Q1 2024 Taseko Mines Ltd Earnings Call

Okay.

Operator: Welcome to your conference call. Please continue to stand by. Your conference will begin shortly.

Welcome to our conference call. Please continue to stand by your conference will begin shortly.

Unnamed Speaker: [inaudible]

Unnamed Speaker: [music].

Ina: Good morning. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to Taseko's first quarter earnings conference call. All lines have been placed on mute to prevent any background noise.

Speaker Change: Good morning, My name is.

Speaker Change: I will be your conference operator today at this time I would like to welcome everyone to the C. Crest Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press Star then the number do you think you missed.

Ina: After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star, then the number 2. Thank you. Mr. Bergot, you may begin your conference.

Ina: Mr. Vogel you may begin your conference.

Brian Bergot: Welcome everyone and thank you for joining <unk> first quarter 2024 results conference call. The news release and regulatory filings announcing our financial and operational results was issued yesterday after market close and is available on our website at <unk> dot com and on SEDAR plus.

Brian Bergot: Thank you, Ina. Welcome, everyone, and thank you for joining Taseko's first quarter 2024 results conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after the market closed and is available on our website at tasekomines.com and on CDAR Plus. 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.

Brian Bergot: I'm joined today in Vancouver by <unk>, President and CEO, Stuart Mcdonald to <unk>, Chief Financial Officer, Bryce Hamming, and our COO Richard Tremblay.

Brian Bergot: As usual before we get into opening remarks by management I would like to remind our listeners that our comments and answers to your questions will contain forward looking information. This information by its nature is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome for further information on these risks and.

Brian Bergot: As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information. This information, by its nature, is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our first quarter QDNA and the related news release, as well as the risk factors particular to our company.

Brian Bergot: TS 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.

Brian Bergot: 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 and the related news release and finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified.

Brian Bergot: 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 the 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.

Brian Bergot: Following opening remarks, we will open the phone lines to analysts and investors for a questions I will now turn the call over to Stuart for his remarks.

Stuart: Thank you, Brian and welcome everyone. Thanks for joining us today for our quarterly conference call as usual I'll start with a brief overview of the quarter and then I'll turn it over to price for some more detailed commentary on our financials.

Stuart McDonald: Thank you, Brian, and welcome everyone. Thanks for joining us today for our quarterly conference call. As usual, I'll start with a brief overview of the quarter and then I'll turn it over to Bryce for some more detailed commentary on our financials. It's obviously been a very busy few months for us here with construction activity ramping up at Florence, the buyout of our JV partners at Gibraltar, and also our recent bond refi. But before we get into that, let's start with some brief comments on Gibraltar operations.

Stuart: It's obviously been a very busy few months for us here with construction activity ramping up of Florida.

Stuart McDonald: The buyout of our JV partners at Gibraltar and also our recent bond bond refi.

Stuart McDonald: But before we get into that let's start with right.

Stuart McDonald: Alright brief comments on Gibraltar operations and the mine has been running smoothly and our production results are generally on plan for the first quarter Gibraltar produced 30 million pounds of copper and.

Bryce: And 250000 pounds of molybdenum.

Stuart McDonald: The mine has been running smoothly, and our production results are generally on plan for the first quarter. Gibraltar produced 30 million pounds of copper and 250,000 pounds of molybdenum. Grade for the quarter was 0.24%, which is right around where we expect to average for the year. As we've previously talked about, one of our two concentrators was shut down for a planned major maintenance in January. The mill was down for about 12 days, but actually, since it's come back online, our total mill throughput has been very strong, averaging just over 90,000 tons a day, which is 6% over nameplate capacity. Copper recoveries for the quarter averaged 79%, slightly lower than planned due to higher throughput and also milling of some partially oxidized material.

Bryce: Great for the quarter was two 4%, which is right around where we expect to average for the year.

Stuart McDonald: As we've previously talked about one of our two concentrator is was shut down for a planned major maintenance in January.

Stuart McDonald: The mill was down for about 12 days, but that actually since it's come back online. Our total mill throughput has been very strong averaging just over 90000 tons, a day, which is 6% over nameplate capacity.

Stuart McDonald: Copper recoveries for the quarter averaged 79% slightly lower than plan on higher throughput and also milling of some partially oxidize.

Stuart McDonald: Material in terms of cost or total site costs were consistent with the prior quarter with Q4 last year.

Stuart McDonald: But lower copper production and a lower capital strip allocation had an impact on our unit costs and.

Stuart McDonald: And our <unk> one operating cost came in at $2 46 per pound for this quarter that's U S dollars.

Stuart McDonald: In terms of costs, our total site costs were consistent with the prior quarter and Q4 last year, but lower copper production and a lower capital strip allocation had an impact on our unit costs. And our C1 operating cost came in at $246 per pound for this quarter, that's in U.S. dollars. With a realized sales price of $3.89 per pound, we were able to generate $50 million of adjusted EBITDA and $60 million of operating cash flow.

