6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934

As at February 23, 2005

TASEKO MINES LIMITED
(Exact name of Registrant specified in its charter)

BRITISH COLUMBIA, CANADA
(Jurisdiction of incorporation or organization)

Suite 1020, 800 West Pender Street
Vancouver, British Columbia, Canada, V6C 2V6
(Address of principal executive offices)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
  Form 20-F  x    Form 40-F   ¨   
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
 
 
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
 
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
 
 
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes   ¨   No   ¨   
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
 

SUBMITTED HEREWITH

Exhibits

99.1	Audited Annual Consolidated Financial Statements for the Year ended September 30, 2004
99.2	Management's Discussion and Analysis for the Year ended September 30, 2004

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TASEKO MINES LIMITED
Dated: February 23, 2005	By:	/s/ Jeffery R. Mason
		Jeffrey R. Mason
		Director and Chief Financial Officer

EX-99.1

TASEKO MINES LIMITED
CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2004

(Expressed in Canadian Dollars)

KPMG LLP
Chartered Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
Telephone (604) 691-3000
Fax (604) 691-3031
Internet www.kpmg.ca

AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Taseko Mines Limited as at September 30, 2004 and 2003 and the consolidated statements of operations, deficit and cash flows for each of the years in the three year period ended September 30, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at September 30, 2004 and 2003 and the results of its operations and its cash flows for each of the years in the three year period ended September 30, 2004 in accordance with Canadian generally accepted accounting principles.

KPMG LLP (signed)
Chartered Accountants

Vancouver, Canada

January 24, 2005, except as to note 12(e)
   which is as of February 3, 2005

KPMG LLP, a Canadian limited liability partnership is the Canadian
member firm of KPMG International, a Swiss cooperative.

TASEKO MINES LIMITED
Consolidated Balance Sheets
(Expressed in Canadian Dollars)

		September 30,			September 30,
		2004			2003
Assets
Current assets
Cash and equivalents	$	14,892,947		$	2,424,221
Amounts receivable		2,766,184			1,049,093
Advances to related parties (note 11)		194,857			224,538
Supplies inventory		2,277,397			2,278,096
Prepaid expenses		210,015			134,207
		20,341,400			6,110,155
Property, plant and equipment (note 5)		35,759,634			9,554,186
Reclamation deposits (notes 4, 6(a) and 6(d))		17,647,056			16,757,274
Promissory note (note 6(f))		68,172,380			–
Mineral property interests (note 6)		3,000			28,813,296
	$	141,923,470		$	61,234,911
Liabilities and Shareholders' Equity
Current liabilities
Operating line of credit (note 7)	$	1,857,740		$	1,993,396
Accounts payable and accrued liabilities		14,578,172			1,857,740
Income taxes (note 9)		23,744,000			–
		40,179,912			3,851,136
Reclamation liability (note 5)		32,700,000			32,700,000
Royalty obligation (note 6(f))		67,357,000			–
Deferred revenue (note 6(f))		1,750,000			–
		141,986,912			36,551,136
Shareholders' equity
Share capital (note 8)		150,481,429			99,446,319
Convertible debenture (note 8(c))		20,577,225			19,599,520
Tracking preferred shares (note 4)		26,641,948			26,641,948
Contributed surplus (note 8(f))		4,947,588			65,344
Deficit		(202,711,632	)		(121,069,356	)
		(63,442	)		24,683,775
Nature of operations (note 1)
Commitments and contingencies (note 6)
Subsequent events (notes 5, 6, 8 and 12)
	$	141,923,470		$	61,234,911

See accompanying notes to consolidated financial statements.

Approved by the Board of Directors

/s/ Ronald W. Thiessen	/s/ Jeffrey R. Mason
Ronald W. Thiessen	Jeffrey R. Mason
Director	Director

TASEKO MINES LIMITED
Consolidated Statements of Operations
(Expressed in Canadian Dollars)

		Years ended September 30
		2004			2003			2002
Expenses
Conference and travel	$	93,071		$	43,398		$	44,429
Consulting		251,790			178,104			133,672
Corporation taxes		45,352			76,135			577,228
Depreciation		723,249			711,170			714,065
Exploration (schedule)		4,457,600			2,029,529			2,071,885
Gibraltar mine refinery project (schedule)		–			500,000			1,698,826
Gibraltar mine restart project (schedule)		14,982,008			–			–
Interest and finance charges (note 6(d))		499,294			201,942			507,790
Legal, accounting and audit		458,238			169,356			334,492
Office and administration		599,450			292,853			247,061
Premium paid for acquisition of
Gibraltar Reclamation Trust Limited Partnership (note 6(d))		5,095,249			–			–
Property investigation		141,067			–			–
Shareholder communication		657,342			74,687			90,835
Stock-based compensation (note 8(d))		5,172,244			65,344			–
Trust and filing		88,530			21,113			36,802
		33,264,484			4,363,631			6,457,085
Other items
Interest and other income		5,154,209			721,480			551,842
Gain on sale of property, plant and equipment		–			131,638			1,314
Write down of mineral property acquisition costs (note 6(c))		(28,810,296	)		–			(600,000	)
Income taxes (note (9))		(23,744,000	)		–			–
		(47,400,087	)		853,118			(46,844	)
Loss for the year	$	(80,664,571	)	$	(3,510,513	)	$	(6,503,929	)
Basic and diluted loss per common share (notes 3(h) and 8)	$	(1.09	)	$	(0.09	)	$	(0.24	)
Weighted average number of common shares outstanding		75,113,426			46,984,378			30,338,098

Consolidated Statements of Deficit
(Expressed in Canadian Dollars)

		Years ended September 30
		2004			2003			2002
Deficit, beginning of year	$	(121,069,356	)	$	(116,670,020	)	$	(109,358,070	)
Loss for the year		(80,664,571	)		(3,510,513	)		(6,503,929	)
Accretion expense on convertible debenture (note 8(c))		(977,705	)		(888,823	)		(808,021	)
Deficit, end of year	$	(202,711,632	)	$	(121,069,356	)	$	(116,670,020	)

See accompanying notes to consolidated financial statements.

