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Gibraltar Mine has an estimated $32.7 million liability to reclaim and manage the area should it be determined that operations must permanently cease and the area be reclaimed. (See Item 4, Gibraltar Mine – Acquisition Terms and Environmental Matters.)

In accordance with the Gibraltar mine permit, the Company has pledged the mine's plant and certain equipment which, when combined with reclamation deposits (approximately $17.7 million at December 31, 2004), provide the Government of British Columbia with the required security for the estimated reclamation liability on the Gibraltar Mine of $32.7 million.

In March 2004, the Company purchased a mining shovel for approximately US$10.1 million ($13.0 million). In May 2004, the Company purchased five mine haul trucks for approximately US$8.2 million ($10.7 million).

During the period September 2004 to December 2004, the Company sold the mining shovel and the five haul trucks for approximately US$18.3 million (approximately $21.0 million), of which approximately US$14.7 million ($17.5 million) was received in November 2004, net of a 20% down payment (US$3.7 million, or $4.4 million) which was funded by the Company and represents prepaid lease payments. The purchaser leased the shovel and trucks to a subsidiary of Ledcor CMI Ltd. ("Ledcor"), the Company's joint venture partner at the Gibraltar Mine, and this equipment forms part of Ledcor's contribution to the joint venture.

The Company has also guaranteed residual values totaling US$7.1 million ($8.5 million) on this equipment at the end of the lease term in November 2008.

Neither the Prosperity Project nor the Harmony Gold Project have any mining plant or equipment located thereon, although both projects have field accommodation and miscellaneous exploration equipment, which is of little realizable value, on site.

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E.          Further Particulars Of Taseko’s Properties

E.1          

Location of Taseko’s Projects

The Gibraltar Mine

Acquisition Terms

On July 21, 1999, Taseko’s subsidiary, Gibraltar Mines Ltd., purchased the Gibraltar Minemine from Boliden Westmin (Canada) Limited (“Boliden”("Boliden") and certain of its affiliates, including all mineral interests, mining and processing equipment and facilities, and assumed responsibility for ongoing reclamation. Pursuant to the terms of the acquisition, Gibraltar acquired mining equipment, parts and supplies inventories valued at $19 million, an existing Government environmental deposit of $8 million, and mineral interests valued at $3.3 million. Gibraltar assumed the estimated reclamation liability pertaining to the Gibraltar mine of $32.7 million and Taseko guaranteed Gibraltar’s obligations to Boliden.

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The Company received $20.1 million in cash over 18 months from closing,between July 1999 and February 2001, of which $17 million was received pursuant to a 10-year non-interest bearing convertible debenture issued to Boliden. Gibraltar assumed the estimated reclamation liability pertaining to the Gibraltar Mine of $32.7 million and Taseko guaranteed Gibraltar’s obligations to Boliden. The principal sum advanced under the debenture is convertible into Taseko common shares in the first year at $3.14C$3.14 per Taseko share. The conversion price escalates $0.25C$0.25 per Taseko share each year over the 10-year term of the debenture on each July 19th anniversary of closing. The conversion price at September 30, 2003 (and at March 31, 2004)2004 was $4.14C$4.39 per Taseko share. The debenture is due on July 19, 2009. After July 31, 2004five years the debenture can be converted at Taseko’s option at then-prevailing market prices for Taseko shares or, paid out in cash, at Taseko’s election. Taseko retains certain rights of first refusal respecting any proposed sale of shares which may potentially be acquired by Boliden under the debenture. One provision

Gibraltar-Ledcor Joint Venture

In May 2004, Taseko and Ledcor CMI Ltd. ("Ledcor") signed a framework agreement whereby re-commissioning and operation of the agreement with Boliden is currentlyGibraltar mine would proceed as a joint venture. In September 2004, Taseko and Ledcor concluded a Joint Venture Operating Agreement (the "Joint Venture"). Taseko (through its wholly owned operating subsidiary Gibraltar Mines Ltd. ("Gibraltar")) has an 85% interest in disputethe residual profits of the Joint Venture (ie. profits after payment of usage fees to the participants (Taseko and Ledcor) for their respective contributed assess and services) and Ledcor has a 15% interest in the residual profits. The Joint Venture holds rights to operate the mine as well as leases on certain mining equipment such as a mechanical shovel and trucks, but the mill and other mine assets, including mineral titles, belong to Gibraltar. The Joint Venture pays usage fees to each of Gibraltar and Ledcor for use of their respectively contributed assets as well as for services that they contribute to the Joint Venture. Taseko is claiming indemnity from Boliden in respectresponsible for concentrate sales, off-site activities and certain aspects of tax liability associated withadministration and Ledcor is responsible for on-site operations and Ledcor, as Operator of the $8Joint Venture, has primary responsibility for carrying out mining and milling activities as well as recruitment of personnel and maintenance of the equipment and facilities. More than 250 people are currently employed at the mine.

As part of its contributions, Ledcor provided on behalf of the Joint Venture certain lease financing guarantees to third parties which allowed for the timely acquisition of a new mining shovel and five new mine-haul trucks valued at US$18.3 million environmental deposit which Taseko alleges is a liability for which Boliden remains responsible. Taseko’s claim is for approximately $3-4 million and although(C$21 million) necessary to restart activities at the matter has not yet proceeded to legal proceedings, Taseko has notified Boliden it is claiming a right of set-off of this claim in connection with the Boliden debenture.Gibraltar mine.

Gibraltar Property, British Columbia Canada – Technical Summary

Location, Access and Infrastructure

The Gibraltar Minemine area consists of 251 mineral claims, 30 mining leases, and some ancillary fee simple real estate held by Gibraltar.Gibraltar for the Joint Venture. The mine site covers approximately 109 square km,kilometres, located at latitude 52 degrees 30’N and longitude 122 degrees 16’W in the Granite Mountain area, approximately 65 kmkilometres north of the City of Williams Lake in south-central British Columbia, Canada. Access to the Gibraltar Minemine from Williams Lake is via Highway 97 to McLeese Lake. From McLeese Lake, a paved road provides access to the Gibraltar Minemine site. The total road distance from the City of Williams Lake to the Gibraltar Minemine is 65 kmkilometres and motor vehicle travel time is approximately 45 minutes.

The British ColumbiaCanadian National Railway services Williams Lake and has rail service to facilitate the shipping of bulk commodities from Williams Lake to Vancouver, or copper concentrates through to the Pacific Ocean port of North Vancouver. A rail siding and storage shed for the shipment of concentrate is located 26 kilometers from the Gibraltar Mine has been established adjacent to Highway 97 at MacAllister, 6 km north of McLeese Lake.mine site. Electricity is obtained from the British Columbia Hydro and Power Authority (“("BC Hydro”Hydro"). Natural gas is provided by Avista Energy and Terasen Gas (formerly, "BC Gas")BC Gas). The communitycommunities of Williams Lake isand Quesnel are sufficiently close and is capable of supplyingto the site to supply goods and services to the Gibraltar Minemine and its personnel.

The Gibraltar Mine mineral claims cover an area of gentle topography; local relief is in the order of 200 m. The plant site is located at an elevation of approximately 1,100 mmetres above sea level. The project area has a moderate continental climate with cold winters and warm summers. Ambient air temperature ranges from a winter minimum of -34 degrees-34° C to a summer maximum of 35 degrees35° C. Annual precipitation at the site averages 51 cm,centimetres, of which about 17 cmcentimetres falls as snow. Maximum snow depth is about 1 m,metres, most of which falls in late February.

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History

The earliest record of work at the Gibraltar Minemine is found in the 1917 British Columbia Minister of Mines Annual Report, which describes the activities of Joseph Briand and partners exploring copper-bearing quartz veins (a tabular or sheet-like mineral deposit with identifiable walls, often filling a fracture or fissure) on the Rainbow group of mineral claims. These original showings are believed to lie about 60 mmetres west of the current Pollyanna pit.

The early 1960s marked the entry of the major mining companies into the Granite Mountain area and the subsequent introduction of modern exploration techniques, which ultimately led to the discovery of the mineral deposits. Of the

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seven Gibraltar mineral deposits that are now known, only Gibraltar West offered any exposure of surface mineralization; Pollyanna, Connector and Gibraltar East had a few minor exposures of leached limonitic capping; Granite Lake, Gibraltar West Extension and the Sawmill Zone were completely covered by overburden. In this environment, the most effective exploration tools were soon found to be Induced Polarization (“IP”("IP") geophysics and diamond drilling.

Mine production began in March 1972. Mining reserves as estimated on December 31, 1971 (at a 0.25% copper cut-off), were approximately 300 million tonnes of 0.37% copper at a 2.15:1 waste-to-mineralized material strip ratio.

The Gibraltar Mine1972 and the mine operated almost continuously from 1972 to 1998.1972-1998. Total production to the end of 1998 totalshad totalled 845,825 tonnes (1.86 billion lbs.) of copper and 8,938 tonnes (19.7 million lbs.) of molybdenum from 305 million tonnes (336 million tons) milled. During the past operating mine life, reconciliation studies on a number of open pit stages have demonstrated good correlation between reserve estimates and actual production.

In addition to copper production in concentrate, the Gibraltar Minemine has also produced cathode copper by leaching both low-grade dump material (approximately 339 million tonnes [374 million tons] containing copper at grades lower than the milling cut-off grades of 0.16 -0.25%) and leachable oxide material from the pits using sulphuric acid and natural bacteria. TheBeginning in October 1986 to when the mine was shut down in late 1998, the copper iswas recovered from solution by the solvent extraction-electrowinning (SX/EW) process. SX/EW plant operations are expected to resume when further oxide material is mined from the Pollyanna and Connector pits.

Over the mining life since 1972, Gibraltar stockpiled approximately 339Some 38,430 tonnes (84.7 million tonnes (374 million tons)pounds) of waste rock in five main storage areas. Much of this material containselectrowon cathode copper though at grades lower than the milling cutoff grades which have ranged between 0.16% and 0.25% Cu. The stockpiles have become chemically and biologically active, and naturally discharge small quantities of acidified water, containing copper, in dilute solution.were produced. Prior to 1986 and more recently since the SX/EW plant has been shut down, these and all other mine area drainage waters have been collected in ditches and ponds and neutralized prior to safe disposal in the tailings impoundment. Since February 1999, these waters have been discharged to the completed Gibraltar East Pit.

From October 1986 to the time thePit, where mining was completed. SX/EW plant was shut down, acidic solutions drainingoperations are expected to resume when further oxide material is mined from the dumps were treated in the solvent extraction-electrowinning plant. To date, some 38,430 tonnes (84.7 million pounds) of electrowon copper have been produced.Pollyanna and Connector pits. Future recovery of electrowon copper will be mainly from engineered leach pads.

During 1999-2000,Geological modelling, geophysical surveys (dominantly Induced Polarization) and diamond drilling have been the primary exploration tools used at the Gibraltar mine in order to delineate sulphide (a compound of sulphur and another element, typically a metallic sulphide compound) resources. Mining phase exploration, during the period of 1972-1998, added extensive sulphide resources. Oxide copper mineralization was recognized during early exploration programs at Gibraltar. The potential economic benefit from this mineralization, however, was not realized until late 1986 when a SX/EW plant was commissioned to treat acidic copper solutions draining from existing low grade mineralized material pits. Data collected during a sulphide copper exploration program in the 1990’s between the Gibraltar East and Pollyanna open pits (Connector Zone) indicate that there is potential for substantial oxide copper mineralization in this zone.

From 1999-2004, Taseko geologists and engineers actively explored for additional mineralized material and to better definingdefine known resources. They haveThe on-site staff also been maintainingcompleted on-going reclamation work and maintained the Gibraltar Minemine for re-start and completing on-going reclamation work. All mining and process equipment has been maintained in a ready-to-go state and operating/re-start. Operating/environmental permits have beenwere kept in good standing.

A drill program, with combined environmental and geological information objectives, was conducted in November and DecemberNovember-December of 1999. The program comprised 25 drill holes (4 diamond and 21 reverse circulation) and, while aimed at obtaining information pertaining to regional groundwater flow, allowed for collection of much geological information includingsuch as lithology, alteration, mineralization and structure. In total, 1,635 mmetres of drilling was completed and the core was analyzed for copper content. The analytical results increased deposit information and will assist in future geological and engineering activities.

In December 1999 and January 2000, the digital database of geological information on the Gibraltar property was expanded to include information from both inside and outside the pit areas. All historic geophysical and

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geochemical data contained in archive files, field reports and maps were digitized and a series of maps illustrating geophysical and geochemical data were generated. Drill collar coordinates and downhole survey information, including hole length, geology, sample intervals and assay (a quantitative test of minerals and ore by chemical and/or fire techniques) results for drill holes that had not previously been in digital form were added. Data for some 200 drill holes, comprising 24,000 mmetres were added. Plans identifying the location of drill holes relative to known geophysical and geochemical data and anomalies were generated.

SubsequentExploration during mine operation was limited and focused predominantly in and around existing pits. A number of excellent targets to explore for new deposits occur near the completionexisting open pits (Gibraltar West Extension, Connector, Gibraltar East Extension, Crusher zones) and on other parts of the geological compilation described above a property-scale Induced Polarization (“IP”) geophysical survey was designed and initiated in August 2000. Field activities included 237 kilometres of line-cutting and approximately 220 km of IP survey. Interpretationproperty (e.g. Sawmill). These target zones required testing by drilling; the remainder of the resultsGibraltar property requires exploration utilizing a comprehensive program of geological mapping, induced polarization geophysical surveying and geochemical sampling. This work began in 2000 with an extensive IP geophysical survey. Drilling in 2003 tested several of the anomalies outlined by the 2000 IP surveys.

Six target areas were drilled in 2003: the 98 Oxide Zone, the GM Southwest Zone, the Highway Zone, the TK Zinc Zone, the Water Tank Zone and a large IP anomaly located 2 kilometres east of the existing plant site.

Ninety-six holes, totalling 13,650 metres (44,785 feet), were drilled at the98 Oxide Zone.Significant copper mineralization was completedencountered, indicating potential for a mineral resource in this area.

Nine holes, totalling 1,758 metres (5,769 feet), were drilled at theGM Southwest Zonealong two lines located about 1,220 metres southeast of the 98 Oxide Zone to test a large IP anomaly. Results indicate the anomaly reflects a large pyrite zone. Holes drilled along the southwest edge of the anomaly, however, did hit moderate copper-molybdenum mineralization indicating that mineralization may occur southwest of the anomaly towards the Gunn Zone.