Stuart McDonald: With our realized sales price of $3 89 per pound, we were able to generate $50 million of adjusted EBITDA and $60 million of operating cash flow.

Stuart McDonald: So overall strong financial results and Brian will provide some further detail on that in a minute.

Stuart McDonald: Looking ahead to the next few months, we have a pit transition underway.

Stuart McDonald: The Gibraltar pit was the main source of ore in the first quarter and the connector pit supply to about 25% of the mill feed.

Stuart McDonald: So overall, strong financial results, and Bryce will provide some further detail on that in a minute. Looking ahead to the next few months, we have a pit transition underway. The Gibraltar Pit was the main source of ore in the first quarter, and the Connector Pit supplied about 25% of the mill feed.

Stuart McDonald: By mid year, the connector pit will become the primary pit into the <unk>.

Stuart McDonald: Militate that transition, we're getting ready to move the in pit crusher this quarter.

Stuart McDonald: Our contractor tax office began mobilizing their equipment to site ahead of the move.

Stuart McDonald: By mid-year, the connector pit will become the primary pit, and to facilitate that transition, we're getting ready to move the In-Pit Crusher this quarter. Our contractor, Tacroft, has begun mobilizing their equipment to the site ahead of the move. Mill number one will be down for a few weeks, and we'll take advantage of that downtime to complete some other proactive maintenance in the mill. Mill number two will continue operating normally during that time, and mining activity will also continue as normal during that downtime.

Bryce: Mill number one will be down for a few weeks and we will take advantage of that downtime to complete some other proactive maintenance in the mill.

Stuart McDonald: Number two we'll continue operating normally during that time in mining activity will also.

Stuart McDonald: Continue as normal during that down.

Stuart McDonald: The operation remains on track to achieve annual production guidance of 115 million pounds of copper.

Stuart McDonald: At the end of the first quarter, we closed the acquisition of the remaining 12, 5% interest in Gibraltar, So second quarter will be our first.

Stuart McDonald: The operation remains on track to achieve annual production guidance of 115 million pounds of copper. At the end of the first quarter, we closed the acquisition of the remaining 12.5% interest in Gibraltar. So, the second quarter will be our first full period of 100% ownership. This is a great transaction for us. It provides immediate cash flow and a deferred payment structure that preserves our liquidity for Florence development over the next two years. As part of the deal, we also got back the 30% life of mine offtake contract that was held by our JV partners. Doa and Furukawa

Stuart McDonald: Full period of 100% ownership.

Stuart McDonald: This is a great transaction for us it provides immediate cash flow and the deferred payment structure that preserves our liquidity for Florence development over the next two years.

Stuart McDonald: As part of the deal. We also got back to 30% life of mine off take contract that was held by our JV partners don't want for a collar.

Stuart McDonald: Those additional uptake rates have come to us at a time, where smelter treatment and refining costs are near record lows and we've been able to take advantage of that by selling additional spot shipments in the second half of this year at negative Tcs.

Stuart McDonald: So thats a premium in other words to CECO is being paid by traders to take the concentrate.

Stuart McDonald: Those additional offtake rights have come to us at a time when smelter treatment and refining costs are near record lows, and we've been able to take advantage of that by selling additional spot shipments in the second half of this year at negative TCs. So that's a premium. In other words, Taseko is being paid by traders to take the concentrate, which is something I've never seen before, and I don't think we've ever had that in 20 years of operating Gibraltar, but it certainly shows us the value of clean concentrate in the current market.

Stuart McDonald: Which is something I've never seen before and I don't think we've ever had that in 20 years of operating Gibraltar.

Stuart McDonald: But it certainly shows is the value of clean concentrate in the current market.

Stuart McDonald: And comparing this to our previous benchmark contract cost savings in the second half of 2024 are about $10 million.

Stuart McDonald: We've also marketed recently significant additional tons for 2025, and 2026 and that material has also been sold at negative Tcs.

Stuart McDonald: And comparing this to our previous benchmark contract, cost savings in the second half of 2024 are about $10 million. We've also recently marketed significant additional tons for 2025 and 2026, and that material has also been sold at negative TC. So it's clear that the traders do not see the copper concentrate shortages ending anytime soon. The market for refined copper is also strong, and as we've seen the big price move up since quarter end, up to the 450 a pound range. That's about 60 cents higher than our realized price in Q1.

Stuart McDonald: So it's clear that the traders do not see the copper concentrates shortages ending anytime soon.

Stuart McDonald: Yes.

Stuart McDonald: The market for refined copper is also strong and as we've seen the big price move up since quarter end up to the $4 50, a pound range.