TASEKO MINES LIMITED
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)

		Years ended September 30
Cash provided by (used for):		2004			2003			2002
Operating activities
Loss for the year	$	(80,664,571	)	$	(3,510,513	)	$	(6,503,929	)
Items not involving cash
Accrued interest on reclamation deposits		(488,471	)		(680,750	)		(546,632	)
Depreciation		723,249			711,170			714,065
Stock-based compensation		5,172,244			65,344			–
Income taxes		23,744,000			–			–
Write down of mineral property acquisition costs		28,810,296			–			600,000
Gain on sale of property, plant and equipment		–			(131,638	)		(1,314	)
Acquisition premium paid for Gibraltar Refinery (2002) Ltd.		–			–			314,330
Acquisition premium paid for remaining business of
Gibraltar Engineering Services Limited Partnership (note 6(d))		–			500,000			–
Acquisition premium paid for
Gibraltar Reclamation Trust Limited Partnership (note (6(d))		5,095,249			–			–
Shares issued for loan guarantee		450,000			–			400,000
Shares issued pursuant to farmout agreement (note 6(e))		935,000			–			–
Changes in non-cash operating working capital
Amounts receivable		(1,717,091	)		(712,846	)		(104,815	)
Supplies inventory		699			4,858			117,046
Prepaid expenses		(75,808	)		(30,576	)		(76,448	)
Accounts payable and accrued liabilities		12,720,432			288,452			764,478
Cash used by operating activities		(5,294,772	)		(3,496,499	)		(4,323,219	)
Investing activities
Cash paid on acquisition of Harmony Gold Property		–			–			(2,230,000	)
Purchase of property, plant and equipment		(26,928,697	)		(135,193	)		–
Proceeds on sale of mineral property interests		–			–			1
Proceeds received on sale of property, plant and equipment		–			160,000			9,802
Funds advanced on promissory note		(68,172,380	)		–			–
Reclamation deposits		(401,311	)		2,500,000			–
Cash provided (used) by investing activities		(95,502,388	)		2,524,807			(2,220,197	)
Financing activities
Operating line of credit		(135,656	)		(6,604	)		2,000,000
Advances from related parties		29,681			(3,693,706	)		2,185,389
Advances from Gibraltar Engineering Services Limited Partnership		–			3,000,000			1,849,000
Advances from Gibraltar Reclamation Trust Limited Partnership		17,097,792			–			–
Proceeds on sale of royalty		67,357,000			–			–
Common shares issued for cash, net of issue costs		27,167,069			4,057,119			465,835
Cash provided by financing activities		111,515,886			3,356,809			6,500,224
Increase (decrease) in cash and equivalents		10,718,726			2,385,117			(43,192	)
Cash and equivalents, beginning of year		2,424,221			39,104			82,296
Cash and equivalents, end of year	$	13,142,947		$	2,424,221		$	39,104

Supplementary cash flow disclosures (note 10)

See accompanying notes to consolidated financial statements.

TASEKO MINES LIMITED
Consolidated Schedules of Exploration Expenses
(Expressed in Canadian Dollars)

		Property
Year ended September 30, 2004		Prosperity		Gibraltar		Harmony		Total
Exploration expenses
Assays and analysis	$	18,867	$	831,951	$	11,786	$	862,604
Drilling		–		1,332,596		–		1,332,596
Equipment rentals		5,283		26,198		–		31,481
Geological		5,299		225,429		3,328		234,056
Mine planning		37,612		464,351		27,597		529,560
Site activities, net		2,713		1,464,280		310		1,467,303
Exploration expenses during the year		69,774		4,344,805		43,021		4,457,600
Cumulative expenses, beginning of year		41,576,410		10,902,295		27,317		52,506,022
Cumulative expenses, end of year	$	41,646,184	$	15,247,100	$	70,338	$	56,963,622
		Property
Year ended September 30, 2003		Prosperity		Gibraltar		Harmony		Total
Exploration expenses
Assays and analysis	$	27,727	$	354	$	3,177	$	31,258
Claim staking		–		500		–		500
Drilling		–		439,950		–		439,950
Equipment rentals		2,746		6,000		–		8,746
Geological		3,965		174,508		1,309		179,782
Mine planning		38,023		190,010		16,875		244,908
Site activities, net		16,039		1,102,390		5,956		1,124,385
Exploration expenses during the year		88,500		1,913,712		27,317		2,029,529
Cumulative expenses, beginning of year		41,487,910		8,988,583		–		50,476,493
Cumulative expenses, end of year	$	41,576,410	$	10,902,295	$	27,317	$	52,506,022

		Property
Year ended September 30, 2002		Prosperity			Gibraltar		Westgarde			Total
Exploration expenses
Assays and analysis	$	7,352		$	367	$	–		$	7,719
Equipment rentals		6,546			–		–			6,546
Geological		–			39,830		–			39,830
Mine planning		(50,800	)		215,900		–			165,100
Site activities		1,044			2,081,645		–			2,082,689
Recovery of exploration expenses incurred on sale (note 4)		–			–		(229,999	)		(229,999	)
Exploration expenses (recovery) during the year		(35,858	)		2,337,742		(229,999	)		2,071,885
Cumulative expenses, beginning of year		41,523,768			6,650,841		210,976			48,385,585
Cumulative expenses, end of year	$	41,487,910		$	8,988,583	$	(19,023	)	$	50,457,470

TASEKO MINES LIMITED
Consolidated Schedules of Gibraltar Mine Restart Project Expenses
(Expressed in Canadian Dollars)

		Years ended September 30
Gibraltar Mine Restart Project Expenses		2004		2003		2002
Mine	$	6,421,828	$	–	$	–
Mill		5,432,869		–		–
Site services		1,657,567		–		–
Administration		916,866		–		–
Warehouse		311,099		–		–
Engineering		125,865		–		–
Environmental		115,914		–		–
Expenses during the year		14,982,008		–		–
Cumulative expenses, beginning of year		–		–		–
Cumulative expenses, end of year	$	14,982,008	$	–	$	–

Consolidated Schedules of Gibraltar Mine Refinery Project Expenses
(Expressed in Canadian Dollars)

		Years ended September 30
Gibraltar Mine Refinery Project Expenses		2004		2003		2002
Concentrate production	$	–	$	–	$	–
Engineering		–		–		403,494
Environmental and permitting		–		–		57,988
Interest		–		–		73,289
Metallurgy		–		–		10,883
Pilot plant testwork		–		–		290,680
Support services		–		–		548,162
Acquisition premium paid for Gibraltar Refinery (2002) Ltd.		–		–		314,330
Acquisition premium paid for remaining business of GESL Partnership		–		500,000		–
Expenses during the year		–		500,000		1,698,826
Cumulative expenses, beginning of year		5,770,768		5,270,768		3,571,942
Cumulative expenses, end of year	$	5,770,768	$	5,770,768	$	5,270,768

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

1.	Nature of operations
	Taseko Mines Limited ("Taseko" or the "Company") is a public company incorporated under the laws of the Province of British Columbia. At September 30, 2004, the Company's principal business activities relate to the restart of operations of the Gibraltar Copper Mine, and exploration on the Company’s 100% owned Gibraltar-area exploration properties, the Prosperity Gold-Copper Property, and the Harmony Gold Property. The Gibraltar Mine and the Prosperity Gold Property are located in south central British Columbia, Canada, near the City of Williams Lake. The Harmony Gold Property is located on Graham Island, Queen Charlotte Islands - Haida Gwaii, British Columbia.
	The recoverability of the amounts shown for the Gibraltar mine and related plant and equipment and supplies inventory is dependent upon the existence of economically recoverable mineral resources and future profitable production or proceeds from the disposition of the mine. The Company is exploring its Prosperity and Harmony mineral properties and has not yet determined the existence of economically recoverable reserves.
	The Company’s continuing operations are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its mineral property interests, and upon future profitable production or proceeds from the disposition of its mineral property interests.
	These financial statements are prepared on the basis that the Company will continue as a going concern. The Company has recorded significant losses and operating cash flow deficiencies in each of the last three fiscal years. Management recognizes that the Company must generate additional financial resources in order to meet liabilities as they come due and to enable it to continue operations. The Company is actively pursuing restart of the Company’s operations at the Gibraltar mine and is continuing with its exploration programs. However, there can be no assurances that the Company will obtain sufficient financial resources and/or achieve profitability or positive cash flows. If the Company is unable to obtain adequate additional financing or successful restart, the Company will be required to curtail operations and exploration activities. These financial statements do not reflect adjustments, which could be material, to the carrying values of assets and liabilities which may be required should the Company be unable to continue as a going concern.
2.	Basis of presentation and principles of consolidation
	These financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). These consolidated financial statements include the accounts of Taseko, its wholly-owned private company subsidiaries, Gibraltar Mines Ltd. (note 6(a)), 688888 BC Ltd., and Cuisson Lake Mines Ltd., and its interest in Gibraltar Reclamation Trust Limited Partnership (“GRT Partnership”) (note 6(d)). All material intercompany accounts and transactions have been eliminated.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

