TASEKO REPORTS FIRST QUARTER 2015 RESULTS · ril 2015, the rs of 2015 at n. y 2015, an up ll strip ratio a allbauer, Pre rth quarter, a er we succe, given the n the upper etween 0.25

*

T(cou M" F

*Non-GAAP p

This release s("MD&A"), acurrency amoof Williams Lunless otherw

May 13, 201"Company") r

First Quarter

First qmilliorespec

Gibraperfor

Total molybthe fo

Total increa

In Janput op

In Apquartemillio

In Maovera

Russell Hto the fouthe quartproductionmaterial ifluctuate bthan expebeen comrecoveries

erformance me

TASEK

should be reaavailable at wwunts are state

Lake in south-wise indicated.

5, Vancouvereports the res

r Highlights

quarter 2015 on and adjustectively, in the

altar throughprming quarter

production inbdenum, relat

ourth quarter 2

sales for the ased by 3.0 m

nuary 2015, thptions for cash

pril 2015, the ers of 2015 aton.

ay 2015, an upll strip ratio a

Hallbauer, Prerth quarter, ater we succen, given the in the upper between 0.25

ected considermpleted on ths going forwa

easure. See end

KO REPO

ad with the Cww.tasekom

ed in Canadian-central Britis.

er, BC – Tassults for the th

earnings fromed EBITDA* e fourth quarte

put averaged 8r since the con

n the first quatively flat com2014.

quarter were million pounds

he Company th proceeds of

Company acqt a strike price

pdated mine pand increases

sident and CEs expected, buessfully oper

lower coppebenches and %-0.28% for ring the lowe

he grinding anard.

d of news relea

ORTS FIR

Company’s Fiines.com andn dollars. Tas

sh Columbia.

seko Mines Lhree months e

m mining operwas $11.2 m

er 2014,

86,100 tons pencentrator wa

arter was 28.4mpared to pro

25.4 million s due to shipm

took advantagf $17.4 millio

quired coppere of US$2.50

plan and reserprofitability o

EO of Tasekout trended higrated our coer grade. Min

are now prothe balance o

r copper gradnd flotation

ase.

RST QUAR

inancial Stated filed on wwseko’s 75% oProduction v

Limited (TSXended March

rations (beformillion compar

er day in the fas upgraded.

4 million pounoduction of 28

pounds of conment timing.

ge of the weaon, resulting in

r put options fper pound. T

rve for Gibraof the mine.

o, commentedgher in March

oncentrators aning operatioogressing intoof 2015. Coppde. The increacircuits in re

RTER 201

ements and Mww.sedar.comowned Gibraltvolumes stated

X: TKO; NY31, 2015.

re depletion ared to a loss o

first quarter,

nds of copper8.1 million po

ntained coppe

ak copper pricn a gain on de

for 30 millionTotal cost of th

altar was anno

d, “Copper gh to 0.240% aabove design

ons have nowo higher gradper recoverieasing copper ecent months

15 RESUL

Management Dm. Except whetar Mine is lod in this relea

YSE MKT: T

and amortizatiof ($0.9) milli

above design

r and 404 thouounds and 445

er in concentr

ce and settled erivatives of

n pounds overhese put optio

ounced. The n

grade in the fiand then to 0.n capacity iw worked thrde ore, with s during the fgrade combin is expected

LTS

Discussion &ere otherwiseocated north oase are on a 10

TGB) ("Tasek

ion)* were $2ion and ($8.4

n capacity and

usand pounds5 thousand po

rate. Inventor

all outstandin$11.8 million

r the second aons was US$

new plan redu

irst quarter w.260% in Aprin order to rough the lowthe grade ex

first quarter wned with worto result in

& Analysis noted, all

of the City 00% basis

ko" or the

2.3 4) million,

d the best

s of ounds in

ry

ng copper n.

and third 1.1

uces the

was similar ril. During maximize wer grade xpected to were better rk that has improved

T

N

“srmwumg Mea MrapthsMinwDth

The table belo

Tons Milled

Tons Per Day

Strip Ratio

Grade

Recovery

Cu Productio

Cost Per Ton

Site OperatinBy-Product C

Note: Numbers ma

“Last week wstudy optimizreduces the stmore profitabwe have madupdated long-milled, and asgrade stabilize

Mr. Hallbaueenvironmentaand liquidity.

Mr. Hallbauerrecently receiawarded the Mpresented to Rhe successfu

solutions at GMining Persondividual wh

was recognizeDirector durinhe public, gov

ow details mo

(000s tons)

y

on (000s lbs)

nne Milled (C

ng Costs Net oCredits (US$/ay not add up exact

we announced zed cut-off gtrip ratio and le copper proe at Gibraltar-term plan. Ins the grade hes at higher le

er added, “Ol assessment Until copper

r concluded, ived importanMineral ProceRob in recognl advanceme

Gibraltar and on of the Yeaho has shown ed for his wong a period whvernment, me

onthly produc

Jan-

2

79

0

8

9

C$) $1

of /lb)

$

tly due to rounding

an updated mgrade, strip ra

in combinatioduction,” conr. In recent mn the space ohas been imprevels, recover

Our Florence phases. We amarket condi

“I would alsnt industry awessor of the Ynition of the ont of the GibTaseko as a

ar by the Mileadership in

ork on leadinghen significanedia, and Firs

tion statistics

-15 Fe

2,480

9,800

2.4

.23%

1.1%

9,100

10.09

$2.06

g.

mine plan andatio and pit ion with the nntinued Mr. Hmonths, we haf just a few mroving, costsries improve a

and Aley pare managingitions improv

o like to conwards. In JaYear by the Coutstanding wbraltar Mine,a whole. In Mning Associa

n advancing ag the Mining nt changes wet Nations.”

s for the first q

eb-15 M

2,600

92,700

2.1

0.21%

80.2%

8,600

$8.96

$2.13

d long-term redevelopment

new pit develHallbauer. “Thave been minmonths, we hper pound ar

and as we adv

projects contg spending onve, we will ma

ngratulate threnuary, Rob RCanadian Minwork he perfo, and for hisMay, John Mation of BC. and promotin

Association ere occurring

quarter, as we

Mar-15

2,680

86,500

2.5

0.24%

83.0%

10,700

$10.00

$1.77

eserves for Gt sequencing.lopment sequhis is only achning to a shorhave made sire also fallingvance other c

tinue to pron these projecaintain a very

ee members oRotzinger, Vineral Process

ormed on the s commitmenMcManus, Ch

This award pg the mining of British Co

g with respect

ell as a second

Q1 Total

7,760

86,100

2.4

0.23%

81.4%

28,400

$9.66

$2.00

Gibraltar. The . The new muence, will rehievable becart-term plan wgnificant redug. Costs will ost saving ini

ogress througcts to correspoy conservative

of my managice President,sors (CMP) GGDP3 projec

nt to advancinhief Operatinpublicly recoindustry in B

olumbia bothto how our in

d quarter fore

Q2 Forecast

7,700

84,600

2.2

0.27%

84.0%

35,500

$10.80

$1.75

six-month enmine plan sigsult in lower ause of the inwhich is simuctions in cocontinue to d

itiatives.”

gh the permiond with oure spending po

gement team , Capital Proj

Group. This act, for his dedng mineral p

ng Officer, wognizes an ouBritish Columh as Chairmanndustry is per

ecast:

ngineering gnificantly

costs and vestments ilar to the

ost per ton decline as

itting and cash flow

olicy.”

who have jects, was

award was dication to processing

was named utstanding

mbia. John n and as a rceived by

“MeSt

H

F

(

R

E

E

N

A

E

A

C

O

T

T

P

S

*N

“Also in MayMining, Metaexemplary effService Medao the CIM Va

HIGHLIGHT

Financial Data

Cdn$ in thousa

Revenues

Earnings (loss)

Earnings (loss)

Net earnings (lo

Per share - b

Adjusted net ea

Per share - ba

EBITDA *

Adjusted EBITD

Cash flows prov

Operating Data

Tons mined (m

Tons milled (mi

Production (mil

Sales (million p

Non-GAAP performa

y, Tom Broddallurgy and P

ffort in introdal for his commancouver Bra

S

a

ands, except fo

from mining op

from mining op

oss)

basic (“EPS”)

arnings (loss)*

asic (“adjusted

DA *

vided by (used

a (Gibraltar - 1

illions)

llions)

lion pounds Cu

pounds Cu)

ance measure. See p

dy, Manager, Petroleum (C

ducing studenmendable me

anch.”

or per share am

perations befor

perations

EPS”) *

for) operations

100% basis)

u)

page 19 of this MD&

Engineering CIM). He wants to the minentoring, his c

mounts)

re depletion an

s

&A.