Thirty-eight holes, totalling 7,722 metres (25,336 feet), were drilled on a large IP anomaly located about 1.5 kilometres northwest of the Gibraltar East Pit. Results to date indicate the anomaly reflects a zone of significant pyrite-chalcopyrite mineralization called theHighway Zone. Good copper mineralization associated with pyrite, was encountered in several holes. Geological modeling indicates a relatively steep, narrow (30-60 metres) mineralized zone with a strike length of at least 915 metres. The zone also contains elevated gold and silver values.

Thirty holes, totalling 6,199 metres (20,334 feet), were drilled to test an IP anomaly located about 2.5 kilometres northwest of the Gibraltar West Pit. Two holes, drilled in the springarea in the early 1990’s, intersected over 200 feet of 2001. Several deposit scale anomalies were identified including one 800 m wide by 4,200 m long anomaly, which

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to date,near surface anomalous zinc (average grade 0.45 -0.50% Zn). Anomalous zinc mineralization (sphalerite) has been tested by only 7 drillobserved in about 10 of the new holes. Additional drillThis new discovery is called theTK Zinc Zone.

Twenty-one other holes to testwere drilled during the quality2003 program. Ten holes, totalling 2,081 metres (6,827 feet), were drilled on a large IP anomaly located about 500 meters northeast of thisthe plant site in an area called the Water Tank Zone. Preliminary results indicate the anomaly and other geophysically significant locationsreflects a large pyrite zone with minor copper-molybdenum mineralization. Similarly, eleven holes, totalling 2,338 metres (7,669 feet), were drilled on a large IP anomaly located about 2 kilometres east-northeast of the plant site. Preliminary results indicate the anomaly reflects a large pyrite zone with minor copper-molybdenum mineralization. Further funding will be undertaken in the future.required to determine mining feasibility of these zones.

New Refinery StudyProcess Potential

AIn August 2000, a scoping study (preliminary(which is a preliminary review of capital and operating costs to determine the economic viability of a project at an accuracy of plus or minus 25-30%30%) was conducted to investigate the concept of building and

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operating a copper refinery at the Gibraltar site, using a new hydrometallurgical process. The process had been developed by Cominco Engineering Services Ltd. (CESL) to recover copper from concentrate was completed in August 2000.using the new process. The study, undertaken by Gibraltar and CESL, considered existing infrastructure, general site layouts, capital and operating costs, and resulting cash flows. The economic assumptions used were copper price of US$0.90/lb; exchange rate of US$0.68=Cdn$1.00; negotiated power reduction costs; reduced labour rate for 3 years following construction; refinery recovery rate of 95.8%; and concentrator recovery increase of 6% due to decreased concentrate grade to 24%. The cash flow analysis was conducted in constant July 2000 Canadian dollars without consideration for inflation and before any income taxes. The

Based on the results of the study were an internal rate of return of 18.4% with a net present value at an 8% discount of Cdn$68.4 million (that is, the amount of net present value resulting from the investment of the needed capital costs described below).

The scoping study, projected that the capital cost for the refinery would be Cdn$95.0 million including contingencies. Development of the refinery could reduce the operating costs of the mine by up to US$0.20 per pound of copper produced due to elimination of transporting concentrate off-site and other site efficiencies. The scoping study also determined the cost to re-start the Gibraltar Mine. The cost, including working capital, was estimated to be Cdn$25.0 million; this amount would cover concentrator modifications required for the refinery and six months of pre-production stripping in the Pollyanna pit.

After the details of the study were reviewed, a decision was made to proceed to the feasibility-level engineering and analysis stage. On October 6, 2000, Gibraltar and CESL signedanalyses were initiated under a Memorandum of Agreement (“("Gibraltar/CESL MOA”MOA"). dated October 6, 2000. The Gibraltar/CESL MOA outlined a work plan as well as management and funding arrangements for thea C$2.7 million work plan (to be funded 50/50 by Gibraltar and CESL) and, upon satisfactory results and receipt of requisite approvals, the project management, construction, commissioning and operation of a refinery at the Gibraltar mine site. Under the terms of the agreement, Gibraltar and CESL would each pay 50% of the Cdn$2.7 million cost of the MOA work plan.

In late 2000, Gibraltar shipped 900 tonnes of mineralized material from site in south-central British Columbia to CESL’s pilot concentrator in Vancouver, BC. As this material was processed in the CESL pilot concentrator, tailingsTailings were back-hauled to the Gibraltar site for disposal. Seven tonnes of concentrate were produced, comprising 3.5 tonnes of 18% copper concentrate and 3.5 tonnes of 24% copper concentrate. Concurrently, Gibraltar conducted metallurgical tests on representative samples of Gibraltar mineralized material at G&T Metallurgical Services in Kamloops BC, in order to develop parameters for lock cycle tests that would definitively confirm an increase in mill copper recovery with a decrease in concentrate copper grade. TestsAdditional tests were done to dateat Gibraltar’s on-site metallurgical test laboratory. Tests indicate up to a 6% increase in mill copper recovery may be available with minor modifications to the mill circuit and a decrease in specifications for the concentrate copper grade.

In early 2001, the concentrate that was produced at the pilot concentrator was run through the CESL process pilot plant. The run successfully produced London Metal Exchange (LME) grade cathode copper and proved that the CESL process was adaptive to the Gibraltar material. It was also found that the CESL process is more amenable to the 24% concentrate than the 18% concentrate. The pilot plant program provided the process design criteria for a Process Engineering Package that formed the basis for a feasibility-level capital and operating cost study. Feasibility-level work for the refinery was carried out in 2001 under the direction of Gibraltar Engineering Services Limited (“GESL”("GESL") Partnership, a Taseko-sponsored investment partnership financed mainly by arms'-length investors, whichvehicle that raised funding for the studies on behalf of Taseko and Gibraltar, and CESL.

During the latter half of the 2001 fiscal year, Bateman Engineering Pty of Australia was engaged to conduct an engineering feasibility-level cost study for the construction and operation of a hydrometallurgical copper refinery utilizing CESL technology at the Gibraltar mine. The study involved engineering and design work sufficient to determine the capital and operating costs for the facility to an accuracy of –5% to +15%. The refinery would be capable of processing 130,000 tonnes of 24% copper concentrate and producing 30,000 tonnes of London Metal Exchange-gradeLME grade copper cathode annually. The study estimated the refinery capital cost to be $109.5 million and the annual operating cost to be $16.3 million or US$0.147 per pound copper produced.

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The results of the study also identified severalindicated that development of the refinery could reduce the operating costs of the mine in the range of US$0.20 per pound of copper produced. This is due to the reduced cost of transporting cathode versus concentrate off site. Mine site refinery operating costs are lower than long term treatment costs at copper smelters. There are other synergies with the existing Gibraltar mill and treatment facilities.an on site refinery that would also result in cost savings. For example, as acid would be produced in the refinery, less acid would need to be procured for the heap leach facility at the Gibraltar site. In addition, heating the leach solution with excess heat generated by the refinery would enhance copper recovery from the heap leach. Implementing some of these additional opportunities would result in cost savings beyond the $17.4 million per annum savings associated with changing the Gibraltar mine from a concentrate producer to a cathode producer. Another advantage is that cathode copper receives a premium over the LME price.

In 2001, GESL had the mandate of raising financingfinances to advance engineering work on the Gibraltar Refinery for use of the CESL technology at the Gibraltar Minemine and in other similar operations. This limited partnership raised $1.85 million in late 2001 and was purchased by Taseko, with TSX Venture Exchange consent, under a takeover bid, for 4.967 million shares in February 2002. GESL then owned about 39% of the engineering business with the balance owned by an affiliated limited partnership that was acquired in April 2003. GESL and the affiliate used their funds to advance technical and economic feasibility studies of the CESL process. (Seeprocess (see Item 5B)5). Since that date, however, Taseko has not had sufficient funds to further advance the new refinery initiative.

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Property Geology

The Gibraltar Minemine generally consists of seven separate mineralized zones. Six of these – Pollyanna, Granite Lake, Connector, Gibraltar East, Gibraltar West and Gibraltar West Extension – occur within the Granite Mountain batholith (a large, generally larger than 100 square kilometres in area, mass of intrusive rocks) in a broad zone of shearing and alteration. A seventh copper mineralized body, the Sawmill zone, lies about 6six kilometres to the south, along the southern edge of the batholith, within a complex contact zone between the batholith and Cache Creek Group rocks.

Two major structural orientations have been recognized at Gibraltar: the Sunset and Granite Creek mineralized systems. The Sunset system strikes northwesterly with one set of structures dipping 35 degrees35° to 45 degrees45° to the south and a conjugate set, known as the Reverse Sunset, dipping 50 degrees50° to 60 degrees60° to the north. The Granite Creek system strikes east-west and dips 20 degrees20° to 40 degrees40° to the south with a subordinate set of structures dipping steeply in a northerly direction. Structures of the Sunset system that host mineralization are mainly shear zones, with minor development of stockwork and associated foliation lamellae. Host structures of the Granite Creek system are predominantly oriented stockwork zones.

The Granite Creek system provides the major structures that control mineralization of Pollyanna, Granite Lake and the Sawmill zones. These bodies have the characteristic large diffuse nature of porphyry copper type mineralization. The Gibraltar East deposit is essentially a system of interconnected Sunset zones, which create a large body of uniform grade. Gibraltar West and Gibraltar West Extension deposits are contained within a large complex shear zone.

Geological modelling, geophysical surveys (dominantly Induced Polarization) and diamond drilling have been the primary exploration tools used at the Gibraltar Mine in order to delineate sulphide (a compound of sulphur and another element, typically a metallic sulphide compound) resources. Subsequent exploration has added 363 million tonnes grading 0.285% copper to the sulphide mineral resource and 95 million tonnes grading 0.305% copper and 0.010% molybdenum to the sulphide ore resource. Further exploration activity appears warranted depending on available funds to outline new mineralized zones.

Oxide copper mineralization was recognized during early exploration programs at Gibraltar. The potential economic benefit from this mineralization, however, was not realized until late 1986 when a solvent extraction-electrowinning plant was commissioned to treat acidic copper solutions draining from existing low grade mineralized material pits. Data collected during a sulphide copper exploration program in the 1990’s between the Gibraltar East and Pollyanna open pits (Connector Zone) indicate that there is potential for substantial oxide copper mineralization in this zone.

Exploration during mine operation has been limited and focused predominantly in and around existing pits. A number of excellent targets to explore for new deposits occur near the existing open pits (Gibraltar West Extension, Connector, Gibraltar East Extension, Crusher) and on other parts of the property (e.g. Sawmill). These target zones require testing by drilling; the remainder of the Gibraltar property requires exploration utilizing a comprehensive program of geological mapping, induced polarization geophysical surveying and geochemical sampling. This work began in 2000 with an extensive IP survey. Several of the IP anomalies outlined during the 2000 surveys were tested by drilling in 2003 (see Exploration 2003).

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Mineralization Types

Pyrite and chalcopyrite (a sulphide mineral of copper and iron) are the principal primary sulphide minerals of the Gibraltar Minemine mineralization. Fine-grained chalcopyrite, generally barely visible without magnification, accounts for 60 percent of the copper content and constitutes the single most important form of copper mineralization. Coarser grained chalcopyrite usually occurs in quartz veins and shear zones.

Small concentrations of other sulphides are present in Gibraltar mineralization. Bornite (a sulphide mineral of copper and iron: Cu₅FeS₄)Cu5eS4), associated with magnetite and chalcopyrite, occurs on the extremities of the Pollyanna and Sawmill deposits. Molybdenite (molybdenum sulphide MoS₂;MoS2; an ore of molybdenum) is a minor but economically important associate of chalcopyrite in the Pollyanna, Granite Lake and Sawmill deposits.

There is a close spatial relationship between sulphide mineralization and alteration in the Gibraltar deposits. The principal alteration minerals are chlorite, sericite, epidote, carbonate and quartz. Higher-grade mineralization is associated mainly with sericite and chlorite.

Sampling and Analytical Procedures

During the 2003 exploration program, 31,944 metres (104,804 feet) of NQ sized core were drilled. All drill core was photographed, then logged and sampled by technical staff under the supervision of a qualified person. All core was split into two pieces using a mechanical core splitter and sampled. Average sample length is three metres (10 feet). Preparation and analytical testing of the 2003 drill core samples were carried out on-site at the Gibraltar Mines Ltd. Metallurgical Testing Services laboratory. All core was analyzed for copper and molybdenite (MoS2), and selected intervals were also analyzed for acid soluble copper (ASCu), cyanide soluble copper (CNSCu), gold, silver, zinc and lead.

Assays provided for samples from the 2003 Exploration Program include percent total copper, percent acid soluble copper, percent cyanide soluble copper, percent molybdenite, percent zinc, percent lead, grams per tonne silver and grams per tonne gold. The total copper, acid soluble copper, molybdenite, lead, silver and zinc assays are performed by acid digestion of pulverized drill core samples followed by Atomic Absorption Spectrometry (AAS) analyses of the resulting solutions. The cyanide soluble copper assay is performed by cyanide digestion of pulverized drill core

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samples, followed by AAS on the resulting solutions and the gold assays are performed by fire assay with AAS finish.

QA/QC Procedures

The following Quality Assurance/Quality Control Protocols are implemented in Gibraltar’s Assay Laboratory ensure that accurate, precise and reproducible analytical results are obtained.

Security of Samples

At Gibraltar, a library of representative samples of the different rock types and mineralization is retained in a secured on-site core facility.

The Gibraltar mine site has restricted access. All core from the 2003 program was drilled, transported and analyzed on-site. Remaining half-core and rejects from half-core samples are retained in a secured on-site facility. Pulps are retained at the on-site laboratory.

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Mining

The Gibraltar Minemine is a typical open pit operation that utilizes drilling, blasting, cable shovel loading and large-scale truck hauling to excavate rock. The mine is planned to enable excavation of sulphide mineralized material of sufficient grade that it can be economically mined, crushed, ground and processed to a saleable product by froth flotation. (Flotation is a method of mineral separation after crushing and grinding ore, whereby a froth created in a slurry by a variety of reagents causes some finely crushed minerals to float whereas others sink).

The flotation overflow, or concentrate (mineralization, which is increased in purity by primary production techniques that include crushing, grinding and flotation to eliminate portions of valueless rock), has a copper grade of about 100 times that of the rock from which it was processed and is sold to smelters for further treatment to provide high purity copper metal. The flotation underflow, or tailings, has had its minerals removed and is pumped to the tailings storage facility.

During the mining process, unmineralized and insufficiently mineralized rock must be excavated to expose the economically mineralized material. This low grade material contains either sulphide or oxide copper mineralization. A portion of the low-grade sulphide and all of the oxide material can be leached with sulphuric acid, which is naturally assisted by bacterial action. The resultant copper sulphate solution can be processed to cathode copper in the Gibraltar Mine’smine’s solvent extraction/electrowinning (SX/EW) plant.