3.	Significant accounting policies
(a)	Cash and equivalents
	Cash and equivalents consist of cash and highly liquid investments, having maturity dates of three months or less from the date of acquisition, that are readily convertible to known amounts of cash.
(b)	Supplies inventory
	Supplies inventory is reported at the lower of moving average cost and net realizable value.
(c)	Property, plant and equipment
	Plant and equipment are stated at cost less accumulated depreciation. Depreciation is recorded over the estimated economic life of the plant and equipment on a straight line basis at annual rates ranging from 1.3% to 16.5%, except for the solvent extraction/electrowinning plant and equipment included in Gibraltar mine plant and equipment (note 5), which are depreciated on a straight line basis at rates from 20% to 50% per annum.
(d)	Mineral property interests
	The Company capitalizes mineral property acquisition costs on a property-by-property basis. Exploration expenditures and option payments incurred prior to the determination of the feasibility of mining operations are charged to operations as incurred. Development expenditures incurred subsequent to such determination, to increase production, or to extend the life of existing production are capitalized, except as noted below. Such acquisition costs and deferred development expenditures are amortized and depreciated over the estimated life of the property, or written off to operations if the property is abandoned, allowed to lapse, or if there is little prospect of further work being carried out by the Company or its option or joint venture partners.
	All costs incurred by the Company during the standby care and maintenance and restart period at the Gibraltar mine are expensed as incurred.
	Mineral property acquisition costs include the cash consideration and the fair market value of common shares, based on the trading price of the shares at the agreement date, issued for mineral property interests, pursuant to the terms of the relevant agreement. Payments relating to a property acquired under an option or joint venture agreement, where such payments are made at the sole discretion of the Company, are recorded in the accounts upon payment.
	Costs related to feasibility work and the development of processing technology are expensed as incurred. Costs incurred subsequent to the determination of the feasibility of the processing technology will be capitalized and amortized over the life of the related plant.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

	Administrative expenditures are expensed as incurred.
	The amount presented for mineral property interests represents costs incurred to date and the accumulated fair value of shares issued to date relating to acquisition costs, less write-downs (note 6), and does not necessarily reflect present or future values.
(e)	Share capital
	The Company records proceeds from share issuances net of issue costs. Shares issued for consideration other than cash are valued at the quoted market price on the date the agreement to issue shares was reached.
	The proceeds, net of issue costs, from common shares issued pursuant to flow-through share financing agreements are credited to share capital and the tax benefits of these exploration expenditures are transferred to the purchaser of the shares.
(f)	Stock-based compensation
	The Company has a share option plan which is described in note 8(d). The Company accounts for all non-cash stock-based payments and awards that are direct awards of stock, that call for settlement in cash or other assets, or that are stock appreciation rights which call for settlement by the issuance of equity instruments, granted on or after October 1, 2002, using the fair value based method.
	Under the fair value based method, stock-based payments are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of non-cash stock-based payments is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. The cost of non-cash stock-based payments that are fully vested and non-forfeitable at the grant date is measured and recognized at that date.
	Under the fair value based method, compensation cost attributable to awards that are direct awards of shares, or share appreciation rights which call for settlement by the issuance of equity instruments, is measured at fair value at the grant date and recognized over the vesting period. Compensation cost attributable to awards which call for settlement in cash or other assets is measured at fair value at the grant date and recognized over the vesting period. For awards that vest at the end of a vesting period, compensation cost is recognized on a straight-line basis; for awards that vest on a graded basis, compensation cost is recognized on a pro-rata basis over the vesting period.
	Consideration received on the exercise of stock options is recorded as share capital and the related contributed surplus is transferred to share capital.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars

(g)	Income taxes
	The Company uses the asset and liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are computed based on differences between the carrying amounts of assets and liabilities on the balance sheet and their corresponding tax values, generally using the substantively enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Future income tax assets also result from unused loss carry forwards, resource-related pools, and other deductions. Future tax assets are recognized to the extent that they are considered more likely than not to be realized. The valuation of future income tax assets is adjusted, if necessary, by the use of a valuation allowance to reflect the estimated realizable amount.
(h)	Loss per common share
	Basic loss per common share is calculated by dividing the loss available to common shareholders by the weighted average number of common shares outstanding during the period. For all periods presented, loss available to common shareholders equals the reported loss.
	Diluted loss per share is calculated using the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding used for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period.
	In the Company’s case, diluted loss per share for all years presented is the same as basic loss per share as the effect of the outstanding options and warrants would be anti-dilutive.
(i)	Fair value of financial instruments
	The carrying amounts of cash and equivalents, amounts receivable, reclamation deposits, operating line of credit, and accounts payable and accrued liabilities, approximate their fair values due to their short term nature.
	At September 30, 2004, the carrying values of the promissory note and the royalty obligation approximate their fair values, due to the timing of the transaction.
	The fair values of the convertible debenture and the tracking preferred shares are not readily determinable with sufficient reliability due to the difficulty in obtaining appropriate market information. It is not practicable to determine the fair values of the advances due to/from related parties because of the related party nature of such amounts and the absence of a secondary market for such instruments. Details of the terms of these financial instruments are disclosed in these notes to the financial statements.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

(j)	Use of estimates
	The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of management estimates relate to the impairment of mineral property interests and plant and equipment, the balance of reclamation liability, income taxes, rates for depreciation and the assumptions used in computing share-based compensation. Actual results could differ from these estimates.
(k)	Segment disclosures
	The Company operates in a single reportable operating segment, the exploration, development and operation of mineral property interests, within the geographic area of British Columbia, Canada.
(l)	Comparative figures
	Certain of the prior years’ comparative figures have been restated to conform with the presentation adopted for the current period.
4.	Arrangement agreement
	In October 2001, the Company and its subsidiary Gibraltar Mines Ltd. (“Gibraltar") completed the acquisition of the Harmony Gold Property and related assets from Continental Minerals Corporation ("Continental"), a British Columbia company with certain directors in common with Taseko, for 12,483,916 series "A" non-voting tracking preferred shares of Gibraltar and $2.23 million cash. The tracking preferred shares are designed to track and capture the value of the Harmony Gold Property and will be redeemed for common shares of Taseko upon a realization event, such as a sale to a third party or commercial production at the Harmony Gold Property, or at the option of Gibraltar, if a realization event has not occurred within ten years. Accordingly, the tracking preferred shares have been classified within shareholders’ equity on the consolidated balance sheet.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