Projects receas presented ning industrycommitment t

nd amortization

eived two awthe District

y and to the to the Surface

T

6n* 2

(7

(25

(

(2

(

(11

1

(3

T

wards from theDistinguishe

CIM, as wele Mining Soc

Three months

2015

1,835

2,329

7,979)

5,206)

(0.11)

2,434)

(0.01)

,996)

1,224

3,328)

Three months

2015

21.0

7.8

28.4

25.4

e Canadian Ined Service All as the Distciety and his d

ended March

2014

104,996

19,439

8,787

(9,148)

(0.05)

(2,710)

(0.01)

8,858

14,594

23,301

ended March

2014

25.9

7.0

34.5

40.0

nstitute of Award for tinguished dedication

31,

Change

(43,161)

(17,110)

(16,766)

(16,058)

(0.06)

275

-

(20,854)

(3,370)

(26,629)

31,

Change

(4.9)

0.8

(6.1)

(14.6)

H

HIGHLIGHT

Earnin

Coppegraderemai

Site olower

Total result

At Ma

In Maovera

In Jansold astrate

In Apquarte *Non-GA

S - CONTIN

ngs from min

er productiones. Grade is nder of 2015

operating costhan the first

operating co of lower site

arch 31, 2015

ay 2015, an uall strip ratio a

nuary 2015, wall outstandin

egy is designe

ril 2015, the Cers of 2015 at

AAP performance m

NUED

ing operation

n at Gibraltar steadily incre;

st per ton milquarter of 20

osts* were USoperating cos

the Compan

pdated mine nd increases

when the copng copper pued to mitigate

Company acqt a strike price

measure. See the en

s before depl

was 28.4 mileasing and i

led* decreas014 due to an

S$2.39 per psts and weak

y had a cash

plan and resprofitability o

pper price drout options fora short term

quired coppee of US$2.50

nd of the news relea

etion and am

llion pounds s expected t

ed to $9.66 overall reduc

pound produckening Canad

balance of $5

erve for Gibraof the mine;

opped to a rer cash procedecline in cop

r put options per pound.

ase.

mortization we

(100% basis)to fluctuate b

in the first qction in spend

ced, lower thian dollar exc

58 million;

altar was ann

ecent low of eeds of $17.4pper price; an

for 30 million

ere $2.3 millio

), and was imbetween 0.25

uarter of 201ding;

an the previochange rate;

nounced. The

US$2.45 per4 million. Thnd

n pounds ove

n;

mpacted by lo5% and 0.28

15, approxima

ous two quar

e new plan re

r pound, the e Company’s

er the second

ower head % for the

ately 19%

rters as a

duces the

Company s hedging

d and third

R

G O O

T

T

S

S

C

C

M

P

S

O

T

*N

REVIEW OF

Gibraltar min

Operating res

Operating Data

Tons mined (m

Tons milled (mi

Strip ratio

Site operating c

Copper conce

Grade (%)

Recovery (%)

Production (m

Sales (million

Inventory (mil

Copper cathod

Production (m

Sales (million

Molybdenum c

Grade (%)

Recovery (%)

Production (th

Sales (thousa

Per unit data (

Site operating

By-product cr

Site operating c

Off-property cos

Total operating

Non-GAAP performa

F OPERATIO

ne (75% Ow

ults in the foll

a (100% basis

illions)

llions)

cost per ton mil

ntrate

)

million pounds C

pounds Cu)

llion pounds Cu

de

million pounds)

pounds)

concentrate

)

housand pound

and pounds Mo

US$ per poun

g costs*

redits *

costs, net of by

sts

costs (C1) *

ance measure. See t

ONS

wned)

lowing table a

s)

lled (CAD) *

Cu)

u)

ds Mo)

o)

nd) *

y-product credit

the end of the news

are presented

Q1 201

2

$9

0.

8

2

2

0.

4

$2

(0

ts * $2

0

$2

s release.

d on a 100% b

15 Q4 20

21.0

7.8

2.4

9.66 $1

.225 0

81.4

28.4

25.4

6.2

-

-

.006 0

40.0

404

379

2.12 $

0.12) (

2.00 $

0.39

2.39 $

basis.

014 Q3

25.1

7.6

3.1

10.13 $

0.222

81.3

27.7

26.0

3.2

0.4

0.5

0.008

38.8

445

481

$2.43

(0.11)

$2.32

0.45

$2.77

3 2014 Q

32.5

7.8

3.0

$12.10

0.267

83.3

34.5

37.1

1.4

0.9

1.0

0.011

38.0

654

708

$2.60

(0.25)

$2.35

0.40

$2.75

Q2 2014

30.2

7.7

3.1

$11.42

0.285

85.3

37.6

38.1

3.9

0.9

0.6

0.011

41.4

667

731

$2.11

(0.35)

$1.76

0.36

$2.12

Q1 2014

25.9

7.0

2.8

$11.91

0.290

84.6

34.5

40.0

4.4

-

-

0.009

42.5

566

589

$2.19

(0.21)

$1.98

0.50

$2.48

O

Dtoo Agnim Ccqm G IUapra OUcd Tp

G

FfomrinrTpadr Tg

OPERATION

During the firsons per day. of mine equip

Average headgrades are exnegatively impmprove as we

Copper in concopper produquarter of 20molybdenum

Gibraltar’s SX

n the first quUS$2.00, comapproximatelyprices and lowreported US das a result of

Off-property cUS$0.39 per pcosts are drivdifferences be

The total opeproduced, com

GIBRALTAR

For the balanorecasted grmillion poundreduce total onitiatives undreduction effeThe mine is aprices have fapproximatelydenominated reported in US

The cumulativgoing forward

NS ANALYS

st quarter of 2Gibraltar minment to reduc

d grade for thexpected to flupacted coppeell.

ncentrate proction in the f15 was 0.4 production is

X/EW plant wa

uarter of 2015mpared to USy 19% to $9.6wer maintenadollar unit coslower head g

costs, includipound producven by salesetween produ

erating costs,mpared to US

R OUTLOOK

nce of 2015,rades and sus of copper operating cosderway includective in Janualso benefitingfallen by appy 15% since in Canadian d

S dollars.

ve effects of .

SIS

2015, Gibraltaned 21.0 millioce expenditur

e first quarterctuate betwe

er recoveries

oduction in thfirst quarter omillion pounddue to lower

as seasonally

5, site operaS$1.98 during66 in the first ance costs. Tst. The increarades, which

ng transportaced, compares volumes, anction and sale

including ofS$2.48 per po

K

copper gradubsequent imin 2015 (100

sts per poundding mine pluary 2015, ang from continuproximately 2

the beginnindollars, the w

these factors

ar milled 7.8 mon tons of mares in the face

r of 2015 was een 0.25% anin the first qu

e first quarteof 2014 of 3ds, a decreamolybdenum

y idle in in the

ting costs, ne the first quaquarter of 20The weakeninase in per pouhas offset the

ation, treatmeed to US$0.50nd therefore es volumes.

ff-property coound in the firs

des are foremproved recov0% basis). Ind over the relan modificatnd initiatives ued declines 23% since thng of 2014 a

weakening dol

s are expecte

million tons oaterial which e of temporar

0.225% comnd 0.28% for uarter of 2015

r of 2015 wa4.5 million pse of 29% o

m grade.

first quarter b

et of by-prodrter of 2014. 15 as a resulng Canadianund unit costse impact of op

ent and refin0 per pound p

off-property

osts, for the st quarter of 2

ecasted to fluveries, the Gncreases in cemainder of tions to reduwith vendorsin the price o

he beginningand with applar has a sign

ed to result in

of ore, slightlywas lower th

ry lower grade

mpared to 0.29the remainde

5. As grade im

as 28.4 millionpounds. Molybover the first

but was resta

duct credits pSite operatin

lt of a reductin dollar is alss is being driperating cost

ing charges, produced in thcost per pou

first quarter 2014.

uctuate betweGibraltar Minecopper gradethis year. T

uce waste sts to reduce cof diesel, whi of this yeaproximately 8nificant impac

n reduced op

y over the deshan recent que to the mill.

9% in the firster of 2015. Lomproves reco

n pounds, a bdenum prodquarter of 2

arted in April 2

per pound of ng cost per toon in waste m

so having a pven by the loreductions.

for the first he first quarteund produce

of 2015 wer

een 0.25% ae is expectedes and produhere are a ntripping requ

costs of suppch is a signifr. The Cana80% of Gibract on total ope

perating costs

sign capacity arters due to

t quarter of 20ower head groveries are ex

decrease of duction during2014. The de

2015.

copper prodon milled decmining, declinpositive impa

ower copper p

quarter of 2er of 2014. Ofd fluctuates

re US$2.39 p

and 0.28%. d to produceuction are exnumber of coirements, a lies and cons

ficant input coadian dollar haltar’s operaterating costs p

s at the Gibra

of 85,000 the idling

014. Head rades also xpected to

18% from g the first

ecrease in

uced was reased by

ning diesel act on our production

2015 were ff-property based on

per pound

Based on e 130-140 xpected to ost control workforce sumables. ost. Diesel has fallen ting costs per pound

altar Mine

R

F

TF TEsIfocp

A

OE

N

Onptrv Ot TrinbS F B RP

N

REVIEW OF

Florence Cop

The FlorenceFacility ("PTF

The TemporaEnvironmentasubmitted in Mn December,rom the U.S.of Florence Cconstruct andpublic comme

Aley Project

On SeptembeEnvironmenta

New Prosper

On February necessary foproceedings ihe decision wreviews into avehicle to purs

On January 1he Environme

Taseko will hosresults. The conternationally.

be archived forStates, or (404)

For further inf

Brian Bergot,

Russell HallbaPresident and

NON-GAAP P

F PROJECTS

pper Project

Copper ProF").

ry Aquifer Pral Quality (“AMarch 2015 a 2014, the C Environment

Copper's injecd operate the ent period exp

er 19, 2014 thal Assessmen

rity Project

26, 2014 thr the New Pn the form ofwas reached

a civil action. Tsue the reme

4, 2015 the Bental Assessm

st a conferenceonference call m Alternatively,

r later playback) 537-3406 inte

formation on

Vice Preside

auer d CEO

No regula

PERFORMAN

S

t

oject is curren

rotection PermADEQ”) was and issuance

Company anntal Protection

ction wells at PTF. The pu

pired in April,

e BC Environt Act, initiatin

he GovernmeProsperity prof two separat. In August 2The motion wdies that the

British Columment Certifica

e call on Thursmay be accesse, a live and archk until May 21,ernationally an

Taseko, plea

ent, Investor R

atory authority h

NCE MEASU

ntly in the fin

mit (“APP”) fosubject to aof the amen

ounced the rn Agency (EPthe site and ublic hearing 2015. The C

nmental Asseg the BC env

ent of Canadoject to proce judicial rev2014, the Co

was dismissedCompany see

bia Minister oate.

