million of commissioning and start-up costs incurred at Florence. We also capitalized well field development costs of $18 million for new wells being constructed. These drilling and well development costs will continue to be capitalized as sustaining capital throughout the operation's mine life, and they'll be depreciated over the useful life of the well on a unit of production basis from the copper recovered.

Next quarter, with increasing production from Florence's SX/EW facility, we will see much less capitalized site operating costs, with most of the operating costs expensed as cost of production as cathode is sold. We ended the quarter with total available liquidity of $322 million, including $169 million of cash, with stable cash flows being generated from Gibraltar, combined with our rising production and cash flow from Florence, our liquidity should be maintained in the second quarter and begin increasing in the second half. As our liquidity grows, we will look to begin at opportunities to reduce debt and delever later this year. With that, I'll pass it back to the operator for questions. Thanks.

[Operator Instructions] And we will take our first question from Dalton Baretto from Canaccord Genuity.

I'm trying to unpack this whole diesel and asset exposure a little bit more. I know you've got some context on that. Let's start with the diesel though. I know you highlighted the impact on C1 cost. But outside of that, when you look at your cap strip at Gibraltar and then the well field deployment at Florence, what sort of impact would you anticipate there?

I mean -- Dalton, it's Stuart here. In total, across Gibraltar, we're using roughly 40 million liters of diesel a year across capital operating. We've seen a CAD 0.50 per liter increase, CAD 20 million roughly is kind of year-over-year what you're seeing across that. And of course, at Florence, a very different type of operation. We don't -- we don't really use any diesel or any fuel to speak of. So yes, that's the impact on diesel.

And then just on the asset, Stuart, it's great to see you guys are locked up over the rest of this year. Are you starting to have conversations with your suppliers about next year yet, both around availability as well as around pricing?

Yes, Dalton, Richard here. We've maintained contact with our current supplier, and obviously, discussions around next year are on -- are obviously on the agenda, but nothing in any kind of formal or detailed or specific way, but definitely watching the market and seeing what's happening.

But have you been given any comfort around availability. I mean, I'm assuming pricing is a separate conversation, but just around availability?

Yes, and that availability seems like it will be there. It will be more of a price discussion.

[Operator Instructions] And we will take our next question from Craig Hutchison from TD Cowen.

Just on Florence, I appreciate you guys have given some guidance around back half weighted. But can you provide any more kind of clarity in terms of what we can expect here for the cadence? Should we expect kind of material uplift in Q2 or something similar to kind of Q1? Just kind of anything in terms of what we should be kind of modeling from a cadence perspective would be appreciated.

Yes. I think -- Craig, it's Stuart. We're -- as I mentioned in my remarks there, we're running right now around at a daily production rate around 55,000, 60,000 a day, 1.5 million to 1.8 million pounds a month. We will have new wells. So that's kind of April and May, like we will have new wells coming on in this month, which will start to produce copper in June. But generally, I wouldn't expect a major uplift in production in Q2 from that kind of monthly rate. I think you'll start to see a much bigger increase in Q3 and Q4 when we have additional big portions of the well field open -- starting to open up. So yes, that's kind of why we've indicated it's quite heavily weighted to the second half of the year.

Okay. Great. Maybe shifting focus to Yellowhead. You guys mentioned it's on the new major list project for British Columbia. What does that mean from your perspective? Does that mean there's going to be some kind of effort to fast track permitting? Is there certain financial support you'll get from the province? And I guess you also mentioned dialogue with the federal government as well. Just anything in terms of where you see, I guess, permitting going and what kind of support you guys are receiving from different levels of government?

Yes, thanks. Yes, certainly, I appreciate it was good recognition to be included on that list. But the reality, I think, is we don't see any significant change in the permitting process. We've been working closely with all levels of government here in the last -- for the last couple of years. And I think between the Simpcw First Nation, the Province of BC, Government of Canada, like, you know everyone focused on trying to have an efficient permitting process and have not have duplication of work across different agencies.

So that's really where our focus has been. We don't see much changing on the permitting track as a result of that announcement. On government, more broadly on government support, we do think we've got good support from the Province. And Government of Canada, we have some dialogue ongoing as well. Certainly, Yellowhead would be a major new copper mine. It's got the potential to be the second biggest copper mine in Canada, and that, of course, is getting attention. So yes, but nothing to really nothing tangible yet to announce, but certainly progressing on some good discussions across governments.

Okay. Great. Maybe one last question for me. Just New Prosperity, anything new on that front in terms of moving that project forward?

No, nothing -- no major updates to report. I mean, we're focused on expanding our relationship with the Tsilhqot'in Nation continuing to work with them, following on the dialogue that we completed last year, but otherwise, no significant updates there.

Thank you. We have reached the end of the Q&A session. I will now turn the call back over to the management for closing remarks.

Great. Okay. Well, thanks, everyone, for joining today, and we will talk to you next quarter. Thank you.

The meeting has now concluded. Thank you all for joining, and you may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Jericho, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Taseko Mines 2025 Q4 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Brian Bergot, Vice President of Investor Relations. Please go ahead.

Thank you, Jericho. Welcome, everyone, and thank you for joining Taseko's 2025 Fourth Quarter and Annual Results Conference Call. The news release and regulatory filing announcing our annual financial and operational results was issued yesterday after market close and is available on our website at tasekomines.com and on SEDAR+.

I am joined today in Vancouver by Taseko's President and CEO, Stuart McDonald; Taseko's Chief Financial Officer, Bryce Hamming; and our COO, 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, and this information, by its nature, is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our fourth quarter MD&A and the related news release as well as the risk factors particular to our company. These documents can be found on our website and also on SEDAR+.

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. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we'll open the phone lines to analysts and investors for questions.

I'll now turn the call over to Stuart for his remarks.

Great. Okay. Thanks, Brian, and good morning, everyone. Thanks for joining our call today to discuss our fourth quarter and 2025 annual results, which were released yesterday. As usual, I'll start by providing some comments and additional detail on the operational aspects of our business, and then Bryce will review the recent financial performance.

So I'm going to jump straight to the exciting news that we announced yesterday. Florence Copper is now producing copper as of just a few days ago when we turned on the electrowinning circuit. Copper is now being plated, and we're just a few days away from harvesting the first cathodes. This is a great achievement for everyone at Taseko and especially the construction and operating teams at Florence.

As we've talked about, wellfield operations commenced in the fourth quarter, so we've actually had solutions flowing in the commercial wellfield for about 3 months now. Initial results from the wellfield have been very positive as we've been able to achieve higher injection flow rates than expected in these first few months. As a result of those higher flows, the acidification of the ore body has been faster than planned and the grade of copper recovered in solution or PLS has actually ramped up faster than expected. So it's still early days, but the initial leaching results have been quite positive. And actually, our PLS grade was high enough to begin copper production several weeks ago, but the commissioning of the SX/EW plant took a few weeks longer than planned.