As this acquisition was a related party transaction not in the normal course of business and did not result in the culmination of an earnings process, the acquisition was recorded by the Company at the net book value of the assets transferred, net of cash consideration, as follows:

Assets acquired		Amount
Property and equipment	$	8,488
Reclamation deposit		175,000
Mineral property interests		28,811,296
	$	28,994,784
Consideration given
Cash	$	2,230,000
12,483,916 tracking preferred shares of Gibraltar		26,641,948
114,800 common shares of the Company to a dissenting shareholder		122,836
	$	28,994,784

As previously noted, the Gibraltar tracking preferred shares are redeemable for common shares of Taseko upon the occurrence of certain value realization events for the Harmony Gold Property. The tracking preferred shares are redeemable at specified prices per common share of Taseko starting at $3.39 and escalating by $0.25 per year ($3.89 per share as at September 30, 2004). If a realization event does not occur on or before October 16, 2011, Gibraltar has the right to redeem the tracking preferred shares for Taseko common shares at a deemed price equal to the greater of the average 20 day trading price of the common shares of Taseko and $10.00. The Taseko common shares to be issued to Continental upon a realization event will in turn be distributed pro-rata, after adjustment for any taxes, to the holders of redeemable preferred shares of Continental that were issued to Continental shareholders at the time of the Arrangement Agreement.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

5. Property, plant and equipment

		September 30, 2004						September 30, 2003
Equipment - Prosperity
Property and Harmony				Accumulated		Net book				Accumulated		Net book
Property		Cost		depreciation		value		Cost		depreciation		value
Field	$	11,879	$	10,677	$	1,202	$	11,879	$	10,162	$	1,717
Computer and office		15,172		14,262		910		15,172		13,871		1,301
	$	27,051	$	24,939	$	2,112	$	27,051	$	24,033	$	3,018
Gibraltar Mine				Accumulated		Net book				Accumulated		Net book
Plant and equipment		Cost		depreciation		value		Cost		depreciation		value
Buildings and equipment	$	5,931,580	$	492,030	$	5,439,550	$	5,931,580	$	416,225	$	5,515,355
Mine equipment		32,458,793		2,544,160		29,914,633		5,589,193		2,063,493		3,525,700
Plant and equipment		975,493		666,369		309,124		962,061		541,935		420,126
Vehicles		198,519		115,426		83,093		152,854		90,680		62,174
Computer equipment		101,162		90,040		11,122		101,162		73,349		27,813
	$	39,665,547	$	3,908,025	$	35,757,522	$	12,736,850	$	3,185,682	$	9,551,168
Total property, plant
and equipment	$	39,692,598	$	3,932,964	$	35,759,634	$	12,763,901	$	3,209,715	$	9,554,186

In accordance with the Gibraltar mine permit, the Company has pledged the mine's plant and certain equipment which, when taken at market value and combined with reclamation deposits (approximately $17.6 million at September 30, 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), of which US$4.9 million ($6.4 million) had been paid to September 30, 2004. Subsequent to September 30, 2004, the Company paid the remaining US$3.3 million ($4.3 million) to complete the purchase of the five mine haul trucks. Also subsequent to September 30, 2004, the Company sold the mining shovel and the five haul trucks for approximately US$18.3 million ($22.0 million), of which US$15.6 million ($18.8 million) was received in November 2004. 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 (note 6(a)), and this equipment forms part of Ledcor's contribution to the joint venture.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

6. Mineral property interests

		September 30,		September 30,
		2004		2003
Gibraltar Copper Mine (note 6(a))	$	1,000	$	1,000
Prosperity Gold-Copper Property (note 6(b))		1,000		1,000
Harmony Gold Property (note 6(c))		1,000		28,811,296
	$	3,000	$	28,813,296

(a) Gibraltar Copper Mine

In July 1999, the Company acquired a 100% interest in the Gibraltar Copper Mine mineral property, located near Williams Lake, British Columbia, Canada from Boliden Westmin (Canada) Limited ("BWCL") for $3.3 million. The acquisition included plant and equipment and supplies inventory of the Gibraltar mine, and $8 million of funds set aside for future reclamation. As part of its 1999 operating permits, the Company had agreed to incur a total of $4 million on reclamation and environmental programs during the six year period July 1999 to July 2005. The Gibraltar mine final reclamation and closure plan is updated every five years. The most recent reclamation plan and closure report was approved by the British Columbia Ministry of Energy and Mines in 2004. Pursuant to this approved closure plan, the Ministry agreed that the Company had satisfied the $4 million reclamation obligation required under the 1999 operating permits.

The agreement contained certain indemnification clauses. The $8 million of funds set aside for future reclamation were considered a "Qualified Environmental Trust" for Canadian income tax purposes. During the year ended September 30, 2003, the Government of British Columbia released these funds from the Trust, which resulted in an income inclusion to the Company, and consequently resulted the Company utilizing $3.57 million of tax pools otherwise available to it. The Company has made claim to BWCL for this estimated tax liability under the indemnification terms of the agreement.

During the year ended September 30, 2001, Gibraltar Mines Ltd., Gibraltar Engineering Services Limited Partnership (the "GESL Partnership") (see note 6(d)), and Cominco Engineering Services Ltd. ("CESL") concluded a Memorandum of Agreement ("MOA") to jointly complete an evaluation for a potential hydrometallurgical copper refinery (using CESL technology) at the Gibraltar mine. Expenses incurred in excess of the $2.7 million agreed to in the original MOA were funded by the Company and the GESL Partnership. During fiscal 2002 and 2003, the Company acquired the business carried on by the GESL Partnership (note 6(d)).