day, May 14, 2ed by dialing (8hived webcast , 2015 and can d using the pas

se see the Co

Relations – 77

has approved or

RES

nal stages of

or the PTF issn appeal. Aded APP is n

receipt of a dPA). The UIC

is the final refor the draft

Company expe

ssment Officevironmental as

da announceceed. In the iews which cmpany applie

d as the court eks.

of Environmen

2015 at 11:00 a877) 303-9079 will also be avbe accessed by

sscode 334071

mpany's web

78-373-4554,

disapproved of t

f permitting

sued in July 2As a result onow anticipatdraft Undergro

permit regulaegulatory milet permit was ects the UIC p

e (EAO) issuessessment pr

ed its decisiowake of th

challenge the ed to the Fedfelt that the j

nt granted the

a.m. Eastern Ti in Canada andvailable at tasey dialing (855)88.

bsite at www.t

toll free 1-80

the information

for the Phas

2013 by the Aof the appeated during theound Injectioates the consestone requirheld on Janupermit to be i

ed a Section rocess for the

on to not issis decision, decision and

deral Court tudicial review

e Company a

ime (8:00 a.m.d the United Stekomines.com. ) 859-2056 in

tasekomines.c

00-667-2114

in this news rele

se 1 Produc

Arizona Depaal an amendme third quarten Control (UIstruction and red by the Couary 22, 201ssued by mid

10 Order unde Aley Niobium

sue the authTaseko initia

d the processto convert bow process is t

a five-year ex

. Pacific) to distates, or (970) 3The conferencCanada and th

com or contac

ease.

ction Test

artment of ment was

er of 2015. IC) permit operation

ompany to 5 and the

d-2015.

der the BC m Project.

horizations ated legal s by which oth judicial he correct

xtension to

scuss these 315-0461 ce call will he United

ct:

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This document inmeasures may dihat these meas

understanding of a consistent basimeasure.

Total operating co

Total costs of salcosts is calculatecosts, net of by-pproduct credits peper pound is the product credits aproduced during t

Cdn$ in thousan

Cost of sales

Less Depletion an

Net change in inv

Less off-property

Treatment and r

Transportation c

Site operating co

Less by-product c

Molybdenum

Silver

Site operating co

Total copper prod

Total costs per po

Average exchang

Site operating co

Site operating co

Add off-property c

Treatment and r

Transportation c

Total operating co

Total operating c

ncludes certain iffer from those usures are commthe Company’s s. The following

osts & Site opera

les include all coed by removing nproduct credits ier pound are casum of site ope

are calculated bathe period. Thes

ds, unless otherw

nd amortization

ventory

costs:

refining costs

costs

sts

credits:

sts, net of by-pro

duced (thousand

ound produced

ge rate for the pe

osts, net of by-p

sts, net of by-pro

costs:

refining costs

costs

osts

costs (C1) (US$

non-GAAP perfoused by, and mamonly used by performance. T

g tables below p

ating costs, net o

osts absorbed innet changes in ins calculated by lculated by dividerating costs, neased on actual e measures are

wise indicated) –

oduct credits

pounds)

eriod (CAD/USD)

product credits

oduct credits

$ per pound)

ormance measury not be comparcertain investo

These measures provide a reconc

of by-product cre

to inventory, as nventory, depletioremoving by-proing the aggregat

et of by-product sales of molybdcalculated on a c

– 75% basis

)

(US$ per poun

res that do not rable to such meors, in conjunct

have been derivciliation of these

dits

well as treatmenon and amortizaoduct credits frote of the applicacredits and off-p

denum and silveconsistent basis

nd)

have a standardeasures as reportion with conveved from the Comnon-GAAP mea

nt and refining coation and off-propom the site operble costs by copproperty costs der during the pefor the periods p

dized meaning pted by, other issuntional IFRS mmpany’s financia

asures to the mo

osts and transpoperty costs from rating costs. Sitepper pounds prodivided by the co

eriod divided by presented.

Three mo Mar

2015

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and Exchange

TASEKO MINES LIMITED Management’s Discussion and Analysis

1

This management’s discussion and analysis ("MD&A") is intended to help the reader understand Taseko Mines Limited (“Taseko”, “we”, “our” or the “Company”), our operations, financial performance, and current and future business environment. This MD&A is intended to supplement and complement the unaudited condensed consolidated interim financial statements and notes thereto, prepared in accordance with IAS 34 Interim Financial Reporting for the three month period ended March 31, 2015 (collectively, the “Financial Statements”). You are encouraged to review the Financial Statements in conjunction with your review of this MD&A and the most recent Form 40-F/Annual Information Form, which is available on the Canadian Securities Administrators’ website at www.sedar.com and on the EDGAR section of the United States Securities and Exchange Commission’s (“SEC”) website at www.sec.gov. This MD&A is prepared as of May 11, 2015. All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified. Cautionary Statement on Forward-Looking Information This discussion includes certain statements that may be deemed "forward-looking statements". All statements in this discussion, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities, and events or developments that the Company expects are forward-looking statements. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. All of the forward-looking statements made in this MD&A are qualified by these cautionary statements. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by applicable law. Further information concerning risks and uncertainties associated with these forward-looking statements and our business may be found in our most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities.


2

CONTENTS

OVERVIEW ................................................................................................................................................... 3

HIGHLIGHTS ................................................................................................................................................. 3

REVIEW OF OPERATIONS .......................................................................................................................... 5

OPERATIONS ANALYSIS ............................................................................................................................ 6

GIBRALTAR OUTLOOK .............................................................................................................................. 7

REVIEW OF PROJECTS .............................................................................................................................. 7

MARKET REVIEW ........................................................................................................................................ 8

FINANCIAL PERFORMANCE ...................................................................................................................... 9

FINANCIAL CONDITION REVIEW ............................................................................................................. 13

SUMMARY OF QUARTERLY RESULTS ................................................................................................... 15

CRITICAL ACCOUNTING POLICIES AND ESTIMATES .......................................................................... 16

CHANGE IN ACCOUNTING POLICIES ..................................................................................................... 16

INTERNAL CONTROLS OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES .............................................................................................................................. 17

RELATED PARTY TRANSACTIONS ......................................................................................................... 17

NON-GAAP PERFORMANCE MEASURES .............................................................................................. 19


3

OVERVIEW

Taseko Mines Limited (“Taseko” or “Company”) is a mining company that seeks to create shareholder value by acquiring, developing, and operating large tonnage mineral deposits which, under conservative forward metal price assumptions, are potentially capable of supporting a mine for 10 years or longer. The Company’s sole operating asset is the 75% owned Gibraltar Mine, a large copper/molybdenum mine located in central British Columbia. The Gibraltar Mine has undergone a major expansion in recent years and is now one of the largest copper mines in North America. Taseko also owns the New Prosperity gold-copper, Aley niobium, Florence Copper and Harmony gold projects.

HIGHLIGHTS

Financial Data Three months ended March 31,

(Cdn$ in thousands, except for per share amounts) 2015 2014 Change

Revenues 61,835 104,996 (43,161) Earnings (loss) from mining operations before depletion and amortization* 2,329 19,439 (17,110) Earnings (loss) from mining operations (7,979) 8,787 (16,766) Net earnings (loss) (25,206) (9,148) (16,058) Per share - basic (“EPS”) (0.11) (0.05) (0.06) Adjusted net earnings (loss)*

(2,434) (2,710) 275 Per share - basic (“adjusted EPS”) * (0.01) (0.01) - EBITDA * (11,996) 8,858 (20,854)Adjusted EBITDA * 11,224 14,594 (3,370)Cash flows provided by (used for) operations (3,328) 23,301 (26,629)

Operating Data (Gibraltar - 100% basis) Three months ended March 31,

2015 2014 Change

Tons mined (millions) 21.0 25.9 (4.9)

Tons milled (millions) 7.8 7.0 0.8

Production (million pounds Cu) 28.4 34.5 (6.1)

Sales (million pounds Cu) 25.4 40.0 (14.6)

*Non-GAAP performance measure. See page 19 of this MD&A.


4

HIGHLIGHTS - CONTINUED

Earnings from mining operations before depletion and amortization were $2.3 million;

Copper production at Gibraltar was 28.4 million pounds (100% basis), and was impacted by lower head grades. Grade is steadily increasing and is expected to fluctuate between 0.25% and 0.28% for the remainder of 2015;

Site operating cost per ton milled* decreased to $9.66 in the first quarter of 2015, approximately 19% lower than the first quarter of 2014 due to an overall reduction in spending;

Total operating costs* were US$2.39 per pound produced, lower than the previous two quarters as a result of lower site operating costs and weakening Canadian dollar exchange rate;

At March 31, 2015 the Company had a cash balance of $58 million;

In May 2015, an updated mine plan and reserve for Gibraltar was announced. The new plan reduces the overall strip ratio and increases profitability of the mine;

In January 2015, when the copper price dropped to a recent low of US$2.45 per pound, the Company sold all outstanding copper put options for cash proceeds of $17.4 million. The Company’s hedging strategy is designed to mitigate a short term decline in copper price; and

In April 2015, the Company acquired copper put options for 30 million pounds over the second and third quarters of 2015 at a strike price of US$2.50 per pound. *Non-GAAP performance measure. See page 19 of this MD&A


5

REVIEW OF OPERATIONS

Gibraltar mine (75% Owned) Operating results in the following table are presented on a 100% basis. Operating Data (100% basis) Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014