The sulphide mineralized rock, which formsEstimates of Remaining Mineralization

Gibraltar mineral reserves and resources as at the basis for mine planning, is considered the “Sulphide Inventory.” The leachable, low-grade mineralized material is not included in the “Sulphide Inventory” and constitutes the “Leachable Copper Inventory.” Muchbeginning of the rock adjacentre-start plan were reviewed and a Technical Report was prepared by James W. Hendry, P.Eng., and C. Stewart Wallis, P.Geo., of Roscoe Postle and Associates, Inc. (“Roscoe Postle”) in April 2004. This report was updated in March 2005 to reflect certain changes in development plan prior to the Gibraltar mine pits or withinre-start of operations. The report by Roscoe Postle concluded that Taseko's technical analysis and supporting documentation was equivalent to a Pre-feasibility level study, as required for mineral reserves under National Instrument 43-101. Under Canadian standards the mine’s claim boundaries is mineralized and has been delineated and quantified. This material has not been included inunder the currentmineral reserves supporting the 12 year mine plan in the “Sulphide Inventory” or in the “Leachable Copper Inventory”. This mineralized material has been called “Additional Mineralized Material.”

Estimates of Mineralizationare classified as Proven and Probable Reserves.

There are approximately 760837 million tonnes (837tons (760 million tons)tonnes) of measured and indicated resources currently outlined at Gibraltar and described in detail in the following sections. This includes a total sulphide (in-pit inventory and additional material) resourcemeasured resources of about 743606.5 million tonnes (821 million tons)tons grading 0.287%0.29% copper and 0.008% molybdenum at a 0.2%and 230.7 million tons of indicated resources grading 0.271% copper cut-off and an oxide0.008% molybdenum. These mineral resources include the proven and leachable copper resource of 16.4 million tonnes (18.1 million tons) grading 0.2% copper at a 0.1% acid soluble copper cut-off.probable reserves described below.

12Year Mine Plan

The resource estimate for a furtherBased on the 12 year mine plan, was completed by Gibraltar staff in 1998,proven and audited by a professional geologist at Roscoe Postle and Associates Inc. The in-pit measured and indicated resourcesprobable reserves are comprised of 149148 million tonnes (163.9(163.5 million tons) grading 0.305%0.313% copper and 0.010% molybdenum of sulphide mineralization and 14.8 million tonnes (16.3(16.5 million tons) of oxide mineralization at 0.148% copper.Cu. The sulphide

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resources for the Polyanna and Granite Lake pits reserves were estimated atusing a 0.20% copper cut-off and for the Connector pit at a 0.16% copper cut-off. The oxide mineralization was estimated at a 0.10% acid soluble copper cut-off.

Additional measured resources of 401 million tonnes (442 million tons) grading 0.288% total copper and 0.007% Mo and indicated resources of 195 million tonnes (215 million tons) grading 0.27% total copper and 0.008% molybdenum have also been outlined on the property but outside of the 12-year mine plan. The cut-off used varied according to location and characteristics of the material that was estimated; the cut-off for the Connector area was 0.16% copper, for Gibraltar East area was 0.17% copper and for all other areas was 0.20% copper.- 23 -

The average waste-to-mineralized material strip ratio is 1.62

15Year Mine Plan

A 15-year mine plan was developed for the mine in conjunction with the resource estimate and refinery studies in 2001. The resource estimate was completed in 2001 by George Barker, P.Geo. In-pit measured and indicatedin-pit sulphide resources in the Polyanna and Granite Lake deposits and the Connector Zone outlined under a 15-year plan are estimated to be 189 million tonnes (208 million tons) grading 0.311% copper and 0.010% molybdenum at a 0.2% copper cut-off. Thereinventory is also a leachable copper inventory in the Polyanna deposit and PGE Connector Zone, estimated to be 16.4 million tonnes (18.1 million tons) of measured and indicated resources grading 0.146% acid soluble copper at a 0.10% acid soluble copper cut-off.1.8:1.

There are also an estimated 554 million tonnes (611 million tons) of measured and indicated resources in the Gibraltar deposits, in addition to those within the 15-year mine plan. These include 367 million tonnes (404 million tons) grading 0.288% copper and 0.007% molybdenum of measured resources and 187 million tonnes (206 million tons) grading 0.27% copper and 0.008% molybdenum of indicated resources. The cut-off used varied according to location and characteristics of the material that was estimated; the cut-off for the Connector area was 0.16% copper, for Gibraltar East area was 0.17% copper and for all other areas was 0.20% copper.

Environmental Matters

TheFrom 1972 to 1998, the Gibraltar mine has operated for some 27 years from four open pits. Waste dumps were developed in various areas adjacent to the open pits, and tailings were disposed in a pond located about three kilometres north of the mill. A comprehensive assessment of what would be necessary to rehabilitate the site at closure was developed while the mine was operating. The 1998 Decommissioning Plan included an assessment of the costs of reclamation and

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ongoing water treatment based on a 12-year mine life and that much of the reclamation would take place while the mine was in operation.

On acquiring the Gibraltar Minemine in 1999, Gibraltar received both independent and government assessments of the reclamation and water management liability for the Gibraltar Mine.mine. The reclamation plan for Gibraltar involves a water management program and establishment of grass/legume vegetative covers for all areas in order to protect against wind and water erosion. Areas around the pits and waste rock storage areas will be re-sloped, dressed with overburden, and seeded. The beaches and slopes of the tailing storage area will also be seeded. The objective is to promote re-establishment of indigenous species, and evolve toward a self-sustaining ecosystem.

The reclamation plan is reviewed periodically and revised as necessary. Progressive reclamation has also been carried out since the mine has been on standby. Also in 2002, Gibraltar and the Cariboo Regional District completed studies and agreed to develop a landfill site on waste dumps in an area that would not be needed for future operation of the mine. The landfill will provide reclamation credits to the land it occupies, as well as revenues. As a result, the Company received a release of $2.5 million from the reclamation deposits held by the government of British Columbia in December 2002. Construction was initiated in June 2003 and operations began in October 2003. Additional credits and offsets are expected related to an on-site mini-hydro power generation project that is presently in the implementation stage.

AsThe Gibraltar mine final reclamation and closure plan is updated every five years. The most recent reclamation plan and closure report was approved by the BC Ministry of Energy and Mines in 2004. This report states that the total

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closure costs with 1.0 meter of till cover would be $36.7 million. The Ministry of Energy and Mines agreed to consider Gibraltar’s request to reduce the cover to 0.5 meters. If approved this would reduce final closure costs to $32.9 million.

In the event that Gibraltar did not carry out the final reclamation using its own equipment, the Ministry of Energy and Mines would have to hire a result ofcontactor to do the work. This would increase final reclamation completedcosts by $4.5 million to date,cover contractor mobilization, equipment ownership costs and revenuesprofit.

The recently approved mine and credits from new projects,reclamation permit requires that the reclamation liability was estimated to be approximately $32.7 million. Gibraltar held aoutlined in the final closure and reclamation fund deposit of approximately $16.5 million on hand that has been determined to be adequate to handle necessary water management under the Decommissioning Plan. The fund accumulated interest at approximately 3% per annum. Additional reclamation costs, of approximately $13 million, wouldreport be covered from the sale of the plant and other equipment on site. A Taseko-sponsored mining investment partnership, the GRT Limited Partnership raised approximately $18.6 million to fund Gibraltar reclamation obligations in December 2003. As a consequence of the GRT Partnership replacing the existing environmental deposit with its own funds Taseko received a refund of $16.7by $18.5 million in January 2004.a Reclamation Trust. The GRT Limited Partnership investors received put rights in Taseko shares as a consequence of the agreements whereby the partnership funded the reclamation liability. It isexpectedthat a full or partial release of the security on the residual value of plant and other equipment on site may possibly be providedadditional liability is covered by the Government.Province of British Columbia having a registered security interest on equipment owned by Gibraltar.

2003 ExplorationMine Planning and Pre-Production

Six target areas were drilled in 2003, summarized in the table below:

Ninety-six holes, totalling 13,650 metres (44,785 feet), were drilled at the98 Oxide Zone, outlining a significant resource. Roscoe Postle and Associates is currently completing an independent estimate of the mineral resource.

Nine holes, totalling 1,758 metres (5,769 feet), were drilled at theGM Southwest Zonealong two lines located about 1,220 metres southeast of the 98 Oxide Zone to test a large IP anomaly. Results indicate the anomaly reflects a large pyrite zone. Holes drilled along the southwest edge of the anomaly, however, did hit moderate copper-molybdenum mineralization indicating that mineralization may occur southwest of the anomaly towards the Gunn Zone.

Thirty-eight holes, totalling 7,722 metres (25,336 feet), were drilled on a large IP anomaly located about 1.5 km northwest of theTaseko maintained Gibraltar East Pit. Results to date indicate the anomaly reflects a zone of significant pyrite-chalcopyrite mineralization called theHighway Zone. Good copper mineralization, associated with pyrite, was encountered in several holes and geological modeling indicates a relatively steep and narrow (30-60 metres)

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mineralized zone with a strike length of at least 915 metres occurs in the area. The zone also contains elevated gold and silver values.

Thirty holes, totalling 6,199 metres (20,334 feet), were drilled to test an IP anomaly located about 2.5 km northwest of the Gibraltar West Pit. Two holes, drilled in the area in the early 1990’s, intersected over 200 feet of near surface anomalous zinc (average grade 0.45 and 0.50% Zn). Anomalous zinc mineralization (sphalerite) has been observed in about 10 of the new holes. This new discovery is called theTK Zinc Zone.

Twenty-one other holes were drilled during the 2003 program. Ten holes, totalling 2,081 metres (6,827 feet), were drilled on a large IP anomaly located about 500 meters northeast of the plant site in an area called the Water Tank Zone. Preliminary results indicate the anomaly reflects a large pyrite zone with minor copper-molybdenum mineralization. Similarly, eleven holes, totalling 2,338 metres (7,669 feet), were drilled on a large IP anomaly located about 2 km east-northeast of the plant site. Preliminary results indicate the anomaly reflects a large pyrite zone with minor copper-molybdenum mineralization.

Sampling and Analytical Procedures

During the 2003 exploration program, 31,944 metres (104,804 feet) of NQ sized core were drilled. All core was photographed, then logged and sampled by technical staff under the supervision of a qualified person. All core was split into two pieces using a mechanical core splitter and sampled. Average sample length is three metres (10 feet). Preparation and analytical testing of the 2003 drill core samples were carried out on-site at the Gibraltar Mines Ltd. Metallurgical Testing Services laboratory. All core was assayed for copper and molybdenite^(MoS2^{). Selected}intervals were also assayed for acid soluble copper (ASCu), cyanide soluble copper (CNSCu), gold, silver, zinc and lead.

Assays provided for samples from the 2003 Exploration Program include percent total copper, percent acid soluble copper, percent cyanide soluble copper, percent molybdenite, percent zinc, percent lead, grams per tonne silver and grams per tonne gold. The total copper, acid soluble copper, molybdenite, lead, silver and zinc assays are performed by acid digestion of pulverized drill core samples followed by Atomic Absorption Spectrometry (AAS) analyses of the resulting solutions. The cyanide soluble copper assay is performed by cyanide digestion of pulverized drill core samples, followed by AAS on the resulting solutions and the gold assays are performed by fire assay with AAS finish.

QA/QC Procedures

The following Quality Assurance/Quality Control Protocols are implemented in Gibraltar’s Assay Laboratory ensure that accurate, precise and reproducible analytical results are obtained.

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• Reject assay pulps are placed in labeled bags and stored as sets corresponding to assay certificate numbers for future reference. Each sample bag also contains an ID tag to ensure positive sample identification.
  
• Reject drill core pulps are stored in labeled bags as drill-hole sets for future reference. Each sample bag also contains an ID tag to ensure positive sample identification.

Security of Samples

At Gibraltar, whole core samples from drilling in the main mine area are taken for analysis, but a library of representative samples of the different rock types and mineralization is retained in an on-site core facility.

Mine Planning

Gibraltar has been maintained on stand-by sincefrom July 1999 and, subject to refurbishment and start-up investment of approximately $25 million, will be ready to re-start once copper prices stabilize in the range of US-0.90-$1.00 per pound (at an exchange rate of US$0.70=Cdn$1.00). As copper prices are rising and current smelting and treatment costs for concentrate are at historic lows, planning for re-opening the operation has accelerated in 2003 and planning has begun for a possible re-start by lateOctober 2004.

In early fiscal 2004, Gibraltar has developed a plan to mine 148163.5 million tonnestons (148 million tonnes) of “ore grade” material over 12 years to produce an average of 70 million pounds of copper and 700,000980,000 pounds of molybdenum per year in concentrate plus additional cathode copper from its 10 million pound per year solvent extraction electro-winning plant. Gibraltar has the mineral resource base, physical plant and technical/the technical and management expertise in place to operate the mine over the 12-year mine plan.

Along with The factors which primarily affected the start-up decision were the copper price, the US$-Can$/C$ exchange rate, and concentrate treatment charges impact on the minimum copper price required to justify a re-start decision.charges. There is currentlywas generally a shortage of copper concentrates available from operating mines resulting in recordearly 2004 which at that time resulted in relatively low treatment and refining charges charged by smelters. This meansGibraltar was able to secure long term (40 month) contracts for treatment and refining cost at a reductionsignificant discount to the prevailing market in treatment costs of over US$0.10 per pound for copper mining companies.early 2004. The US$-Can$:C$ exchange rate has gonemoved from 0.67 to 0.76 overapproximately 0.80 during the last two years,past year, which increasesincreased the copper price required to justify re-start,re-start; however, the recent rise in copper price to overthe US$1.00/lb1.50/lb. range has more than offset the negative effect of the increase in the exchange rate.

The Gibraltar re-start isdecision was based on a “four-year “mine"forty month" mine plan i.e.– specifically, the initial 3.5three years of the long-range 12-year mine plan. Once the decision is made to re-start the mine, planned openOpen pit pre-development work would beginbegan in June 2004 in the Pollyanna pit area, consisting of planned mining 10of 7.5 million tonnes of waste rock. Waste rock removal will requirerequired drilling and blasting. The pre-development work in the Pollyanna pit will exposeexposed ore grade material allowing for continuous mill feed for 3.53.3 years.

