Ladies and gentlemen, thank you for standing by. Hello, welcome to Taseko Mines 2026 first quarter earnings conference call. Please note that this call has been placed on mute to prevent any background noise. Thank you. I would now like to turn the conference over to our Vice President of Investor Relations, Brian Bergot. Please go ahead.
Thank you, Dustin. Welcome everyone, and thank you for joining Taseko's first quarter 2026 conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close, and is available on our website at tasekomines.com and on SEDAR+. I am joined today in Vancouver by Taseko's President and CEO, Stuart McDonald, Taseko's Chief Financial Officer, Bryce Hamming, and our COO, Richard Tremblay. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information, and this information, by its nature, is subject to risks and uncertainties. Actual results may differ materially from the views expressed today.
For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our first quarter MD&A and the related news release, as well as the risk factors particular to our company. These documents can be found on our website and also on SEDAR+. I would also like to point out that we will use various non-GAAP measures during the call. You can find explanations and reconciliations regarding these measures in the related news release. Finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks.
Thank you, Brian, and welcome everyone to our first quarter earnings call. As usual, I'll start with an overview of our recent operating results, and Bryce can then review the financial performance. It was an exciting quarter for us, obviously, with the startup at Florence and first copper from that new operation. I'll start today with our Gibraltar Mine, which had another solid quarter. Steady production that we saw in the second half last year continued into the first quarter. The mine produced 30 million pounds of copper and just over 700,000 pounds of molybdenum, which was generally in line with our expectations. Head grade of 0.25% was slightly above our life of mine reserve grade, and copper recoveries of 83% also benefited from the higher quality ore from the lower benches of the Connector pit.
Mill throughput was slightly lower this quarter as we focused on optimizing copper recoveries from the higher-grade ore. We also had some unplanned mill downtime. Overall, it was a good production quarter at Gibraltar. We did see some operating cost increases in the period as Gibraltar's C1 cash cost increased to $2.63 U.S. per pound produced. That's about 6% higher than the previous quarter and was impacted by inflation in a few areas, most notably diesel prices and explosives. With the situation in the Middle East, diesel prices have increased about CAD 0.50 per liter compared to last year. Those are Canadian cents, which represents $0.15 U.S. per pound of copper at Gibraltar. We're also seeing higher costs for explosives as the market for ammonium nitrate has been affected by a plant outage in the U.S.
Repairs and maintenance was also higher this quarter, although that was more of a timing issue for some key repairs, and we don't expect that level of spend to continue for the rest of this year. Offsetting those factors was a strong quarter for molybdenum production, which continues to provide a meaningful byproduct credit, and we expect similar moly grades for the remainder of this year. Gibraltar's SXEW plant also contributed 733,000 pounds of copper cathode production in Q1. We were able to keep that plant running through the winter months, which was a positive. We stopped leaching operations at Gibraltar in April to complete the tie-in of a second leach pad, and that should support higher cathode production going forward.
Turning to Florence now, it was a major milestone that we achieved in late February with first copper cathode production. This is a testament to the perseverance and technical expertise that our project team has demonstrated over the last decade to bring this project through the PTF test program permitting, through a well-executed capital project, and now finally, into commercial production. In Q4, we started injection of solutions into the well field, the initial flow rates were higher than expected. This allowed for faster acidification of the ore body, solution grades increased faster than planned, reaching targeted levels in January. The commissioning of the SXEW plant was completed in mid-February.
That was a few weeks behind schedule, and by that time, we had built up an inventory of copper in solution, and we harvested 1.5 million pounds of cathode over the remainder of Q1. In recent weeks, our operating team has done an excellent job of stabilizing the whole circuit from well field through to cathode production. We now have approximately 90 production wells producing copper at a consistent daily rate in the range of 55,000-60,000 pounds a day. This is in line with our expectations for the initial wells at this stage and represents another significant de-risking step for the project. Now our focus is on ramping up, which means expanding the well field to increase flow rates and copper production. We currently have five drill rigs operating. After a slow start, we have seen drilling productivities improve in the last few weeks.
This month, an additional 20 production wells will come online. Later in the summer, an additional group of 26 new wells will begin producing. Further groups of wells will be added every month for the remainder of the year. As the well field expands, we will see higher solution flows and PLS grade, which will allow us to achieve the 30 million-35 million pounds target for the year. It's important to note that production will not be perfectly correlated with the number of wells, as each four block has a slightly different ramp-up profile, and the new wells added to the perimeter of the well field will improve the performance of the existing inner wells.