We're expecting Florence to produce approximately 30 million to 35 million pounds of copper this year. And by the time we report first quarter earnings, we'll be in a good position to provide some operating metrics in terms of flow rates, PLS grade and production from the initial wells.

A key factor in the ramp-up will be our ability to expand the wellfield and bring on new wells through the year. Drilling resumed in the fourth quarter, and there are now 3 drill rigs running. It's taken some time for the new drilling crews to get ramped up. We have a fourth drill rig being added in the next week or so and expect to see improved drilling productivity going forward.

Before we turn to Gibraltar, I'd like to start by commenting that safety is a core value at Taseko. Nothing is more important than ensuring that the people who work at our operations go home each day the same way they arrived.

In November, a tragic accident occurred at Gibraltar that resulted in the death of a contract worker. We're deeply saddened by the loss of a colleague and again, offer our condolences to the coworkers, friends and family of the individual. Findings from that incident are in the process of being reviewed with employees on site.

In terms of production at Gibraltar, in the fourth quarter, we saw copper head grades increase to 0.26% and recoveries of 81%, which led to 31 million pounds of copper production. So it was a strong production quarter. The higher grades and recoveries were slightly offset by throughput, which was about 8% under design capacity for the period due to unscheduled mill downtime.

Molybdenum production was 800,000 pounds and also benefited from higher grades and recoveries. Copper and moly production for the quarter was the highest level of 2025 as we expected it would be. And for molybdenum, it was actually the best production quarter in the history of the mine. With higher production, our total operating costs dropped to USD 2.47 per pound in Q4. For the year, Gibraltar produced a total of 98 million pounds of copper and 1.9 million pounds of molybdenum at a cost of $2.66 per pound. Production was heavily weighted to the second half of the year as we mine deeper into the connector pit to access higher grades and better ore quality in the third and fourth quarters.

Looking ahead to 2026, mining operations are much better situated in the Connector pit, so we expect higher annual production and much less quarterly variability than last year. We are, however, taking a more conservative view on copper grades due to the impact of small higher-grade zones that have not been realized through our mining so far in the Connector pit.

Over the last 18 months, we've also encountered more oxide and supergene and transitionary ore in the Connector pit than we originally expected. The oxide ore has been stacked on leach pads and would be processed through the Gibraltar SX/EW plant. But the supergene ore goes through the concentrator with lower recoveries. For 2026, we're expecting average recoveries between 75% to 80%. And that's really a similar level to what we saw in the second half of 2025.

Taking all of this into account, we're expecting Gibraltar to produce 110 million to 115 million pounds of copper this year. And given that the Connector pit will be the primary source of ore for the next 3 years, we expect annual production will remain in the same range, plus or minus 5% through the end of 2028. With copper prices now roughly 25% higher than last year's average price, we are well positioned to benefit from our copper price leverage supported by higher production from Gibraltar and production growth at Florence.

Tight supply due to global mine disruptions, combined with strong demand from traditional end users and new demand from AI data centers and grid modernization all support continued strong copper prices. So Taseko is very well positioned for cash flow growth in the future.

We also have significant long-term optionality and value in our other projects. And in 2025, we achieved some significant milestones at both Yellowhead and New Prosperity. The new technical report from Yellowhead confirms strong economics, and we will continue to advance the project towards an ultimate construction decision and begin unlocking the net present value. And talking about leverage to copper, that NPV also benefits from a strong copper price environment. When we published our report in June, we used a price of $4.25 per pound, which gave us a $2 billion NPV. At today's pricing, that's more like $4 billion after-tax NPV or even higher.

So the project is getting a lot of attention from potential partners. And when you consider the lack of large-scale open pit copper projects in North America that can be brought online in this time frame, these opportunities are very rare. So it's a great asset, I think, for the company going forward.

Permitting efforts are very active, and we continue to engage with the local communities and open houses in recent months with no major issues arising so far. Our Yellowhead project team is also preparing the detailed project description that will be filed later this year. So 2026 promises to be another busy and productive year on many fronts.

And with that, I'll turn the call over to Bryce for some commentary on the financials.

Thank you, Stuart, and again, welcome, everyone. I'll give some further color on some financial details before we get into any questions.

Total copper sales for the fourth quarter were 32 million pounds, including 800,000 pounds of cathode from Gibraltar's SX/EW facility at an average realized price of $5.13 per pound. Including $25 million of revenue from moly, we generated revenue of $244 million in the quarter. For the year, revenues of $673 million were recorded for the sale of 99 million pounds of copper and 1.9 million pounds of moly. The average realized copper price in 2025 was robust at USD 4.61 per pound, and we benefited from a generally weaker Canadian dollar. Both quarterly and annual revenue are the highest Taseko has ever recorded now that we own 100% of it.

For the quarter, we recorded net income of $4.5 million or $0.01 per share. And on an adjusted basis, after removing unrealized marks on our liabilities, which are tied to the higher copper price and other unrealized items, it was $42 million or $0.11 per share of adjusted earnings.

Adjusted EBITDA in the fourth quarter was $116 million as compared to $56 million in the same quarter in 2024 and $62 million in Q3. For the year, adjusted EBITDA was $230 million, slightly higher than the prior year. So production in Q4 contributed to half of our annual earnings. Also for the quarter, cash flow from operations was $101 million, which was significantly higher than previous quarters, with Gibraltar contributing free cash flow of $72 million. For the year, $220 million of cash flow from operations was generated from Gibraltar.

Overall, financial performance was strong and definitely benefited from the higher copper pricing in the second half of the year with improved production and sales levels.

I will remind everyone that we do have copper price collars in place that we put in place to support our Florence copper project development and project finance. It has a ceiling price of $5.40 per pound until the end of June, which had a mark at year-end of $22 million. For Q3 of 2026, we have added copper price collars that have secured a minimum price of $4.75 per pound for 8 million pounds per month in the third quarter, and that have much higher ceiling prices of $7.50 and $8.50 per pound.

As we move beyond the ramp-up of Florence, we do plan to revert to our longer-term strategy of just buying copper put options over shorter-term time horizons and leaving the entire upside to copper price open with 2 mines running. Now on to Florence, where things have been going very well, as Stuart mentioned, we completed the capital project in the fourth quarter. Capital spending decreased dramatically from prior quarters to just USD 8 million in the quarter as construction activity started winding down. Final capital costs for the commercial facility were USD 275 million, which was approximately 3% over the revised budget from early 2024 when we started construction.

In the fourth quarter, $60 million of site operating costs and commissioning costs were capitalized for Florence. With cathode production now underway, we will begin expensing operating costs, which to date have been capitalized significantly still in the first quarter. We ended the year with a cash balance of $188 million plus our undrawn revolving credit facility for USD 110 million. So that brings our total liquidity to a very strong $340 million.

