EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1

Taseko Mines Ltd.: Exhibit 99.1 - Filed by newsfilecorp.com

Condensed Consolidated Interim Financial Statements
March 31, 2014
(Unaudited)

TASEKO MINES LIMITED

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Cdn$ in thousands, except share and per share amounts)

(Unaudited)

					Three Months ended March 31
					2014			2013
		Note
Revenues		3			104,996			60,150
Cost of sales		4
Production costs					(85,557	)		(40,557	)
Depletion and amortization					(10,652	)		(6,379	)
Earnings from mining operations					8,787			13,214
General and administrative					(5,074	)		(4,977	)
Exploration and evaluation					(1,748	)		(2,637	)
Other income (expenses)		5			2,167			(377	)
Write-down of marketable securities		6			-			(9,387	)
Income (loss) before financing costs and income taxes					4,132			(4,164	)
Finance expenses		7			(6,647	)		(2,293	)
Finance income		8			1,122			1,742
Foreign exchange gain (loss)					(8,092	)		(4,300	)
Income (loss) before income taxes					(9,485	)		(9,015	)
Income tax recovery (expense)		9			337			(1,467	)
Net income (loss) for the period					(9,148	)		(10,482	)
Other comprehensive income (loss), net of tax
Unrealized income (loss) on available-for-sale financial assets					3,509			(2,560	)
Reclassification for permanent impairment on available for sale financial         assets, included in the net loss					-			8,213
Total other comprehensive income (loss) for the period					3,509			5,653
Total comprehensive income (loss) for the period					(5,639	)		(4,829	)
Earnings (loss) per share
Basic					(0.05	)		(0.05	)
Diluted					(0.05	)		(0.05	)
Weighted average shares outstanding (thousands)
Basic					193,708			191,060
Diluted					193,708			191,060

The accompanying notes are an integral part of these consolidated financial statements.

TASEKO MINES LIMITED

Condensed Consolidated Interim Statements of Cash Flows

(Cdn$ in thousands)

(Unaudited)

					Three Months ended March 31
					2014			2013
		Note
Operating activities
Net income (loss) for the period					(9,148	)		(10,482	)
Adjustments for:
Depletion and amortization					10,735			6,518
Income tax expense (recovery)		9			(337	)		1,467
Share-based compensation expense					2,083			1,355
Change in fair value of copper put options		5			(1,082	)		1,088
Finance expenses (income)		7,8			5,525			(11	)
Unrealized foreign exchange loss (gain)					8,480			4,140
Write-down of marketable securities		6			-			9,387
Other operating activities					(18	)		(103	)
Net change in non-cash working capital		17			7,063			(17,103	)
Cash provided by (used for) operating activities					23,301			(3,744	)
Investing activities
Purchase of property, plant and equipment					(5,644	)		(53,742	)
Investment in financial assets					(8,109	)		(15	)
Interest received					92			162
Investment in long-term prepaids					-			(3,750	)
Other investing activities					-			(216	)
Cash provided by (used for) investing activities					(13,661	)		(57,561	)
Financing activities
Repayment of debt					(6,142	)		(5,073	)
Interest paid					(1,006	)		(816	)
Common shares issued for cash					480			329
Proceeds from debt issuance					-			597
Cash provided by (used for) financing activities					(6,668	)		(4,963	)
Effect of exchange rate changes on cash and equivalents					863			418
Increase (decrease) in cash and equivalents					3,835			(65,850	)
Cash and equivalents, beginning of period					82,865			134,995
Cash and equivalents, end of period					86,700			69,145

The accompanying notes are an integral part of these consolidated financial statements.

