President and Head of Investor Relations for Taseko Mines Limited, a Canadian company that acquires, develops, and operates copper mines in North America, primarily in British Columbia and in Arizona, if I'm not mistaken.
Correct.
The floor is yours.
Thank you very much. And thanks, everyone, for sticking around long enough today. I'll run you through the Taseko story. It's a pretty exciting time for the company as we're just completing construction of our second producing asset, which will be coming into production here in the coming months. We are North American focused. We are a copper producer today. We own and operate the Gibraltar Mine in British Columbia. It's a large-scale open-pit copper mine. It's the second largest copper mine in Canada, the fourth largest in North America. We've been operating it now for 20 years, and we have 20 years of mine life remaining. It's been our foundational asset, and we've taken all the cash we've produced there and put it back into the company.
As I mentioned, our Florence Copper Project down in Arizona, we've just completed construction there on time, on budget, and in the coming days, we're going to be starting operations there. We expect first copper production, and it'll actually be copper cathode. We expect that sometime about the end of the year. We acquired that project 10 years ago, and it's hard to believe we're about to hit the green switch and start producing. We are North American focused. We like the North American jurisdiction. Upfront permitting could be a little bit more challenging than in other jurisdictions, but we know when we have the permits, we don't have to worry about the government stealing our asset. We will stay in North America, and we are focused on copper.
We believe the fundamentals for copper today are as strong as they've ever been or much stronger, and that's really driven by supply or lack of supply. We also have a pipeline of other projects all back up in British Columbia. We've got our Yellowhead Copper Project, which we just started the environmental assessment on. We've got four or five years of permitting work ahead of us there. It's a longer-dated project. We have New Prosperity, which is actually the original project of the company, a very large gold project. There's 13 million ounces of gold in the ground there. We had some exciting news about that project, which has been stuck in permitting and legal challenges for over 10 years, but we think we maybe have a path forward. Again, that's a longer-dated project. Our focus today is obviously on Florence and getting that ramped up.
We trade in New York on the NYSE, in Toronto, and in London. Our market cap today is about CAD 1.8 billion. We've obviously, like a lot of companies here, our share price has done very well in the last number of months, and that's partly, you know, the whole copper sector has moved up. As we've been de-risking our Florence Copper Project and advancing on construction, I think we're starting to get some value in our equity for that project. We're widely held. We have no controlling shareholders. We're covered by all the standard Canadian banks and brokerage houses. A little bit on copper, why we're focused on copper, and I'm sure you've heard this a few times today, but the fundamentals are exceptionally strong for copper. The price today is about CAD 4.84.
In the U.S., it's over CAD 5, and we think it's really being driven by supply or a lack of supply. It takes upwards of 20 years to build a copper mine now, and the industry always underperforms. If you look at what's happened in the last number of months, whether it's the Kamoa-Kakula mine in Africa or most recently Grasberg, they had the event there, the mud event, and it's going to take them the better part of two years to get ramped back up. That's the second largest copper mine in the world. We seem to be headed towards a supply deficit, and that's only going to put further upward pressure on pricing. On the demand side, lots of new demand in addition to the traditional demand. Now we're talking AI and data centers, and that all requires significant amounts of copper.
I would say consensus now that we are headed for a supply gap, whether it's a few million tons or 30 million tons, that's up for debate. This deficit has been three years away for the last 10 years, but we seem to be getting closer and closer to it. What happened to Grasberg last week only exacerbates it. We like copper, and we think CAD 5 copper we could be looking back at not too far. A little bit more about Gibraltar. We actually acquired Gibraltar from Boliden, a Swedish company, a Swedish miner, in 1999 for a dollar. They had just shut it down, and they were going to scrap it. We bought it, and the price of copper was CAD 0.80. It wasn't economic at that time.
We kept it on care and maintenance until 2004, and then we restarted it with the idea we'd run it for a few years, generate some cash, and then shut it back down when the price of copper cycled back. In the end, copper didn't cycle back. We started investing in it in 2006, and over the course of six years, we spent CAD 800 million. We took it from 30,000 tons a day processing capacity to 85,000 and increased production to what it is today, 130 million lbs, sorry. It's been a great asset for us and still a long mine life ahead, you know, 20 more years of production here. In reality, it's had a 20-year mine life for the last 20 years, so we fully expect it'll run longer than 20 years. Maybe just skip ahead, talk about Florence. Florence, yeah, it's in Arizona.