With strong cash flows expected from Gibraltar in 2026 and the development capital spending behind us at Florence, our balance sheet will improve throughout the year in the current copper price environment. As Florence Copper begins to provide cash flow as the second operating mine, our credit rating will naturally re-rate, and we will prioritize delevering the balance sheet with our excess cash later this year.

And with that, operator, I'll open the lines for questions. Thank you.

[Operator Instructions] Our first question comes from Ernad Sijercic from TD Securities.

Congratulations guys on Florence. Just a quick question here. What should we expect for CapEx and stripping this year?

It's Bryce. Yes, I think with respect to CapEx, last year, we had $80 million of capitalized strip and we'll have slightly less this year as we're kind of in -- we're past some of the heavier strip sequences of Gibraltar. So we'll see that come down to some extent. I think we have on the sustaining CapEx side as well, the main thing is some additional tailings work that we're going to do this year, but that should also be contained. So nothing really unusual compared to some of the capital projects that we've had in prior years like the crusher move and so forth.

Great. And just one follow-up. How should we think about grade and throughput this year as it relates to your guidance?

Well, I think -- I mean, I think throughput, we're always expecting to achieve something in the range of design capacity, which is 85,000 tonnes a day, just over 30 million tonnes for the year. That's always the goal. And I think we've been successful. I think last year, we achieved that. Grade, as I noted in my remarks, I think the reserve grade in the Connector pit is 0.25. But what we've actually seen is the impact to some -- of that reserve grade being skewed a little bit by some smaller high-grade zones. So we're being a little more conservative now in our expectations and expecting something potentially 5% to 10% lower than that. So yes, that's generally how we get to the guidance figures.

Our next question comes from Dalton Baretto from Canaccord Genuity.

Congratulations on Florence. And maybe I'll start there. Stuart, as you're thinking about the ramp-up on a go-forward basis now, is -- how do you think about some of the risks? What are you keeping your eye on? Is it purely a function of wellfield expansion? Are you sort of concerned around homogeneity of the ore body? What are you keeping an eye on?

Yes. I think -- I mean, obviously, we're very pleased with the initial leaching results, right, and our ability to solidify new sections of the wellfield, get our PLS grade up. Obviously, we still have a lot of work to do to stabilize the whole process from wellfield through to actually plating the copper. So it's still very much a ramp-up, but early days, but so far, so good.

One thing I would say on the ramp-up, as you noted, is definitely the drilling. We do need to add new wells. And in our mining plan, we plan to add 80 to 100 new wells essentially every year for the next decade or longer. So that's normal course, going to be normal course at Florence, and that's an important part of the ramp-up. So, yes, I don't know, Richard, if you have any comments.

Yes. No, that is exactly, Stuart. Really, the thing we're watching closely is just the drilling performance and how the drilling is moving forward to bring on the new wells that we know we need as the production profile increases.

That's great, guys. And then maybe switching gears to Gibraltar. Can you talk a little bit about some of these issues you're seeing at the Connector pit? I mean what happened? Why aren't you picking up some of those higher-grade zones? And maybe why some of the higher oxide and supergene material was maybe missed in the reserve?

Yes. I think the easiest way to explain the high-grade zone is there's very high -- there's a kind of isolated drill hole -- exploration drill hole results that are skewing the geological model, and we're in the process of kind of going through and I guess, reinterpreting those drill holes. And in turn, it's going to downgrade the grade that we're encountering because we've mined through a few of those areas and not realized the grade that we expected. So we know those, I would describe as ultra-high grade pockets that are in the model need to be adjusted, which we're in the process of doing, and that's why we provided the guidance we did today.

And what about on the supergene and oxide material? It sounds like you're seeing more of it than you anticipated.

Yes. The oxide has been a positive that's allowed us to go to the oxide dumps and will actually allow us to run the SX/EW plant longer than was originally envisioned. So it's actually a good case scenario from an overall cathode production perspective. The supergene hypogene kind of transition zone is there's interpretations of where that is. And in some places, we've seen it not be properly reflected where the supergene actually is more than we have in the model. And those things are -- we just need to adjust it to reflect the reality of what we're seeing.

Got it. And if I could just squeeze in another one here just on the portfolio. I mean, in this environment, clearly, Yellowhead and Prosperity are very valuable assets and niobium looks like it's going to have its day in the sun as well. Stuart, how are you thinking about next steps for each of those?

Well, Yellowhead is very much a permitting project now. We've got a lot of work underway. We have a big -- good solid team in place that's working closely with the regulators and with the community. We've got solid relationships, I think, there. I think in the coming -- over the next year or 2, I think we're going to probably advance some discussions with potential JV partners there. There's a lot of interest, as you would expect in this copper price market. And as I mentioned in my remarks, this is a pretty unique opportunity with a large-scale open pit greenfield project in North America. There are very few of these out there that could be brought on in the next 5 years, 4 to 5 years.

So that's heading on a path, I think, on a good path to realize value. New Prosperity, obviously, the big news last year, we signed our agreement with the Tsilhqot'in Nation in BC. I think generally, look, we all know that is an incredibly valuable deposit. But to really unlock it and move forward, we need the consent of the Tsilhqot'in Nation, and that was clarified, obviously in our agreement last summer. So we're allowing their land use planning process to move forward, and we'll be patient and respect that process, obviously still in the future.

Yes. And then niobium, you mentioned, it's obviously one that's a little bit off the radar perhaps for some of our investors, but it's a very large open pitable niobium deposit in Northern BC. It's one of the largest undeveloped niobium deposits in the world. And we continue to work on that in the background. We don't talk a lot about it, but we do have a strong technical team that is pushing forward on and doing some very good work. And we're also expanding our work and looking for potential offtake partners and partners to help us develop that project. So lots happening there.

Yes, so it's good. We've got -- I think one thing about our company. We've got obviously immediate growth with Florence, but we've got a lot of longer-term options as well in our portfolio. So pretty exciting, we think.

[Operator Instructions] There are no further questions at this time. That concludes the question-and-answer session. I would like to turn the call back over to the Taseko management for closing remarks.

Great. Okay. Well, thanks again, everyone, for joining. Yes, we will continue to keep you updated as the Florence ramp-up progresses and obviously look forward to talking again next quarter. Thanks.

This concludes today's conference call. Thank you for joining. You may now disconnect.

Thank you, everyone, for joining us post lunch. I really appreciate it. In this current panel, we have Taseko Mines. So from Taseko, we have Bryce, CFO, joining us. Thank you, Bryce, for joining us. If anyone out there has a question, please raise your hand. We'll get a mic to you, and you can ask your question.

Maybe to start off, Bryce, again, thank you very much for coming here. Maybe just provide a general overview, recent developments.