Stuart McDonald: That's about 60% higher than our realized price in Q1.

Stuart McDonald: So it's a great time to be bringing on additional production, which is exactly what we're doing at Florence here in the next 18 months initial construction activities and well field development at Florence had been running smoothly. We have three drills operating with the fourth to be mobilized in may.

Stuart McDonald: So it's a great time to be bringing on additional production, which is exactly what we're doing at Florence here in the next 18 months. Initial construction activities and well field development at Florence have been running smoothly. We have three drills operating, with the fourth to be mobilized in May. To date, 10 new wells have been drilled in line with our planned timing. Earthworks and site prep for the plant and other surface infrastructure have also been a key focus, and last week we had the first concrete pour in the planned area. In the first quarter, we spent $18 million on the construction of the commercial production facility out of the original estimate of $232 million from our technical report last year.

Stuart McDonald: To date 10, new wells have been drilled in line with our planned timing.

Stuart McDonald: <unk> and site prep for the plant and other construct.

Stuart McDonald: Other surface infrastructure.

Stuart McDonald: There's also been a key focus and last week, we had the first concrete pour in the plant area.

Stuart McDonald: Last quarter or sorry in the first quarter, we spent $18 million U S. On construction of the commercial production facility out of the original estimate of $232 million from our technical report last year.

Stuart McDonald: Spending will continue to ramp up in the coming months as we get into full construction of the Sx EW plant.

Stuart McDonald: As noted in our MD&A. We also had 15 million U S of other Capex at Florence, which includes final deliveries of long lead equipment that was ordered in 2022.

Stuart McDonald: That spending will continue to ramp up in the coming months as we get into full construction of the SXCW plant. As noted in our MD&A, we also had US $15 million of other CAPEX at Florence, which included final deliveries of long-lead equipment that was ordered in 2022 and also the cost to construct an additional evaporation pond which was previously planned for year two of operations, but we decided to bring that work forward to give us additional flexibility on site water management.

Stuart McDonald: And also the cost to construct an additional evaporation pond, which was previously planned for year two of operations, but we decided to bring that work forward to give us additional.

Stuart McDonald: Flexibility on site water management.

Stuart McDonald: So overall, we're very pleased with the progress on Florence recruiting is going well the site operating team continues to prepare for initial well field operations and.

Stuart McDonald: And construct and copper production late next year.

Stuart McDonald: So overall, we're very pleased with the progress on Florence. Recruiting is going well. The site operating team continues to prepare for initial wellfield operations and copper production late next year. We've completed a number of key financings in recent months, and we consider the Florence project to now be fully funded. The remaining project costs can be funded by our available liquidity, through the remaining installments coming from Mitsui and, of course, cash flow from Gibraltar.

Stuart McDonald: We've completed a number of key financings in recent months and we consider the Florence project to now be fully funded.

Stuart McDonald: The remaining project costs can be funded by our available liquidity.

Stuart McDonald: Through the remaining installments coming from Mitsui and of course cash flow from Gibraltar.

Stuart McDonald: Our hedging program has also been extended recently to secure a minimum copper price of $4 a pound for 2025, and that gives us additional protection through the Florence construction period as well. Last but not least, I wanted to make a few comments on our bond refinancing that was just completed in April. We're very happy with the result and believe it was a significant de-risking event for the company. It was something we wanted to complete this year, and bond market conditions were such that it made sense to move forward with the refinancing immediately following the announcement of our Gibraltar transaction.

Stuart McDonald: Our hedging program has also been extended recently to secure a minimum copper price of $4 a pound for.

Stuart McDonald: For 2025.

Stuart McDonald: And that gives us additional protection through the <unk> construction period as well.

Stuart McDonald: Last but not least I wanted to make a few comments on our bond refinancing that was just completed.

Stuart McDonald: In April we're very happy with the result, and believe it was a significant derisking event for the company it.

Stuart McDonald: It was something we wanted to complete this year and bond market conditions were such that it made sense to move forward with the refinancing immediately following our.

Stuart McDonald: <unk> of our Gibraltar transaction.

Stuart McDonald: Upsizing the senior notes from 400 to 500 million provides additional proceeds that can replace more costly bank debt alternatives at Florence.

Stuart McDonald: And pushing out the maturity date from early 2026 out to 2030 gives us plenty of time to generate cash flow from Florence and <unk>. So we can look to delever our balance sheet in the future.

Stuart McDonald: Upsizing the senior notes from $400 million to $500 million provides additional proceeds that can replace more costly bank debt alternatives at Florence, and pushing out the maturity date from early 2026 out to 2030 gives us plenty of time to generate cash flow from Florence and Gibraltar so we can look to de-lever our balance sheet in the future. And with that, I'll pass the call over to Bryce.