Tons mined (millions) 21.0 25.1 32.5 30.2 25.9

Tons milled (millions) 7.8 7.6 7.8 7.7 7.0

Strip ratio 2.4 3.1 3.0 3.1 2.8

Site operating cost per ton milled (CAD) * $9.66 $10.13 $12.10 $11.42 $11.91

Copper concentrate

Grade (%) 0.225 0.222 0.267 0.285 0.290

Recovery (%) 81.4 81.3 83.3 85.3 84.6

Production (million pounds Cu) 28.4 27.7 34.5 37.6 34.5

Sales (million pounds Cu) 25.4 26.0 37.1 38.1 40.0

Inventory (million pounds Cu) 6.2 3.2 1.4 3.9 4.4

Copper cathode

Production (million pounds) - 0.4 0.9 0.9 -

Sales (million pounds) - 0.5 1.0 0.6 -

Molybdenum concentrate

Grade (%) 0.006 0.008 0.011 0.011 0.009

Recovery (%) 40.0 38.8 38.0 41.4 42.5

Production (thousand pounds Mo) 404 445 654 667 566

Sales (thousand pounds Mo) 379 481 708 731 589

Per unit data (US$ per pound) *

Site operating costs* $2.12 $2.43 $2.60 $2.11 $2.19

By-product credits * (0.12) (0.11) (0.25) (0.35) (0.21)

Site operating costs, net of by-product credits * $2.00 $2.32 $2.35 $1.76 $1.98

Off-property costs 0.39 0.45 0.40 0.36 0.50

Total operating costs (C1) * $2.39 $2.77 $2.75 $2.12 $2.48

*Non-GAAP performance measure. See page 19 of this MD&A


6

OPERATIONS ANALYSIS

During the first quarter of 2015, Gibraltar milled 7.8 million tons of ore, slightly over the design capacity of 85,000 tons per day. Gibraltar mined 21.0 million tons of material which was lower than recent quarters due to the idling of mine equipment to reduce expenditures in the face of temporary lower grade to the mill. Average head grade for the first quarter of 2015 was 0.225% compared to 0.29% in the first quarter of 2014. Head grades are expected to fluctuate between 0.25% and 0.28% for the remainder of 2015. Lower head grades also negatively impacted copper recoveries in the first quarter of 2015. As grade improves recoveries are expected to improve as well. Copper in concentrate production in the first quarter of 2015 was 28.4 million pounds, a decrease of 18% from copper production in the first quarter of 2014 of 34.5 million pounds. Molybdenum production during the first quarter of 2015 was 0.4 million pounds, a decrease of 29% over the first quarter of 2014. The decrease in molybdenum production is due to lower molybdenum grade. Gibraltar’s SX/EW plant was seasonally idle in in the first quarter but was restarted in April 2015. Site operating costs, net of by-product credits,* per pound (Q1 2014 compared to Q1 2015)

*Non-GAAP performance measure. See page 19 on this MD&A In the first quarter of 2015, site operating costs, net of by-product credits per pound of copper produced was US$2.00, compared to US$1.98 during the first quarter of 2014. Site operating cost per ton milled decreased by approximately 19% to $9.66 in the first quarter of 2015 as a result of a reduction in waste mining, declining diesel prices and lower maintenance costs. The weakening Canadian dollar is also having a positive impact on our reported US dollar unit cost. The increase in per pound unit costs is being driven by the lower copper production as a result of lower head grades, which has offset the impact of operating cost reductions. Off-property costs, including transportation, treatment and refining charges, for the first quarter of 2015 were US$0.39 per pound produced, compared to US$0.50 per pound produced in the first quarter of 2014. Off-property costs are driven by sales volumes, and therefore off-property cost per pound produced fluctuates based on differences between production and sales volumes.


7

The total operating costs, including off-property costs, for the first quarter of 2015 were US$2.39 per pound produced, compared to US$2.48 per pound in the first quarter of 2014.

GIBRALTAR OUTLOOK

For the balance of 2015, copper grades are forecasted to fluctuate between 0.25% and 0.28%. Based on forecasted grades and subsequent improved recoveries, the Gibraltar Mine is expected to produce 130-140 million pounds of copper in 2015 (100% basis). Increases in copper grades and production are expected to reduce total operating costs per pound over the remainder of this year. There are a number of cost control initiatives underway including mine plan modifications to reduce waste stripping requirements, a workforce reduction effective in January 2015, and initiatives with vendors to reduce costs of supplies and consumables. The mine is also benefiting from continued declines in the price of diesel, which is a significant input cost. Diesel prices have fallen by approximately 23% since the beginning of this year. The Canadian dollar has fallen approximately 15% since the beginning of 2014 and with approximately 80% of Gibraltar’s operating costs denominated in Canadian dollars, the weakening dollar has a significant impact on total operating costs per pound reported in US dollars. The cumulative effects of these factors are expected to result in reduced operating costs at the Gibraltar Mine going forward.

REVIEW OF PROJECTS

Florence Copper project

The Florence Copper Project is currently in the final stages of permitting for the Phase 1 Production Test Facility ("PTF"). The Temporary Aquifer Protection Permit (“APP”) for the PTF issued in July 2013 by the Arizona Department of Environmental Quality (“ADEQ”) was subject to an appeal. As a result of the appeal an amendment was submitted in March 2015 and issuance of the amended APP is now anticipated during the third quarter of 2015. In December, 2014, the Company announced the receipt of a draft Underground Injection Control (UIC) permit from the U.S. Environmental Protection Agency (EPA). The UIC permit regulates the construction and operation of Florence Copper's injection wells at the site and is the final regulatory milestone required by the Company to construct and operate the PTF. The public hearing for the draft permit was held on January 22, 2015 and the public comment period expired in April, 2015. The Company expects the UIC permit to be issued by mid-2015.

Aley project

On September 19, 2014 the BC Environmental Assessment Office (EAO) issued a Section 10 Order under the BC Environmental Assessment Act, initiating the BC environmental assessment process for the Aley Niobium Project.

New Prosperity project

On February 26, 2014 the Government of Canada announced its decision to not issue the authorizations necessary for the New Prosperity project to proceed. In the wake of this decision, Taseko initiated legal proceedings in the form of two separate judicial reviews which challenge the decision and the process by which the decision was reached. In August 2014, the Company applied to the Federal Court to convert both judicial reviews into a civil action. The motion was dismissed as the court felt that the judicial review process is the correct vehicle to pursue the remedies that the Company seeks.


8

On January 14, 2015 the British Columbia Minister of Environment granted the Company a five-year extension to the Environmental Assessment Certificate.

MARKET REVIEW

Copper Molybdenum Canadian/US Dollar Exchange

Prices (USD per pound for Commodities) (Source: Bloomberg) While the US dollar price of copper slipped over the course of the first quarter 2015, there was a recovery from the lows experienced in late January. While the US dollar price of copper declined to US$2.45 in January 2015 and was US$2.74 at the end of the first quarter, 4% lower than the end of 2014, the Canadian dollar price increased by 5% to C$3.48 per pound, due to a weakened Canadian dollar. At the end of March 2015, heavy rains in northern Chile caused severe flooding in the region and shut down a number of copper mines. For most of the impacted mines the shutdowns were short-term, but a number of the mines sustained a significant amount of damage and remained idled into April 2015. Continued weakness in the iron ore and steel sectors put downward pressure on molybdenum pricing in the first quarter although the declining Canadian dollar partially offset the drop. At the end of the quarter the price was C$10.30 per pound, down approximately 4% since the end of 2014. In the first quarter of 2015, the Canadian dollar sank to its lowest level in over six years. In March, the Canadian dollar hit a low of 0.78 to the US dollar before slightly rebounding to 0.79 at the end of the quarter. A significant factor that is driving the decline in the Canadian dollar is the price of oil which has fallen by approximately 50% in the last year. Fluctuations in the Canadian dollar/US dollar exchange rate can have a significant effect on our operating results and the net operating costs of production is reported in US dollars per pound.


9

FINANCIAL PERFORMANCE

Earnings

Earnings from mining operations decreased to a loss of $8.0 million in the first quarter of 2015 from earnings of $8.8 million in the first quarter of 2014, primarily due to decreased copper production driven by lower grade, offset by lower production costs. Revenues decreased by 41% from the first quarter of 2014 primarily due to decreased sales volumes of copper and molybdenum at the Gibraltar mine. Although the average realized US dollar copper price declined in the first quarter of 2015, the impact of this was largely offset by a weakening Canadian dollar. The Company realized a net loss of $25.2 million ($0.11 per share), compared to a net loss of $9.1 million ($0.05 per share) in 2014. Included in net earnings (loss) are a number of items that management believes require adjustment in order to better measure the underlying performance of the business. These items are in the table below:

Three months ended

March 31, (Cdn$ in thousands) 2015 2014 Change

Net (loss) earnings (25,206) (9,148) (16,058) Unrealized loss (gain) on derivatives 1,751 (2,744) 4,495 Unrealized foreign exchange (gain) loss 21,469 8,480 12,989

Estimated tax effect of adjustments (448) 702 (1,151)

Adjusted net earnings (loss) * (2,434) (2,710) 275

*Non-GAAP performance measure. See page 19 of this MD&A Unrealized gains/losses on derivatives can vary materially each period and have a significant impact on earnings. These amounts represent the change in fair value of copper put options during the period. The Canadian dollar weakened during the first quarter of 2015 which resulted in an unrealized foreign exchange loss of $22.0 million. The unrealized foreign exchange (gain) loss and the unrealized gains and losses on the derivative instruments are removed from the adjusted net earnings (loss) measure as they are not indicative of a realized economic gain/loss or the underlying performance of the business in the period.


10

Revenues

Three months ended

March 31,

(Cdn$ in thousands) 2015 2014 Change

Copper in concentrate 58,663 98,894 (40,231)

Copper cathode (130) - (130)

Total copper sales 58,533 98,894 (40,361)

Molybdenum concentrate 2,598 5,090 (2,492)

Silver contained in copper concentrate 704 1,012 (308)

61,835 104,996 (43,161)

(thousands of pounds, unless otherwise noted)

Copper in concentrate * 18,375 28,914 (10,539)

Copper cathode - - -

Total copper sales 18,375 28,914 (10,539)

Average realized copper price (US$ per pound) 2.57 3.10 (0.53)

Average LME copper price (US$ per pound) 2.63 3.19 (0.56)

* This amount includes a net smelter payable deduction of approximately 3.5% to derive net pounds of copper sold.