Yes, for sure. Thanks for having me as well. Enjoying the conference. Yes. So I think recent developments, it's really for Taseko Mines is really about Florence Copper this year. That's our newest asset that we've brought on stream. We finished the construction just recently, and we've started operations. So that's been our major achievement this year as far as recent developments.

We've had actually all things firing on all fronts, including some developments on our more junior properties, including New Prosperity, we did a deal on in June. And then we also announced the permitting of Yellowhead starting, which is also very exciting for us. We also updated the economic study on that. So it's clear to the market what that asset is going to be for us. As people ask us what's next after Florence Copper, we have a pipeline of assets that we're advancing as well, all in copper, all in North America.

Maybe taking a step back, looking at kind of your ongoing mine at Gibraltar, I know you've typically provided like annual guidance, and it's kind of kind of taken a little bit of a step down to where it was initially. I guess what caused the downward revision? And how sustainable do you think that is? And what's the turnaround look like?

Yes, definitely in a turnaround position now. We had a tough start to the year for sure. We were always planning to process some stockpiled material and our mine fell behind plan with some of the weather challenges and pioneering that we had to do to open up this new phase of mining. So we had what we call like a pushback where we're opening up more mine feed. And then we got through that in the first half of the year. We stepped up the mining rates, deployed more trucks. We hired more people.

Second half of this year, we're definitely at more normal run rates, had a good October that we announced, 11 million pounds, November, just shy of 10 million pounds. So we're definitely on track to how we guided there at the end of Q3. And then again, next year is a much more normal year. We won't have as much processing of stockpiled material, which impacted our production in the first half of the year.

What does that normal production look like over there?

Yes. So generally, like Gibraltar can do between 120 million to 130 million pounds. We expect to be back at those kind of run rates next year. The other thing that's helping is we've fired up our SX/EW plant. We have oxide material at the top of this pit that we've added to the leach dumps, and we've got our SX/EW firing again. We'll get a second dump going next year, and that will add production as well for cathode.

Great. That's good to hear. To your point, Florence, I think, has been extremely topical and has been kind of the focus of a lot of people, a new like 85 million pound run rate annual production project kind of nearing the end of that construction. Could you just maybe describe that project? What makes it unique? And just kind of update us on construction time line spend.

Yes. I think probably the one thing that's unique about it is it's a U.S. copper mine. We're very proud to be bringing it on at this time. Copper is obviously very critical to the U.S., and there's been a lot of focus on copper given the tariffs and the need to bring back U.S. domestic capacity. So we happen to be at this stage of bringing on the next copper mine. So I think that's what makes it unique to start.

Obviously, there's a bit of a premium for U.S.-sourced copper with the COMEX price higher than the LME price, which we hope to capture. The other thing that's unique about it is the mining method. It's not your traditional open pit hard rock mine. It's an in situ recovery operation. That means that we -- instead of drilling and blasting and hauling rock, we actually get access to the ore body with wells. We have a well field there, and we pass the leach solution through the wells and capture the copper that way.

There's 2 advantages to that. One is it's a lower cost. We didn't have as large a mine to build to begin with, but a lower operating cost going forward. It's also much less impact on the environment. It's lower water intensity, lower energy use and lower carbon. So all of those factors are -- make it unique. And so at these copper prices, it can contribute a lot of cash flow as we get it up to 85 million pounds a day. We've just finished construction of it. We finished it in line with our time and budget plan. We're within 2% of budget. So we have about $5 million more to spend before the end of the year.

But yes, we started operation. That means we started the leaching, and we're going to see first cathode likely in January based on the current plan. And then we ramp up next year. Next year, we should be doing in the range of 30 million to 40 million pounds with our existing wells, but we're starting the drilling now to bring more wells. Right now, we have about 110 wells, and then we'll be building another 120. So doubling the well field, and we'll continue to do well field development. That's kind of our mining method. So analogous to stripping. It's really getting access to the ore. So we're going to advance that, and that's with the objective of getting it up to full capacity by 2027, that 85 million pounds that you were mentioning.

I guess the in situ mining, it's a little different of a mining method. It works really well in uranium. I guess what provides you confidence in this kind of sustainably being a successful mining method?

Yes, absolutely. In order to get the permit to do this, we had to do a test facility. So we actually constructed a well field there. We had around 20 wells that we operated for several years. And it was to demonstrate that it could work. We could operate it within our permitting guidelines. But also what we were able to do was take it all the way through the production process to finish cathode. And so we used all the same design parameters that we would have in our commercial facility. We tested it in the actual in-situ conditions that we have there.

And that's a really important derisking step when it comes to solution mining is to actually test it in real-world conditions and then to, again, take it all the way through to the end product. So you know the quality of the product can meet the standards as well. And that isn't what -- I don't think it's as common to do that in in-situ. I think a lot of people will skip that step and then figure it out kind of as they go if they build a commercial size facility. Sometimes it works, sometimes it doesn't or sometimes it's -- again, they have to adjust on the fly. Whereas in our case, what we're really doing is scaling up, we're actually expanding the well field that we built for the test facility, and then we're just starting again from there.

So we've built the wells that we built during construction in that area, and we're continuing to branch out from there. So it's really an extension of what we've already done there. And then again, we learned a lot by operating it, how it reacts, different well field strategies, reverse flow, different areas that we can target within the wells. It's actually quite an exciting little operation, a lot more flexible in some ways than a traditional open pit, which requires a lot of stripping of the mine to get access to ore. Here, we have a lot of levers that we can pull.

So I think currently, you said you have 110 wells, and you're looking to more than double that looking into next year. I guess, how do you think about looking into ramping into next year? Any key milestones, KPIs we should be tracking? And kind of how do you expect that production to cadence as well?

Yes, for sure. Like it starts with anything, it's a leach curve. We've got the 110 wells. And that gets us up to a certain run rate, but it's really this next phase of the 120 that we're building. That should -- I think by the end of next year, we're really trying to get it up to, I'll call it, our run rate. And so it's a pretty steady month-over-month increase. We start with about 1 million pounds in January. And by the end of the year, we're trying to target upwards of 6 million to 7 million pounds a month.

So it's a pretty steady climb over that period. And then other operational metrics, we are investing in the wellfield. So there's quite a lot of well development expense related to that. And then it's really about making operating profit. This becomes quite profitable. We're seeing operating profit already in the second quarter next year and free cash flow at these copper prices, not far behind that.

And then it's about scaling it up so it can truly make the $3-plus copper pound margin that we expect it can do in full operations. So we're definitely looking for that, getting it up to its run rate capacity by the end of the year and then, obviously, operating cash flow and free cash flow during the year next year.

Working capital needs, we probably have -- I mentioned the $5 million more to go on the CapEx side and probably another $10 million to $15 million of working capital. Again, some of that varies here depending on what the copper price will do when January comes around. But so far, at these rates, should be pretty minimal on working capital.