Bryce: And with that I'll pass the call over to price.

Bryce: Thank you Stuart yes, it has been quite a busy start to the year between the various financing operating and construction initiatives. So just add a little more information about the bond refinancing to start.

Bryce: We're very happy with the outcome of this process and we moved very quickly into refinancing mode. After closing of the second Caribbean transaction in March being able to refinance and upsize the new notes to 500 million with an 8.25% coupon is quite attractive seeing bank debt is more than 95% at the moment.

Bryce Hamming: Thank you, Stuart. Yes, it has been quite a busy start to the year between the various financing, operating, and construction initiatives. So just to add a little more information about the bond refinancing. To start, we're very happy with the outcome of this process, and we moved very quickly into refinancing mode after the closing of the second Caribou transaction in March. Being able to refinance and upsize the new notes to $500 million with an 8.25% coupon is quite attractive, seeing that bank debt is more than 9.5% at the moment.

Bryce Hamming: Originally we expected that we would be refinancing later this year with the expectation that interest rates may have started to decline by now as the expectation of lower rates diminished in recent months and weeks. We made the decision to move forward sooner as the high yield market was open and constructive and even though we are in a much higher interest rate.

Bryce Hamming: Originally, we expected that we would be refinancing later this year, with the expectation that interest rates may have started to decline by now. However, as the expectation of lower rates diminished in recent months and weeks, we made the decision to move forward sooner, as the high-yield market was open and constructive.

Bryce Hamming: <unk> today as compared to our last bond financing in 2021 the credits.

Bryce Hamming: The credit spread within the high yield rate is historically, low and notably better for us by more than 2% than it was for it to CECO in 2021 and.

Bryce Hamming: And even though we are in a much higher interest rate environment today, as compared to our last bond financing in 2021, the credit spread within the high yield rate is historically low and notably better for us by more than 2% than it was for Taseko in 2021. An important factor that investors looked at was our increased ownership in Gibraltar since our last issue and the flexible payment terms we achieved with those acquisitions.

Bryce Hamming: An important factor that investors looked at was our increased ownership in Gibraltar since our last issue and our flexible payment terms, we achieved with those acquisitions today, our production and financial metrics are 33% higher than in early 2021 with copper prices.

Bryce Hamming: More than a dollar and a half more per pad and the fact that our deal was roughly four times oversubscribed shows that bond investors are now able to see the credit re rating that will come with Florence cash flow in the not too distant future.

Bryce Hamming: Today, our production and financial metrics are 33% higher than in early 2021, with copper prices more than a dollar and a half higher per pound. And the fact that our deal was roughly four times oversubscribed shows that bond investors are now able to see the credit re-rating that will come with Florence Cash Flow in the not-too-distant future. Having two copper-producing, cash-flowing assets will make a significant difference to our credit profile and our objective of deleveraging in the years ahead.

Bryce Hamming: Having two copper producing cash flowing assets will make a significant difference to our credit profile and our objective of deleveraging in the years ahead.

Bryce Hamming: The recent Gibraltar acquisition with Don for Cal was a great deal for us in several ways first we agreed to pay them back their invested capital into Gibraltar of $117 million Canadian that was on the agreement we would essentially only pay them from cash flow from caribou, the 25% owner of Gibraltar that we acquired.

Bryce Hamming: The recent Gibraltar acquisition with Dole and Furacao is a great deal for us in several ways. First, we agreed to pay them back their invested capital into Gibraltar of $117 million Canadian. If that was in the agreement, we would essentially only pay them from cash flow from Caribou, the 25% owner of Gibraltar that we acquired. We agreed to a term of 10 years to pay this back, with any amounts not paid over that time to be made up in a final balloon payment in 2034.

Bryce Hamming: We agreed to a term of 10 years to pay this back with any amounts not paid over that time to maybe to be made up in our final balloon payment. In 2034. We also agreed a payment framework that was based on copper prices. So that copper prices are higher they get a higher annual payment, but we obtained downside protection and lower cost.

Bryce Hamming: For price environments for example at $4 copper, we would pay them only $6 million per year and added $5 copper price, we would pay them no more than 15.

Bryce Hamming: We also agreed a payment framework that was based on copper prices, so that if copper prices were higher, they got a higher annual payment, but we obtained downside protection in lower copper price environments. For example, at $4 copper, we would pay them only $6 million per year, and at a $5 copper price, we would pay them no more than $15 a year. We also achieved, most importantly, a two-year holiday for any payments to ensure we have the runway in the near term to build Florence. The obvious question is, why did they sell it to us on such favorable terms? The answer is quite simple.

Bryce Hamming: We also achieved most importantly, a two year holiday.

Bryce Hamming: For any payments to ensure we have the runway in the near term to build warrants.