Copper revenues for the first quarter of 2015 decreased by $40.2 million, or 41%, over the first quarter of 2014, primarily due to a decrease in copper sales volumes with a lower US dollar realized copper price, partially offset by the strengthening US dollar. As copper sales are denominated in US dollars, the strengthening of the US dollar translates into increased Canadian dollar revenues. Comparing the average foreign exchange of the first quarters of 2014 and 2015 the US dollar strengthened by 12% in 2015, partially offsetting the weakening average realized copper price, which declined by 17% over the same period. The Company’s average realized copper price for the first quarter of 2015 was US$2.57 per pound, compared to US$3.10 for the first quarter of 2014. London Metals Exchange (LME) copper prices averaged US$2.63 in the first quarter of 2015. The Company’s average realized copper price is lower than the LME’s average due to a portion of the Company’s receivables being revalued in a decreasing copper price environment. Molybdenum revenues for the first quarter of 2015 totaled $2.6 million, down from $5.1 million in the corresponding last year’s quarter. The decrease in revenues was due to a decrease in sales volumes as a result of lower production driven by grade, and the declining molybdenum price.


11

Cost of sales

Three months ended

March 31,(Cdn$ in thousands) 2015 2014 Change

Direct mining and processing costs 56,180 62,720 (6,540)

Treatment and refining costs 6,770 7,702 (932)

Transportation costs 3,617 6,513 (2,896)

Changes in inventories of finished goods and WIP (7,061) 8,622 (15,683)

Production costs 59,506 85,557 (26,051)

Depletion and amortization 10,308 10,652 (344)

Cost of sales 69,814 96,209 (26,395)

Site operating costs per ton milled* $9.66 $11.91 ($2.25)*Non-GAAP performance measure. See page 19 of this MD&A Direct mining and processing costs decreased by 10% compared to the first quarter of 2014 due to lower diesel prices, lower tons mined and decreased maintenance costs. Additionally, a grinding media recycling program is resulting in declining milling costs. Overall tons milled increased, cost per ton milled decreased 19% from the first quarter of 2014. Total treatment and refining costs and transportation have decreased over the first quarter of 2014, mostly due to the 36% decrease in copper sales volumes offset by the strengthening of the US dollar. Depletion and amortization for the first quarter of 2015 was $10.3 million, a 2% decrease from the prior years quarter. Other expenses (income)

Three months ended

March 31,


General and administrative 4,473 5,074 (601)

Exploration and evaluation 264 1,748 (1,484)

Other expense (income) (271) (1,085) 814 General and administrative costs are relatively constant quarter-over-quarter as the Company is focusing on controlling general and administrative expenditures. Exploration and evaluation costs represent all costs associated with the New Prosperity project. Project development costs for the Aley and Florence Copper projects have been capitalized.

Gain on derivatives

During the first quarter of 2015, the Company received $2.3 million on the settlement of the January copper put options that settled in-the-money and proceeds of $15.2 million from the sale of the copper put options that were scheduled to mature in February to June, 2015. The Company recognized a realized gain of $13.5 million on these settlements in the first quarter of 2015. In the first quarter of 2014 the Company recognized a $2.7 million unrealized gain on the copper derivative instruments due to increases in the fair value of the put options on the outstanding contracts. The Company’s hedging strategy is designed to mitigate short term declines in copper


12

prices. In April 2015, the Company acquired copper put options for 30 million pounds over the second and third quarters of 2015 at a strike price of US$2.50 per pound.

Finance income & expenses

Finance expenses for the first quarter of 2015 decreased by $0.3 million compared to the first quarter of 2014 due to lower equipment lease liabilities. Finance income is primarily comprised of income earned on reclamation deposits. For the first quarter of 2015, finance income is lower than the prior year’s quarter due to lower interest earned on the reclamation deposits.

Income tax

Three months ended

March 31,(Cdn$ in thousands) 2015 2014

Current expense (recovery) - 234 (234)

Deferred expense (recovery) (3,035) 103 (3,138)

(3,035) 337 (3,372)

Effective tax rate 10.7% 1.9% 8.8%

Canadian statutory rate 26.0% 26.0% -

BC Mineral tax rate 9.62% 9.62% - The Company did not have a current tax expense or recovery in the quarter. The deferred income tax recovery for the quarter was mainly driven by an increase to certain deferred income tax assets such as non-capital losses and the temporary difference recognized on the reclamation obligation, offset by an increase in temporary differences on property, plant and equipment. The effective tax rate for the first quarter of 2015 was 10.7%, which is lower than the statutory rate of 35.6%. The difference is a result of permanent differences related to non-deductible share-based compensation and expenditures incurred that are not deductible for BC Mineral tax, in addition to an increase in items not recognized for tax, such as unrealized foreign exchange losses on debt and other items.


13

FINANCIAL CONDITION REVIEW

Balance sheet review

As at March 31, As at December 31


Cash and equivalents 58,260 53,299 4,961

Other current assets 73,568 83,332 (9,764)

Non-current assets 820,456 793,659 26,797

Other assets 63,595 62,252 1,343

Total assets 1,015,879 992,542 23,337

Current liabilities 55,588 66,444 (10,856)

Long-term debt 325,142 293,506 31,636

Other liabilities 232,541 210,317 22,224

Total liabilities 613,271 570,267 43,004

Equity 402,608 422,275 (19,667)

Working capital 76,240 70,187 6,053

Net debt 278,305 260,364 17,941

Total common shares outstanding (millions) 221.8 221.8 - The Company’s asset base is comprised principally of non-current assets, including property, plant and equipment, reflecting the capital intensive nature of the mining business. The current assets include cash, accounts receivable, other financial assets and inventories (supplies and production inventories), along with prepaid expenses and deposits. Production inventories, accounts receivable and cash balances fluctuate in relation to shipping and cash settlement schedules. Total liabilities increased from $570.3 million at December 31, 2014 to $616.3 million as at March 31, 2015. Current liabilities decreased by $10.9 million, primarily due to the settlement of the copper and molybdenum sales provisionally invoiced during a period of higher prices along with a reduction in contractor expenses. Long-term debt increased by $31.6 million mainly represented by the Company’s US dollar denominated debt being revalued. Other long-term liabilities increased by $22.2 million mainly due to a $24 million increase in the provision for the environmental rehabilitation (PER) driven by changes in inflation and discounts rates. The Bank of Canada long-term benchmark bond rate used as a proxy for long-term discount rates decreased to 1.99% at March 31, 2015 from the 2.33% level at December 31, 2014. Given the long timeframe over which environmental rehabilitation expenditures are expected to be incurred (over 100 years), the carrying value of the provision and asset are very sensitive to changes in discount rates. As at May 11, 2015, there were 221,808,638 common shares outstanding. In addition, there were 9,422,000 director and employee stock options outstanding at May 11, 2015. More information on these instruments and the terms of their exercise is set out in note 21 of our 2014 annual financial statements.


14

Liquidity, cash flow and capital resources

At March 31, 2015, the Company had cash and equivalents of $58.3 million, a $5 million increase over the $53.3 million reported at December 31, 2014. The Company maintained a strategy of retaining significant liquidity to fund operations and to reflect the capital intensive nature of the business. Cash used for operations was $3.4 million for the first quarter of 2015 compared with $23.3 million cash provided for the first quarter of 2014. Operating cash flow decreased due to lower production resulting in lower sales accentuated by a declining copper price market. These factors were partially offset by lower operating costs and a strengthening US dollar. Changes in non-cash working capital items resulted in cash used of $1.0 million compared with $7.1 million provided in the first quarter of 2014, mostly due to the higher levels of copper inventories and higher accounts receivable balances and lower accounts payable, offset by a reduction in tax receivables. During the first quarter of 2015, rock slides caused rail disruptions which reduced the Company’s ability to transport copper concentrate to the port, that lead to a higher inventory balance at quarter end. Cash provided by investing activities for the first quarter of 2015 was $11.7 million compared to $13.7 million used in the prior period’s quarter. Cash flow provided by investing activities in the first quarter of 2015 primarily related to the sale of copper put options which resulted in an inflow of $17.4 million, partially offset by $5.8 million property, plant and equipment expenditure. Included in property plant and equipment expenditure was $2.5 million of capitalized stripping, $0.5 million of capital expenditures at Gibraltar, $0.3 million for the Aley project and $2.2 million for the Florence Copper Project. The prior period’s quarter major components were an outflow of $5.7 million invested in property, plant and equipment and $8.1 million invested in financial assets. Cash used for financing activities for the first quarter of 2015 was $5.0 million, primarily due to debt repayment and interest paid. Cash used for financing activities for the prior period’s quarter was $6.7 million, debt repayment and interest paid were slightly higher for the first quarter of 2014 offset by $0.4 million received for share issuances. Future changes in copper and molybdenum market prices could impact the timing and amount of cash available for future investment in capital projects and/or other uses of capital. To partially mitigate these risks, copper put options are entered into for a portion of our share of Gibraltar copper production. In addition to operating cash flows generated by the Gibraltar mine, alternate sources of funding for future capital or other liquidity needs may include, strategic partnerships, such as the Gibraltar joint venture and the Franco-Nevada gold stream transaction for the New Prosperity project, and debt or equity financings. These alternatives are regularly evaluated to determine the optimal mix of capital resources to address capital needs and to minimize the weighted average cost of capital.

Hedging strategy

The Company’s hedging strategy is to secure a minimum price for a portion of copper production using put options that are either purchased outright or funded by the sale of call options that are significantly out of the money. The amount and duration of the hedge position is based on an assessment of business-specific risk elements combined with the copper pricing outlook. Copper price and quantity exposure are reviewed at least quarterly to ensure that adequate revenue protection is in place. Hedge positions are typically extended adding incremental quarters at established put strike prices to provide the necessary price protection. Considerations on the cost of the hedging program include an assessment of Gibraltar’s estimated production costs, anticipated copper prices and the Company’s capital requirements during the relevant period.