And then I think you may have made a comment about roughly free cash flow breakeven-ish in Florence next year. Can you bridge us to that? And then how do we think about kind of ongoing sustainable free cash flow thereafter?

Yes. Look, I think for sure, at 85 million pounds, I think our study indicated that we could produce copper at about $1.10 a pound. That assumed a sulfur -- sulfuric acid price of about $130 per tonne. We're currently seeing landed cost at our site about double that right now. So that's adding about $0.40 a pound to our overall cost structure. That takes our C1 up to around $1.50. And then as I mentioned, we -- overall, we're going to have to build about 80 to 90 wells a year, and those wells are anywhere from $400,000 to $500,000 each to build.

So you've got probably another $0.40 or $0.50 there. So all in, at these sulfuric acid prices, we could do it for about $2 a pound. And yes, it's still a very good margin when you're looking at a copper price north of $5. So yes, the potential to generate a lot of free cash flow coming out of next year.

You kind of mentioned one variable that seems to be changed in the sulfuric acid. How have you gone about securing enough supply? And how do you think about pricing today and going forward?

Yes, it's definitely elevated, as I mentioned. So that's -- we're susceptible to that. Right now, we have a 1-year contract. We're focused mainly on the ramp-up and getting our operations up and running. So we're a bit of a price taker. I think we have one supplier at the moment, so it's a 1-year contract. We're not at full usage rates yet, probably about 60% looking ahead to next year. But yes, to look at the overall needs, we'll probably have about 200,000 tonnes of acid that we'll use a year.

We're going to be looking to, hopefully, sourcing from multiple suppliers. We could also look at a longer-term contract arrangement that could involve some investment either in a nearby sulfur burner or transload facilities in the area or even close to the site. Obviously, logistics are a big part of the sulfuric acid price. So we can look at different strategies with that. But I think next year, the focus is really on getting to steady-state operation and ramp up, getting that behind us, and then we can look at sort of a longer-term sulfuric acid.

But we will -- I think the main thing is becoming a large consumer of it and then being able to contract and create competitive opportunities and potentially even looking at working with traders to try to secure some price protection from it. So you can participate in the spot price, but also protect against harder markets.

In 2022, I know Taseko agreed with Mitsui for a copper stream plus a call option on the asset -- on Florence. How are you thinking right now about that Mitsui stream and that call option? And is there any way for you to repurchase it?

Yes. I'd say that from Mitsui's perspective, we think that it's very likely they're going to exercise their call option. They're going to convert that stream plus another $50 million of investment into a 10% ownership interest in Florence. Their offtake right is really an initial right for them to get long-term exposure or opportunity with the offtake. They do need to convert to be our partner. If they don't convert, then we have the opportunity to buy it back at a fixed price, and we would do that if they don't convert.

But I think all signs, especially in this market, I think Mitsui has identified that this is a very strategic asset with this backdrop in the U.S., but also globally. So they're very keen to be involved with it long term. So our expectation is that they will convert and become our partner. And once they do, they will market the product with us to the customers, which we expect to be in the U.S.

Is that stream kind of considered within your total?

Yes. The stream would be -- it's within our cost structure. When I -- when we talk about $1.10 per pound, it's not included in there. But again, we only expect the stream to be in place for the initial years of production. They have 3 years from mid-October. So it would expire in 2028. They would have the option expiry come due.

But to your point, given what the cost structure would look like, where copper prices are, production levels, $50 million for 10% stake is the...

Yes. Florence is -- at the time, it was quite different even when we did the deal, I'd say, 4 years ago, copper price was different. The U.S. focus on copper was different. But now given where it is, the value that Florence has, the copper price and the strategic nature of it, it's very attractive. So -- and we think they'll be a good partner for us. And again, it's a partnering model that we can look to deploy when we build other mines like Yellowhead.

I know recently, you kind of came to the equity market and you issued 42 million shares at USD 4. And I think you used those proceeds to repay your revolver for GCP. What is pro forma liquidity? And why did you decide to raise equity now?

Yes. We had a good -- obviously, we've had a great year in the equity market. Our stocks performed, I'd say, above copper and above our peers. So we've had a good year. It was an attractive price to do some equity. I think we wanted to not just use leverage to get through ramp-up and commissioning. So we wanted to take some of that pressure off. And again, we had a very favorable market and a lot of support from the equity market. So we thought it prudent just to take a bit of pressure off and pay down some of the revolving credit facility and just put ourselves in a good liquidity position to -- with the ramp-up ahead. So I think it positions us well to do exactly that, and that was the thinking behind it.

Looking today, do you need more liquidity or are you comfortable with the liquidity level?

I think -- no, I think we have good liquidity. Pro forma-wise, we ended Q3 at $90 million. I think our net proceeds from here would take us up to CAD 200 million pro forma after paydown of the RCF, plus we have USD 110 million of capacity in the RCF. So we have a fair bit of liquidity here going north of $300 million. So we're in a very strong position. So some uses I mentioned about the working capital needs in the finish of the construction, but really relatively modest. And again, we're getting pretty good cash flow out of Gibraltar at these copper prices.

If we look at your capital structure right now today, you have the $500 million, 8.25% secured bonds. Right now, your revolver undrawn. You have various equipment loans, leases, et cetera. I guess, how do you see your capital structure evolving, especially after Florence has ramped?

Yes. We definitely, I'd say, deleveraging. I think the easiest or the lowest hanging fruit there amongst that, obviously paid down the revolver already and then the next step would be the equipment. Some of that will be sort of paid down over the course of the next year or 2, and we can accelerate that, pay that down for pretty modest prepayment penalties. So that would be the first thing that we do. The bonds, there's opportunities potentially to take some of the bonds down.

And again, we're probably talking a bit beyond 2026, but perhaps we're taking $50 million to $100 million of the bonds down. I think we want to -- obviously, the high-yield market has been good to us. It's rewarded us for the construction of Florence already, and they're obviously looking to Florence to contribute cash flow and delever us.

But -- so it's a market we're going to stay in. I think after we pay down the equipment debt and some of the bonds, if we choose to, we could then look to potentially some shareholder type returns, whether it's a shareholder buyback program, an NCIB or something like a dividend, even a dividend policy that's maybe perhaps tied to copper price.

Do your bonds have that 10% at 103?

Yes. Our bonds still have a 10% at 103 feature. And then they -- or the non-call period ends next November.

So given where your bonds trade kind of...

Yes. Look, I think the first things first, I think we're focused on Florence. And I think we still have some more expensive debt with our equipment loan that we probably take down first, everything equal. But yes, there's opportunities. And a lot of it is tied to the copper price. The copper price is obviously giving us more degrees of freedom at the moment. So if that continues, yes, I think some of these opportunities could be upon us here next year.