Bryce Hamming: The obvious question is why did they sell it to us on such favorable terms. The answer is simple last year, both Don for Ocala exited the <unk> smelter in Japan and sold their interest to Mitsubishi They no longer needed the concentrates from Gibraltar to feed that smelter and with the acquisition of Tso Jets in the prior year to CECO.

Bryce Hamming: Last year, both Doe and Furukawa exited the Onahama smelter in Japan and sold their interest to Mitsubishi. They no longer needed the concentrates from Gibraltar to feed that smelter, and with the acquisition of Sojitz in the prior year, Taseko was the only natural buyer. So Doe and Furukawa agreed to work with us so we could achieve our mutual objectives.

Bryce Hamming: The only natural buyer so Don for power agreed to work with us. So we could achieve our mutual objectives, but we think this will be a very valuable deal to CECO in the short term and of course in the long term.

Bryce Hamming: But we think this will be a very valuable deal to Taseko in the short term and, of course, in the long term. All this said, this caribou transaction did create some different accounting in our Q1 financials, so I'll talk about that now. When we moved from 87.5% to 100% ownership, we were required under IFRS to move from joint control proportionate consolidation accounting to full consolidation. And under IFRS, we need to revalue our existing 87.5% interest on this deemed acquisition date.

Bryce Hamming: All this said this caribou transaction did create some different accounting in our Q1 financials. So I'll talk about that now when we moved from 87, 5% to 100% ownership. We are required under <unk> for us to move from joint control proportionate consolidation accounting to full consolidation and underwrite it for us we need to revalue our existing 80.

Bryce Hamming: Seven 5% interest on this deemed acquisition date.

Bryce Hamming: This required us to write up the book value of our inventory at March 2005 to its fair value or net realizable value, which resulted in a $15 million gain in the income statement.

Bryce Hamming: It's noted as a gain on acquisition.

Bryce Hamming: This required us to write up the book value of our inventory at March 25th to its fair value or net realizable value, which resulted in a $15 million gain in the income statement. It's noted as a gain on acquisition. But $13.3 million of that accounting gain was actually realized by the end of March as we had a concentrate shipment in that last week. So $13 million of that was really a realized gain, which otherwise would have been operating margin.

Bryce Hamming: $13 $3 million of that accounting gain was actually realized by the end of March as we had a concentrate shipment in that last week. So $13 million of that was really a realized gain which otherwise would have been operating margin. We have illustrated this in our adjusted earnings reconciliation. So it's clear to the reader what happened there that this gain on acquisition.

Bryce Hamming: <unk> was substantially just operating margin in the quarter just reclassify to this other category called gain on acquisition.

Bryce Hamming: We have illustrated this in our Adjusted Earnings Reconciliation, so it's clear to the reader what happened there, that this gain on acquisition was substantially just operating margin in the quarter, just reclassified to this other category called gain on acquisition.

Bryce Hamming: Sales volumes in the first quarter were 32 million pounds at an average realized price of <unk> 89 per pound or shared these sales generated $147 million of revenue in the quarter sales exceeded production as we brought down our copper inventories again to a more typical level of less than 5 million pounds, while the copper price year over year was very.

Bryce Hamming: Sales volumes in the first quarter were £32 million at an average realized price of £3.89 per pound. Our share of these sales generated £147 million of revenue in the quarter. Sales exceeded production as we brought down our copper inventories again to a more typical level of less than £5 million.

Bryce Hamming: The 25% higher revenue was driven by increased production and sales and the increased ownership of Gibraltar.

Bryce Hamming: Total site guest at Gibraltar were $110 million in the quarter in line with the prior quarter and the first quarter last year overall site spend that Gibraltar is quite consistent quarter over quarter and we expect this level.

Bryce Hamming: While the copper price year over year was very similar, the 25% higher revenue was driven by increased production and sales and the increased ownership of Gibraltar. Total site costs at Gibraltar were $110 million in the quarter, in line with the prior quarter and the first quarter last year. Overall site spend at Gibraltar is quite consistent quarter over quarter, and we expect this level of revenue to grow and of spend over the next quarters and for the rest of this year.

Bryce Hamming: <unk> spend over the next.

Bryce Hamming: Orders for the rest of this year on a cost per pound basis, our <unk> costs in Q1 were $2 46 per pound.

Bryce Hamming: Adjusted EBITDA for the quarter was $50 million, including that $13 million of margin from inventory on hand at March 25th and sold before the end of the quarter and our cash flow from operations was $60 million significantly higher than the first quarter of 2023. This was driven by increased production and higher sales include.

Bryce Hamming: On a cost per pound basis, our C1 costs and Q1 were $2.46 per pound. Adjusted EBITDA for the quarter was $50 million, including that $13 million of margin from inventory on hand at March 25th and sold before the end of the quarter. And our cash flow from operations was $60 million, significantly higher than the first quarter of 2023. This was driven by increased production and higher sales, including that £2 million of inventory that we drew down over our production, as well as increased ownership of Gibraltar.