TASEKO MINES LIMITED

Condensed Consolidated Interim Balance Sheets

(Cdn$ in thousands)

(Unaudited)

					March 31, December 31,
					2014			2013
		Note
ASSETS
Current assets
Cash and equivalents					86,700			82,865
Accounts receivable					17,592			4,532
Other financial assets		10			66,009			69,729
Inventories		11			38,479			47,174
Current tax receivable					18,696			18,284
Prepaids					5,862			6,354
					233,338			228,938
Other financial assets		10			38,694			38,272
Property, plant and equipment		12			689,365			678,580
Prepaids					9,310			10,543
Other receivables					13,895			13,895
					984,602			970,228
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities					36,597			26,864
Current portion of long-term debt					26,883			22,625
Interest payable					7,854			3,435
Other financial liabilities		13			47,889			63,985
					119,223			116,909
Long-term debt		14			269,732			259,515
Other financial liabilities		13			437			565
Provision for environmental rehabilitation ("PER")					74,443			69,673
Deferred tax liabilities					97,772			97,350
					561,607			544,012
EQUITY
Share capital		15			372,961			372,274
Contributed surplus					40,238			38,507
Accumulated other comprehensive income (loss) ("AOCI")					8,452			4,943
Retained earnings					1,344			10,492
					422,995			426,216
					984,602			970,228

The accompanying notes are an integral part of these consolidated financial statements.

TASEKO MINES LIMITED

Condensed Consolidated Interim Statements of Changes in Equity

(Cdn$ in thousands)

(Unaudited)

		Share			Contributed						Retained
		capital			surplus			AOCI			earnings			Total
Balance at January 1, 2013		368,128			37,487			(5,365	)		45,331			445,581
Exercise of options		482			(153	)		-			-			329
Share-based compensation		-			978			-			-			978
Total comprehensive income (loss) for the period		-			-			5,653			(10,482	)		- (4,829	)
Balance at March 31, 2013		368,610			38,312			288			34,849			442,059
Balance at January 1, 2014		372,274			38,507			4,943			10,492			426,216
Exercise of options		687			(207	)		-			-			480
Share-based compensation		-			1,938			-			-			1,938
Total comprehensive income (loss) for the period		-			-			3,509			(9,148	)		(5,639	)
Balance at March 31, 2014		372,961			40,238			8,452			1,344			422,995

The accompanying notes are an integral part of these consolidated financial statements.

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

1.          REPORTING ENTITY

Taseko Mines Limited (the Company) is a corporation governed by the British Columbia Business Corporations Act. The unaudited consolidated interim financial statements of the Company as at and for the period ended March 31, 2014 comprise the Company, its subsidiaries and its 75% interest in the Gibraltar joint arrangement since its formation on March 31, 2010. The Company is principally engaged in the production and sale of metals, as well as related activities including exploration and mine development, within the province of British Columbia. Seasonality does not have a significant impact on the Company’s operations.

2.          SIGNIFICANT ACCOUNTING POLICIES

(a)   Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting and follow the same accounting policies and methods of application as the Company’s most recent annual financial statements. These condensed consolidated interim financial statements do not include all of the information required for full consolidated annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as at and for the year ended December 31, 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

These condensed consolidated interim financial statements were authorized for issue by the Board on May 6, 2014.

(b)   Changes in accounting policies and disclosures

IAS 32 Financial instruments: presentation (IAS 32)

The Company adopted IAS 32 on January 1, 2014. IAS 32 establishes principles for presenting financial instruments as liabilities or equity and for offsetting financial assets and financial liabilities.

Based on the Company’s analysis, IAS 32 did not have an impact on the consolidated financial statements for the current period or prior periods presented.

IFRIC Interpretation 21 Levies (IFRIC 21)

IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the Interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. Based on the Company’s analysis, IFRIC 21 did not have an impact on the consolidated financial statements for the current period or prior periods presented.