I know it's early, bonds are at [ 106, ] trading around 6%, give or take. How are you thinking about refinancing that bond? Do you like an all-secured cap structure? Would you want some unsecured in there? How do you think about that?

Yes. I think we're definitely going to be moving towards an unsecured cap structure over time. Again, the refinancing of the bonds will be a bit situation dependent. I think part of what we're focusing on in the coming years is Yellowhead. We're going to be investing more in Yellowhead to get it ready for final investment decision. We have some engineering to do there, field studies, geotechnical work. And so that will be a growing use of cash flow as well. So we want to position ourselves to build Yellowhead and retain control of it, of course.

And that's going to really kind of drive our bond strategy as to when and how to take that out and whether we're going to be ultimately using the bond market to finance Yellowhead, which would be probably one of our top choices if we -- as we have 2 assets to lever them to build our third mine. So that would be in the years ahead as we look to a 2030 maturity, that's something we could be looking to do, probably not in 2027, but more like in 2028, we'd be looking at adjusting the cap structure and perhaps moving unsecured, like you said, or even going deeper into the bond market to get capital to build our next mine.

Leverage right now elevated just given kind of the construction. How do you think about a leverage target longer term? Do you have a gross leverage number maybe you kind of are more comfortable with or thinking about as a longer-term target?

Yes. On the premise of staying in the high-yield market, I think there's good liquidity. If we stay around the $400 million level, I think you look at our future contributions of Florence together with 100% of Gib, I think we could then obtain something in the 1x or less leverage target level. And that, I think, is what we want to do is improve our credit rating here, get up to high single Bs, low BBs with the 2 assets and leverage in that sort of range ahead of building our second -- or sorry, our third mine, which would be later this decade.

So this $400 million-ish gross debt number, roughly less than 1x, is that kind of the -- what you set yourself as a target before you decide to kind of look at [indiscernible] in Yellowhead?

That's right, 2027 onwards. Yes.

And then maybe discuss a little bit more about Yellowhead. Obviously, you put out earlier this year, very interesting...

Yes, very exciting opportunity. I think we're announcing it amidst other development opportunities in North America and the U.S. There's some in Arizona, nearby us in Florence that are advancing. We think this is Canada's next greenfield copper mine. It will be the second largest one after Highland Valley and bigger than Gibraltar, has the potential to produce 200 million pounds of copper in its first years. And so it's a very strategic asset for Canada for the company.

We've got our work to do on it. We're in the EA process. I think where we stand today, it could be in sort of that 3 to -- let's say, 3 years from now. And then it's about putting together the financing for that. We're focused on -- I think, in 2026, we're very focused on getting a partnership together with the First Nation there and then advancing towards getting an offtake partner that would work with us similar to what Mitsui has done and what we did at Gibraltar previously.

I think the one advantage we have as a producer is we have strategic units of copper in Gibraltar. We're able to leverage those to attract a partner. So a partner could participate in Gibraltar and get feed from Gibraltar and while they're waiting for Yellowhead to get built. So we could look to do a partnering deal on that in the years ahead as part of the finance strategy in addition to looking at the bond market and other federal funding that might be forthcoming.

You kind of anticipated my next question there. Is this -- are you thinking for funding go forward like another copper stream? Or are you thinking actually like a JV partner kind of owning a stake into it or...

Yes. I think it would be more like the JV model they established. We saw one of our peers, Hudbay there did a deal earlier this year with Mitsubishi Corp. on their Copper World asset. It would be similar to that kind of a transaction. I think what you're finding is that buyers or the customers are doing these deals sooner before the permits. And that's, I think, something we could look to do is rather than waiting for the permits is to do it sooner.

And again, we'd leverage the Gibraltar units to do that because we could provide them offtake as part of that strategy. So that's -- yes, that's going to be a growing focus of us in the years ahead is to unlock the value that Yellowhead will bring. And that has the potential to take us from, call it, 100,000 tonnes of copper a year to 200,000 tonnes. So it's pretty exciting, and that would really help us achieve our objective of becoming a true mid-cap North American copper producer.

After Florence has ramped, you kind of alluded to this a little bit by hinting at potential shareholder returns. I guess, how are you thinking about capital allocation policy priorities after Florence's ramp? Are you thinking about dividends? Are you thinking maybe land acquisitions around Florence? Obviously, Yellowhead, we've discussed, debt repayments, et cetera?

Yes. I think we're definitely focused on deleveraging. We want to keep emphasizing that. I want to improve our credit and cost of capital. I think as far as excess, we could definitely look at some shareholder return options. We'll have to weigh the pros and cons of dividends versus shareholder buybacks or some combination of those. We are looking to invest in Yellowhead. That's going to be a significant use of free cash flow in the years ahead.

And then, yes, we've done historically to hold investments in other companies. So we could look to buy companies that have exciting deposits, reserves either in -- that are with a junior company or that is in need of partnering. So those are things that we could look to do.

As far as reinvestment, we can always look to expand Florence, obviously. There's expansion potential there. I don't know about land consolidation, but we could look to other ISL opportunities for sure. I think we'll be the resident copper experts, and that's a global opportunity. We'll look both within the U.S. but globally for opportunities in ISL where we can deploy this expertise.

That's kind of an interesting opportunity that's a little bit unusual from other copper operators, that expertise and future...

Yes, there's definitely deposits out there that could be conducive, and there's definitely interest. We do feel that the world of copper is watching what's happening here in Arizona and how successful this mining method will be. We think it has a lot of potential to be deployed. You obviously need the right conditions, which we have at Florence Copper, but it could be used potentially elsewhere, and we'd like to be the leaders in that. So...

I think currently, you're using some copper price collars. How does that evolve as Florence begins to scale?

Yes. We've been very keen to hedge a lot of our copper price risk over the project finance build here over the last 2 years. So we've done these collar strategies where we've sold the call and bought the put. We've covered all the way to mid next year. We have $4 protected. As we come out of the ramp-up and start making money out of Florence, I think we'll probably go back to our older strategy, which is to probably just buy shorter-term protection.

Maybe we're looking at buying puts just for premium and keep the upside for both bondholders, but more importantly, our shareholders who are keen not to cap it. It's very hard to sometimes see the top of where copper could end on this -- in this market. So it might be more of a short-term put strategy that we deploy across both assets.

To your point, copper has been moving up higher. Everyone is very bullish on copper, including people in our audience. And that's kind of led to a lot of discussion around consolidation. We've already seen a deal, a large deal happening. I guess, how does Taseko think about consolidation, M&A within copper and how they fit in?

Yes. I think there's definitely the buy versus build. I think in our world -- from Taseko's perspective, we're very focused on our organic growth. We have a lot of value still in our projects that we're looking to unlock here over the coming 3 to 5 years, first and foremost with Florence, but then Yellowhead. And we also have an asset in New Prosperity that we announced a deal on earlier this year.