Bryce Hamming: That 2 million pounds.

Bryce Hamming: Of inventory that we drew down over our production as well as the increased ownership of Gibraltar.

Bryce Hamming: Adjusted net income was $8 million or <unk> <unk> per share, which was also higher than we reported last year GAAP earnings for the quarter was $19 million or <unk> seven per share.

Bryce Hamming: They included that $47 million gain on the Gibraltar acquisition from doing for account.

Bryce Hamming: Adjusted net income was $8 million, or $0.03 per share, which was also higher than reported last year. Gap earnings for the quarter were $19 million, or $0.07 per share, and it included that $47 million gain on the Gibraltar acquisition from Dillon Furukawa. That's also known as a bargain purchase game, similar to what we had with SOJIT.

Bryce Hamming: That's also known as a bargain purchase gain similar to what we had with <unk>.

Bryce Hamming: Capital spending at Gibraltar in the quarter was $22 million, including $14 million for capitalized strip and $6 million in general sustaining as well as $2 5 million for capital projects, mainly that crusher relocation project, which is progressing this quarter that will wrap up and we have we expect about another $8 million.

Bryce Hamming: Capital spending at Gibraltar in the quarter was $22 million, including $14 million for the capitalized strip and $6 million in general sustaining, as well as $2.5 million for capital projects, mainly the Crusher relocation project, which is progressing this quarter. That will wrap up, and we expect about another $8 million to go on it for spending. With the Mil 2 downtime in January to replace a major component, we are now in the process of finalizing our insurance claim for that.

Bryce Hamming: Go on it for spending.

Bryce Hamming: With the mill to downtime in January to replace a major component. We are now in the process of finalizing our insurance claim for that we have received $3 5 million on that in U S dollars to date and we expect to receive a total claim of at least $20 million or more still to come in the coming months.

Bryce Hamming: We ended the quarter with $158 million of cash, which includes the $50 million U S dollars received from tourists and the first $10 million U S dollars from Mitsui in April we received the additional proceeds of $110 million Canadian from the bond refinancing and we are also now paid down $20 million that was outstanding on there.

Bryce Hamming: We have received $3.5 million on that in U.S. dollars to date, and we expect to receive a total claim of at least $20 million or more still to come in the coming months. We ended the quarter with $158 million of cash, which includes the $50 million we received from TORUS and the first... $10,000,000 from Mitsui. In April, we received additional proceeds of $110,000,000 Canadian from the bond refinancing, and we've also now paid down $20,000,000 that was outstanding on the revolving credit facility.

Bryce Hamming: Revolving credit facility.

Bryce Hamming: And as Stuart mentioned, we've taken advantage of the recent copper price move by adding additional price protection for 2025, we now have a minimum price secured for $4 for all of 2025. In addition to the $3 75 per pound we have for the second half of this year for 42 million pounds.

Bryce Hamming: As Stuart mentioned, we've taken advantage of the recent copper price move by adding additional price protection for 2025. We now have a minimum price secured for $4 for all of 2025 in addition to the $3.75 per pound we have for the second half of this year for 42 million pounds. These 2025 hedges were for copper-priced collars that we purchased for around $0.03 per pound at a premium, with a ceiling achieved of $5 for the first half and $5.40 for the second half of the year, and we've covered a total of 108 million pounds of copper for 2025.

Bryce Hamming: These 2025 hedges were for copper price callers that we purchased for around three per pound for premium with the ceiling achieved a $5 for the first half and $5 40 for the second half of the year and we've.

Bryce Hamming: Covered a total of 108 million pounds of copper.

Bryce Hamming: For 2025, it is important for us to protect the downside with our capital commitments and leverage while retaining upside to fund Florida.

Bryce Hamming: Current copper price environment is definitely benefiting us and as we are participating fully in the recent rise, especially now that we own 100% of Gibraltar.

Bryce Hamming: It's important for us to protect the downside with our capital commitments and leverage while retaining the upside to fund flooring. The current copper price environment is definitely benefiting us, and we are participating fully in the recent rise, especially now that we own 100% of Gibraltar. So with that, I'll turn it over to the operator for questions. Thank you.

Bryce Hamming: With that I'll turn it over to the operator for questions. Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your telephone keypad.

Speaker Change: John Thompson acknowledging request questions will be taken into order received should you wish to cancel your request. Please press star followed later too.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. Your first question comes from the line of Craig Hutchison from TD Bank. Please go ahead.

Operator: Thank you speaker phone please lift the handset before pressing any key one moment. Please please the first question.

Operator: Your first question comes from the line of Craig Hutchison from TD Bank. Please go ahead.