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

3.          REVENUE

		Three months ended March 31,
		2014			2013
Copper concentrate		98,894			56,426
Copper cathode		-			33
Total copper sales		98,894			56,459
Molybdenum concentrate		5,090			2,735
Silver contained in copper concentrate		1,012			956
		104,996			60,150

4.          COST OF SALES

		Three months ended March 31,
		2014			2013
Direct mining costs		62,720			40,014
Treatment and refining costs		7,702			3,412
Transportation costs		6,513			3,333
Changes in inventories of finished goods and work in process		8,622			(6,202	)
Production costs		85,557			40,557
Depletion and amortization		10,652			6,379
Cost of sales		96,209			46,936

Cost of sales consists of direct mining costs, which include personnel costs, mine site supervisory costs, non-capitalized stripping costs, repair & maintenance costs, depletion and amortization, operating supplies and external services.

5.          OTHER EXPENSES (INCOME)

		Three months ended March 31,
		2014			2013
Realized loss on copper derivative instruments		1,662			3,073
Unrealized loss (gain) on copper derivative instruments		(2,744	)		(1,985	)
Management fee income		(281	)		(281	)
Other income		(804	)		(430	)
		(2,167	)		377

6.          MARKETABLE SECURITIES

During the three month period ended March 31, 2014, the Company reviewed the value of its marketable securities and subscription receipts for objective evidence of impairment based on both quantitative and qualitative criteria and determined that no write down was required (2013: $9,387). The Company determined that the marketable securities were to be written up by $3,987 through OCI to reflect an increase in fair value during the three month period ended March 31, 2014.

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

7.          FINANCE EXPENSES

		Three months ended March 31,
		2014			2013
Interest expense		6,176			1,742
Accretion on PER		471			551
		6,647			2,293

8.          FINANCE INCOME

		Three months ended March 31,
		2014			2013
Interest income		1,122			1,441
Realized income on dual currency deposits		-			267
Gain on sale of marketable securities		-			34
		1,122			1,742

9.          INCOME TAX

		Three months ended March 31,
		2014			2013
Current expense (recovery)		(234	)		300
Deferred expense (recovery)		(103	)		1,167
		(337	)		1,467

10.        OTHER FINANCIAL ASSETS

		March 31,			December 31,
		2014			2013
Current:
Copper put option contracts (note 18)		4,760			1,295
Marketable securities – available for sale		13,759			4,951
Red Mile Promissory Note		47,490			63,483
		66,009			69,729
Long-term:
Subscription receipts – available for sale		12,400			12,400
Reclamation deposits		26,294			25,872
		38,694			38,272

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

11.        INVENTORIES

		March 31,			December 31,
		2014			2013
Work in process		3,815			1,250
Finished goods:
Copper contained in concentrate		9,016			20,049
Molybdenum concentrate		705			859
Materials and supplies		24,943			25,016
		38,479			47,174

12.        PROPERTY, PLANT & EQUIPMENT

		Property			Mineral			Plant and
		acquisition costs			properties1			equipment			CIP 3			Total
Cost
At December 31, 2013		5,438			145,487			626,281			13,418			790,624
Additions 2		-			3,533			11,485			2,185			17,203
Rehabilitation cost asset 4.		-			4,317			-						4,317
Capitalized interest		-			-			-			-			-
Disposals		-			-			-			-			-
New Mine Allowance credit		-			-			-			-			-
Transfers between categories 3		-			-			1,710			(1,710	)		-
At March 31, 2014		5,438			153,337			639,476			13,893			812,144
Accumulated depletion, amortization and impairments
At December 31, 2013		-			31,795			80,249			-			112,044
Depletion and amortization		-			3,514			7,221			-			10,735
Disposals		-			-			-			-			-
At March 31, 2014					35,309			87,470			-			122,779
Carrying amounts
At December 31, 2013		5,438			113,692			546,032			13,418			678,580
At March 31, 2014		5,438			118,028			552,006			13,893			689,365

¹ Mineral properties consists of the cost of acquiring and developing mineral properties. Development costs include capitalized stripping costs, capitalized exploration and evaluation costs, and rehabilitation cost asset.
^2. Additions to mineral properties include $3,342 of capitalized stripping during the three month period ended March 31, 2014 (2013: $4,044).
^3. Construction in process (CIP) is transferred to the relevant category of property, plant and equipment once the asset is available for use.
^4. Represents movements in the rehabilitation cost asset as a result of changes in estimates during the period. The increase in PER (Provision for environmental rehabilitation) during the period was driven by market discount rate changes.