A recent review2004 mine re-start plan indicated a total capital cost before equipment financing of the re-start mine plan indicates capital costs of approximately $21C$51.3 million and $4 millionplus C$3.0 in working capital would be required. Therequired; the breakdown of the capital cost is $8.58C$29.1 million for mine equipment, $1.83C$5.7 million for expense projectsmill, building and $11.05services refurbishment and C$16.5 million for pre-production mining operations. Equipment lease financing of $21 million was put in place, resulting in a total capital cost after equipment financing of $30.3 million plus $3.0 million of working capital The four-year mine plan will requirerequired six months from the re-startrestart decision date to resumption of fullmill operations. The plan has some challenges, as lower grade/higher strip material would be accessed early in the plan. The average operating cash breakeven cost over the four-years is US$0.83 per pound, with an average cost of US$ 0.90 per pound in the first two years.

During year two of the four year mine plan, it is anticipated copper treatment charges will return to the long term traditional rates of US$0.24 per pound from today’s US$0.11 per pound. AtIn preparation for that point in time,event, Taseko will reevaluateis re-evaluating the economics of its potential copper refinery project for Gibraltar.

E.2          An independent review of mineral reserves and resources was completed by Roscoe Postle and Associates Inc. ("RPA") in the third quarter of fiscal 2004, updated in March 2005, and described in a technical report by James W. Hendry, P.Eng., and C. Stewart Wallis, P.Geo., of RPA dated March 21, 2005. There was no significant change in the resources from the audit of the estimates that had been carried out by RPA in December 1998 when the mine was closed.

Taseko received approval for the mine plan from the BC Ministry of Energy and Mines on June 1, 2004. Ledcor personnel were mobilized to site in late May to accelerate preparations for restart. One shovel, three haul trucks and one drill were re-commissioned and put into operation, culminating in the commencement of pre-development mining operations in the Pollyanna Pit on June 10. Between June and September 30, some 5,558,000 tons of overburden and waste rock material was stripped to expose Pollyanna mineralization. Mill startup occurred in October 2004.

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Labour Matters

Gibraltar and its former union, the National Automobile, Aerospace, Transportation and General Workers Union of Canada (the "CAW" union), appeared before the British Columbia Labour Relations Board ("LRB"), which ruled on June 29, 2004 (the "Original Decision") that Gibraltar was entitled to joint venture with Ledcor to commission and start up the Gibraltar mine. Further, the LRB ruled that once the majority of workers on the Gibraltar site consist of the longer term mining and mill operating personnel, a vote would be held to determine which union would represent those employees – CAW, or the Christian Labour Association of Canada ("CLAC"), which represent Ledcor’s employees.

The CAW applied for leave and reconsideration of the Original Decision, on the basis that the Taseko/Ledcor Joint Venture to operate the Gibraltar mine had not proceeded in a manner represented to the original LRB panel. A representation vote was held on November 15 and 16, 2004, but before the vote could be counted, the LRB had to be satisfied that the terms of the JV Agreement had been implemented and the necessary elements of a successorship had been established. The ballot boxes were ordered sealed by the LRB, and the original LRB panel, pending those determinations, would decide whether the vote results would be counted.

A series of submissions were made by the unions and the JV in December 2004 and in January 2005. On February 16, 2005, Taseko and Ledcor received a LRB ruling that confirmed the Joint Venture was the valid successor employer for the Gibraltar operation and accordingly, the LRB directed the parties to count the ballots from the representation vote originally held in November 2004, to determine which union would represent the employees. The ballots were counted February 21, 2005, and 74% of the workers had voted for the CLAC union, making CLAC Local No. 68 the certified union for the Joint Venture. CLAC had previously ratified a collective agreement with Ledcor, the mine operator on behalf of the Joint Venture, in September 2004.

Royalty Sale Agreement

In September 2004, the Company entered into agreements with an arms-length investment partnership, the Red Mile Resources No. 2 Limited Partnership ("Red Mile"). Gibraltar sold to Red Mile a royalty over Gibraltar production for $67.357 million, which was received on September 29, 2004 but immediately loaned to a financial institution as the Company had pledged these funds to secure its obligations under the royalty agreements.

Pursuant to the royalty sale and cash pledge agreements, the Company received net amount of $10.5 million in fees and interest for services performed in relation to the Red Mile transaction, of which $5.25 million was received on each of September 2004 and in December 2004. The amount of $5.25 million received in September 2004 included $1.75 million for indemnifying an affiliate of Red Mile from any claims relating to a breach by Gibraltar Mines Ltd. under the royalty agreement. The funds received in respect of the indemnification are presented as deferred revenue in the Company's financial statements, and are being recognized over the expected remaining (approximately 10 year) life of the royalty agreement.

Under the Royalty Agreement, annual royalties will be payable by Gibraltar at rates ranging from $0.01 per pound to $0.14 per pound of copper produced during the period from the commencement of commercial production (as defined in the agreement) to December 2014. Gibraltar is entitled to have released to it funds held under the promissory note to fund its royalty obligations to the extent of its royalty payments.

The Company has a pre-emptive option to effectively purchase ("call") the royalty interest by acquiring the Red Mile partnership units at a future date in consideration of a payment commensurate with the gross funds which were received by the Company. Under certain circumstances, the investors in Red Mile also have a right to sell ("put") their Red Mile partnership units to the Company; however such right is subject to the Company's pre-emptive right to exercise the "call" in advance of any "put" being exercised and completed.

The Company also granted to Red Mile a net profits interest ("NPI"), which survives any "put" or "call" of the Red Mile units. For the years 2011 to 2014, the NPI is 2% if the price of copper averages US$2.50 to US$2.74 per pound, 3% if the price of copper averages US$2.75 to US$2.99 per pound and 4% if the price of copper averages US$3.00 per pound or greater for any year during that period. The US-dollar pricing amounts specified above are

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based upon an exchange rate of US$0.75 for C$1.00, and shall be adjusted from time to time by any variation of such exchange rates. No NPI is payable until the Company reaches a pre-determined aggregate level of revenues less defined operating costs and expenditures. See also discussion of 2004 Results below for further information on the accounting treatment of the Royalty Sale.

Prosperity Project

Location, Access and Infrastructure

The Prosperity Project consists of 196 mineral claims covering the mineral rights for approximately 85 square kmkilometres of south centralsouth-central British Columbia, Canada. The property is located at latitude 51degrees 28'N51 degrees 28’ N and longitude 123 degrees 37'37’ W in the Clinton Mining Division, approximately 125 kmkilometres southwest of the City of Williams Lake in south-central British Columbia. Access from Williams Lake is via Highway #20 to Lee'sLee’s Corner, then via an all-weather main line logging haulage road to the site, a total road distance of 192 km.kilometres. The British ColumbiaCanadian National Railway

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services Williams Lake and has rolling stock to facilitate shipping bulk commodities from Williams Lake to Vancouver, or copper concentrates through to the Pacific Ocean portsport of Squamish and North Vancouver. The community of Williams Lake is sufficiently close and is capable of supplying goods and services to a possible mine, and its personnel.

Multiple high-voltage transmission lines from the existing Peace River hydroelectric power grid are situated 118 kmkilometres east of the Prosperity Project. A 124-km124-kilometres conventional power line was designed to connect to the existing B.C. HydroelectricBC Hydro electric power grid and should be capable of supplying the required power to service a large mine and mill complex at the Prosperity Project site. A major natural gas transmission pipeline is situated 112 kmkilometres northeast of the Prosperity Project. AmpleManagement believes ample water is available nearby for a mining operation.

Geology and Mineralization

The Prosperity property hosts a large porphyry copper-gold deposit. The deposit is predominantly hosted in Cretaceous andesitic volcaniclastic and volcanic rocks. In the western portion of the deposit, the host rocks have been intruded by the multi-phase, steeply south-dipping Fish Creek Stock. The stock is surrounded by an east-west trending, south-dipping swarm of subparallel quartz-feldspar porphyritic (intrusions with larger crystals in a finer grained groundmass) dikes. The stock and dikes comprise the Late Cretaceous Fish Lake Intrusive Complex that is spatially and genetically related to the deposit. Post mineralization porphyritic diorite occurs as narrow dikes that cross-cut all host rocks. The central portion of the deposit is cut by two major faults, striking north-south and dipping steeply to the west.

Pyrite and chalcopyrite are the principal sulphide minerals in the deposit. They are uniformly distributed as disseminations, fracture-fillings, veins and veinlets and may be accompanied by bornite (copper sulphide) and lesser molybdenite (molybdenum sulphide) and tetrahedrite-tennantite.tetrahedrite-tennantite (copper and copper-silver sulphides). Native gold occurs as inclusions in and along microfractures with, copper-bearing minerals and pyrite.

ExplorationHistory

Prospectors discovered mineralization in the 1930s. Exploration continued intermittently and by a variety of operators until about 1991, and included extensive IP, magnetic and soil geochemical surveys, and 176 percussion and diamond drill holes, totaling approximately 27,200 metres. This work helped define the Prosperity Project mineralization to a depth of 200 metres, and outlined a copper-gold mineralized zone approximately 850 metres in diameter.

Taseko carried out ongoing and systematic exploration programs from 1991-1999, increasing drilling to 154,631 metres has been drilled in 452 holes and accompanied by progressive engineering, metallurgical and environmental studies.

Sampling and Analysis

Since the current Taseko management group took over the project in 1991, 127,000 m of HQ and NQ core has been drilled in 275 bore holes, and a single 200-m percussion hole. Core recovery averaged 95.7%. Drill company personnel boxed all core and delivered it to Taseko’s logging compound at the Prosperity site twice daily. Taseko geological and engineering staff based at the Prosperity site supervised drilling, logging and sampling. A total of 57,778 core samples were taken, each sample was generally 2 m in length.

In 1991-1994, drill core was mechanically split, one half of which was submitted for preparation and analysis. In 1996-97, 42% was subject to whole core sampling, 44% was sampled as sawn half-core, 5% of samples comprised the larger portion of core sawn 80:20. The remaining 9% was cored overburden, which was not generally sampled. Half of the core remaining after splitting is stored in core racks at site.

Samples were bagged and shipped by commercial surface transport to Vancouver area laboratories, where it was prepped. Samples were dried at temperatures less than 65 degrees C. In 1991-1993, primary comminution to approximately 1/4 inch (6.4 mm) size by a jaw crusher with secondary roll crushing to obtain minus 15 mesh. In 1994-1997, samples were crushed in a single stage so that greater than 60% passed a 10 mesh screen and 500 gram assay splits were riffled out for crushing. Coarse rejects were retained until year 2000 at a warehouse in Port Kells, British Columbia. Ring and puck pulverization was used. In 1991-1993, approximately 95% of the sample passed a 120 mesh screen. In 1994-1997, greater than 90% of the sample passed a 150 mesh screen. Pulp rejects are retained indefinitely at the Port Kells warehouse.

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All assays and analyses were performed by Min-En Laboratories. Gold analysis was done by lead collection fire assay, using a 30 g charge and an Atomic Absorption Spectroscopy (AAS) finish. Copper analysis was done by Aqua Regia digestion on a 2 g sample, AAS finish. Mercury analysis was done by Cold Vapour AA. Multi-element analysis by Inductively Coupled Plasma Emission Spectroscopy (ICP-ES) was also done on all samples.

In order to assess quality control, duplicate and standard reference samples were submitted for assaying, representing more than 10% of the total assays. Random duplicates were derived from 5% of all rejects. Every twentieth sample was shipped to either Chemex Labs Ltd. (now ALS Chemex) or International Plasma Laboratories Ltd. for riffle splitting of the coarse reject, pulverization and analysis for gold and copper. In 1994-1997, project-based, bulk standard reference materials were created and submitted within the mainstream and duplicate analytical streams.

Security of Samples

For Prosperity, drill core is stacked and stored on the property. Pulps and rejects from core samples are generally stored by the analytical facility for one year, then acquired by the Company and stored in a secured facility in Port Kells. All rejects are discarded after two years.

Estimates of Mineralization

In 1998, G. Giroux, P.Eng., reported estimated measured and indicated mineral resources of 1.0 billion tonnes at 0.41 grams gold/tonne and 0.24% copper and an inferred resource of 0.2 billion tonnes grading 0.25 grams gold/tonne and 0.21% copper at $3.25/tonne NSR cut-off.

Engineering Studies

In 1993, Melis Engineering Ltd. was retained by Taseko to carry out comprehensive metallurgical tests on drill core samples from the Prosperity Project to evaluate the metallurgical variability of the deposit. The test program

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included batch flotation tests and eleven lock-cycle flotation tests on various composites, and provided detailed copper-gold concentrate analyses, grindability assessments, tailings settling tests and environmental data.

The results from the variability testwork demonstrated that copper recoveries ranged from 83.0% to 88.4% with copper concentrate grades ranging from 22.2% copperCu to 28.8% copper.Cu. Gold recoveries ranged from 66.1% to 79.8% with grades ranging from 26.0 grams gold/Au/tonne to 71.3 grams gold/Au/tonne reporting to the copper concentrate. Bond rod mill and ball mill grindability tests of drill hole composites indicated a variation of hardness within individual levels and an increase in hardness with depth. Work indices ranged betweenfrom 16.4 to 20.4.

The conceptual concentrator design was conventional, consisting of SAG (Semi-Autogenous Grinding) and ball mill grinding; bulk sulphide flotation; regrind and rougher/scavenger flotation; cleaner flotation; and concentrate dewatering.

Late in 1993, Kilborn Engineering Pacific Ltd. was contracted to complete a detailed Project Pre-feasibility Study, which was successfully tabled in mid-1994. The Kilborn Pre-feasibility Study, which considered a 60,000 tonne per day milling rate, addressed most aspects of the Project at the level of detail and analysis greater than that normally attributed to a pre-feasibility study. It confirmed that the Prosperity Project compared favourably with open pit mines currently operating in the region and provided excellent benchmarks for productivity and cost comparisons.

For the Pre-feasibility Study, a mine plan encompassing mineralized material (mineral resource) of 675 million tonnes at an average grade of 0.236% copper and 0.434 grams gold/tonne was outlined, containing 9.4 million ounces of gold and 3.5 billion pounds of copper. The geometry and continuity of the deposit provided for efficient open pit mining with an overall life of mine waste to mineralized material stripping ratio (ratio of waste rock to mineralized material to be removed) of 1.57. At a milling rate of 60,000 tonnes per day (21.9 million tonnes per year), average annual production would be 222,360 ounces of gold, 99 million pounds of copper and 530,000 ounces of silver contained in 185,000 tonnes of concentrate.

In October 1997, Lakefield Research Limited completed pilot plant metallurgical programs and bulk sample processing to confirm final process design criteria. The program focused on finalizing detailed process criteria for a feasibility study, including copper and gold recovery into a copper-gold flotation concentrate, assessment of

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grindability characteristics and detailed concentrate and environmental analyses. Results from the 50-tonne pilot plant program results compared favourably with the Pre-feasibility Study metallurgical results.