There's potentially an option to vend that out. That could be something we look to do over this time line. And again, we've had a lot of success buying into properties. So it's definitely something we are doing. We're evaluating opportunities. The producing companies, there's really a short list and the values are relatively high at the moment. So that's not something that's particularly attractive for us. But not to say, I think in this market, it's fair to say that there'll continue to be M&A opportunities and pressures. So -- but I think we'll just continue to focus on what we've done, which is build value through our organic growth.

On that big organic growth opportunity, Yellowhead, how much is the total CapEx that has to be spent?

Yes. So that one is -- we just announced -- so we updated the cost estimates to mid-2025. And we estimate that it's CAD 2 billion to build that. There's a new tax credit in Canada that they've announced, which will support copper mines like Yellowhead and that could cover 30% of the build. So that's not included in that [ CAD 2 ] billion, but that could be another $500 million that we received in the first years of operation to help fund it indirectly. So CAD 2 billion, which is, again, comparable to some of the other projects that are out there in the space, and we think is very financeable. Our estimates at these copper prices of $4.25 long term is that it can generate a 20% IRR or more.

So we think about it, $2 billion plus $500 million from tax credits, [ $4.5 ] billion JV partner in there, your own free cash flow plus raising debt is kind of how we think about funding?

Absolutely, yes.

Great. We're a little bit over, but do you have any closing thoughts, important items. I didn't touch on and things you want to emphasize or messages for bondholders before we close out?

No. I think, obviously, the bondholders have been patiently waiting to see Florence, and the company is excited to be bringing Florence on stream next year and adding to our credit profile.

Great. Thank you so much for being here, Bryce. Really appreciate it.

Thank you.

Thank you.

ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Taseko Mines 2025 Third Quarter Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Brian Bergot. You may begin.

Thank you, Jericho. Welcome, everyone, and thank you for joining Taseko's Third Quarter 2025 conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at tasekomines.com, and on SEDAR+.

With me in Vancouver today is Taseko's President and CEO, Stuart McDonald; Taseko's Chief Financial Officer, Bryce Hamming; and our COO, 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, and this information, by its nature, is subject to risks and uncertainties. As such, actual results may differ materially from the views expressed today.

For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our third quarter MD&A and the related news release as well as the risk factors particular to our company. These documents can be found on our website and also on SEDAR+.

I would also like to point out that we will use various non-GAAP measures during the call. You can see explanations and reconciliations regarding these measures in the related news release. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions.

I will now turn the call over to Stuart for his remarks.

Great. Thanks, Brian. Good morning, everyone. Thank you for joining our call today to discuss the third quarter financial and operating results. As usual, I'll provide some commentary focusing on the operational results, and then Bryce will get into the financial performance for the quarter.

As outlined in our release yesterday, third quarter results were definitely an improvement over the previous 2 quarters, both operationally and financially. Mining in the connector pit had presented more challenges in the early part of this year than we'd anticipated. But on the positive side, the higher mining rates in the last 2 quarters have opened up higher-grade benches that we've been anticipating. In the third quarter, grades increased to 0.22%, which is up from 0.19% in the first quarter and 0.20% in the same quarter.

This higher grade ore and less transitional oxide material both benefited mill recoveries, which increased to 77% in the third quarter. Mill throughput has been very steady this year, consistently operating at around design capacity. So overall copper production in the third quarter was just under 28 million pound and that includes 900,000 pounds of cathode production from Gibraltar's SX/EW operation. Molybdenum production in the quarter was 560,000 pounds, which is also a big increase from prior quarters due to higher moly grades, which typically track copper grades. Costs in the quarter were USD 287 per pound, an improvement over the quarter.

Total site costs in the quarter was $7 million higher than the previous quarter, mainly due to SX/EW costs now being expensed as well as increased maintenance costs. Maintenance costs, including parts and major components is one area where we continue to see steady inflation. And all of that translated into $62 million adjusted EBITDA for the third quarter.

Looking ahead, we expect to finish the year with a strong fourth quarter. Gibraltar produced 11 million pounds of copper in October, which was the mine's highest production month in 2 years. So the quarter is off to a good start. We will provide formal guidance for 2026 in the new year as we normally do. But generally, we're looking for a more consistent year next year with less quarterly volatility.

Now shifting over to Florence, where we have achieved a number of major milestones recently and the operation is now well on its way to producing first copper. In September, our general contractor achieved substantial completion of the SX/EW plant in plant area. This is a huge accomplishment for the project team. In just 18 months since we broke ground to Florence, our team has been able to deliver this major capital project on time and in line with our previous cost estimates. So it's really a great achievement and the project is now into the commissioning phase.

In mid-October, we received the final regulatory approvals we required to commence wellfield operations. We then initiated a short commissioning period, which included pumping water from the offer to establish hydraulic control in the wellfield. A number of normal course commissioning issues were identified and resolved and in early November, so about a week ago, we began acidifying the commercial well field.

Overall, we're a few weeks behind our original plan, but we're very happy with the wellfield performance so far as initial flow rates in the wellfield are in line with and even exceeding our expectations. So it's early, obviously, but the operation is off to a good start. About half of the wellfield is being acidified now and the second half will start up in the next week or so. And in the weeks ahead, we expect to see the grade of copper and solution or PLS grade from the wellfield start to increase to a point where we can turn on the SX/EW plant and start plating copper cathode.

Commissioning of the plant area is advancing in parallel with initial wellfield operations, and we expect to be producing copper early in the new year. An important aspect of the production ramp-up in 2026 will be our ability to develop and integrate additional wells into the operation. We're now preparing to restart drilling activity with 2 drills planned to start up here in November, and an additional 2 drills will be added early next year. The operating team in Florence continues to grow. Recruiting has gone very well, and we're up to about 140 employees on site now.

Needless to say, it's a very busy and exciting time for all of them. It's great timing to be starting up a major new supply of refined copper inside the U.S. Obviously, copper markets and pricing remains very strong. And there are some interesting dynamics in the U.S. cathode market. Although there are no U.S. import tariffs on refined copper right now, the possibility of tariffs in the future has led to some speculative trading activity and growing capital inventories inside the U.S.

The COMEX space has continued to trade at a premium to the LME recently at a 4% premium or roughly $0.20 a pound. However, our understanding is that the quoted COMEX price may not reflect what can actually be realized in the physical market, and capital sales in the U.S. maybe at a higher discount than normal -- higher than normal discounts that you might normally see to the COMEX price.

Although we're still seeing a premium to LME pricing. This is a situation we're going to continue to monitor as we start cathode sales from Florence in the next few months. The U.S. government has aided that it plans to revisit tariffs in middle of next year with the potential for 15% tariff on cathode at the end of 2026, increasing to 30% potentially at the end of 2027.