We continue to expect 30 million-35 million pounds of copper production from Florence this year, with production weighted to the second half as new wells are put into production. Our target is still to achieve 80 million-85 million pounds of copper production next year in 2027, which is the steady-state capacity of Florence. Lastly, I can give a quick update on Yellowhead. Our project team remains quite busy advancing the environmental assessment work. Following on from the community open houses that we hosted last fall, we're now incorporating feedback from stakeholders to complete the detailed project description. We expect to file that this summer, which will lead towards a readiness decision and the next phase of work. Also, just last week, the government of British Columbia announced the addition of new major projects to its priority projects list, and Yellowhead Copper was included.
This is a clear message that the province recognizes the value of our Yellowhead project, and we're continuing to work closely with the Simpcw First Nation, province of B.C., and the government of Canada to move the permitting process forward as efficiently as possible. With that, I'll now turn the call over to Bryce.
Thank you, Stuart. Good morning, everyone. Overall, despite some cost inflation at Gibraltar, the strong production and sales translated to another strong financial performance in the quarter. As Stuart mentioned, Gibraltar copper sales were 27 million pounds in the quarter, and lower than the 30 million pounds that we produced due to shipment timing. This included 938,000 pounds of cathode sales. This buildup of concentrate inventory is expected to be sold in Q2. Moly sales were 708,000 pounds and benefited from higher moly grade in the connector pit. Together, copper and moly sales generated CAD 237 million of revenue in the quarter, which is the highest quarterly revenue generation for the company to date.
Moly revenues were more than double the same period in 2025, benefiting from the higher production levels and roughly 25% higher moly price. Today, it's over CAD 28 per pound. Total site costs in the first quarter were CAD 142 million, which includes CAD 15 million of capitalized stripping costs. This is 13% higher than Q4 last year, and includes the cost inflation that we talked about. For the quarter, Taseko generated CAD 94 million of adjusted EBITDA, CAD 115 million of earnings from mining operations, and CAD 94 million in cash flow from operations. Net income in the quarter was CAD 17 million or CAD 0.05 per share, and on an adjusted basis was CAD 28 million or CAD 0.08 per share after removal of unrealized fair value adjustments.
Financial performance and adjusted earnings was impacted by the copper collars we currently have in place. We put these collars in place last year to support our project finance and our ramp-up of Florence Copper. These collars reduced our effective selling price to $5.40 U.S. per pound in the current quarter as compared to the LME, which averaged around $5.83 in the quarter. As a reminder, these collars roll off at the end of June, with 27 million pounds remaining for the second quarter, at which point we'll begin realizing the full LME price up to a much higher level of $7.50 and $8.50 U.S. per pound. There's no limit after Q3 at the moment.
It's also worth noting that as Florence begins to generate free cash flow later this year, we will likely revert to our previous practice of just purchasing out of the money copper price puts with shorter time horizons, say a quarter or two out, which is to protect against shorter-term copper price volatility. That lower strike will have a modest payment of premium to provide that downside protection. That strategy of purchasing copper puts outright doesn't limit our copper price upside now that we're getting to the end of our development and ramp-up of Florence. Florence Copper reported sales of 600,000 pounds of cathode in the quarter, with a balance of production of 900,000 in finished inventory. We also had 600,000 pounds of copper in solution as what we call work in progress inventory.
Direct costs associated with the cathode production at Florence in the quarter was CAD 10 million, which is split across these inventory amounts. Our operating segment note, you know, referred to note 22 in our financials, now shows our revenue and cost of production at Florence, and it showed CAD 4.5 Million for the quarter. No initial profit was recognized on our first sales of Florence cathode. In the first quarter, we capitalized CAD 21 million of commissioning and startup costs incurred at Florence. We also capitalized well field development costs of CAD 18 million for new wells being constructed. These drilling and well development costs will continue to be capitalized as sustaining capital throughout the operations mine life, and they'll be depreciated over the useful life of the well on a units of production basis from the copper recovered.
Next quarter, with increasing production from Florence's SXEW facility, we will see much less capitalized site operating costs, with most of the operating costs expensed as cost of production as cathode is sold. We ended the quarter with total available liquidity of CAD 322 million, including CAD 169 million of cash. With stable cash flow being generated from Gibraltar combined with our rising production and cash flow from Florence, our liquidity should be maintained in the second quarter and begin increasing in the second half. As our liquidity grows, we'll look to begin at opportunities to reduce debt and delever later this year. With that, I'll pass it back to the operator for questions. Thanks.
Thank you. Quick reminder before we start the Q&A. If you'd like to ask a question, please press star and the number one on your telephone keypad to raise your hand and enter the queue. If you'd like to withdraw a question, simply press star one again. We will take our first question from Dalton Baretto from Canaccord Genuity. Please go ahead.