15

During the three month period ended March 31, 2015, the Company received $2.2 million on the settlement of the January copper put options that settled in-the-money and proceeds of $15.1 million from the sale of the copper put options that were scheduled to mature in February to June, 2015. The Company recognized a net gain of $11.8 million on these settlements. The Company’s hedging strategy is designed to mitigate short term declines in copper prices.

In April 2015, the Company acquired copper put options for 30 million pounds over the second and third quarters of 2015 at a strike price of US$2.50 per pound.

Commitments and contingencies

(a) Commitments At March 31, 2015, capital commitments totaled $1.0 million on a 100% basis, of which the Company’s share was $0.9 million. At March 31, 2015, the Company’s share of operating commitments totaled $10.1 million. (b) Contingencies The Company has guaranteed 100% of certain capital lease and equipment loans entered into by the Gibraltar joint venture in which it holds a 75% interest. As at March 31, 2015, this debt totaled $41.0 million on a 100% basis. The Company has also guaranteed its share of additional capital lease and equipment loans totaling $19.8 million on a 75% basis. The Company is party to various contracts in respect of its operations, of which certain contracts were terminated by the Company during the prior year. The Company accrues its best estimate of the final settlement amount to be paid in respect of terminated contracts, however the actual settlement amount could differ when negotiations are finalized and any changes in cost estimates will be reflected in future periods.

SUMMARY OF QUARTERLY RESULTS

2015 2014 2013

(Cdn$ in thousands, except per share amounts)

Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2

Revenues 61,835 65,179 93,714 107,307 104,996 94,916 66,799 68,191

Net earnings (loss) (25,206) (26,427) (20,937) 2,628 (9,148) (9,756) 120 (14,721)

Basic EPS (0.11) (0.13) (0.11) 0.01 (0.05) (0.05) 0.00 (0.08)

Adjusted net earnings (loss) * (2,434) (20,983) (11,221) (2,172) (2,710) 834 (1,851) (10,177)

Adjusted basic EPS * (0.01) (0.10) (0.06) (0.01) (0.01) (0.00) (0.01) (0.05)

EBITDA * (11,996) (13,397) (7,148) 23,336 8,858 11,869 15,173 (2,171)

Adjusted EBITDA * 11,224 (8,355) 2,385 19,217 14,594 17,716 12,545 3,888

(US$ per pound, except where indicated)

Realized copper price * 2.57 2.82 3.07 3.16 3.10 3.18 3.33 3.52

Total operating costs * 2.39 2.77 2.75 2.12 2.48 2.14 2.21 2.34

Copper sales (million pounds) 19.1 19.6 26.0 28.4 28.9 27.0 18.9 20.1 *Non-GAAP performance measure. See page 19 of this MD&A


16

Financial results for the last eight quarters reflect: volatile copper prices that impact realized sale prices; variability in the quarterly sales volumes due to timing of shipments which impacts revenue recognition; and a trend of increasing absolute production costs caused by increasing production volumes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's significant accounting policies are presented in note 2.5 of the 2014 annual financial statements. The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

In the process of applying the Company’s accounting policies, significant areas where judgment is required include the determination of a joint arrangement and recovery of other receivables.

Other significant areas of estimation include reserve and resource estimation and asset valuations; finished and in-process inventory quantities; plant and equipment lives; tax provisions; provisions for environmental rehabilitation; valuation of financial instruments and derivatives; deferred stripping costs and share-based compensation. Key estimates and assumptions made by management with respect to these areas have been disclosed in the notes to these consolidated financial statements as appropriate.

The accuracy of reserve and resource estimates is a function of the quantity and quality of available data and the assumptions made and judgment used in the engineering and geological interpretation, and may be subject to revision based on various factors. Changes in reserve and resource estimates may impact the carrying value of property, plant and equipment; the calculation of depreciation expense; the capitalization of stripping costs incurred during production; and the timing of cash flows related to the provision for environmental rehabilitation.

Changes in forecast prices of commodities, exchange rates, production costs and recovery rates may change the economic status of reserves and resources. Forecast prices of commodities, exchange rates, production costs and recovery rates, and discount rates assumptions, either individually or collectively, may impact the carrying value of derivative financial instruments, inventories, property, plant and equipment, and intangibles, as well as the measurement of impairment charges or reversals.

CHANGE IN ACCOUNTING POLICIES

IFRS 2, Share-based Payments (effective for annual periods beginning on or after July 1, 2014) clarifies the definition of a vesting condition and separately defines performance and service conditions. Based on the Company’s analysis, this clarification did not have an impact on the consolidated financial statements for the current or prior periods presented.

IFRS 3, Business Combinations (effective for annual periods beginning on or after July 1, 2014) requires that an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as a financial liability or as equity on the basis of the definitions of IAS 32. Additionally, it clarifies that IFRS 3 does not apply to the formation of any joint arrangement and that the scope exemption only applies in the financial statements of the joint arrangement itself. Based on the Company’s analysis, this standard did not have an impact on the consolidated financial statements for the current or prior periods presented.

IAS 24 Related Party Disclosures (effective for annual periods beginning on or after July 1, 2014) requires a reporting entity to include as a related party, an entity that provides key management personnel services to the


17

reporting entity or to the parent of the reporting entity. Based on the Company’s analysis, this standard did not have an impact on the consolidated financial statements for the current or prior periods presented. INTERNAL CONTROLS OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure controls and procedures. The Company’s internal control system over financial reporting is designed to provide reasonable assurance to management and the Board of Directors regarding the preparation and fair presentation of published financial statements. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions

and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or

disposition of the Company’s assets that could have a material effect on the financial statements. The Company’s internal control system over disclosure controls and procedures is designed to provide reasonable assurance that material information relating to the Company is made known to management and disclosed to others and information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by us under securities legislation is recorded, processed, summarized and reported within the time periods specified in the securities legislation. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined effective can provide only reasonable assurance with respect to financial reporting and disclosure.

There have been no changes in our internal controls over financial reporting and disclosure controls and procedures during the period ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting and disclosure. RELATED PARTY TRANSACTIONS Key management personnel Key management personnel include the members of the Board of Directors and executive officers of the Company. The Company contributes to a post-employment defined contribution pension plan on the behalf of certain key management personnel. This retirement compensation arrangement (RCA Trust) was established to provide benefits to certain executive officers on or after retirement in recognition of their long service. Upon retirement, the participant is entitled to the distribution of the accumulated value of the contributions under the RCA Trust. Obligations for contributions to the defined contribution pension plan are recognized as compensation expense in profit or loss in the periods during which services are rendered by the executive officers.


18

Certain executive officers are entitled to termination and change in control benefits. In the event of termination without cause, other than a change in control, these executive officers are entitled to an amount ranging from 9-month to 12-month’s salary. In the event of a change in control, if a termination without cause or a resignation occurs within 12 months following the change of control, these executive officers are entitled to receive, among other things, an amount ranging from 24-month to 32-months’ salary and accrued bonus, and all stock options held by these individuals will fully vest. During the first quarter 2015, the Company incurred total compensation expenses of $2.4 million for its key management personnel compared to $3.2 million in the first quarter 2014. 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, 2015, the Company did not issue DSUs to directors (2014: 66,079). The total number of deferred and restricted share units outstanding at March 31, 2015 was 99,371 units (2014: 199,412). Income of $33 has been recognized for the three month period ended March 31, 2015 (2014: $155). Other related parties Hunter Dickinson Services Inc. ("HDSI") is a private company which has certain directors in common with the Company. HDSI carries out geological, engineering, corporate development, administrative, financial management, investor relations, and other management activities for the Company. The terms and conditions of the transactions are similar to transactions conducted on an arm’s length basis. During the first quarter of 2015, the Company incurred total costs of $1.2 million (Q1 2014: $0.8 million) in transactions with HDSI. Of these, $0.4 million (Q1 2014: $0.4 million) related to legal, tax, exploration, and business development services, $0.1 million related to reimbursements of office rent costs (Q1 2014: $0.1 million), and $ 0.7 million (Q1 2014: $0.3 million) related to compensation paid for Taseko directors and the Chief Executive Officer, who are also directors of HDSI. The Gibraltar joint venture pays a management fee to Taseko for services rendered as operator of the Gibraltar mine. The first quarter of 2015, the Company earned $0.3 million of other operating income for these services rendered, which is comparable to the amounts earned in 2014.


19

NON-GAAP PERFORMANCE MEASURES This document includes certain non-GAAP performance measures that do not have a standardized meaning prescribed by IFRS. These measures may differ from those used by, and may not be comparable to such measures as reported by, other issuers. The Company believes that these measures are commonly used by certain investors, in conjunction with conventional IFRS measures, to enhance their understanding of the Company’s performance. These measures have been derived from the Company’s financial statements and applied on a consistent basis. The following tables below provide a reconciliation of these non-GAAP measures to the most directly comparable IFRS measure. Total operating costs & Site operating costs, net of by-product credits Total costs of sales include all costs absorbed into inventory, as well as treatment and refining costs and transportation costs. Site operating costs is calculated by removing net changes in inventory, depletion and amortization and off-property costs from cost of sales. Site operating costs, net of by-product credits is calculated by removing by-product credits from the site operating costs. Site operating costs, net of by-product credits per pound are calculated by dividing the aggregate of the applicable costs by copper pounds produced. Total operating costs per pound is the sum of site operating costs, net of by-product credits and off-property costs divided by the copper pounds produced. By-product credits are calculated based on actual sales of molybdenum and silver during the period divided by the total pounds of copper produced during the period. These measures are calculated on a consistent basis for the periods presented.