Detailed Engineering Work

Detailed investigative work has included a review of all major facilities and their construction requirements, unit costs for labour, materials and equipment. Along with the construction aspects of the project, the deposit’s mine development plan has undergone a series of optimization studies that analyzed how the mining should best progress in consideration of the most recent metal price and exchange rate forecasts. Milling reviews examined the original Lakefield Research investigations, pilot plant program and the more recent modal analyses by G&T Metallurgy to determine if they offered any changes that would result in cost savings. Upon completion of the multitude of studies, an all-encompassing project analysis was conducted in preparation for completing a project feasibility report. During 1999, consulting geotechnical engineers Knight Piesold Ltd. focused their attention on rock waste and tailings storage studies. At the same time, Merit Consultants reviewed the parameters for construction of major structures. The tailings storage studies investigated holding capacities from 490 million tonnes to 810 million tonnes, methods of embankment design from impervious to free draining, filling by cyclone or spigot, and various tailings pumping scenarios. Knight Piesold Ltd. designed the embankment, tailing and reclaim water pipeline system, freshwater supply system, open pit dewatering and slope, waste dumps, geotechnical foundation and surface water run-off control systems. Triton Environmental Consultants developed management for environmental and socio-economic permitting, planning, fisheries compensation, mitigation and reclamation. Merit Consultants International continued to review construction and project management criteria. They also provided details and rates for alternative collective bargaining construction agreements.

All major building structures for the crusher, process plant, service complex, etc were assessed with respect to pre-engineered versus custom engineering plus labour productivity and cost, material unit rates and construction equipment content. Project construction productivity and costs were adjusted to those recently experienced on BC mine projects. Mine engineers examined mining/milling rates of 60,000 and 90,000 tonnes per day along with a reduced mine plan of 400 million tonnes and stripping ratio of 1:1, respectively. The intent was to determine which production rate and plan was better suited for a mine production schedule and mill throughput that considered current metal price and exchange rate forecasts. Following the 60,000 and 90,000 tonnes per day investigations, Taseko engineers and outside consultants conducted detailed optimization investigations for mine production schedules and milling rates of 70,000, 75,000 and 80,000 tonnes per day. A series of pit development plans were investigated, along with decreasing cut-off grade and stockpiling strategies. Waste excavation deferral programs were also examined. Mine-related activities included compilation of the Prosperity economic model with the most recent operating costs, smelter charges, treatment terms, metal prices and exchange rate forecasts. As previously noted, operating costs were rationalized by using those experienced for identical activities at Gibraltar Mine.mine. Facilities would require only one primary crusher and a single overland

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conveyor to a coarse ore stockpile rather than the dual system originally considered necessary. This large cost saving has beenwas incorporated into the economic evaluations.

In March 2000, subsequent to economic analyses and mining plan optimization studies undertaken by Taseko, a revised processing rate of 70,000 tonnes per day was adopted for a detailed study of the Prosperity Project. The study addressed mining, processing, environmental, ancillary facilities and infrastructure required for completion of the financial and technical evaluation of the Project. It includes a project management plan and summary project schedule, and cost estimates to bring the Project into operation, and an economic analysis. The 2000 work was based on an in-pit resource estimated to be 490.8 million tonnes grading 0.22% copper and 0.43 grams Au/tonne at a $3.25/tonne net smelter return cut-off. This material is within the grade model constructed by Giroux in 1998 from the geological interpretation and rock modelling done by Taseko personnel. The open pit mine design, mine plans, mining capital and operating costs were prepared by Nilsson Mine Services Ltd. with the assistance of the engineering staff of Gibraltar Mines Ltd. Kilborn developed the mill flow sheet in conjunction with the Gibraltar engineering staff. Butterfield Mineral Consultants Ltd. conducted a study of the saleability of the Prosperity concentrate. Pilot plant tailings aging tests continued until August 2000 when the 36-month analyses were completed. The tailings aging tests tables for the 1998 Pilot Plant report were also updated for environmental requirements of the Project Reporting. Electrical transmission design engineers Ian Hayward International Ltd. designed the 230 kilovolt (kV) transmission line, provided the detailed material take-off and selected the right-of-way to the site from the BC Hydro Dog Creek substation.

The latest mining/milling optimization work has detailed much of the engineering work beyond that conducted previously by considering two major initiatives. Firstly, environmental analyses were reviewed and the waste rock

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storage criteria revised, enabling reduced truck haulage requirements. Secondly, application of current and actual Gibraltar mine equipment operating costs resulted in reduced overall mining costs. The most suitable waste rock and tailings storage designs were incorporated into the development. Reduced milling costs were achieved by increasing the primary grind specification from 160 microns to 200 microns. This improvement was determined through additional metallurgical reviews. Cost effective construction criteria, investigated by Merit Consultants, were applied to all major structure cost estimating.

Hypothetical Operating Scenario, Economics

Engineering work by Kilborn and others has determined that Prosperity deposit is technically amenable to open pit mining. A four phase mining plan was designed in whichmining; however, the life of mine strip ratio would be 0.72:1. Under the 70,000 tonnes per day scenario, the project would have a 16-year mine life and a 20-year project life, producing, on average, 235,920 ounces of gold and 102 million pounds of copper per year. Low-grade mineralized material mined over the first 14 years would be stockpiled and processed in the last four years. Mineralized material and waste rock would be mined by conventional drilling, blasting, loading and truck hauling methods.

Gold and copper would be recovered as concentrate employing conventional crushing, grinding and stage flotation technologies. Recoveries would average 70.2% gold and 86.6% copper. A concentrated grading 24.5% copper, 38.8 grams Au/tonne and 89 grams Ag/tonne would be produced. Average annual concentrate production would be 188,885 tonnes (dry). Tailing and waste rock would be storied in an impoundment on site in Fish Lake. Reclamation plans include a fish enhancement plan to compensate for fish habitat lost in Fish Lake. Concentrate would be transported to the Port of Vancouver BC, and shipped overseas for smelting and refining. Supplies would be trucked to site. Power will be supplied by BC Hydro; annual requirements are estimated to be 819.5 gigawatt-hours/year via a 230-kilovolt transmission line that would require construction over a distance of 124 km to the site.

Cost engineering and economic analyses demonstrate that the mine-mill complex would have an average life of mine estimated site operating cost of Cdn$4.99 per tonne of mineralized material and a net smelter return (monies actually received for concentrate delivered to a smelter net of metallurgical recovery losses, transportation costs, smelter treatment-refining charges and penalty charges) of Cdn$7.82 per tonne. Initial capital cost for the mine, mill, ancillary facilities and infrastructure is estimated to be Cdn$684 million (capital costs varies from Cdn$400 – $800 million depending on throughput assumptions of 60,000 to 120,000 tonnes/day). The pre-tax discounted cash flow rate of return (DCFROR) of 3.1% was determined using long-term average price projections. These are: gold at US$350/oz; copper at US$1.00/lb; silver US$6.50/oz and an exchange rate of US:Cdn $0.68. A sensitivity analysis indicates that the DCFROR is most sensitive to the currency rate exchange variable. For example, a 20% reduction in the exchange rate results in a DCFROR of 11.9% and a 20% increase in the exchange rate would result in a DCFROR of –5.2%. It is also sensitive to gold head grade, gold recovery, copper variables and operating cost. For example, a 20% decrease in operating cost gives a DCFROR of 7.6% and a 20% increase reduces the DCFROR to –2.4%. It is least sensitive to smelter terms and initial project capital cost. These rates of return arewere not sufficient to justify construction of a mine at the Prosperity Project given currentat the 2000 copper and gold prices.

Kilborn Engineering Pacific Ltd provided a draft report on the detailed engineering studies in December 2000.

Engineering studies will continue and assessments will be undertaken over time as metal prices and other conditions indicate new opportunitiespossibilities for the Prosperity project. However

Sampling and Analysis

Since the current Taseko management group took over the project in 1991, 127,000 metres of HQ and NQ core has been drilled in 275 bore holes, and a single 200-metre percussion hole. Core recovery averaged 95.7% . Drill company personnel boxed all core and delivered it to Taseko’s logging compound at this time,the Prosperity site twice daily. Taseko geological and engineering staff based at the Prosperity site supervised drilling, logging and sampling. A total of 57,778 core samples were taken, each sample was generally two metres in length.

In 1991-1994, drill core was mechanically split, one half of which was submitted for preparation and analysis. In 1996-97, 42% was subject to whole core sampling, 44% was sampled as sawn half-core, 5% of samples comprised the larger portion of core sawn 80:20. The remaining 9% was cored overburden, which was not generally sampled. Half of the core remaining after splitting is focusing its resourcesstored in core racks at site.

Samples were bagged and shipped by commercial surface transport to Vancouver area laboratories, where they were prepared. Samples were dried at temperatures less than 65° C. In 1991-1993, primary comminution to approximately 1/4 inch (6.4 mm) size by a jaw crusher with secondary roll crushing to obtain minus 15 mesh. In 1994-1997, samples were crushed in a single stage so that greater than 60% passed a 10 mesh screen and 500 gram assay splits were riffled out for crushing. Coarse rejects were retained until year 2000 in a warehouse in Port Kells, British Columbia. Ring and puck pulverization was used. In 1991-1993, approximately 95% of the sample passed a 120 mesh screen. In 1994-1997, greater than 90% of the sample passed a 150 mesh screen. Pulp rejects are retained indefinitely at the Port Kells warehouse.

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All assays and analyses were performed by Assayers Canada (formerly Min-En Laboratories). Gold analysis was done by lead collection fire assay, using a 30 gram charge and an Atomic Absorption Spectroscopy (AAS) finish. Copper analysis was done by Aqua Regia digestion on a 2 gram sample, AAS finish. Mercury analysis was done by Cold Vapour AA. Multi-element analysis by Inductively Coupled Plasma Emission Spectroscopy (ICP-ES) was also done on all samples.

In order to assess quality control, duplicate and standard reference samples were submitted for assaying, representing more than 10% of the total assays. Random duplicates were derived from 5% of all rejects. Every twentieth sample was shipped to either Chemex Labs Ltd. (now ALS Chemex) or International Plasma Laboratories Ltd. for riffle splitting of the coarse reject, pulverization and analysis for gold and copper. In 1994-1997, project-based, bulk standard reference materials were created and submitted within the mainstream and duplicate analytical streams.

Security of Samples

For Prosperity, drill core is stacked and stored on the Gibraltar project.property. Pulps and rejects from core samples are generally stored by the analytical facility for one year, then acquired by the Company and stored in a secured facility in Port Kells. All rejects are discarded after two years.

E.3          Estimates of Mineralization

The following estimate is considered to be a historical estimate because it was done prior to the implementations of National Instrument 43-101 regulations. However, the estimate uses the designated categories applicable under National Instrument 43-101.

In 1998, G. Giroux, P.Eng., reported estimated measured and indicated mineral resources of 1.0 billion tonnes at 0.41 grams Au/tonne and 0.24% Cu and an inferred resource of 0.2 billion tonnes grading 0.25 grams Au/tonne and 0.21% Cu at $3.25/tonne NSR cut-off.

Harmony Gold Project

Gibraltar Mines Ltd, a subsidiary of Taseko Mines Limited, acquired the Harmony Gold Project in 2002October 2001 through a related party transaction with Misty Mountain Gold Ltd. (now renamedknown as Continental Minerals Corporation) involvingfor consideration $2.23 million in cash and the issuance of preferred shares in Taseko’s wholly-owned subsidiary Gibraltar Preferred SharesMines Ltd. (with an initial paid up capital of $62.77 million) and which preferred shares are convertible intoexchangeable for Taseko shares in certain liquidation events at prices for the Taseko shares similar to the consideration price of the Boliden Debenture (see "Gibraltar Mine – Acquisition Term"). Details of the exchange terms of these preferred shares can be found in connection withprior Annual Information Form filings by Taseko atwww.sedar.com.

Management does not believe there has been a fundamental change in the nature of the Harmony Gold Project (see Items 7 and 19).Property; however, during the 2004 fiscal year, the Harmony Gold Property was written down to a nominal value of $1,000. Accounting rules require that the Company must write down its investment in the property if it has not conducted significant exploration or development on the property in the last several years, unless there is persuasive evidence to the contrary.

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Assessments will be undertaken over time as metal prices indicate new opportunities for the Harmony project.

Location, Access and Infrastructure

The Harmony Gold Project is located at latitude 53 degrees 31’ N and longitude 132 degrees 13’ W in the Skeena Mining Division, on Graham Island, Queen Charlotte Islands-Haida Gwaii,Islands (also referred to by its aboriginal inhabitants as "Haida Gwaii"), on the northwestern coast of British Columbia, Canada. The Harmony Gold ProjectProperty comprises of 50 four post mineral claims, 37two post mineral

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claims and one fractional claim, totalling 970 claim units and 24,250 ha. The deposit-area claims are in good standing until June 29, 2009.

The Queen Charlotte Islands-Haida Gwaii, are approximately 89 kilometres west of the British Columbia mainland, 159 kilometres southwest of the City of Prince Rupert, and approximately 770 kilometres northwest of the City of Vancouver. Existing high capacity industrial logging roads, extending from the towns of Port Clements, Masset and Queen Charlotte City, are used access the site. By road, the property is approximately 40 kilometres from Queen Charlotte City and 30 kilometres from Port Clements. Graham Island is readily accessed by ferries and commercial barges and shipping from both Prince Rupert and Vancouver. There are also daily commercial flights from Vancouver.

Geology and Mineralization

The Harmony property hosts the Specogna epithermal gold deposit, controlled by the Sandspit fault. It is a right lateral transverse-normal fault, with its eastern side down dropped at least several hundred metres, and a dip of 40 to 60^oto the east. Cretaceous Haida Formation mudstones underlie the western side (footwall) of the fault, and the eastern side by Miocene sandstones, siltstones and conglomerates of the Skonun Formation.

Dacite dykes of Tertiary age have intruded along the fault. Contemporaneous, pervasive silicification, hydrothermal brecciation, stockwork and banded quartz veining and gold mineralization have developed along the hanging wall of the fault. This extends for a strike distance of at least 800 metres, eastwards from the fault at least 200 metres and to a depth of at least 240 metres. Pyrite and marcasite are the dominant metallic minerals. Gold occurs as native gold and electrum, which are commonly visible. Silver is also present as an alloy with gold.