The Company retained Procorp Services Limited Partnership ("Procorp") to provide technical, financial, management and marketing services related to all facets of the start-up, expansion and development of the Gibraltar mine and the proposed hydrometallurgical refinery. Procorp is a mining services, financing and marketing partnership comprised of experienced, specialized independent contractors as well as members who are also directors and officers of the Company. Compensation to Procorp included an initial payment of US$0.9 million for services rendered in fiscal 2001 and 2002 (which has been paid) and a second payment of US$0.9 million upon

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

	successful recommencement of commercial production of the Gibraltar mine using the CESL technology prior to October 31, 2005. In addition, the Company agreed, subject to regulatory approval, to issue to Procorp 3.5 million warrants to purchase common shares of the Company at a price of $1.70 per share for two years and a royalty of US$0.01 per pound of copper sold, upon successful recommencement of commercial production using the hydrometallurgical refinery by October 31, 2005.
	The Gibraltar mine had been on care and maintenance since being acquired in 1999 and commenced restart activities during the year ended September 30, 2004. During fiscal 2001, due to continued uncertainty regarding start-up and an extended cycle of depressed metal prices, the Company wrote down the accumulated mineral property interest acquisition costs of $5.9 million to a nominal amount of $1,000.
	Part of the Gibraltar mine consists of waste rock dumps which the Company has an obligation to reclaim. On November 1, 2002, the Company entered into a Landfill Management Agreement and an associated Partnering Agreement with the Cariboo Regional District (“CRD”), whereby the CRD funded the Company to construct (which was completed by the Company), operate, manage and maintain, on an ongoing basis, a municipal landfill on certain of the waste rock dumps for the CRD for the life of the landfill, expected to be in excess of 80 years. As a result of these agreements, the Company’s reclamation obligation was reduced and accordingly, during fiscal 2003, the Government of British Columbia released $2.5 million of the reclamation deposits held.
	During the year ended September 30, 2004, the Company formed a joint venture with Ledcor CMI Ltd. (“Ledcor”), whereby Ledcor would commission, restart, and operate the Gibraltar mine. As operator, Ledcor’s primary responsibility would be commissioning and operating the mine in addition to other aspects of mine operations, including drilling, blasting, loading and hauling of ore and waste as well as the recruitment of personnel and the maintenance of equipment and facilities. Ledcor will contribute to the joint venture its own mine equipment and will purchase or lease additional equipment as necessary. Taseko would contribute to the joint venture certain mineral rights and usage rights to the existing mill and equipment.
(b)	Prosperity Gold-Copper Property
	The Company owns 100% of the Prosperity Gold-Copper Property, consisting of 196 mineral claims covering the mineral rights for approximately 85 square km in the Clinton Mining Division in south central British Columbia, Canada. The $28.66 million cash and share consideration to acquire the Prosperity property was written down to a nominal $1,000 value in fiscal 2001, to reflect the extended depressed conditions in the metals markets.
(c)	Harmony Gold Property
	Under the terms of an arrangement agreement (note 4), the Company acquired a 100% interest in the Harmony Gold Property in fiscal 2002.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

	The Company does not believe there has been a fundamental change in the nature of the Harmony Gold Property; however, as the Company had not conducted significant exploration or development on the property in the last several years the Harmony Gold Property was written down to a nominal value of $1,000 during the year ended September 30, 2004.
(d)	Acquisition agreements
	Gibraltar Engineering Services Limited Partnership
	In December 2001, the GESL Partnership completed a private placement of limited partnership units for aggregate proceeds of $1.85 million. In February 2002, the Company issued 4,966,659 Taseko common shares at $0.44 per share to acquire Gibraltar Refinery (2002) Ltd., which had acquired certain of the private placement units of the GESL Partnership. The Company also issued 50,000 Taseko common shares to its financial adviser in connection with this acquisition. A further $3 million of expenditures were incurred by the GESL Partnership, which were financed by a separate partnership, the GESL Refinery Process ("GRP") Partnership, for a total financing amount of $4.85 million. In December 2002, a general partnership interest in the GRP Partnership was acquired and financed by a third party for $3.0 million. In April 2003, under a plan of arrangement, the Company issued 7,446,809 Taseko common shares for total consideration of $3.5 million to complete the acquisition of Gibraltar Engineering Services Limited ("GESL"), which had acquired the remaining business of the GESL Partnership.
	Gibraltar Reclamation Trust Limited Partnership
	In December 2003, the GRT Partnership completed a private placement of limited partnership units for aggregate proceeds of $18.6 million, and entered into a joint venture arrangement with Gibraltar Mines Ltd. to proceed towards restarting the Gibraltar mine with the funds raised. Gibraltar Mines Ltd., as its contribution to the joint venture, was to contribute the use of its mine assets and fund the start-up expenses of the Gibraltar mine, and the GRT Partnership funded a qualifying environmental trust (“QET”), which consequently allowed Gibraltar Mines Ltd. to access other funds then 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 was to be entitled to certain revenues or production share from the Gibraltar mine following the resumption of production. In March 2004, the Company issued 7,967,742 common shares at $2.79 per share for total consideration of $22.23 million to acquire all of the units of the GRT Partnership. In conjunction with this agreement, certain directors and officers of the Company personally guaranteed certain obligations to third parties on behalf of the Company to the extent of $4.5 million. In consideration for the guarantee, the Company issued 225,000 common shares at $2.00 per share to those directors and officers.
(e)	Farmout Agreement
	In December 2003, the Company entered into a Farmout Agreement (the "Agreement") with Northern Dynasty Minerals Ltd. ("Northern Dynasty") and Rockwell Ventures Inc. ("Rockwell"),

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

	each public companies with certain directors in common with the Company. Under the terms of the Agreement, the Company granted to Northern Dynasty, and to Rockwell, rights to earn joint venture working interests, subject to a maximum of $650,000 in the case of Northern Dynasty and $200,000 in the case of Rockwell, on certain exploration properties located in the vicinity of the Gibraltar mine property. For a period of 150 days after Northern Dynasty and Rockwell earned their working interests, the Company had the right to purchase their interests at 110% in cash or in common shares of the Company, at the Company's option. If the Company elected to issue common shares, the common shares to be issued were to have been valued at the weighted average ten-day trading price as traded on the TSX Venture Exchange.
	In December 2003, Northern Dynasty earned an interest in these properties to the extent of $650,000 and Rockwell earned an interest in these properties to the extent of $200,000. In March 2004, Taseko exercised its right to purchase the interests earned by Northern Dynasty and Rockwell by issuing 256,272 common shares to Northern Dynasty and 78,853 common shares to Rockwell.
(f)	Royalty Agreement
	In September 2004, the Company entered into agreements with an unrelated investment partnership, the Red Mile Resources No. 2 Limited Partnership (“Red Mile”). Gibraltar Mines Ltd. sold to Red Mile a royalty for $67.357 million cash, which cash was received on September 29, 2004. These funds were subsequently loaned to a financial institution (and a promissory note received) and the Company has pledged these funds to secure its obligations under the agreements.
	Pursuant to the agreements, the Company received an aggregate 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, and are recognized over the expected remaining life of the royalty agreement.
	Annual royalties will be payable by Gibraltar Mines Ltd. 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 Mines Ltd. 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 funds 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

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

	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 has 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 based upon an exchange rate of US$0.75 for CDN$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.
7.	Operating line of credit
	The Company has an unsecured $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. At September 30, 2004, approximately $1.86 million was outstanding on this line of credit. This operating line of credit is guaranteed by a director of the Company.
8.	Share capital
(a)	Authorized
	Authorized share capital of the Company consists of 200,000,000 common shares without par value.
	At the Company’s Annual and Extraordinary General Meeting held on February 2, 2004, an increase in authorized share capital from 100,000,000 to 200,000,000 was approved by shareholders.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