So in the longer term, this shows the strategic value of Florence, which will become one of the few U.S.-based suppliers of refined copper. Before I pass the call over to Bryce, I wanted to say a few words about our recent equity offering that was completed in October. The proceeds of that raise have significantly strengthened our balance sheet. We've now repaid the $75 million that was drawn on our revolving credit facility, and the remaining funds provide additional working capital support ahead of the Florence ramp up next year.

We're also planning additional spending at Yellowhead next year on environmental and engineering work to support the environmental assessment process. In the third quarter, we held open houses in the local communities and initial feedback has been quite positive. So Yellowhead project permitting is off to a good start, and we continue to view Yellowhead as an important longer-term growth project for us.

And with that, I'll turn it over to Bryce.

Thanks, Stuart. Good morning, everyone, and thanks for joining us today. Total copper sales for the quarter were 26 million pounds, which includes 900,000 tons of cathode. This was slightly below production due to shipment timing at the end of the quarter.

We achieved a strong average realized copper price in the quarter, just shy of USD 450 per pound, in line with the LME average. And this has still continued to strengthen since the quarter end. This strong copper price translated into total revenue of $174 million, which includes $14 million from moly sales. Combination of higher sales volume and strong pricing drove a 50% increase in revenue quarter-over-quarter.

On an adjusted basis, we reported net income of $6 million or $0.02 per share. For GAAP purposes, we reported a net loss of $28 million or $0.09 per share, and that was primarily due to unrealized foreign exchange losses on our U.S. dollar denominated debt and an unrealized derivative loss related to our copper collars we have in place.

Adjusted EBITDA came in at $62 million, a significant increase over prior quarter, driven by the higher sales and stronger copper price. Capitalized stripping for the quarter was only $6 million, and it was substantially lower than the previous 2 quarters, and that reflects our progress deeper into the connector pit, where the strip ratio has declined and access to ore has improved.

Turning to Florence. We spent USD 27 million on the commercial facility this quarter, and that brings our total capital spend since the start of construction, USD 267 million. We achieved substantial completion with our contractor in Q3, and we only have a few million more on this capital project to finish the year. This is within a few percentage points of our original construction budget since the start of 2024, and it's a testament to the execution of our capital projects team.

Operating costs at Florence were $8 million in the quarter, and these will increase as we continue hiring full-time staff and ramp up our well field operations, and that will include the procurement and consumption of asset going forward now our operations are underway. We ended the quarter with $91 million of cash.

In October, we closed an equity financing, USD 173 million, and we used $75 million of that to pay down our revolver. And with capital spending at Florence largely behind us now and improving production at Gibraltar. And coupled with this cash injection from this financing, our liquidity outlook is robust. We're well positioned to support the ramp-up at Florence and advance our work at Yellowhead.

That concludes my remarks, and I'll now turn it back to the operator to begin the Q&A session.

[Operator Instructions] Our first question comes from Duncan Hay from Panmure Liberum.

Just a quick one on the wellfield drilling. What's the -- can you talk through the benefits of accelerating that and bringing that forward? I mean, presumably, you're constrained by capacity in the plant. But yes, what sort of flexibility or comfort does that give you?

Well, I think initially in the ramp-up period, the key for us is going to be opening up additional wells. The constraint is going to be not the plant, but the amount of solution flows that we can get off the wellfield. So it will be key to be advancing that forward. So we've got 2 drills starting up here in November, an additional 2 early in the new year.

And in Q2 and Q3 next year, we'll see those additional wells start to come online and contribute to the ramp-up. So no, it's a big part of the plan. I think it's always been part of the plan. But yes, glad that we've got a solid balance sheet, and we can move forward confidently with that work now.

You could see -- I mean you're going to put guidance out in the new year, but that -- if you look at what you were thinking, say, 6 months ago, you could have more production next year given the position you're in?

Well, yes, we'll see. I mean we're not -- we're giving -- we're actually not going to give production guidance today. Obviously, the technical report is out there and that had some assumptions about drilling as well. But no, we're optimistic certainly what we see today, the early results from the well field are positive, but it's early days. And yes, we're keep pushing forward. And obviously, first copper is going to be a big milestone for us early next year.

Our next question comes from Craig Hutchison from TD Cowen.

I realize you guys aren't going to provide guidance for next year until, I guess, early next year. But just curious how you guys think about the kind of milestones for declaring commercial production. Obviously, ISRs are relatively new for most people. Just how do you guys think about that in terms of production rate you need to get to, to clear commercial product and is it the 60% of design? Or is there some kind of metric that you guys look at to determine that?

Yes, Craig, we're not thinking about it in that way. I know that's a conventional way it's been done in the past for concentrators. It's going to be a steady ramp-up of production through 2026. And yes, as I said, the key is going to be bringing on new wells, but we should see sequential growth each quarter in the copper production. I don't know, Bryce, do you want to make a couple of comments about the accounting? So we see, I guess, the rules have changed in recent years.

Yes. I think the real focus will be on our -- obviously, our C1 costs. We're going to be looking at what point that our production generates operating cash flow, operating profit. And with this project, given the nature of the operating costs, that happens relatively back from what we're seeing, like we could see that by midyear. And then I think as we continue to do the ramp-up, it's really about free cash flow and making enough money there to pay for the ongoing sustaining capital with the wellfield development.

And that we see sort of later by the end of next and then onwards, , of course. So those are kind of the 2 key milestones. I think first is operating profit, operating cash flow and the second really being generating free cash flow. And so that's what we're really kind of targeting as we think about that ramp up into commercial operations.

Okay. So I guess until you reach your mid next year, do we assume that some of the costs will be capitalized or the moment you guys are producing sellable cathode, you'll start booking revenues right way in terms of kind of accounting? Do we think about revenues next year?

Yes. On the accounting side, the standards changed a few years ago. We now recognize revenue once it's sold. So even the first pounds of capital will be sold. From a capital perspective, there'll be some of the -- until the plant is fully up and running, there will be some of the plant costs which get capitalized until it's sort of available for its full intended use. .

But the key, I think, with this operation, as we've looked at it, is the wellfield development cost. So that's the drilling and development of the wells, that is capitalized. So there will be significant ongoing sustaining capital that's put to the balance sheet and then amortized over the life of the well.

Okay. Great. And maybe just one last question for me. Just in terms of the capital, you effectively now complete the initial capital spend at this point? Or is there still some lingering costs into Q4?

Effectively, the work is complete. There'll be a few costs, commissioning costs that kind of trickle in, in Q4. I think we still probably have some of the cost and payables, right, that will come through the cash flow. But effectively, the construction piece is complete.

[Operator Instructions] There are no further questions at this time. I would now like to turn the call back over to the Taseko team for closing remarks.

Okay. Thanks, everyone, for joining. And yes, if there are other questions, feel free to reach out to any of us. And otherwise, we will talk to you next quarter. Thanks, again. .