Craig Hutchison: Hey, good morning, guys. Thanks for taking my questions.

Craig Hutchison: Just a question on the Trc is obviously very positive to see you guys are good at recognized negative <unk>, but can you give us a sense in terms of what percent of your concentrate you expect to produce seed. This year next year in 2006 is actually under contract.

Craig Hutchison: Hi, good morning guys. Thanks for taking my questions. Just a question on the TCRC. It's obviously very positive to see you guys are going to recognize negative TCRCs, but can you give us a sense in terms of what percent of your concentrate you expect to produce, say this year, next year, in 2026, is actually under contract?

Craig Hutchison: Okay.

Craig Hutchison: Sure, Yes, Hi, Craig it's Stuart speaking here.

Craig Hutchison: Essentially we are we have sold previously sold.

Craig Hutchison: All of our all of our material for the current year for 2024, but what happened with the caribou deal. We got about 50000 tons of concentrate back for shipments.

Stuart McDonald: Hi Craig, it's Stuart speaking here. Essentially, we have previously sold all of our material for the current year and for 2024, but what happened with the caribou deal, we got about 50,000 tonnes of concentrate back for shipments that were scheduled for the second half, so those have been re-marketed at negative TCs. So that's 50,000 this year in the second half. And that's, I don't know, roughly 40% or 50% of our shipments. No, maybe 30% or 40% of our shipments in the second half.

Stuart McDonald: Shipments that were scheduled for the second half so those have been remarketed at negative Tcs.

Stuart McDonald: So that's 50000 this.

Stuart McDonald: This year.

Stuart McDonald: In the second half and Thats roughly.

Stuart McDonald: 40% or 50% of our of our shops, known maybe maybe 30 or 40%, 30%, 40% of our shipments in the second half.

Stuart McDonald: And then for 2025 and 2026, yes, we've now sold.

Stuart McDonald: 220000 tonnes.

Stuart McDonald: Of concentrate.

Stuart McDonald: 160 of that in both years with what we've just marketed so.

Stuart McDonald: And then for 2025 and 2026, we've now sold 220,000 tons of concentrate; 160 of that in both years was what we've just marketed, and 60, the other 60, was sold previously under a long-term deal. So that gives you an idea of what we've been doing. So the new, it's pretty significant; it's 75, 80% of our production in 25 and 26 that we just sold in the current market.

Stuart McDonald: 60, the other 60 was sold previously under a long term deal. So that gives you an idea.

Stuart McDonald: What we've been done so the new the new it's pretty significant at 75%, 80% of our of our production and 25 and 26 that we just sold in the current market.

Speaker Change: Okay great.

Speaker Change: Just a question on transportation cost just kind of looking year over year. It looks like they are up a 100% I know some of that is just recognizing a lot of owning a larger interest in Gibraltar, but could you give us a sense of.

Stuart McDonald: Why they are up so much.

Craig Hutchison: It's a question about transportation costs, just kind of looking year-over-year, looks like they're up by hundreds of percent. I know some of that is just, you know, you're recognizing only a larger interest in Gibraltar, but can you give us a sense of why they're up so much and, you know, is that something we should be modeling going forward?

Stuart McDonald: Is that something we should be modeling going forward.

Craig Hutchison: Yes, Hi, Greg Richard here really the story in transportation cost as we've had utilized trucking too.

Craig Hutchison: To move concentrate from <unk>.

Craig Hutchison: Down to the coast for.

Craig Hutchison: Over the last few years and Thats become a regular part of our business, we're working hard to get back to being able to rail at all.

Richard Tremblay: Yeah, hi Craig, Richard here. Really, the story and transportation cost is we've had to utilize trucking to move concentrate from Toronto down to the coast for the last few years, and it's become a regular part of our business. We're working hard to get back to being able to rail at all. So that's really the, I guess the objective on a go forward basis, but we'll continue to utilize trucking as a backstop to inefficiencies and be able to rail the concentrate.

Richard Tremblay: So thats really the.

Richard Tremblay: I guess the objective on a go forward basis, but we will continue to utilize trucking as.

Richard Tremblay: As a backstop to inefficiencies and being able to rail the concentrate.

Richard Tremblay: Okay.

Richard Tremblay: The limitation on the rail side of things is it.

Richard Tremblay: The more cars or.

Speaker Change: It gives a sense of what that issue is yes, it's quite it's quite complex, but I guess to simplify it would be it comes down to how fast the cars are cycling.

Craig Hutchison: Okay, what's the sort of limitation on the rail side things? eat more cars or gives a sense of what that issue is.

Craig Hutchison: On the route backend back a number of years here to just over two years.