(b) Issued and outstanding

		Number of
Common shares		Shares		Amount
Balance, September 30, 2001	$	25,067,697	$	87,897,199
Issued during the year
To a dissenting Continental shareholder in exchange for
Gibraltar preferred shares at $1.07 per share (note 4)		114,800		122,836
Loan guarantee at $0.66 per share (note 7)		606,061		400,000
Private placement at $0.50 per share		414,850		185,835
Private placement at $0.47 per share		276,596		130,000
Private placement at $0.40 per share		375,000		150,000
For acquisition of Gibraltar Refinery (2002) Ltd. at $0.44 per share,
net of issue costs (note 6(d))		4,966,659		2,163,330
For debt settlement at $0.40 per share		2,100,000		840,000
Balance, September 30, 2002		33,921,663		91,889,200
Issued during the year
Share purchase options at $0.50 per share		40,000		20,000
Private placement at $0.30 per share, net of issue costs		2,185,000		645,245
Private placement at $0.30 per share, net of issue costs		4,470,001		1,253,654
Private placement at $0.40 per share, net of issue costs		5,817,500		2,146,666
For acquisition of the remaining business of the GESL Partnership,
net of issue costs (note 6(d))		7,446,809		3,491,554
Balance, September 30, 2003		53,880,973		99,446,319
Issued during the year
Share purchase options at $0.50 per share		4,265,000		2,132,500
Share purchase options at $0.40 per share		152,500		61,000
Share purchase options at $0.25 per share		75,000		18,750
Share purchase options at $0.55 per share		380,000		209,000
Share purchase options at $0.65 per share		25,500		16,575
Fair value of stock options allocated to shares issued on exercise		–		290,000
Share purchase warrants at $0.58 per share		276,596		160,426
Share purchase warrants at $0.55 per share		414,850		228,168
Share purchase warrants at $0.40 per share		302,250		120,900
Share purchase warrants at $0.50 per share		7,393,751		3,696,876
Share purchase warrants at $0.75 per share		473,332		354,999
Private placement at $0.60 per share, net of issue costs		6,700,000		3,910,728
Private placement at $2.00 per share, net of issue costs		3,900,000		7,323,943
Private placement at $1.25 per share, net of issue costs		8,000,000		8,933,206
For acquisition of Gibraltar Reclamation Trust Limited Partnership
at $2.79 per share, net of issue costs (note 6(d))		7,967,742		22,193,039
Loan guarantee at $2.00 per share (note 6(d))		225,000		450,000
Farmout agreement at $2.79 per share (note 6(e))		335,125		935,000
Balance, September 30, 2004		94,767,619	$	150,481,429

(c)	Convertible debenture
	On July 21, 1999, in connection with the acquisition of the Gibraltar mine, the Company issued a $17 million interest-free debenture to BWCL, which is due on July 21, 2009, but is convertible

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

into common shares of the Company over a 10 year period commencing at a price of $3.14 per share in year one and escalating by $0.25 per share per year thereafter ($4.39 per share as at September 30, 2004). BWCL’s purchase of the convertible debenture was receivable as to $4,000,000 in July 1999, $1,000,000 on October 19, 1999, $3,500,000 on July 21, 2000, and $8,500,000 by December 31, 2000, all of which were received. BWCL has the right to convert, in part or in all from time to time, the debenture into fully paid common shares of the Company from year one to year ten.

From the commencement of the sixth year to the tenth year, the Company has the right to automatically convert the debenture into common shares at the then-prevailing market price. Since the Company has the right and the intention to settle the convertible debenture through the issuance of common shares, notwithstanding the Company’s right to settle the debenture with cash, it has been included as a separate component of shareholders’ equity on the balance sheet.

Accounting standards in Canada for compound financial instruments require the Company to allocate the proceeds received from the convertible debenture between (i) the fair value of the option to convert the debenture into common shares and (ii) the fair value of the future cash outflows related to the debenture. At issuance, the Company estimated the fair value of the conversion option by deducting the present value of the future cash outflows of the convertible debenture, calculated using a risk-adjusted discount rate of 10%, from the face value of the principal of the convertible debenture. The residual carrying value of the convertible debenture is required to be accreted to the face value of the convertible debenture over the life of the debenture by, in the Company’s case, a direct charge to deficit.

		September 30,		September 30,
		2004		2003
Present value of convertible debenture
Beginning of year	$	9,777,058	$	8,888,235
Accretion for the year		977,705		888,823
End of year		10,754,763		9,777,058
Conversion right		9,822,462		9,822,462
	$	20,577,225	$	19,599,520
		September 30,		September 30,
		2004		2003
Summary of the convertible debenture terms
Principal amount of convertible debenture	$	17,000,000	$	17,000,000
Price per common share of the unexercised conversion right	$	4.39	$	4.14
Number of common shares potentially issuable under
unexercised conversion right		3,872,437		4,106,280

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

(d)	Share purchase option plan
	The Company has a share purchase option plan approved by the shareholders that allows it to grant a maximum of 10% of the issued and outstanding common shares of the Company at the time an option is granted, less common shares reserved or issued in the plan, subject to regulatory terms and approval, to its employees, officers, directors and consultants. The exercise price of each option may be set equal to or greater than the closing market price of the common shares on the TSX Venture Exchange on the day prior to the date of the grant of the option, less any allowable discounts. Options have a maximum term of ten years and terminate 30 to 90 days following the termination of the optionee’s employment or term of engagement, except in the case of retirement or death. Vesting of options is at the discretion of the Board of Directors at the time the options are granted.
	The continuity of share purchase options is as follows:

		2004					2003					2002
		Number			Average		Number			Average		Number			Average
		of shares			Price		of shares			Price		of shares			Price
Opening balance		4,685,000		$	0.48		4,145,000		$	0.50		657,000		$	1.56
Granted during the period		8,855,500			1.12		770,000			0.41		4,042,500			0.50
Exercised during the period		(4,898,000	)		0.50		(40,000	)		0.50		–			–
Expired/cancelled during period		(15,000	)		1.36		(190,000	)		0.50		(554,500	)		1.38
Closing balance		8,627,500		$	1.13		4,685,000		$	0.48		4,145,000		$	0.50
Contractual remaining life (years)					1.93					1.03					1.96
Range of exercise prices	$	0.25-$1.65				$	0.25-$0.50				$	0.50

The following table summarizes information about share purchase options outstanding at September 30, 2004:

	Options outstanding				Options exercisable
	Number	Weighted		Weighted	Number		Weighted
	outstanding at	average		average	exercisable at		average
Range of exercise	September 30,	remaining		exercise	September 30,		exercise
prices	2004	contractual life		price	2004		price
$0.25 to $0.49	192,500	0.56	$	0.31	192,500	$	0.31
$0.50 to $0.74	2,390,000	2.00	$	0.55	2,390,000	$	0.55
$0.75 to $0.99	45,000	0.97	$	0.81	45,000	$	0.81
$1.00 to $1.24	–	–		N/A	–		–
$1.25 to $1.49	5,920,000	1.97	$	1.38	5,577,500	$	1.38
$1.50 to $1.74	80,000	1.10	$	1.63	70,000	$	1.65
Over $1.74	–	–		N/A	–		–
	8,627,500	1.93	$	1.13	8,275,000	$	1.12

Subsequent to September 30, 2004, to January 24, 2005, a total of 324,500 options were exercised for gross proceeds of $417,800.