Three months ended

March 31, (Cdn$ in thousands, unless otherwise indicated) – 75% basis 2015 2014

Cost of sales 69,814 96,209

Less Depletion and amortization (10,308) (10,652)

Net change in inventory 7,061 (8,622)

Less off-property costs:

Treatment and refining costs (6,770) (7,702)

Transportation costs (3,617) (6,513)

Site operating costs 56,180 62,720

Less by-product credits:

Molybdenum (2,598) (5,090)

Silver (704) (1,012)

Site operating costs, net of by-product credits 52,878 56,618

Total copper produced (thousand pounds) 21,273 25,906

Total costs per pound produced 2.49 2.19

Average exchange rate for the period (CAD/USD) 1.24 1.10Site operating costs, net of by-product credits (US$ per pound) 2.00 1.98Site operating costs, net of by-product credits 52,878 56,618

Add off-property costs:

Treatment and refining costs 6,770 7,702

Transportation costs 3,617 6,513

Total operating costs 63,265 70,833

Total operating costs (C1) (US$ per pound) 2.39 2.48


20

Adjusted net earnings

Adjusted net earnings remove the effect of the following transactions from net earnings as reported under IFRS:

Unrealized gains/losses on derivative instruments; Write down of marketable securities; Unrealized foreign currency gains/losses; and Non-recurring transactions, including non-recurring tax adjustments.

Management believes these transactions do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results. Furthermore, unrealized gains/losses on derivative instruments, changes in the fair value of financial instruments, and unrealized foreign currency gains/losses are not necessarily reflective of the underlying operating results for the reporting periods presented.

Three months ended March 31,

($ in thousands, except per share amounts) 2015 2014

Net earnings (loss) (25,206) (9,148) Unrealized loss (gain) on derivatives 1,751 (2,744) Unrealized foreign exchange (gain) loss 21,469 8,480 Estimated tax effect of adjustments (448) 702

Adjusted net earnings (loss) (2,434) (2,710)

Adjusted EPS (0.01) (0.01)

EBITDA and adjusted EBITDA

EBITDA represents net earnings before interest, income taxes, and depreciation. EBITDA is presented because it is an important supplemental measure of our performance and is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry, many of which present EBITDA when reporting their results. Issuers of “high yield” securities also present EBITDA because investors, analysts and rating agencies consider it useful in measuring the ability of those issuers to meet debt service obligations. The Company believes EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense goes down as deductible interest expense goes up; depreciation is a non-cash charge. Adjusted EBITDA is presented as a further supplemental measure of the Company’s performance and ability to service debt. Adjusted EBITDA is prepared by adjusting EBITDA to eliminate the impact of a number of items that are not considered indicative of ongoing operating performance. Adjusted EBITDA is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that are not likely to recur or are not indicative of the Company’s future operating performance consisting of:

Unrealized gains/losses on derivative instruments; Write down of marketable securities; Unrealized foreign exchange (gain) loss; and Non-recurring transactions.


21

While some of the adjustments are recurring, gains/losses on the sale of marketable securities do not reflect the underlying performance of the Company’s core mining business and are not necessarily indicative of future results. Furthermore, unrealized gains/losses on derivative instruments, foreign currency translation gains/losses and changes in the fair value of financial instruments are not necessarily reflective of the underlying operating results for the reporting periods presented.

Three months ended

March 31, ($ in thousands, except per share amounts) 2015 2014

Net earnings (loss) (25,206) (9,148)

Add:

Depletion and Amortization 10,334 10,735

Amortization of stock-based compensation 206 2,083

Interest expense 6,362 6,647

Interest income (657) (1,122)

Income tax expense (recovery) (3,035) (337)

EBITDA (11,996) 8,858

Adjustments:

Unrealized (gain)/loss on derivative instruments 1,751 (2,744)

Unrealized foreign exchange (gain) loss 21,469 8,480

Adjusted EBITDA 11,224 14,594


22

Earnings from mining operations before depletion and amortization

Earnings from mining operations before depletion and amortization is earnings from mining operations with depletion and amortization added back. The Company discloses this measure, which has been derived from our financial statements and applied on a consistent basis, to provide assistance in understanding the results of the Company’s operations and financial position and it is meant to provide further information about the financial results to investors. Three months ended March 31,

(Cdn$ in thousands, except per share amounts) 2015 2014

Earnings (loss) from mining operations (7,979) 8,787

Add:

Depletion and amortization 10,308 10,652Earnings from mining operations before depletion and amortization 2,329 19,439

Site operating costs per ton milled


(Cdn$ in thousands, except per share amounts) 2015 2014Direct mining and processing costs (included in cost of sales) 56,180 62,720

Tons milled (thousands) (75% basis) 5,813 5,266

Site operating costs per ton milled $9.66 $11.91

TASEKO MINES LIMITEDCondensed Consolidated Interim Statements of Comprehensive Income (Loss)(Cdn$ in thousands, except share and per share amounts)

(Unaudited)

2015 2014

Note

Revenues 3 61,835 104,996 Cost of sales 4 Production costs (59,506) (85,557) Depletion and amortization (10,308) (10,652) Earnings (loss) from mining operations (7,979) 8,787

General and administrative (4,743) (5,074) Exploration and evaluation (264) (1,748) Gain on derivatives 5 11,785 1,082 Other income (expenses) 271 1,085 Income (loss) before financing costs and income taxes (930) 4,132

Finance expenses 6 (6,362) (6,647) Finance income 657 1,122 Foreign exchange loss (21,606) (8,092) Income (loss) before income taxes (28,241) (9,485)

Income tax recovery (expense) 7 3,035 337 Net income (loss) for the period (25,206) (9,148)

Other comprehensive income (loss), net of tax:222 3,509

Foreign currency translation reserve 5,078 - Total other comprehensive income (loss) for the period 5,300 3,509

Total comprehensive income (loss) for the period (19,906) (5,639)

Earnings (loss) per shareBasic (0.11) (0.05) Diluted (0.11) (0.05)

Weighted average shares outstanding (thousands)Basic 221,809 193,708 Diluted 221,809 193,708

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

Unrealized gain (loss) on available-for-sale financial assets

Three months ended March 31

TASEKO MINES LIMITEDCondensed Consolidated Interim Statements of Cash Flows(Cdn$ in thousands)

(Unaudited)

2015 2014

Note

Operating activitiesNet income (loss) for the period (25,206) (9,148)

Adjustments for:Depletion and amortization 10,334 10,735 Income tax expense (recovery) 7 (3,035) (337) Share-based compensation expense 206 2,083 Gain on derivatives 5 (11,785) (1,082) Finance expenses (income) 5,704 5,525 Unrealized foreign exchange loss 21,469 8,480 Other operating activities (4) (18)

Net change in non-cash working capital 14 (1,011) 7,063 Cash provided by (used for) operating activities (3,328) 23,301

Investing activitiesInvestment in property, plant and equipment (5,870) (5,644) Proceeds from the sale/settlement of derivatives 5 17,362 - Investment in financial assets - (8,109) Interest received 178 92

Cash provided by (used for) investing activities 11,670 (13,661)

Financing activitiesRepayment of debt (4,368) (6,142) Interest paid (654) (1,006) Common shares issued for cash - 480

Cash provided by (used for) financing activities (5,022) (6,668)

Effect of exchange rate changes on cash and equivalents 1,641 863 Increase (decrease) in cash and equivalents 4,961 3,835 Cash and equivalents, beginning of year 53,299 82,865 Cash and equivalents, end of period 58,260 86,700


Three months ended March 31

TASEKO MINES LIMITEDCondensed Consolidated Interim Balance Sheets(Cdn$ in thousands)

(Unaudited)

March 31, December 31,2015 2014

Note

ASSETSCurrent assets Cash and equivalents 58,260 53,299 Accounts receivable 18,332 12,618 Other financial assets 8 977 6,554 Inventories 9 44,673 36,094 Current tax receivable 9,072 27,153 Prepaids 514 913

131,828 136,631

Other financial assets 8 42,388 41,484Property, plant and equipment 10 820,456 793,659Other receivables 15,985 15,985Goodwill 5,222 4,783

1,015,879 992,542

LIABILITIESCurrent liabilities Accounts payable and accrued liabilities 35,167 42,541 Current portion of long-term debt 11 11,423 20,157 Interest payable 8,998 3,746

55,588 66,444

Long-term debt 11 325,142 293,506Other financial liabilities 78 110Provision for environmental rehabilitation ("PER") 135,100 110,136Deferred tax liabilities 97,363 100,071

613,271 570,267

EQUITYShare capital 12 417,944 417,944Contributed surplus 41,129 40,890

Accumulated other comprehensive income (loss) ("AOCI") 12,133 6,833Retained earnings (deficit) (68,598) (43,392)

402,608 422,2751,015,879 992,542


TASEKO MINES LIMITEDCondensed Consolidated Interim Statements of Changes in Equity(Cdn$ in thousands)

(Unaudited)

Share Contributed Retained

capital surplus AOCI earnings (deficit)

Total

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

Balance at January 1, 2015 417,944 40,890 6,833 (43,392) 422,275

Share-based compensation - 239 - - 239 Total comprehensive income (loss) for the period

- - 5,300 (25,206) (19,906)

Balance at March 31, 2015 417,944 41,129 12,133 (68,598) 402,608


TASEKO MINES LIMITED Notes to Condensed Consolidated Interim Financial Statements (Cdn$ in thousands - unaudited)

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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 three month period ended March 31, 2015 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, Canada and the state of Arizona, USA. 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, 2014 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 Audit and Risk Committee of the Board on May 11, 2015.

(b) Changes in accounting policies and disclosures

IFRS 2, Share-based Payments (effective for annual periods beginning on or after July 1, 2014) clarifies the definition of a vesting condition and separately defines performance and service conditions. Based on the Company’s analysis, this clarification did not have an impact on the consolidated financial statements for the current or prior periods presented.

