TASEKO AND MITSUI ENTER STRATEGIC PARTNERSHIP TO DEVELOP FLORENCE COPPER

Rhea-AI Summary

Taseko Mines Limited (TGB) announced a strategic partnership with Mitsui & Co. to advance its Florence Copper project in Arizona. Mitsui will invest US$50 million initially through a copper stream agreement, with an option for an additional US$50 million for a 10% equity stake. The partnership includes an offtake contract for 81% of copper cathode output in early production years, focusing on 'green copper' sales in the U.S. Mitsui's involvement aims to enhance Taseko's financing and accelerate construction, highlighting Florence's low-carbon production potential.

Positive

• Mitsui's initial investment of US$50 million supports project construction.
• Partnership positions Taseko to market low-carbon copper in the U.S.
• 81% offtake agreement guarantees sales for early production.

Negative

• None.

VANCOUVER, BC, Dec. 20, 2022 /PRNewswire/ - Taseko Mines Limited (TSX: TKO) (NYSE American: TGB) (LSE: TKO) ("Taseko" or the "Company") is pleased to announce it has signed agreements with Mitsui & Co. (U.S.A.) Inc. ("Mitsui") to form a strategic partnership to develop the Company's Florence Copper project (the "Project"), located in Arizona USA. 

Mitsui has committed to an initial investment of US$50 million, with proceeds to be used for construction of the commercial production facility.  The initial investment will be in the form of a copper stream agreement (the "Copper Stream") on 2.67% of the copper produced at Florence Copper.

In addition, Mitsui has the option to invest an additional US$50 million (for a total investment of US$100 million) for a 10% equity interest in Florence Copper (the "Equity Option"). The Equity Option is exercisable by Mitsui within a three-year period following completion of construction of the commercial production facility.  If Mitsui elects to exercise its Equity Option the Copper Stream will terminate.

As part of the arrangement, Taseko and Mitsui have entered into an offtake contract for 81% of the copper cathode produced at Florence during the initial years of production. The parties intend to use this period to develop premium sales channels for 'green copper' in the United States, leveraging Mitsui's existing US cathode trading business and the unique environmental benefits of Florence Copper, which is expected to be the lowest carbon- and energy-intensity copper producer in North America. 

Stuart McDonald, President & CEO of Taseko, stated, "This agreement with Mitsui establishes a strategic partnership with a leading international company. Mitsui's investment will complement Taseko's financing requirements and construction timeline and advance our goal of ensuring the copper produced at Florence is recognized for its unique low-carbon profile that will advantage US manufacturers and consumers.  In the future, Taseko and Mitsui will collectively evaluate additional investments toward establishing Florence Copper as a zero-carbon copper producer (Scope 1 and 2)."

Sayu Ueno, President & CEO of Mitsui & Co. (U.S.A.), commented, "We are excited to partner with Taseko and its unique, low-carbon and low-impact Florence Copper project. When in production, Florence Copper will significantly expand our US cathode trading business, while providing an environmentally sound, domestically produced product that can be marketed on the basis of its low-carbon advantages.  We believe Florence Copper will be a preferred source of 'made-in-the-US' copper for many end users in North America."

Transaction Details

Under the terms of the initial US$50 million Copper Stream agreement, Mitsui's first deposit payment of US$10 million will be available for drawdown after receipt of Florence Copper's Underground Injection Control permit, with additional US$10 million instalments available each quarter thereafter to fund project construction.  Mitsui will receive 2.67% of the copper metal produced at Florence and pay a delivery price equal to 25% of the market price of copper delivered under the contract.

If Mitsui elects to exercise its Equity Option and invest an additional US$50 million in the Project, these additional funds and the Copper Stream will be converted into a 10% equity interest in Florence Copper.  At that time, the initial offtake agreement will cease and be replaced with a marketing agency agreement.

If the Copper Stream is not converted into an equity interest Taseko will have the right to buy-back 100% of the Copper Stream, otherwise, it will terminate when 40 million pounds of copper have been delivered under the agreement.  Mitsui's offtake entitlement would also reduce to 30% until the Copper Stream deposit has been reduced to nil. 

About Mitsui & Co.
With a long history in the United States, Mitsui & Co. (U.S.A.), Inc. ("Mitsui USA") is a wholly owned subsidiary of Mitsui & Co., Ltd., Tokyo, Japan, one of the most diversified and comprehensive trading, investment, and service enterprises in the world. Mitsui & Co. pursues "360° business innovation" that ranges from product sales, worldwide logistics and financing, through to the development of major international infrastructure and other projects. More information on Mitsui USA may be found at www.mitsui.com/us.

About Taseko
Taseko is focused on the operation and development of copper mines in North America. Headquartered in Vancouver, Canada, Taseko is the owner (75%) and operator of the Gibraltar Mine, the second largest open pit copper mine in Canada.  Taseko's Florence Copper Project in Arizona is a near-term growth project, which will nearly double the Company's annual copper production. Construction of Florence Copper is expected to commence in 2023. Taseko's Yellowhead Copper Project, New Prosperity Gold-Copper Project and Aley Niobium Project are all advanced staged projects which provide the Company with a diverse commodity pipeline.

Stuart McDonald
President and CEO

No regulatory authority has approved or disapproved of the information contained in this news release.

 

CAUTION REGARDING FORWARD-LOOKING INFORMATION

This document contains "forward-looking statements" that were based on Taseko's expectations, estimates and projections as of the dates as of which those statements were made. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "outlook", "anticipate", "project", "target", "believe", "estimate", "expect", "intend", "should" and similar expressions.

Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. These included but are not limited to:

• uncertainties about the future market price of copper and the other metals that we produce or may seek to produce;
• changes in general economic conditions, the financial markets, inflation and interest rates and in the demand and market price for our input costs, such as diesel fuel, reagents, steel, concrete, electricity and other forms of energy, mining equipment, and fluctuations in exchange rates, particularly with respect to the value of the U.S. dollar and Canadian dollar, and the continued availability of capital and financing;
• uncertainties resulting from the war in Ukraine, and the accompanying international response including economic sanctions levied against Russia, which has disrupted the global economy, created increased volatility in commodity markets (including oil and gas prices), and disrupted international trade and financial markets, all of which have an ongoing and uncertain effect on global economics, supply chains, availability of materials and equipment and execution timelines for project development;
• uncertainties about the continuing impact of the novel coronavirus ("COVID-19") and the response of local, provincial, state, federal and international governments to the ongoing threat of COVID-19, on our operations (including our suppliers, customers, supply chains, employees and contractors) and economic conditions generally including rising inflation levels and in particular with respect to the demand for copper and other metals we produce;
• inherent risks associated with mining operations, including our current mining operations at Gibraltar, and their potential impact on our ability to achieve our production estimates;
• uncertainties as to our ability to control our operating costs, including inflationary cost pressures at Gibraltar without impacting our planned copper production;
• the risk of inadequate insurance or inability to obtain insurance to cover material mining or operational risks; 
• uncertainties related to the feasibility study for Florence copper project (the "Florence Copper Project" or "Florence Copper") that provides estimates of expected or anticipated capital and operating costs, expenditures and economic returns from this mining project, including the impact of inflation on the estimated costs related to the construction of the Florence Copper Project and our other development projects;
• the risk that the results from our operations of the Florence Copper production test facility ("PTF") and ongoing engineering work including updated capital and operating costs will negatively impact our estimates for current projected economics for commercial operations at Florence Copper;
• uncertainties related to the accuracy of our estimates of Mineral Reserves (as defined below), Mineral Resources (as defined below), production rates and timing of production, future production and future cash and total costs of production and milling;
• the risk that we may not be able to expand or replace reserves as our existing mineral reserves are mined;
• the availability of, and uncertainties relating to the development of, additional financing and infrastructure necessary for the advancement of our development projects, including with respect to our ability to obtain any remaining construction financing potentially needed to move forward with commercial operations at Florence Copper;
• our ability to comply with the extensive governmental regulation to which our business is subject;
• uncertainties related to our ability to obtain necessary title, licenses and permits for our development projects and project delays due to third party opposition, particularly in respect to Florence Copper that requires one key regulatory permit from the U.S. Environmental Protection Agency ("EPA") in order to advance to commercial operations;
• our ability to deploy strategic capital and award key contracts to assist with protecting the Florence Copper project execution plan, mitigating inflation risk and the potential impact of supply chain disruptions on our construction schedule and ensuring a smooth transition into construction once the final permit is received from the EPA;
• uncertainties related to First Nations claims and consultation issues;
• our reliance on rail transportation and port terminals for shipping our copper concentrate production from Gibraltar;
• uncertainties related to unexpected judicial or regulatory proceedings; 
• changes in, and the effects of, the laws, regulations and government policies affecting our exploration and development activities and mining operations and mine closure and bonding requirements;
• our dependence solely on our 75% interest in Gibraltar (as defined below) for revenues and operating cashflows;
• our ability to collect payments from customers, extend existing concentrate off-take agreements or enter into new agreements;
• environmental issues and liabilities associated with mining including processing and stock piling ore;
• labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in which we operate our mine, industrial accidents, equipment failure or other events or occurrences, including third party interference that interrupt the production of minerals in our mine;
• environmental hazards and risks associated with climate change, including the potential for damage to infrastructure and stoppages of operations due to forest fires, flooding, drought, or other natural events in the vicinity of our operations;
• litigation risks and the inherent uncertainty of litigation, including litigation to which Florence Copper could be subject to;
• our actual costs of reclamation and mine closure may exceed our current estimates of these liabilities;
• our ability to meet the financial reclamation security requirements for the Gibraltar mine and Florence Project;
• the capital intensive nature of our business both to sustain current mining operations and to develop any new projects, including Florence Copper;
• our reliance upon key management and operating personnel;
• the competitive environment in which we operate;
• the effects of forward selling instruments to protect against fluctuations in copper prices, foreign exchange, interest rates or input costs such as fuel;
• the risk of changes in accounting policies and methods we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates; and Management Discussion and Analysis ("MD&A"), quarterly reports and material change reports filed with and furnished to securities regulators, and those risks which are discussed under the heading "Risk Factors".

For further information on Taseko, investors should review the Company's annual Form 40-F filing with the United States Securities and Exchange Commission www.sec.gov and home jurisdiction filings that are available at www.sedar.com, including the "Risk Factors" included in our Annual Information Form.

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SOURCE Taseko Mines Limited

FAQ

What investment has Mitsui made in Taseko Mines Limited (TGB) as of December 2022?

Mitsui has committed an initial investment of US$50 million to Taseko for the Florence Copper project.

What is the total potential investment from Mitsui in the Florence Copper project?

Mitsui can invest up to US$100 million in total, including an additional US$50 million for a 10% equity interest.

How much copper will Mitsui receive from the Florence Copper project?

Mitsui will receive 2.67% of the copper produced at the Florence Copper project under the copper stream agreement.

What is the purpose of the offtake agreement between Taseko and Mitsui?

The offtake agreement ensures the sale of 81% of the copper cathode produced in the early years of Florence Copper's production.

How does the partnership benefit Taseko Mines Limited (TGB)?

The partnership facilitates financing and construction timelines, leveraging Mitsui's expertise to advance Taseko's low-carbon production goals.