Exploration and Estimates of MineralizationHistory

Prospectors discovered mineralization at Harmony in 1970. The project claims were optioned by various companies during the period 1970 to 1975, which carried out geological mapping, geochemical surveys and minor drilling. Consolidated Cinola Mines Ltd acquired the ground in 1977 and with partners, carried out detailed drilling totalling 30,116 metres in 231 holes by 1984. In 1981, 465 metres of an underground drift and crosscuts were excavated for a metallurgical bulk sample. A 45 tonne per day pilot mill was established to treat about 5,200 tonnes of material and in 1982 a feasibility study for a 10,000-15,000 tonnes per day operation was completed. From 1986 to 1988, City Resources drilled 83 diamond drill holes and 64 reverse-circulation drill holes, totalingtotalling 13,356 metres, and completed 117.6 metres of underground development to obtain a bulk sample, conducted bench scale metallurgical testing, and developed open pit scenarios for the project. Barrack Gold acquired the project in 1989 and renamed the company to Misty Mountain Gold Ltd.

Additional drilling, metallurgical and engineering studies were carried out from 1989-1999. In 1997, M. Nowak, P.Eng., estimated the measured and indicated resources in the deposit to be 64 million tonnes grading 1.53 grams Au/tonne, containing approximately 3 million ounces of gold. There are additional inferred resources of 21 million tonnes grading 1.04 grams Au/tonne. The estimates were done at a 0.60 grams Au/tonne cut-off.

Sample Analysis and Security

During the period from 1971 to 1989, the companies conducting exploration sent either split or sawn half core samples for assaying. Samples were taken continuously over lengths ranging between 1.5 to 2.0 metre, crossing lithologic boundaries in most instances. Early gold analyses included chemical extraction followed by gravimetric or Atomic Absorption (AA) finish. Check assaying procedures were included at various laboratories including Chemex, Bondar Clegg, General Testing and Bell-White Labs.

Drill core sample lengths chosen by Misty Mountain were varied to selectively isolate vein material and to avoid sampling across lithologic boundaries. Samples,totalling 22,421 in number from 35,652 metres of core, for the most part ranged between 1.75 and 2.25 metres (actual range 0.06 – 6.10 metres) in length. Whole NQ2 core rather than half core was sampled to obtain maximum assay precision.

Sample preparation was carried out at Min-En Laboratories in North Vancouver, B.C., where drill core was crushed to 60% passing 10 mesh and pulverized to 90% - 150 mesh. Prepared samples were sent to Chemex Labs Ltd. for mainstream assay and to CDN Labs for check assay. A one assay ton charge was used for gold fire assay with an AA finish; a one gram sample was assayedfor silver by AA. All samples were sent for 32 element ICP analysis. A total of 23,690 prepared samples was analysed at Chemex and 1,132 prepared samples was analysed at CDN using a similar assaying procedure.

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Three property standards were prepared to approximate lithologic type and corresponding gold grade, and one of three was inserted into the sample stream. Approximately one in 20 standards was randomly inserted in the mainstream pulps, while one in 13 was inserted in the duplicate pulps. Performance of the three standards assayed, along with the mainstream samples at Chemex, was monitored by comparing the results over time with the mean and tolerance limit values. Of the 1,209 primary results, a total of 48 or 4% were outside of the set tolerances. A rerun of the batches containing the offending standards was re-assayed, resulting in 15 or 1.2% outside of the set tolerances.

Sample Security

Sample pulps are stored in the Company’s warehouse at Port Kells, British Columbia. Drill core is stored at site.

Engineering Studies

Metallurgical testwork completed prior to 1987 fell short of arriving at an economically and environmentally viable ore treatment/gold extraction process for the Specogna Deposit. Since 1996, Misty Mountain has pursued a comprehensive program of extending the previous testwork and exploring other potentially viable process options for the recovery of gold, including gravity, flotation, bio-oxidation of flotation concentrate, bio-oxidation of whole ore, carbon-in-leach cyanidation and thiosulphate leaching.leaching using the chemical compound thiosulphate. This work has included a reassessment of the ore deposit mineralogy, geology and characteristics of gold mineralization. The reassessment of pre-1987 metallurgical sampling discovered that the previous pilot plant bulk sample material was unrepresentative of the overall deposit, having been collected predominantly from a thin horizontal unit that comprises only about 7% of the overall in-pit rock.

Metallurgical samples for the 1997 and 1998 testwork were carefully selected so as to be representative of the overall in-pit rock units. Bench scale tests of these samples have revealed acceptable gold recoveries both through collection and treatment of a sulphide concentrate and through direct bio-oxidation of whole ore followed by gold leaching. Work is required to optimize the processes from an economical perspective and confirm initial results by applying these same processes to larger, representative samples.

In 1997, preliminary mine planning was completed.

For the past several years, there has been no significant exploration work at the Harmony Project. The Harmony Project will be reviewed as metal prices and other conditions warrant.

Geology and Mineralization

The Harmony property hosts the Specogna epithermal gold deposit, controlled by Independent Mining Consultants Inc.the Sandspit fault. It is a right lateral transverse-normal fault; the eastern side is down-dropped at least several hundred metres, and the dip is 40 to

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60^oto the east. Cretaceous Haida Formation mudstones underlie the western side (footwall) of Tucson, Arizona resultedthe fault, and the eastern side by Miocene sandstones, siltstones and conglomerates of the Skonun Formation.

Dacite dykes of Tertiary age have intruded along the fault. Contemporaneous, pervasive silicification, hydrothermal brecciation, stockwork and banded quartz veining and gold mineralization have developed along the hanging wall of the fault. This extends for a strike distance of at least 800 metres, eastwards from the fault at least 200 metres and to a depth of at least 240 metres. Pyrite and marcasite (iron sulphides) are the dominant metallic minerals. Gold occurs as native gold and electrum, which are commonly visible. Silver is also present as an alloy with gold.

Estimates of Mineralization

In 1997, M. Nowak, P.Eng., estimated of in-pit material ofthe mineral resources. The estimate was amended in 2001 to use the categories required under National Instrument 43-101. The estimated measured and indicated mineral resources are 64 million tonnes grading 1.521.53 grams Au/tonne, usingcontaining approximately 3 million ounces of gold. There are additional inferred resources of 21 million tonnes grading 1.04 grams Au/tonne. The estimates were done at a 0.60 grams Au/tonne cut-off,cut-off.

Sample Analysis and Security

During the period from 1971 to 1989, previous operators sent either split or sawn half core samples for assaying. Samples were taken continuously over lengths ranging between 1.5 to 2.0 metres, and crossing lithologic boundaries in most instances. Early gold analyses included chemical extraction followed by gravimetric or Atomic Absorption (AA) finish. Check assaying procedures were included at various laboratories including Chemex, Bondar Clegg, General Testing and Bell-White Labs.

Drill core sample lengths chosen by Misty Mountain were varied to selectively isolate vein material and to avoid sampling across lithologic boundaries. Samplestotalled 22,421 in number from 35,652 metres of core, and for the most part each sample was between 1.75 and 2.25 metres (actual range 0.06 – 6.10 metres) in length. Whole NQ2 core rather than half core was sampled to obtain maximum assay precision.

Sample preparation was carried out at Assayers Canada Vancouver, BC, where drill core was crushed to 60% passing 10 mesh and pulverized to 90% - 150 mesh. Prepared samples were sent to Chemex Labs Ltd. for mainstream assay and to CDN Laboratories for check assay. A one-assay ton charge was used for gold fire assay with an overall waste to ore stripping ratioAA finish; a one-gram sample was assayedfor silver using AA. All samples were sent for 32-element ICP analysis. A total of 0.82 tonnes of waste to 1 tonne of ore.23,690 prepared samples was analysed at Chemex and 1,132 prepared samples was analysed at CDN Laboratories using a similar assaying procedure.

Sample Security

Sample pulps are stored in the Company’s warehouse at Port Kells, British Columbia. Drill core is stored at site.

Environmental Considerations

Perceptions of possiblePossible acid rock drainage havehas been the main environmental concern relating to the Harmony Gold Project, based on the previously proposed large scale, open pit mine plan. The location and size of waste rock sites proposed in that plan was also a concern. The previous mine plan was a concern of First Nations (aboriginal) and other community people,people; however, local citizens have not prevented any development work. The area has been extensively logged and permitting efforts by former operators on the Property were well advanced. Misty Mountain initiated base line environmental, wildlife, fisheries, climate, hydrology and vegetation monitoring studies. These studies were initiated before the commencement of the 1995 exploration work in order to establish both Misty

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Mountain’s intention and desire for the utmost integrity of the database and to establish a firm foundation for future permitting, as the Company recognized that successful development of the project must be done in a safe, environmentally responsible manner, which will maximize benefits to regional communities. The open, cooperative consultation process with all stakeholders, with specific attention to the First Nations community, merged with successful exploration results and utilizing low impact, proven, conventional mining methods, applicable to gold production from epithermal gold mineralization initiated by Misty Mountain would also be the intention of Taseko.

Aboriginal (or “First Nations”"First Nations") Issues

The Queen Charlotte Islands-Haida Gwaii, including the area surrounding the Harmony Gold Project, areis subject to aboriginal peoples’ land claims. Aboriginal land claims are subject to the B.C.BC Treaty Commission Legislation and the B.C.BC Treaty Commission, both established in 1993. The Commission facilitates and manages a six stage process whereby the Government of Canada, the Government of British Columbia and a First Nation negotiate a treaty settlement. The Council of Haida Nations (the First Nation claiming jurisdiction over the area of the Harmony Gold Project) is presently in the second stage, Preparation for Negotiations. The British Columbia government has stated a policy that settlements will not adversely affect existing tenures in the settlement areas.

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In late 1999, the First Nations people on Graham Island launched a lawsuit against the Government of British Columbia (Ministry of Forests). In the suit, the First Nations peoples challenged the ability of government to issue effective permits for resource development on the Queen Charlotte Islands. Due in part to this uncertainty, Misty Mountain’sMountain and Taseko management deferred further work on the project, as has Taseko’s.project. In late 2000, a decision was rendered on the lawsuit. The First Nations lost its application to have the permit set aside. Howeveraside; however, the Court went on to create a new moral duty on the part of the exploration companies to consult with First Nations, and also introduced some new uncertainties. Although the decision did not decide whether the First Nations hold aboriginal title to the Queen Charlotte Islands,Islands-Haida Gwaii, the judge accepted to some degree that at least some of the lands are subject to aboriginal title or rights and contingent on future land claims negotiations. The government asked for further clarification of the Haida decision, which was heard in 2004. The key aspects of the October 2004 decision by the Supreme Court of Canada are: the Crown may have a legal duty to consult prior to rights being negotiated or proven; there is no independent duty on private third parties to consult and aboriginals do not have a right of veto over Crown decisions.

A formal land use planning process, co-sponsored by the Province and the Haida, was initiated in mid-2003mid-2003. At this time, recommendations from the land use table and is expected toterms of reference for further discussions are being finalized and will be completedused by the late fall of 2004.BC government and the Haida for government to government negotiations. The Haida vision is to protect an additional 24%200,000 hectares of the land base.base, in addition to Goal One and Goal Two requests which would involve the protection of approximately another 49,000 hectares. Lands presently in reserve and/or parks comprise approximately 220,000 hectares. The total area of the islands is about 1,000,000 hectares. A narrow corridor along the Yakoun River is proposed for protection by the Haida but at this time it is not known what the full effect wouldwill be on the Harmony property.

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ITEM 5OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

Taseko Mines Limited ("Taseko" or the "Company") is currentlya mineral exploration and mining company with three projects located in British Columbia, Canada. These are the Gibraltar copper mine and two exploration projects: the Prosperity Gold-Copper Project and the Harmony Gold Project.
The Company is an expenditure-based organization whose business strategy is to acquire, explore and conduct detailed engineering and economic analysis of mineral deposits which have large tonnage and multi-year operation potential. NoneOther than the Gibraltar mine, none of Taseko’s currently held mineral deposits currently hosts mineralized material which can be said to be “ore”"ore" or feasibly economic at current metals prices, although the Gibraltar Mine, taken out of production and put on standby in 1998 is capable of near term reactivation if copper prices strengthen significantly and for an extended period (subject to approximately $25 million in restart costs using its current processing facilities).prices. In addition, in 2000-2001, the Gibraltar Mine has beenmine was the subject of research work, described herein, which could significantly reduce the operating cost per pound of copper produced but would require a significant (in excess of $100 million) capital investment.

In March 2004, the Company announced itfocused on pre-production activities at the Gibraltar mine. The restart plan called for six months of pre-production mining and mill commissioning activities. This was revised to a four month plan that included pre-production mining and refurbishing the crushing and milling facilities, but focusing on track tocopper circuit. Re-start of the operation took place in October 2004, when the Company commenced restart operations at the Gibraltar Minemine and that it wasbegan planning copper concentrate shipments to customers to commence in Octobercustomers. The first shipment occurred on December 4, 2004.

Under Taseko’s accounting policies, exploration, corporate/administrative and corporate/administrativecare and maintenance costs are expensed as incurred and property acquisition costs are deferred (ie capitalized).deferred/capitalized. Development costs incurred subsequent to the determination of economic recoverability are also deferred/capitalized. Such acquisition and deferred development costs are written off when Taseko abandons a property due to exploration program results that appear to warrant abandonment or when it appears that the deferred costs may not be recoverable. Acquisition costs and exploration expenditures are usually financed through a combination of existing cash and common share issuances.

As an expenditure-based corporation, Taseko’s results of operations are often evaluated on an “event driven”"event driven" basis. Results of operations are difficult to quantify given that the product of these expenditures relates to the nature, extent and statistical confidence (primarily from diamond drill exploration programs) in a deposit’s size and continuity. It is difficult to evaluate the success of operations in a fiscal year by reference to the financial statements, given that results are more appropriately measured by an evaluation of the minerals discovered and/or confirmed. Taseko’s operating activities do not occur on a regular or periodic basis and are subject to the economic realities of metals prices and equity financing conditions for natural resource exploration issuers. Accordingly, it may not be meaningful to seek observable trends in financial operating statistics. Although Taseko calculates an annual loss per share (which has varied over a range of $0.09 to $2.35 over the last three fiscal years), Taseko is of the view that its share price does not vary in accordance with the loss per share statistic but rather Taseko share prices vary largely with the price of the underlying market for copper and gold and the outlook for these metals.

Taseko’s financial statements are prepared on the basis that it will continue as a going concern. Given that Taseko has no sourcemetals and potential profitability of significant revenue, this assumption is always subject to the further assumption that there will continue to be investment interest in funding large tonnage metal deposits, which are not known to be economic in the current environment. Taseko can give no assurance that it will continue to be able to raise sufficient funds and should it be unable to continue to do so, may be unable to realize on the carrying value of its resource projects and

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the net realizable value could be materially less than Taseko’s liabilities with a potential for total loss to Taseko shareholders.Gibraltar production.