IFRS 3, Business Combinations (effective for annual periods beginning on or after July 1, 2014) requires that an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as a financial liability or as equity on the basis of the definitions of IAS 32. Additionally, it clarifies that IFRS 3 does not apply to the formation of any joint arrangement and that the scope exemption only applies in the financial statements of the joint arrangement itself. Based on the Company’s analysis, this standard did not have an impact on the consolidated financial statements for the current or prior periods presented.

IAS 24 Related Party Disclosures (effective for annual periods beginning on or after July 1, 2014) requires a reporting entity to include as a related party, an entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity. Based on the Company’s analysis, this standard did not have an impact on the consolidated financial statements for the current or prior periods presented.


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3. REVENUE


2015 2014

Copper concentrate 58,663 98,894

Copper cathode (130) -

Total copper sales 58,533 98,894

Molybdenum concentrate 2,598 5,090

Silver contained in copper concentrate 704 1,012

61,835 104,996

4. COST OF SALES


2015 2014

Direct mining costs 56,180 62,720

Treatment and refining costs 6,770 7,702

Transportation costs 3,617 6,513

Changes in inventories of finished goods and work in process (7,061) 8,622

Production costs 59,506 85,557

Depletion and amortization 10,308 10,652

Cost of sales 69,814 96,209

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. DERIVATIVE INSTRUMENTS


2015 2014

Realized gain (loss) on copper put options 13,536 (1,662)

Unrealized gain (loss) on copper put options (1,751) 2,744

11,785 1,082 During the first quarter, the Company received proceeds of $17,362 on the settlement and sale of the copper put option contracts. Of this, $2,244 related to the settlement of contracts that matured in-the-money in January, 2015 and $15,118 related to the sale of the contracts with maturities from February to June, 2015. The Company recognized a realized gain of $13,536 on these settlements in the three month period ended March 31, 2015. Subsequent to the quarter end, the Company purchased additional copper put option contracts for 30 million pounds of copper spread evenly over the second and third quarter of 2015 at a strike price of US$2.50 per pound. The total cost of these put options was $1,413.


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6. FINANCE EXPENSES


2015 2014

Interest expense 5,705 6,176

Accretion on PER 657 471

6,362 6,647

7. INCOME TAX


2015 2014

Current expense (recovery) - (234)

Deferred expense (recovery) (3,035) (103)

(3,035) (337)

8. OTHER FINANCIAL ASSETS

March 31, 2015

December 31,2014

Current:

Copper put option contracts - 5,577

Marketable securities – available for sale 977 977

977 6,554

Long-term:

Subscription receipts – available for sale 12,400 12,400

Reclamation deposits 29,988 29,084

42,388 41,484

9. INVENTORIES

March 31,

2015 December 31,

2014Work in process 3,482 2,095

Finished goods:

Copper contained in concentrate 12,858 7,328

Molybdenum concentrate 458 314

Materials and supplies 27,875 26,357

44,673 36,094


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10. PROPERTY, PLANT & EQUIPMENT

During the three month period ended March 31, 2015, the Company capitalized stripping costs of $2,497 and incurred other capital expenditures for Gibraltar of $535. In addition, the Company capitalized development costs of $2,218 for the Florence Copper Project and $305 for the Aley Niobium Project. The rehabilitation cost asset increased by $24,113 for the three month period ended March 31, 2015, as a result of changes in estimates during the period including market driven discount rate changes. The Company incurred depletion and amortization in mining operations of $10,546 for the three month period ended March 31, 2015.

11. DEBT

March 31, 2015 December 31, 2014

Carrying Value Fair Value Carrying Value Fair Value

Current:

Capital leases 4,175 4,347 13,603 13,566

Secured equipment loans 7,248 7,234 6,554 6,540

11,423 11,581 20,157 20,106

Long-term:

Senior notes 249,826 182,443 228,343 206,127

Long-term loan 36,159 36,159 32,245 32,245

Capital leases 26,580 27,674 19,723 19,670

Secured equipment loans 12,577 12,553 13,195 13,168

325,142 258,829 293,506 271,210 All debt instruments are classified as a level 2 financial instrument (note 16).

12. EQUITY

(a) Share capital

(thousands of shares) Common sharesCommon shares outstanding at January 1, 2015 221,809

Exercise of share options -

Common shares outstanding at March 31, 2015 221,809 The Company’s authorized share capital consists of an unlimited number of common shares with no par value.


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(b) Share-Based Compensation

Three Months Ended

March 31, 2015Three Months Ended

March 31, 2014

(thousands of options) OptionsAverage

price OptionsAverage

priceOutstanding beginning of period 11,908 3.28 9,746 3.43

Granted 40 1.07 3,838 2.27

Exercised - - (350) 1.15

Forfeited (2) 2.27 (7) 2.94

Expired (2,424) 4.31 (256) 3.58

Outstanding at period ended 9,522 3.01 12,971 3.15 The weighted-average fair value of the share options issued in the three month period ended March 31, 2015 was estimated at $0.31 per share option (2014: $1.07), using the Black Scholes Option Pricing Model with the following assumptions:

Three Months Ended

March 31, 2015 Three Months Ended

March 31, 2014Weighted Average Forfeiture Rate (%) - -

Weighted Average Market Price 1.05 2.26

Weighted Average Volatility (%) 44.49 55.63

Weighted Average Risk Free Interest Rate (%) 0.45 1.64

Weighted Average Dividend Yield (%) - -

Weighted Average Expected Life (years) 3 4.7 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, 2015, the Company did not issue any DSUs to directors (2014: 66,079). The total number of deferred and restricted share units outstanding at March 31, 2015 was 99,371 units (2013: 199,412).

13. COMMITMENTS AND CONTINGENCIES

(a) Commitments At March 31, 2015, capital commitments totaled $984 on a 100% basis, of which the Company’s share was $909. At March 31, 2015, the Company’s share of operating commitments totaled $10,046. (b) Contingencies The Company has guaranteed 100% of certain capital lease and equipment loans entered into by the Gibraltar joint venture in which it holds a 75% interest. As at March 31, 2015, this debt totaled $41,005 on a 100% basis.


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The Company has also guaranteed its share of additional capital lease and equipment loans totaling $19,914 on a 75% basis. The Company is party to various contracts in respect of its operations, of which certain contracts were terminated by the Company during the prior year. The Company accrues its best estimate of the final settlement amount to be paid in respect of terminated contracts, however the actual settlement amount could differ when negotiations are finalized and any changes in cost estimates will be reflected in future periods.

14. SUPPLEMENTARY CASH FLOW INFORMATION

Three months ended

March 31, 2015 2014

Change in non-cash working capital items

Accounts receivable (5,715) (13,060)

Inventories (8,579) 8,695

Prepaids 399 1,724

Accounts payable and accrued liabilities (5,640) 10,012

Interest payable 443 142

Income tax (paid)/received 18,081 (450)

(1,011) 7,063

Non-cash investing and financing activities

Assets acquired under capital lease - 11,106

Interest earned on promissory note - (790)

Interest expense on royalty obligation - 731

Royalty obligation settled by promissory note - (16,784)

15. RELATED PARTIES

Transaction value for the three months ended

March 31, Due from (to) related parties

as at March 31, 2015 2014 2015 2014 Hunter Dickinson Services Inc.: General and administrative expenses 1,131 600 Exploration and evaluation expenses 101 226

1,232 826 (593) (106)

Gibraltar joint venture: Other operating income (management fee) 281 281 Reimburseable expenses 29 50

310 331 574 60 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. During the first quarter of 2015, the Company incurred total costs of $1,232 (Q1 2014: $826) in transactions with HDSI. Of these, $367 (Q1 2014: $389) related to legal, tax, exploration, and business development services,


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$147 related to reimbursements of office rent costs (Q1 2014: $151), and $718 (Q1 2014: $286) related to compensation paid for Taseko directors and the Chief Executive Officer, who are also directors of HDSI. 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.

16. 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.

Level 1 Level 2 Level 3 TotalMarch 31, 2015

Concentrate receivables - 14,342 - 14,342

Available-for-sale financial assets

Marketable Securities 977 - - 977

Subscription receipts - - 12,400 12,400

Reclamation deposits 29,988 - - 29,988

30,965 14,342 12,400 57,707

December 31, 2014

Concentrate receivables - 3,867 - 3,867

Financial assets designated at FVTPL

Copper put option contracts - 5,577 - 5,577

Available-for-sale financial assets

Marketable Securities 977 - - 977

Subscription receipts - - 12,400 12,400

Reclamation deposits 29,084 - - 29,084

30,061 9,444 12,400 51,905

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, 2015.


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The fair value of the senior notes, a level 1 instrument, is determined based upon publicly available information. The fair value of the capital leases and secured equipment loans, level 2 instruments, are determined through discounting future cash flows at an interest rate of 5.14% to 5.28% based on the relevant loans effective interest rate. The fair values of the level 2 instruments, copper put option contracts 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 Company’s metal concentrate sales contracts are subject to provisional pricing with the selling price adjusted at the end of the quotational period. At each reporting date, the Company’s accounts receivable on these contracts are marked-to-market based on a quoted forward price for which there exists an active commodity market.

The subscription receipts, a level 3 instrument, are valued based on a third party transaction in the last twelve months or in the absence of a transaction, market comparison based on the average share value of comparable companies.

Commodity Price Risk

Provisional pricing mechanisms embedded within the Company’s sales arrangements have the character of a commodity derivative and are carried at fair value as part of accounts receivables. The table below summarizes the impact on revenue and equity for changes in commodity prices on the fair value of derivatives and the provisionally invoiced sales volumes. Three months ended March 31,

2015

Copper increase/decrease by US$0.25/lb (2014: US$0.31/lb) 1, 2 1,6661The analysis is based on the assumption that the period-end copper price increases 10% with all other variables held constant. The closing

exchange rate for the quarter ended March 31, 2015 of CAD/USD 1.2666 was used in the analysis. 2At March 31, 2015, 5.3 million pounds of copper in concentrate were exposed to copper price movements.

Documents

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