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

13.        OTHER FINANCIAL LIABILITIES

	March 31,	December 31,
	2014	2013
Current:
Red Mile royalty obligation	47,802	63,854
Deferred revenue – Red Mile royalty obligation	87	131
	47,889	63,985
Long-term:
Income tax obligations	-	272
Deferred share units	437	293
	437	565

14.        DEBT

		March 31, 2014						December 31, 2013
		Carrying Value			Fair Value			Carrying Value			Fair Value
Current:
Capital leases		18,922			18,049			13,674			13,036
Secured equipment loans		7,961			7,930			8,951			8,899
		26,883			25,979			22,625			21,935
Long-term:
Senior notes		216,898			222,790			208,349			211,540
Capital leases		35,606			33,816			33,138			31,592
Secured equipment loans		17,228			17,161			18,028			17,926
		269,732			273,767			259,515			261,058

All debt instruments are classified as a level 2 financial instrument (note 20).

15.        EQUITY

(a) Share capital

(thousands of shares)		Common shares
Common shares outstanding at January 1, 2014		193,382
Exercise of share options		395
Common shares outstanding at March 31, 2014		193,777

The Company’s authorized share capital consists of an unlimited number of common shares with no par value.

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

(b) Share-Based Compensation

During the first quarter of 2014, the Company granted 3,330,000 share options to executives and directors. These options have a weighted-average exercise price of $2.27 per share option, with a term of 5 years and vest in equal amounts over two years. The weighted-average fair value of the share option issue was estimated at $1.13 per share option.

During the first quarter of 2014, the Company granted 508,000 share options to employees. These options have a weighted-average exercise price of $2.27 per share option with a term of 3 years and vest in equal amounts over two years. The weighted-average fair value of the share options issued was estimated at $0.72 per share option.

The Company has adopted a Deferred Share Unit (“DSU”) Plan (the “DSU Plan”) for non-employee directors, effective February 15, 2013. The DSU Plan provides for an annual grant to each non-employee director of the Company, or an equivalent cash payment in lieu thereof, which participants have agreed would in first instance be used to assist in complying with the Company’s share ownership guidelines. DSUs vest immediately upon grant and are paid out in cash when a participant ceases to be a director of the Company.

During the three month period ended March 31, 2014, the Company issued 66,079 DSUs to directors (2013: 133,333). The DSUs were valued at $2.27 (2013: $3.18) per unit based upon the underlying share price at grant date and are fair valued based upon the market price every period end. The total number of deferred and restricted share units outstanding at March 31, 2014 was 199,412 units (2013: 133,333). Income of $155 has been recognized for the three month period ended March 31, 2014 (2013: $377).

16.        COMMITMENTS AND CONTINGENCIES

(a) Commitments

At March 31, 2014, capital commitments totaled $1,247 on a 100% basis, of which the Company’s share was $935. At March 31, 2014, the Company’s share of operating commitments totaled $5,439.

(b) Contingencies

The Company has guaranteed 100% of certain debt entered into by the Gibraltar Joint Venture in which it holds a 75% interest. As at March 31, 2014, this debt totaled $58,897 on a 100% basis. The Company has also guaranteed its share of additional debt totaling $25,189 on a 75% basis.