Taseko does not believe that it is significantly impacted by the effects of inflation and theinflation. The Canadian dollar has fluctuated in a relatively narrow band, as compared to long term historical trends, to the United States dollar (ranging from 1.33approximately 1.25 to 1.611.60 C$/US$) during the last few years. During the years presented, the Company has not entered into foreign currency forward contracts or other derivatives to mitigate the impact of exchange rate fluctuations on its operating results. For additional details respecting the five-year historical exchange rates, see Item 3. Taseko has not been significantly affected by government economic, fiscal, monetary or political policies, and the outlook for Taseko’s assets primarily relate to the outlook for gold and copper. For information relating to the historical prices for copper and gold, see “Item"Item D, Trend Information”Information" below.

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Critical Accounting Estimates

The Company's accounting policies are presented in note 3 of the accompanying financial statements. The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to select accounting policies and make estimates. Such estimates may have a significant impact on the financial statements. These include:

• the estimation of mineral resources and reserves,
• the carrying values of mineral properties,
• the carrying values of property, plant and equipment,
• reclamation obligation, and
• the valuation of stock-based compensation expense.

Actual amounts could differ from the estimates used and, accordingly, effect the results of operation.

Mineral resources and reserves, and the carrying values of mineral properties, and of property, plant and equipment

Mineral resources and reserves are estimated by professional geologists and engineers in accordance with recognized industry, professional and regulatory standards. These estimates require inputs such as future metals prices, future operating costs, and various technical geological, engineering, and construction parameters. Changes in any of these inputs could cause a significant change in the resources and reserves determined, which in turn could have a material effect on the carrying value of property, plant and equipment. The carrying value of mineral properties is also dependant on the valuation used for the common shares and warrants of the Company issued for the acquisition of mineral properties. The value of the common shares issued is the price of the common shares of the Company at the date of issuance to effect the acquisition. The carrying value of property, plant, and equipment is dependant on rates used for depreciation, which themselves are estimates.

Stock-based compensation expense

From time to time, the Company may grant share purchase options to employees, directors, and service providers. The Company uses the Black-Scholes option pricing model to estimate a value for these options. This model, and other models which are used to value options, require inputs such as expected volatility, expected life to exercise, and interest rates. Changes in any of these inputs could cause a significant change in the stock-based compensation expense charged in a period.

Reclamation obligation

The Company has an obligation to reclaim its properties, and has estimated the costs necessary to comply with existing reclamation standards. At September 30, 2004, the Company has estimated total reclamation costs to be $32.7 million for its current properties, which it has fully accrued. The estimates are reviewed both in-house and by outside consultants and government authorities on a routine basis as to the accuracy of remaining costs to be incurred. Estimates are adjusted as necessary and reflected on a prospective basis. Changes in this estimate could cause a significant charge to the reclamation expense recorded during a period.

A.Operating Results

Fiscal 2004 Compared to Fiscal 2003

The Company’s loss for the year increased to $80.7 million in 2004 from $3.5 million in 2003. The loss arose primarily from (a) a $28.8 million write down of the Company's interest in the Harmony Gold Property, (b) an accrual of $23.7 million for possible income taxes related to the sale of the royalty, (c) a $5.1 million premium paid to acquire all the units of the Gibraltar Reclamation Trust Limited Partnership, (d) exploration expenses of $4.5 million, (e) expenses totaling $15.0 million related to the restart of the Gibraltar mine and (f) $8.1 million expenses from other operating and overhead activities.

While management does not believe there has been a fundamental change in the nature of the Harmony Gold Property it determined during the year ended September 30, 2004, to write down the Harmony Gold Property to a nominal value of $1,000. Accounting rules require that the Company must write down its investment in the property if it has not conducted significant exploration or development on the property in the last several years, unless there is persuasive evidence to the contrary to support the carrying value.

The Company also accrued a tax provision of a subsidiary company of $23.7 million in the accompanying financial statements reflecting possible income taxes on the proceeds of the Royalty Sale (see Gibraltar Property discussion in Item 4). This tax provision reflects an amount which management believes is less than likely of ever becoming payable. The subsidiary has a June 30, 2005 taxation year end. Prior to making its ultimate tax calculations, the subsidiary will also consider tax planning strategies which might be put in place subsequent to the Company's financial reporting date of September 30, 2004. In addition, the subsidiary would exhaust all appeals if any taxes were actually assessed against the subsidiary in connection with the Royalty Sale. The amount represents a potential liability which has been recognized in a conservative manner in accordance with Canadian generally accepted accounting principles. It does not represent a payable amount based on any filed, or expected to be filed, tax return. It does not arise from a transaction in any already completed taxation year, nor has any taxation authority assessed the amount or any portion thereof as payable.

During fiscal 2004 the Company issued approximately 8 million common shares at $2.79 per share for total consideration of $22.23 million to acquire all of the units of the Gibraltar Reclamation Trust Limited Partnership, which resulted in a non-cash accounting loss of $5.1 million.

Of the $4.5 million in exploration expenditures, $4.3 million was spent on Gibraltar, and the remainder spent on the Prosperity Project and the Harmony Gold Project. The expenditures include the cost of stand-by care and maintenance and exploratory drilling activities at Gibraltar, as well as routine ongoing costs for environmental monitoring, property assessment and claim fees, and mine planning studies for Prosperity and Harmony. The drilling costs included in exploration include the cost of exercising the Company’s right to purchase the interest in the Gibraltar exploration lands earned by Northern Dynasty Minerals Ltd. and Rockwell Ventures Inc. (see Item 7).

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Consulting, legal, and office costs increased as a result of legal and labour matters related to the restart of the Gibraltar mine. Shareholder communications also increased as a result of the Company's drive to restart the mine. Trust and filing fees increased as a result of the Company achieving a listing on the American Stock Exchange in October 2004.

Subsequent to year end, Gibraltar commenced shipping its first concentrates. Under the terms of its 40 month sales agreement with a concentrate purchaser, Gibraltar has secured very competitive refining and treatment charges. While it is not possible at this early stage of production re-commencement under the new Joint Venture structure with Ledcor to be able to predict cash flows with a high degree of certainty, the Company has estimated some expected operating parameters. For the next several years, Gibraltar expects to mine approximately 43 million tons of mineralized material annually of which 12 million to 13 million tons will be milled per annum. Based on copper recoveries in the 80% range and molybdenum recoveries in the 38% range and given the average grades described elsewhere herein, gross revenue for copper should be in the $76 million per year and molybdenum gross revenue in the $7 million range per year. Operating costs (accounting for Ledcor's share of joint venture profits as a cost) are expected to be 80-85% of gross revenue range (assuming copper prices of $1.12 pound and molybdenum prices of $6.39 per pound) with operating costs being a lesser percentage if metals prices stay higher than those prices. For more information on the cash flow forecast, see the March 2005 Technical Report by Roscoe Postle Associates, Inc. at www.sedar.com.

Fiscal 2003 Compared to Fiscal 2002

Most costs have decreased in 2003 when compared to fiscal 2002; the exceptions are consulting fees and office and administration that increased in the fourth quarter relating to financing and planning for the re-start of the Gibraltar mine, and stock-based compensation expense, which is a mandatory change in the accounting for stock-basedstock-base compensation (see notes to the financial statements). Higher costs in fiscal 2002 were attributable to the activities associated with financing the copper refinery studies, in particular, interest and finance charges (2003 - $201,942; 2002 - $507,790) and legal accounting and audit costs (2003 - $169,356; $2002 - 334,492).

The main expenditures in fiscal 2003 were on exploration, which includes both the cost of care and maintenance and the exploratory drilling activities at Gibraltar and ongoing environmental monitoring, property assessment and claim fees and mine planning studies for Prosperity and Harmony. Of the $2,029,529 in exploration expenditures, $1,913,712 was spent on Gibraltar, $88,500 was spent on Prosperity and $27,317 was spent on Harmony.

The Company’s loss for the year is $3.5 million, as compared to $6.5 million loss in fiscal 2002. The Company has no revenue from metal sales as the Gibraltar Mine is currentlymine was in a "care-and-maintenance" mode.mode in fiscal 2003. Decreased expenses due to decreased activity, particularly in refinery studies, and an increase in both interest income (2003 - $721,480; 20032002 - $551,842) and from a gain on the sale of equipment (2003 - $131,638; 2002 - $1,314) resulted in the Company’s improved performance in fiscal 2003.

Hunter Dickinson Inc. (“HDI”B.          Liquidity and Capital Resources

Fiscal 2004 Compared to Fiscal 2003

Reclamation deposits totaling approximately $17.6 million including interest, are to be used at a future date for reclamation purposes at Gibraltar, Prosperity and Harmony.

The reclamation liability of $32.7 million is secured by reclamation deposits and plant and equipment. The $26.6 million liability shown as tracking preferred shares of subsidiary, Gibraltar, is the net book value of 12,483,916 shares issued as part of the cost to acquire the Harmony Gold Project. As Taseko expects to eventually convert these preferred shares into common shares of the Company, they have been included in shareholders’ equity on the balance sheet.

At September 30, 2004, Taseko had a working capital deficiency of approximately $19.8 million, as compared to positive working capital of $18.4 million at the end of the previous quarter, and $2.3 million at the end of the same period in 2003. The decrease in working capital from the end of the previous quarter was principally a result of deposits made for the purchase of a mining shovel and for five mine haul trucks as well as an accrual for possible taxes in connection with the Royalty Sale. (See results of Operations 2004 above).

The Company has accrued a tax provision of a subsidiary company of $23.7 million in the accompanying financial statements. Although management believes it is less than likely that this amount ever becoming payable, a liability has been recognized in a conservative manner in accordance with Canadian generally accepted accounting principles. It does not represent a payable amount based on any filed, or expected to be filed, tax return. It does not arise from a transaction in any completed taxation year, nor has any taxation authority assessed the amount or any portion thereof as payable. Accordingly there is no immediate impact on liquidity.

Management anticipates that revenues from copper and molybdenum sales along with the funds from a $7.5 million financing completed in February 2005, will be sufficient to cover operating costs and working capital during fiscal 2005.

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In March 2004, the Company entered into an agreement to purchase a mining shovel for approximately US$10.1 million, which was completed by September 30, 2004.

In May 2004, the Company entered into an agreement to purchase five mining trucks for approximately US$8.2 million, of which US$4.9 million had been paid to September 30, 2004. Subsequent to September 30, 2004, the Company entered into arrangement with Ledcor whereby the shovel and trucks were sold to a third party leasing company. Ledcor has leased the equipment and will be reimbursed, at Ledcor’s cost, as consideration for making the equipment available to the joint venture in order to facilitate the operation of the Gibraltar mine.

The Company has a $2 million operating line of credit with a Canadian chartered bank at an interest rate of prime, due on demand, with no fixed terms of repayment. As at September 30, 2004, $1.86 million was outstanding under this line of credit. This operating line of credit is guaranteed by a director of the Company.

As of April 5, 2005, the Company had approximately 17.9 million warrants outstanding, of which approximately 12.7 million were in-the-money. No assurance can be given that these warrants will be exercised. Certain of these warrants are subject to an accelerated expiry provision upon notice by the Company if the closing market price of the Company's shares exceeds $1.50 for 10 consecutive trading days. Although this was achieved for a short period, the Company chose not to give notice due to variable market conditions The presumed negative effect the sale of the warrant shares into the prevailing market would have provided negative pressure to the share price. Taseko reserves its right to give notice of accelerated expiry in the future should the trigger price again prevail.

On December 31, 2003, the Company completed a private placement by issuing 6,700,000 units at $0.60 each, for net proceeds of approximately $3.9 million. Each unit was comprised of a common share and warrant. Each warrant entitles the holder to purchase one common share at a price of $0.75 until December 31, 2005.

On March 10, 2004, the Company completed a $7.3 million private placement financing, consisting of 3,900,000 units of its capital at $2.00 per unit. Each unit consisted of one common share and one share purchase warrant exercisable to purchase an additional common share at a price of $2.25 until March 10, 2005.

On September 28, 2004, the Company completed a $8.9 million private placement financing, consisting of 8,000,000 units of its capital at $1.25 per unit. Each unit consisted of one common share and one share purchase warrant exercisable to purchase an additional common share at a price of $1.40 until September 28, 2006.

The Company had no commitments for material capital expenditures as of September 30, 2004, nor as of April 5, 2005.

Gibraltar Reclamation Trust Limited Partnership

On December 31, 2003, the Company reached agreements with Gibraltar Reclamation Trust Limited Partnership (the "GRT Partnership"), a largely arm’s-length private Vancouver-based mining investment partnership which completed a financing to raise proceeds of $18.6 million to partially fund a planned re-start of the Gibraltar copper mine. As part of the financing the GRT Partnership entered into a Joint Venture arrangement with Gibraltar Mines Ltd. to proceed towards restarting the Gibraltar open pit copper mine. Gibraltar Mines Ltd., as its contribution to the Joint Venture, agreed to contribute the use of its mine assets and fund the startup expenses of the Gibraltar mine, and the GRT Partnership funded a qualifying environmental trust ("QET") with the $18.6 million, which has allowed Gibraltar to access other funds currently held by the Government of Vancouver, British Columbia isas a private company withsecurity for the mine’s environmental reclamation obligations. Under the Joint Venture agreement, the GRT Partnership became entitled to certain revenues or production share from the Gibraltar mine following the resumption of production.

To facilitate the startup transactions, five directors in common that provides investor relations, geological, corporate development, administrative and management servicesofficers of the Company personally guaranteed certain obligations (each as to and incursone fifth) to third party costsparties on behalf of the Company pursuant to the extent of $4.5 million. In consideration of the guarantee, they each received compensation equal to 10% of the amount guaranteed, calculated as 45,000 shares having a December 1996 agreement. value of $2.00 each.

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In March 2004 Taseko elected to exercise its call rights for the year ended September 30, 2003, TasekoGRT Partnership and its subsidiaries paid $253,859 to HDI for services renderedissued 7,967,742 shares valued at $2.79 each. Certain directors and officers participated as compared to $574,892investors in the previous year (see also Items 7 and 19)

Fiscal 2002 Compared with Fiscal 2001

DuringGRT Partnership in the 2002 fiscal year, Taseko received $551,842 in interest income, as compared to $1,110,431 for the 2001 fiscal year. Interest income decreased in 2002 due to lower yields on investments.

Expenditures in fiscal 2002 were $6.5 million, which were significantly decreased from the $11.5 million spent in fiscal 2001. The main decreases in fiscal 2002 were for exploration (2002 - $2.1 million; 2001 - $3.9 million) and the refinery project (2002 - $1.7 million; 2001 - $3.6 million). Essentially allaggregate amount of $1,300,000, or about 8% of the exploration expenditures in 2002 related to Gibraltar for mine planning, associated withfinancing. These directors and officers received shares as a consequence of Taseko exercising the monitoring concentrate contracts and other opportunities for re-start of the mine, and assessing other projects such as the landfill site; and site activities, including reclamation and equipment maintenance.