Thank you, operator. Good morning, Stuart and team. I'm trying to unpack this whole diesel and acid exposure a little bit more. I know you've got some context on that. Let's start with the diesel, though. I know you highlighted the impact on C1 cost, but, outside of that, when you look at your cap strip at Gibraltar and then the wellfield deployment at Florence, what sort of impact would you anticipate there? Thank you.
I mean, yeah. Hi, Dalton, it's Stuart here. In total, you know, across Gibraltar, we're using roughly 40 million liters of diesel a year across capital operating. You know, we've seen a CAD 0.50 per liter increase, CAD 20 million roughly is kind of year-over-year what you're seeing across that. Of course, at Florence, you know, very different type of operation. Do we use any diesel? We don't really use any diesel or any fuel to speak of. Yeah, that's the impact on diesel. Yeah.
Just on the acid, Stuart. Yeah, it's great to see you guys are locked up for the, you know, over the rest of this year. Are you starting to have conversations with your suppliers about next year yet, both around availability as well as around pricing?
Yeah, Dalton. Richard here. you know, we maintain contact with our current supplier, and obviously discussions around next year are on, you know, are obviously on the agenda. Nothing in any kind of formal or detailed or specific way. Definitely watching the market and seeing what's happening.
Have you been given any comfort around availability? I mean, I'm assuming pricing is a separate conversation, but just around availability.
Yes, in that availability, seems like it will be there. It'll be more of a price discussion.
Great. Thanks, guys. That is all for me.
Thank you. Again, if you'd like to ask a question, please press star and the number one on your telephone keypad. Again, that is star and the number one on your telephone keypad. We will take our next question from Craig Hutchison from TD Cowen. Please go ahead. Mr. Hutchison, you might be muted on your device.
Good morning, guys. Thanks for that. Just on Florence, I appreciate you guys have given some guidance around back half weighted, but can you provide any more kind of clarity in terms of what we can expect here for the cadence? You know, should we expect a kind of material uplift in Q2 or something similar to kind of Q1? Just kind of anything in terms of what we should be kind of modeling from a cadence perspective, we'd appreciate. Thanks.
Hi, Craig, it's Stuart. As I mentioned in my remarks there, we're running right now at a daily production rate around 55,000, 60,000 a day. You know, 1.5 million-1.8 million pounds a month. We will have new wells. That's kind of April to May. Like, we will have new wells coming on in May this month, which will start to, you know, produce copper in June. Generally, I wouldn't expect, you know, a major uplift in production in Q2 from that kind of monthly rate. I think you'll start to see a much bigger increase in Q3 and Q4 when we have additional, you know, big portions of the wellfield starting to open up.
Yeah, that's kind of why we've indicated it's, you know, quite heavily weighted to the second half of the year.
Okay, great. Maybe shifting focus to Yellowhead. You guys mentioned it's on the new major list project for British Columbia. What does that mean from your perspective? Does that mean there's gonna be some kind of effort to fast track permitting? Is there certain financial support you'll get from the province? I guess you also mentioned dialogue with the federal government as well. Just anything in terms of where you see, I guess, permitting going and what kind of support you guys are receiving from different levels of government? Thanks.
Yeah. Yeah, thanks. Yeah, certainly, and, you know, appreciate it was good recognition to be included on that list. you know, but the reality, I think, is we don't see any significant change in the permitting process. you know, we've been working closely with all levels of government here in the last, you know, for the last couple years. I think between the Simpcw First Nation, the Province of B.C., Government of Canada, like, you know, everyone is focused on trying to have an efficient permitting process. you know, have not have duplication of work across different agencies. That's really where our focus has been. We don't see much changing on the permitting track as a result of that announcement.
On more broadly on government support, you know, we do think we've got good support from the province, and government of Canada, we have some dialogue ongoing as well. Certainly it's a, you know, Yellowhead would be a major new copper mine. It's got the potential to be the second biggest copper mine in Canada, and that of course is getting attention. Yeah. Nothing, you know, nothing to really, nothing tangible yet to announce, but certainly progressing on some good discussions across governments, you know.
Okay, great. Maybe one last question for me. Just New Prosperity. Anything new on that front in terms of moving that project forward? Thanks.
No, nothing, you know, nothing, no major updates to report. I mean, we're focused on, you know, expanding our relationship with the Tsilhqot'in Nation, you know, continuing to work with them, following on, you know, the dialogue that we completed last year. No otherwise, no significant updates there. Yeah.
All right. Thank you, guys.
Thank you. We have reached the end of the Q&A session. I will now turn the call back over to the management for closing remarks.
Great. Okay. Well, thanks everyone for joining today, and we will talk to you, next quarter. Thank you.