We acquired this project in 2014. It was actually originally a BHP project. They did a whole bunch of technical work on it, but just based on copper prices, they sold it. We acquired Curis Resources for this project. This is going to be a different type of process. It's not an open pit. It's not an underground mine. We're going to use a process commonly used in uranium. It's solution mining or in-situ recovery. The benefits of ISR are low upfront capital and very low operating costs. We've been permitting it for over 10 years, and we finally got our final permits in 2023, and we started construction last year. Our last technical report was in 2023. That outlined a 22-year mine life, operating costs of CAD 1.11 per pound, and upfront capital estimated at that time was CAD 230 million.
Once we got into construction, we updated that number to when we said it was going to be about 15% more, so about $265 million , and that's exactly where the capital's come in. You can see fantastic economics, nearly $1 billion of NPV, 50% return, and a two-and-a-half-year payback. That's at CAD 3.75 copper. At today's copper price, those numbers, I think it's more like CAD 1.2 billion or CAD 1.3 billion. The other benefit here is we will be producing copper cathode. Today, that would get us over CAD 5 per pound. The process that we're going to use, ISR, you can see that diagram there. What we do is we drill a well field. There's injection wells and recovery wells. We inject a solution down into the deposit, which is 400 ft- 800 ft deep.
As that solution migrates through the deposit, it leaches out the copper, dissolves the copper, and then we recover that solution with the recovery wells. Then we produce pure copper cathode in a conventional SXEW plant. There are some significant benefits to this process: much lower water use, we're not changing the landscape, 65% less GHG emissions, and a lot less energy use. There are a lot of environmental benefits to this process. Because the process has not been commonly used in copper, it's been used in smaller scale historically. We built the project in two different phases. The first phase was a production test facility. We spent CAD 25 million, and we built that in 2018. That had 13 wells, four injection wells, nine recovery wells, and a small SXEW plant. We ran that for 18 months and produced over 1 million lbs of copper.
The reason we did that was, one, to prove to the regulators that we can control these solutions 800 ft deep and recover the solutions with no issue to the environment and the aquifer, and also to prove that the process will work at Florence. It was very much a success. After the test facility, we had to go into a permit amendment process. We got those final permits, as I mentioned, in 2023 from the EPA and the state, and it gave us the confidence to move forward with the commercial facility. Just to break down on the costs, but we are now, this is old now because this is June 30th, we're about 90% complete construction. As of today, actually, as of September 19th, we declared substantial completion, and our main contractor started demobilizing. We're just wrapping up some final things.
The new well field, which you can see there, we had to drill 90 new wells as part of the capital program. The well field is drilled, all the wells are geared up, and they're ready to start injecting solutions any day now. Hopefully, we have some news out in the next few days about when we're going to start that, but the whole facility is ready to go. As I mentioned, we're hopeful to start producing copper by the end of the year or about the end of the year. It takes about three months from the time we start injecting solutions to where we get the grade in the solutions high enough to plate copper. Next year will be the ramp-up year. We expect to produce about 40 million lbs of copper, and then in 2027, we expect to be at capacity, which is 85 million lbs.
We brought in a couple of partners here, Mitsui & Co. out of the U.S. They contributed CAD 50 million to construction, and in exchange, they got a 2% copper stream, and they get 81% of the offtake. At their option, they have three years to invest another CAD 50 million, and then the stream and the offtake convert to a 10% equity interest in the mine. That's that billion-dollar valuation, CAD 100 million for 10% of the project. Taurus Mining Royalty out of Australia invested CAD 50 million, and they got a 2% gross revenue royalty. We've got some good partners, and it's ready to go. I will talk a little bit about our valuation. As I mentioned, our equity has done really well here in the last number of months. We're about CAD 1.8 billion today.
If you look on an NPV basis, Gibraltar Mine is worth CAD 2.2 billion . Florence Copper Project is worth CAD 1.6 billion , and this is at CAD 4.25 copper. We do have some debt. We took on some debt to build Florence. We have about CAD 800 million of debt. If you take that off the NPVs, you can see there's still a big valuation gap between what those projects are worth and where our equity is trading. If you want to look on a cash flow basis, with both Gibraltar Mine and Florence Copper Project operating, we expect at CAD 4.50 copper to generate about CAD 700 million of EBITDA annually, and on a cash flow basis, probably about CAD 500 million of free cash flow. If you put any multiple on that, a typical multiple that our peers would get, we could see our equity doubling again from here.