Expenditures also decreased in the following areas in fiscal year 2002: legal, accounting and audit (2002 – $0.3 million; 2001 - $0.5 million), consulting (2002 - $0.1 million; 2001 - $1.8 million) and office and administration (2002 - $0.2 million; 2001 - $0.7 million).

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call right. The Company’s loss for the year is $6.5 million compared to $58.2 million in 2001. The loss in 2001 was due primarily to asset write downs. Taseko previously held an interest in the Harmony Gold Project that was valued at $0.6 million. This interest was written down as part of the acquisition of the remaining interest inGRT Partnership provides Taseko with 100% control of those elements necessary for a mine restart decision and will eliminate the project in fiscal 2002, and constitutes part ofroyalty entitlement held by the loss for the year.GRT Partnership.

B.            Liquidity and Capital Resources

Overview

Historically Taseko’s sole source of funding was the sale of equity securities for cash primarily through private placements to sophisticated investors and institutions. As a consequence of the acquisition of the Gibraltar Mine in 1999, Taseko also received funding pursuant to a $17 million convertible debenture financing commitment executed by Boliden Westmin (Canada) Ltd. Of this $17 million commitment, Taseko received $4 million in fiscal 1999, $4.5 million in fiscal 2000 and the $8.5 million balance in fiscal 2001. Taseko also issued common share capital in each of fiscal 2000 and 1999 pursuant to private placement financings and upon the exercise of warrants and/or options. Taseko’s access to exploration financing is always uncertain. Taseko has no assurance of continued access to significant equity funding.

Fiscal 2003 Compared to Fiscal 2002

As a consequence of the acquisition of the Gibraltar Minemine in 1999, Taseko received funding pursuant to a $17 million non-interest-bearing convertible debenture financing by Boliden Westmin (Canada) Ltd. As Taseko has the right and the intention to convert the debenture into common shares, the $17 million Gibraltar debenture is classified as equity rather than as a liability on the Company'sCompany’s balance sheet.

Reclamation deposits totaling $16.8 million including interest, are to be used at a later date for reclamation purposes at Gibraltar and at Harmony.

The reclamation liability of $32.7 million related to the Gibraltar Minemine is secured by reclamation deposits and plant and equipment. The value of the tracking preferred shares of Taseko'sTaseko’s subsidiary, Gibraltar, is the net book value of 12,483,916 shares which were issued as part of the cost to acquire the Harmony Gold Project from Misty Mountain Gold Limited. The tracking preferred shares are designed to track and capture the value of the Harmony Gold Project and will be convertible into common shares of the Company upon a realization event such as a sale to a third party or commercial production at the Harmony Gold Project. As Taseko has the right and the intention to settle these preferred shares with common shares of the Company, they have been included in shareholders’ equity on the balance sheet.

On December 31, 2002, the Company closed three equity private placements of its securities:

In April 2003, the Company acquired the remaining business of the GESL Partnership under a plan of arrangement. In fiscal 2002, the Company had acquired a 38% initial position in these assets comprising primarily of technological and operating rights. The fiscal 2003 transaction resulted in a reduction of certain Taseko liabilities by $3 million. Further, the acquisition consolidated the Company’s 100% ownership of the copper refinery engineering business of the GESL Partnership. Upon receiving TSX Venture Exchange and judicial approvals the Company issued 7,446,809 common shares having a deemed value of $0.47 per share, for total consideration of $3.5 million.

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At September 30, 2003, Taseko had working capital of $2.3 million, as compared to $3.4 million at the end of the previous quarter, and a working capital deficiency of $4.3 million at the end of the 2002 fiscal year. The Company also had 53,880,973 common shares issued and outstanding.

Several other financings were arranged subsequent to the year ended September 30, 2003. The proceeds of these financings will be used to fund activities towards re-start of the Gibraltar mine and for working capital purposes. These include:

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In order to facilitate financing for mine re-start, refinery feasibility and other exploration work at Gibraltar, Taseko has sponsored the formation of several limited partnerships.

The Gibraltar Engineering Services Limited (“GESL”("GESL") Partnership was formed to conduct engineering and contract operation service support for a determination of the feasibility of the hydrometallurgical copper refinery process, developed by Cominco Engineering Services Limited (“CESL”("CESL") to be potentially used at Gibraltar and possibly, other similar copper deposits in British Columbia, owned by third parties, but which also produce copper in concentrate.

The GESL Partnership business expenses are shown in the Consolidated Schedule of Refinery Project Expenses. This amount represents work carried out by personnel at Taseko, Gibraltar, HDI and third party contractors retained by the GESL Partnership and billed by those parties to the GESL Partnership. The Company incurred accumulated expenditures of approximately $5.8 million for the Refinery Project (See Consolidated Schedule of Refinery Project Expenses in the Financial Statements). In January 2002, Taseko announced that it would acquire GESL Partnership, and acquired a 38% initial position in these assets, comprising primarily of technology rights, during fiscal 2002. In the third quarter of fiscal 2003, the Company acquired the remaining business of the GESL Partnership under a plan of arrangement.) The premium paid for this acquisition is also shown in the Consolidated Schedule of Refinery Project Expenses.) This transaction resulted in a reduction of certain liabilities by $3 million and consolidated the Company’s 100% ownership of the copper refinery engineering business held by the GESL Partnership.

On December 31, 2003, the Company reached agreements with Gibraltar Reclamation Trust Limited Partnership (the “GRT Partnership”"GRT Partnership"), a largely arm’s-length private Vancouver-based mining investment partnership which completed a financing to raise proceeds of $18.6 million to partially fund a planned re-start of the Gibraltar copper mine owned by a subsidiary of the Company, Gibraltar Mines Ltd. As part of the financing the GRT Partnership entered into a Joint Venture arrangement with Gibraltar to proceed towards restarting the Gibraltar open pit copper mine. Gibraltar, as its contribution to the Joint Venture, agreed to contribute the use of its mine assets and fund the start-upstartup expenses of the Gibraltar mine, and the GRT Partnership funded a qualifying environmental trust (“QET”("QET"), which has allowed Gibraltar to access other funds currently held by the Government of British Columbia as a security for the mine’s environmental reclamation obligations. Under the Joint Venture agreement, the GRT Partnership became entitled to certain revenues or production share from the Gibraltar mine following the resumption of production.

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In related agreements, the Company obtained the exclusive right (the “Purchase Option”"Purchase Option") to purchase the GRT Partnership for a fixed price of 130% of the total amount of the net financing proceeds, which were actually contributed by the GRT Partnership to the QET being an amount of $18.6 million.). The Purchase Option was payable in common shares of the Company valued at the prevailing market price of the Company’s shares at the

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time the Company decides to trigger the purchase, or the price can be paid in cash by the Company. The investors in the GRT Partnership also acquired the right to sell the GRT Partnership to the Company for the appraised value of the GRT Partnership payable, at the Company’s election, in cash or in shares of the Company valued at the higher of the then-prevailing market (less a stated discount), and the undiscounted market price of the Company’s shares on December 31, 2003 (Cdn$(C$2.15). To facilitate the start-upstartup transactions, five directors and officers of the Company have personally guaranteed certain obligations (each as to one fifth) to third parties on behalf of the Company to the extent of $4.5 million, inclusive of a pledge of a cash deposit of $2 million. In consideration of the guarantee, they will each receive compensation equal to 10% of the amount guaranteed, calculated as 45,000 shares having a value of $2.00 each. In March 2004 Taseko elected to exercise its call rights for the GRT Partnership and issued 7,967,742 million shares valued at $2.79 each to acquire it. These shares were subject to resale restrictions in Canada until May 1, 2004. Certain directors and officers participated as investors in the GRT Partnership in the aggregate amount of $1,300,000. These directors and officers received shares as a consequence of Taseko exercising the call right (see items 7 and 19). The acquisition of the GRT Partnership provides Taseko with 100% control of those elements necessary for a mine restart decision and will eliminate the royalty held by the GRT Partnership.

Fiscal 2002 Compared to Fiscal 2001

As a consequence of the acquisition of the Gibraltar Mine in 1999, Taseko received funding pursuant to a $17 million non-interest bearing convertible debenture financing by Boliden Westmin (Canada) Ltd. Due to the convertibility of the debenture into common shares at the holder’s or Taseko’s option, the $17 million Gibraltar debenture is classified in the equity rather than debt accounts of Taseko’s balance sheet.

The asset shown as reclamation deposits, totalling $18.6 million, including interest, is to be used at a later date for reclamation purposes at Gibraltar and Harmony. As a result of progressive reclamation work and a landfill project reducing liability costs at Gibraltar, $2.5 million was released from the cash reclamation fund in December 2002.

At September 30, 2002, the reclamation liability was estimated at $32.7 million and is secured by reclamation deposits and plant and equipment. The equity item shown as tracking preferred shares is the book value of the 12,483,916 tracking preferred shares of Gibraltar which were part of the cost to acquire the Harmony gold project from Misty Mountain Gold Ltd. The tracking preferred shares are designed to track and capture the value of the Harmony Gold Project and are convertible into common shares of the Company upon a realization event such as a sale to a third party or commercial production at the Harmony Gold Project.

On March 28, 2002, the Company announced that it had agreed to privately place 2.1 million shares with arm’s length creditors in order to settle $840,000 of liabilities, and subsequently received approval from the TSX Venture Exchange. The settlement was completed during the third quarter of fiscal 2002.

At the end of August 2002, the Company completed a financing which privately placed 414,850 units at a price of $0.50 per unit with sophisticated investors and institutions outside of Canada. Each unit was comprised of one common share and a common share purchase warrant exercisable at $0.55 until December 27, 2003. The common share purchase warrants were subject to a regulatory four month hold period and are subject to an accelerated 45-day expiry if the closing price of the common shares as traded on the TSX Venture Exchange is at least $0.83 for any 10 consecutive trading days.

At September 30, 2002, Taseko had a working capital deficiency of $4.3 million, as compared to a deficiency of $3.59 million at the end of the third quarter. The Company had 33,921,663 issued and outstanding common shares.

Subsequent to year-end, in December 2002, Taseko closed equity private placements with Canadian investors of its securities totaling $4.24 million. The placements included $655,500 of common shares at a subscription price of $0.30 per common share, $1,269,600 of units at a price of $0.30 per unit, and $2,315,000 of flow-through units at a subscription price of $0.40 per flow-through unit. Each unit consisted of one common share and one non-transferable common share purchase warrant. Each flow-through unit consisted of one flow-through common share and one-half of a non-transferable common share purchase warrant.

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Each whole common share purchase warrant entitles the holder to purchase one common share at a price of $0.50 until December 31, 2004. The common share purchase warrants are subject to a regulatory four month hold period and a 45-day accelerated expiry if the closing price of the common shares as traded on the TSX Venture Exchange is at least $0.75 for any 10 consecutive trading days, in which event the holder will be given notice of the expiry of the warrants.

Dundee Securities Corporation, to the extent of $1,725,000, and Strand Securities Corporation and certain other agents, to the extent of $250,000, have collectively acted as Agents for the private placement of flow-through units. The Agents’ compensation included a cash fee equal to 6% of the gross proceeds and broker warrants entitling them to purchase that number of common shares, which is equal to 6% of the number of flow-through units sold. The broker warrants are exercisable at $0.40 per common share and expire on December 31, 2003.

The common shares, the flow-through common shares, the warrant common shares and the broker warrant common shares are subject to a hold period in Canada, which expires May 1, 2003.

The net proceeds of the units and common shares will be used for general working capital and corporate purposes. Taseko will utilize the gross proceeds of the flow-through financing to undertake a program to follow up on deposit-scale targets outlined by geophysical surveys completed on the Gibraltar property, and to evaluate other potential exploration projects that may be of interest.

The Gibraltar Engineering Services Limited Partnership (“GESL Partnership”) was formed to conduct engineering and contract operation service support for a determination of the feasibility of the CESL hydrometallurgical copper refinery process to be potentially used at Gibraltar and possibly, other similar copper deposits in British Columbia, owned by third parties, but which also produce copper in concentrate.

Partnership business expenses are shown in the Consolidated Schedule of Refinery Project Expenses. As previously disclosed, $4.85 million was expended on the Gibraltar Refinery Project in fiscal 2001. This amount represents work carried out by Taseko, Gibraltar, and HDI personnel and third party contractors retained by the GESL Partnership, and billed by all those parties to the GESL Partnership. Of this work, $1.85 million was actually funded by GESL Partnership investors as of December 31, 2001 and the balance by HDI, which is owed the funds at that date by Hunter Dickinson Group Inc.(“HDGI”) a private company owned by family trusts of certain of Taseko’s insiders.. HDGI had an investment in the GESL Refinery Process (“GRP”) Partnership, and owned the majority of the remaining outstanding units of the GESL Partnership. HDGI subsequently sold its interest in GESL in 2002 at its cost of $3 million, payable in tranches until 2005, to a Vancouver businessman in an arms'-length transaction. As a consequence of Taseko’s decision to purchase this interest in GESL from the investor in 2003, Taseko will record a net decrease in its accounts payable at that time of the equivalent to about $3 million. As at September 30, 2002, the Company had incurred accumulated expenditures of $5.3 million for the Refinery Project, compared to $3.6 million at September 30, 2001.

Financial Instruments

Taseko financed its activities from 1966 through 1999 primarily through the issuance of equity shares through private and public distributions. Certain of these financings were structured to provide a Canadian income tax incentive to make the securities more attractive. TheIncome Tax Act (Canada) provides certain incentives to encourage exploration on Canadian resource properties including the deductibility of a defined class of “Canadian Exploration Expenses” and “Canadian Development Expenses” which provide deductible pools of resource expenditures deductible against other sources of income. In 1999, Taseko also issued a convertible debenture in conjunction with the acquisition of the Gibraltar Mine, which raised $17 million with a 10-year repayment horizon and with provisions that permit the debenture to be repaid at any time on conversion of the liability into common shares or repaid in cash at Taseko’s option after the fifth year. Accordingly, the debenture has been recorded as part of shareholders’ equity in the accompanying financial statements rather than a liability as would a conventional debenture.

Taseko keeps its financial instruments denominated primarily in Canadian dollars and does not currently engage in any hedging operationsactivities with respect to currency or in-situ minerals.currency. Funds, thatwhich are currently excess to Taseko’s current needs, are invested in government of Canada or like debt obligations and other short term near cash investments pending the need for the funds.