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

17.        SUPPLEMENTARY CASH FLOW INFORMATION

		Three months ended
					March 31,
		2014			2013
Change in non-cash working capital items
Accounts receivable		(13,060	)		(9,244	)
Inventories		8,695			(8,801	)
Prepaids		1,724			(3,148	)
Accounts payable and accrued liabilities		10,012			235
Interest payable		142			4,005
Income tax paid		(450	)		(150	)
		7,063			(17,103	)
Non-cash investing and financing activities
Assets acquired under capital lease		11,106			9,872
Interest earned on promissory note		(790	)		(937	)
Interest expense on royalty obligation		731			191
Royalty obligation settled by promissory note		(16,784	)		(10,820	)

18.        FINANCIAL RISK MANAGEMENT

Summary of derivatives

	Notional amount	Strike price	Term to maturity	Fair value
At March 31, 2014
Commodity contracts
Copper put option contracts	13.56 million lbs	US$3.00	Q2 2014	1,023
Copper put option contracts	14.56 million lbs	US$3.00	Q3 2014	2,218
Copper put option contracts	14.60 million lbs	US$2.75	Q4 2014	1,519
				4,760

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

19.        RELATED PARTIES

Related party transactions

		Transaction value for the
		three months ended						Due from (to) related parties
					March 31,						as at March 31,
		2014			2013			2014			2013
Hunter Dickinson Services Inc.:
General and administrative expenses		600			401
Exploration and evaluation expenses		226			116
		826			517			(106	)		(21	)
Gibraltar joint venture:
Other operating income (management fee)		281			281
Reimburseable expenses		50			45
		331			326			60			42

Hunter Dickinson Services Inc. (HDSI) is a private company, which employs some members of the executive management of the Company and invoices the Company for their executive services as well as other services.

Under the terms of the joint venture operating agreement, the Gibraltar Joint Venture pays the Company a management fee for services rendered by the Company as operator of the Gibraltar mine. In addition, the Company pays certain expenses on behalf of the Gibraltar Joint Venture and invoices the Joint Venture for these expenses.

During the three month period ended March 31, 2014, the Company invested an additional $5,000 in Curis Resources Ltd., a public company that holds mineral property interests, with one director in common with the Company.

20.        FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value, by reference to the reliability of the inputs used to estimate the fair values.

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company has certain financial assets and liabilities that are measured at fair value on a recurring basis and uses the fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, with Level 1 inputs having the highest priority.

TASEKO MINES LIMITED

Notes to Condensed Consolidated Interim Financial Statements

(Cdn$ in thousands - unaudited)

		Level 1			Level 2			Level 3			Total
March 31, 2014
Financial assets designated at FVTPL
Copper put option contracts		-			4,760			-			4,760
Available-for-sale financial assets
Marketable Securities		13,759			-			-			13,759
Subscription receipts		-			-			12,400			12,400
Reclamation deposits		26,294			-			-			26,294
		40,053			4,760			12,400			57,213
December 31, 2013
Financial assets designated at FVTPL
Copper put option contracts		-			1,295			-			1,295
Available-for-sale financial assets
Marketable Securities		4,951			-			-			4,951
Subscription receipts		-			-			12,400			12,400
Reclamation deposits		25,872			-			-			25,872
		30,823			1,295			12,400			44,518

There have been no transfers between fair value levels during the reporting period. The carrying value of cash and equivalents, accounts receivable and payable approximate their fair value as at March 31, 2014.

The senior notes, a level 1 instrument, are valued based upon publicly available information. The capital leases and secured equipment loans, level 2 instruments, are fair valued through discounting future cash flows at a rate of 5.5% to 5.99% based on the relevant loans effective interest rate.

The fair values of the level 2 instruments, copper put option contracts and capped floating rate notes, are based on broker quotes. Similar contracts are traded in an active market and the broker quotes reflect the actual transactions in similar instruments.

The subscription receipts, a level 3 instrument, are initially valued based on a purchase transaction. Subsequent valuations are based on exploration results communicated through discussions with the investment’s management. No indicators of impairment were present at March 31, 2014, although if indicators were present a loss would be recognized in the Company’s profit and loss.