We need to get into the ramp-up at Florence, and we need to advance that and get it cash flowing, but we think there's still a long ways, a lot of room for our equity to grow. Once we start generating that cash, our focus is going to be our balance sheet. As I mentioned, we took on some debt. We want to de-lever our balance sheet. We're hitting peak leverage today as the spending is effectively done at Florence, and we'll naturally grow into that debt, but we want to reduce the quantum of debt we have. Most of our debt is $500 million high-yield note. We refined that last year, and we also have a revolver, corporate revolver, which we've tapped to build Florence.
Our focus will be on reducing our debt, and we think we could be in a net cash position by the end of 2028. We're in a great spot right now. No one else is building copper production in the Americas or in the U.S., and yeah, it's a great growth trajectory for the company, and like I say, a real exciting time. I guess with that...
Thank you for that. Very interesting, and we'll start by looking up. We have some questions here from the floor.
I'm just curious to know what you inject in the ground that dissolves the copper and doesn't affect the groundwater.
It's 99.5% water and 0.5% sulfuric acid. What we're doing is we're acidifying the well field. We're bringing down the pH to a certain level, which allows the copper to dissolve. What we do is we're going to mine this in blocks, and when we're done at a block, which would be about 100 wells, we go into a rinsing program. We did this with the test facility as well, and we have to restore that aquifer to what it was before, and we've proven that we can do that. We just rinse with fresh water, and sometimes you use sodium bicarbonate to bring the pH back up.
Is that normal to have 99% water and the rest salt?
Yeah, there's a lot of leach operations, but it's usually done on surface. The only thing we're doing different is we're doing it in place or in-situ.
Okay. I believe that you have on the website stated that you manage your balance sheet in a conservative way. Apart from buying function mines from Bleden for CAD 1, can you give other examples in this red-hawk sector? There is a global demand, which is widely outstripping the global production, and on top of this, you aim to move into production in Arizona. How do you keep your costs in check?
It's just fiscal prudence. Like I mentioned, we've taken on some debt, but it's a manageable amount of debt for the company, and we will grow into that naturally as we increase our production and revenue. I think we've done a good job. We haven't put our balance sheet in jeopardy, and we've kept a reasonable amount of debt for the size of the company we are.
Because this is a red-hot sector here, and you're competing with other companies, although you stated that you're one of few examples in North America, what about the labor situation? No one seems to have a problem with getting labor, and still everybody's expanding.
Yeah, we've been very fortunate. At Florence, we've obviously been hiring our team down there. We need to hire, we've hired about 120 people to run that operation. Our full complement of people will be about 180 - 190, and the Arizona job market is very hot. The one great thing we have, a couple of good things we have going for us, people like to work at something new, and that's where we are in Florence. There's not many mines where you actually live 10 minutes away from where you work. We're only an hour and 15 minutes out of Phoenix. We're on the outskirts of the town of Florence and a number of other towns.
There is plenty of labor willing to jump in here. My final question here would be First Nation or native tribes. You're operating in Canada and in the U.S.
Yes.
What's the situation there? In some states in the U.S., there are no First Nation equivalent, but...
Yeah, it's an important part of the business. At our Yellowhead Project, which we've just put in, we're just starting the EA process. We spent the first three years engaging with the First Nations community there. We wanted to get their support for the process, and you have to put that at the forefront of everything now. They will be partners for the 25 years we're mining there. It's a very important relationship to foster.
You are on top of that situation.
Yeah, you don't have a choice.
No, that's good. Okay, thank you. If there isn't any more questions, I think we should give Brian Bergot an applause. Did we have a question?
Sorry, I was just also wondering about the ISR. As I understand, and you mentioned it's not a common process for copper production. Are there any companies doing this successfully in the same scale?
No, no one else is doing it in copper today. It's been done historically at smaller scale in Arizona, but not today. We have a very unique core body, and that's why we're allowed to do it. We're able to do it.
Any more for any more? Otherwise, we'll round off with the applause. The delayed applause. Thank you so much.