Unnamed Speaker: Yeah, it's quite a bit. It's quite complex, but I guess to simplify it would be it comes down to how fast the cars are cycling On the route back in back a number of years here to just over two years There was a route change where the cars now started traveling north Instead of going south out of Williams Lake and that added Cycle time that the car is returning So that's been one of the challenges and then the other obvious one is when you get FM events like the flooding or the port strike last year Impacted or back to concentrate up at site, which then we had to resort to trucking to be able to move

Unnamed Speaker: Yeah, it's quite a bit...

Unnamed Speaker: There was a route change where the cars now started traveling north.

Unnamed Speaker: Instead of going South of the Williams Lake and that added a cycle time to the cars returning so thats been one of the challenges and then the other obvious one is when you get a FM events like.

Unnamed Speaker: The flooding or the port strike last year impacted are backed concentrate FSA, which then we had to resort to trucking to be able to move.

Unnamed Speaker: Okay.

Speaker Change: And just another question for Gibraltar, the decision or the consideration to restart the oxide Sx EW plant.

Unnamed Speaker: Some of the factors that you're thinking about there or is it just sulfuric acid prices and can you give us some kind of sense in terms of what the production would look like if it was to restart.

Craig Hutchison: And just another question for Gibraltar, the decision or the consideration to restart the oxide SXCW plant. What are some of the factors that you're thinking about there? Is it just sulfuric acid prices, and can you give us some kind of sense in terms of what the production would look like if it were to restart?

Richard Tremblay: Yes, Greg Richard again.

Craig Hutchison: Really the driving factor there is.

Craig Hutchison: Having sufficient oxide ore placed on the dumps to justify the capital investment.

Craig Hutchison: And.

Richard Tremblay: Yeah, Craig, and Richard again. Really, the driving factor there is having sufficient oxide ore placed on the dumps to justify the capital investment and the, you know, the operating costs to be able to kind of restart that plant and then run it sustainably. So, I think, as we've indicated previously, 2026 is a time frame we're looking at, but also looking at, with some of the additional tons that have been placed on the dump at the end of this, the end of last year, and through the beginning of this year, potentially trying to accelerate that. So, Brooks, anyway, in that regard.

Craig Hutchison: The operating cost to.

Richard Tremblay: To be able to kind of restart that plan and then run it sustainably.

Richard Tremblay: I think as we've indicated previously.

Speaker Change: 26% of timeframe, we're looking at.

Richard Tremblay: Also looking at with some of the additional tons that have been placed on the Dol.

Richard Tremblay: End of last year.

Richard Tremblay: Through the beginning of this year looking at potentially trying to accelerate that so.

Richard Tremblay: Okay.

Speaker Change: Work is underway in that regards.

Brooks: Okay, Great maybe one last question for me just on foreign tourist spending can you talk to the cadence of that spending here throughout the year should we expect a significant uplift in Q2 or is it more starting big spend starting in Q3 Q4.

Craig Hutchison: Okay, great. Maybe one last question for me. Just on foreign spending, can you talk about the cadence of the spending here throughout the year? Should we expect a significant uplift in Q2, or is it more the start of big spends starting Q3, Q4?

Richard Tremblay: Thanks.

Speaker Change: No I think youre going to see.

Speaker Change: A step up in Q2, probably another step up in Q3 and then.

Craig Hutchison: Yeah kind of.

Speaker Change: Steady steady for a couple of quarters from there and then ramp back down a little bit and as we get later on in 2025.

Unnamed Speaker: I think you're going to see a step up in Q2, probably another step up in Q3, and then Yeah, kind of, steady for a couple quarters from there and then ramp back down a little bit as we get later on in 2025. Yeah, it's going to pick up here definitely in Q2.

Unnamed Speaker: Yes, it's going to it's going to pick up here definitely in Q2.

Speaker Change: Alright, great. Thanks, guys.

Unnamed Speaker: Yes.

Speaker Change: Thank you once again should you have a question. Please press star followed by the one on your telephone keypad.

Craig Hutchison: All right. Great. Thanks, guys. Thank you.

Unnamed Speaker: Okay.

Operator: Thank you. Once again, should you have a question, please press star 5 or the 1 on your telephone keypad. Once again, that is Thor, and one to ask a question.

Operator: Okay.

Speaker Change: Okay that is fair.

Speaker Change: And wanted to ask a question.

Speaker Change: I think we're good operator, so we can probably stop at their end.

Speaker Change: Look forward to chatting with everyone again next quarter.

Speaker Change: Thank you that concludes our conference for today. Thank.

Unnamed Speaker: I think we're good, Operator, so we can probably stop it there. I look forward to chatting with everyone again next quarter.

Speaker Change: Thank you all for participating.

Speaker Change: You may all disconnect.

Operator: Thank you. That concludes our conference for today. Thank you all for participating. Can we all disconnect?

Operator: [music].