The exercise prices of all share purchase options granted during the year were equal to the market price at the grant date. Using an option pricing model with the assumptions noted below, the

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

estimated fair value of all options granted during the year have been reflected in the statement of operations as follows:

		Year ended		Year ended
		September 30,		September 30,
		2004		2003
Total compensation cost recognized in operations,
credited to contributed surplus	$	5,172,244	$	65,344

The weighted average assumptions used to estimate the fair value of options granted during the year were:

	2004	2003
Risk free interest rate	3%	3%
Expected life	2.4 years	2.5 years
Volatility	95%	145%
Expected dividends	nil	nil

(e)	Share purchase warrants
	The continuity of share purchase warrants during the year ended September 30, 2004 is as follows:

			Outstanding				Outstanding
		Exercise	September 30,				September 30,
Expiry dates		price	2003	Issued	Exercised		2004
October 19, 2003	$	0.58	276,596	–	(276,596	)	–
December 27, 2003	$	0.55	414,850	–	(414,850	)	–
January 8, 2006	$	0.40	375,000	–	–		375,000
December 31, 2003	$	0.40	302,250	–	(302,250	)	–
December 31, 2004	$	0.50	7,393,751	–	(7,393,751	)	–
December 31, 2005	$	0.75	–	6,700,000	(473,332	)	6,226,668	(i)
March 10, 2005	$	2.25	–	3,900,000	–		3,900,000	(ii)
September 28, 2006	$	1.40	–	8,000,000	–		8,000,000	(iii)
			8,762,447	18,600,000	(8,860,779	)	18,501,668

(i)	Subject to a 45-day accelerated expiry upon notice if, at any time after the regulatory four-month hold period, the closing price of the Company's common shares, as traded on the TSX Venture Exchange, is at least $1.50 for ten consecutive trading days. As at September 30, 2004 management had not given notice of this accelerated expiry.
(ii)	Subject to a 45-day accelerated expiry upon notice if, at any time after the regulatory four-month hold period, the closing price of the Company's common shares, as traded on the TSX Venture Exchange, is at least $4.50 for ten consecutive trading days.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars

(iii)	Subject to a 45-day accelerated expiry upon notice if, at any time after the regulatory four-month hold period, the closing price of the Company's common shares, as traded on the TSX Venture Exchange, is at least $2.80 for ten consecutive trading days.
Subsequent to September 30, 2004, to January 24, 2005, a total of 1,430,001 warrants were exercised for gross proceeds of $1,072,501.
The continuity of share purchase warrants during the year ended September 30, 2003 is as follows:

			Outstanding			Outstanding
		Exercise	September 30,			September 30,
Expiry dates		price	2002	Issued	Exercised	2003
October 19, 2003	$	0.58	276,596	–	–	276,596
December 27, 2003	$	0.55	414,850	–	–	414,850
January 8, 2006	$	0.40	375,000	–	–	375,000
December 31, 2003	$	0.40	–	302,250	–	302,250
December 31, 2004	$	0.50	–	7,393,751	–	7,393,751
			1,066,446	7,696,001	–	8,762,447

The continuity of share purchase warrants during the year ended September 30, 2002 is as follows:

			Outstanding				Outstanding
		Exercise	September 30,				September 30,
Expiry dates		price	2001	Issued	Expired		2002
March 3, 2002	$	1.30	138,089	–	(138,089	)	–
March 3, 2002	$	2.35	407,877	–	(407,877	)	–
December 31, 2000/01	$	1.38	1,245,000	–	(1,245,000	)	–
October 19, 2003	$	0.58	–	276,596	–		276,596
December 27, 2003	$	0.55	–	414,850	–		414,850
January 8, 2006	$	0.40	–	375,000	–		375,000
			1,790,966	1,066,446	(1,790,966	)	1,066,446

(f) Contributed surplus

Balance, September 30, 2002	$	–
Changes during fiscal 2003:
Non-cash stock-based compensation (note 8(d))		65,344
Contributed surplus, September 30, 2003		65,344
Changes during fiscal 2004:
Non-cash stock-based compensation (note 8(d))		5,172,244
Fair value of stock options allocated to shares issued on exercise		(290,000	)
Contributed surplus, September 30, 2004	$	4,947,588

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

9.	Income taxes
	Substantially all of the difference between the actual income tax expense of $23,744,000 (2003 – $nil) and the expected statutory corporate income tax recovery relates to losses not recognized and income realized for tax purposes but not accounting purposes. As at September 30, 2004 and 2003, the tax effect of the significant components within the Company’s future tax assets were as follows:

		2004			2003
Mineral properties	$	7,472,000		$	–
Loss carry forwards		1,412,000			1,778,000
Equipment		15,000			1,085,000
Reclamation obligation		5,359,000			–
Royalty obligation		23,979,000			–
Other tax pools		740,000			775,000
		38,977,000			3,638,000
Valuation allowance		(38,977,000	)		(3,638,000	)
Future income tax asset	$	–		$	–

The Company has accrued a tax provision of a subsidiary company of $23.7 million. This 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 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 in connection with this accrual were actually assessed against the subsidiary. 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 completed taxation year, nor has any taxation authority assessed the amount or any portion thereof as payable.

At September 30, 2004, the Company’s tax attributes include non-capital losses for income tax purposes in Canada totaling approximately $3,063,000 expiring in various periods from 2005 to 2014.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

10.	Supplementary cash flow disclosures
	In addition to the non-cash operating, financing and investing activities previously disclosed, the Company’s non-cash operating, financing and investing activities were as follows:

		September 30,		September 30,			September 30,
		2004		2003			2002
Issuance of tracking preferred shares of Gibraltar Mines
Ltd. on acquisition of Harmony Gold Property (note 4)	$	–	$	–		$	26,764,784
Issuance of common shares on acquisition of Gibraltar
Refinery (2002) Ltd. (note 6(d))		–		–			2,163,330
Issuance of common shares on acquisition of remaining
business of GESL Partnership		–		3,500,000			–
Issuance of common shares on acquisition of Gibraltar
Reclamation Trust Limited Partnership		22,230,000		–			–
Issuance of common shares on redemption of Gibraltar
tracking preferred shares held by a dissenting
Continental shareholder (note 4)		–		–			122,836
Issuance of common shares for loan guarantee (note 7)		450,000		–			400,000
Issuance of common shares settlement of debt		–		–			840,000
Accretion of convertible debenture (note 8(c))		977,705		888,823			808,021
Fair value of stock options allocated to shares issued on
exercise		290,000		–			–
		September 30,		September 30,			September 30,
		2004		2003			2002
Supplemental cash flow information
Cash paid during the year for
Interest	$	49,294	$	101,942	$		107,790
Taxes	$	45,352	$	6,135	$		117,333

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

11.	Related party transactions and advances
	Details of related party transactions and advances not disclosed elsewhere in these financial statements include:

		September 30,		September 30,		September 30,
Transactions		2004		2003		2002
Hunter Dickinson Inc.
Services rendered to the Company and its subsidiaries
and reimbursement of third party expenses (a)	$	806,970	$	253,859	$	574,892
Services rendered to GESL Partnership (b)	$	–	$	–	$	1,384,496
Hunter Dickinson Group Inc.
Consulting services rendered to the Company (c)	$	12,800	$	9,600	$	–
Tom Milner Enterprises Inc.
Consulting services rendered to the Company (d)	$	115,155	$	–	$	–

		September 30,			September 30,
Advances		2004			2003
Advances to (from) (e)
Hunter Dickinson Inc. (a)	$	198,281		$	229,129
Hunter Dickinson Group Inc. (c)		(3,424	)		(4,591	)
Advances to (from) related parties	$	194,857		$	224,538

(a)	Hunter Dickinson Inc. ("HDI") is a private company with certain directors in common that provides geological, corporate development, administrative and management services to, and incurs third party costs on behalf of, the Company and its subsidiaries on a full cost recovery basis pursuant to an agreement dated December 31, 1996.
(b)	During fiscal 2001 and 2002, Hunter Dickinson Inc. provided engineering and other services to the GESL Partnership at industry standard rates.
(c)	Hunter Dickinson Group Inc. is a private company with certain directors in common with the Company that provides consulting services to the Company.
(d)	Tom Milner Enterprises Inc. is a private company controlled by a director of the Company that provides consulting services to the Company.
(e)	Advances are non-interest bearing and due on demand.

TASEKO MINES LIMITED
Notes to Consolidated Financial Statements
For the year ended September 30, 2004
(Expressed in Canadian Dollars)

12.	Subsequent events
	Subsequent to September 30, 2004
	(a)	324,500 options were exercised for gross proceeds of $417,800 (note 8(d));
	(b)	1,430,001 warrants were exercised for gross proceeds of $1,072,501 (note 8(e));
	(c)	the Company sold and arranged lease financing for the mining shovel and five haul trucks acquired in fiscal 2004, for net proceeds of US$14.6 million (note 5);
	(d)	the Company executed its first shipment of copper concentrate, pursuant to its restart plan, in December 2004;
	(e)	On February 3, 2005, the Company announced that it had reached agreements with a number of accredited investors to privately place up to 5,172,500 units in its capital, at a price of $1.45 per unit, for gross proceeds of up to $7.5 million. Each unit will consist of one common share and one common share purchase warrant exercisable to purchase an additional common share at a price of $1.66 for an 18 month period from the completion of the financing. This private placement is subject to regulatory approval and is scheduled to close in February 2005.

EX-99.2

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.1 Date

This Management Discussion and Analysis ("MD&A") should be read in conjunction with the audited financial statements of Taseko Mines Limited ("Taseko", or the "Company") for the year ended September 30, 2004.

This MD&A is prepared as of February 8, 2005. All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.

This discussion includes certain statements that may be deemed "forward-looking statements". All statements in this discussion, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.

1.2 Overview

Taseko Mines Limited ("Taseko" or the "Company") is a 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.

In 2004, the Company focused 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 focussing on copper circuit. Re-start of the operation took place subsequent to the fiscal year end in October 2004.

On October 4, 2004, Taseko began trading on the American Stock Exchange under the symbol “TGB”. Also in October, two new independent directors joined the Board. David Elliott, CA, has a strong and diverse background as a public accountant and corporate executive. Wayne Kirk is an attorney with extensive experience in public practice and also as in-house counsel to companies within the mining sector.

Gibraltar mine

The Gibraltar mine is a 35,000 tonnes per day mine and mill facility, which has had a successful 27-year operating history, and which had been maintained on a standby basis for five years, awaiting higher copper prices. With the improvement in copper markets, the Company raised approximately $18.6 million to fund the restart of the Gibraltar mine.

Planning for restart took place in the first and second quarters of fiscal 2004. An independent review of the capital and operating costs and mineral reserves and resources was completed by Roscoe Postle and Associates (“RPA”) in the third quarter. There was no significant change in the reserves from the audit of the estimates that had been carried out by RPA in December 1998 when the mine was closed.

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

Under the Gibraltar mine plan, 163.5 million tons (148 million tonnes) of sulphide material is to be extracted over 12 years, producing an estimated average of 70 million pounds (31,750 tonnes) of copper and 980,000 pounds (450 tonnes) of molybdenum per year in concentrate. A 10 million pound (4,550 tonnes) per year solvent extraction-electrowinning plant is available to produce copper cathode from oxide mineralization when accessed.

Taseko received approval for the mine plan from the British Columbia Ministry of Energy and Mines on June 1, 2004. 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 work in the Pollyanna Pit on June 10. Between June and September 30, 2004, approximately 5.56 million tons (5.05 million tonnes) of overburden material was stripped to expose Pollyanna mineralization.

Maintenance on other mining equipment and refurbishment of site facilities was carried out concurrently with the pre-development activities. First, water, air and lighting infrastructure was re-established and electrical systems tested and commissioned in the mill, then maintenance of the major crushing, grinding and flotation circuits began. Copper circuit operations in the mill were initiated subsequent to the end of the fiscal year in October.

The mining and construction industry suffered from equipment shortages and delays in delivery 2004, and Gibraltar’s experience was similar. New mining equipment, including five mine-haul trucks and a P&H 2800XPB shovel, arrived at site commencing in July and continuing through October and then was assembled. Late delivery of this equipment, however, delayed some pre-stripping and mining activities. The majority of the equipment was in operation when the copper concentrator was restarted subsequent to year end in October.

During pre-stripping, 600,000 tons (545,000 tonnes) of additional ore was encountered near surface. This oxidized material was processed once the copper concentrator was restarted in the first fiscal quarter.

In fiscal 2003, the Company developed, in partnership with the Cariboo Regional District, a community landfill at the Gibraltar site. The landfill operates in an area where mining is completed. To October 2004, the Gibraltar Landfill had been in full operation for twelve months.

The Company shipped its first copper concentrate in early December. Upgrading of the molybdenum circuit and copper cleaner circuit was initiated in October. Commissioning of the molybdenum circuit is expected to be completed in the second quarter of fiscal 2005.

Gibraltar-Ledcor Joint Venture

In May 2004, Taseko and Ledcor CMI Ltd. (“Ledcor”) signed a framework agreement whereby re-commissioning and operation of the Gibraltar mine would proceed as a joint venture. In September, 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 the residual profits of the Joint Venture (i.e. profits after payment of usage fees to the participants for 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

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

assets as well as for services that they contribute to the Joint Venture. Taseko is responsible for concentrate sales, off-site activities and certain aspects of administration and Ledcor is responsible for on-site operations and Ledcor, as Operator of the Joint Venture, has primary responsibility for carrying out mining and milling activities as well as recruitment of personnel and maintenance of the equipment and facilities. Over 250 people are currently employed at the mine.

As part of its contributions to the joint venture, Ledcor provided important lease financing guarantees to third parties that allowed for a timely acquisition of the new shovel and five new mine-haul trucks valued at US$18.3 million ($22.0 million).

Labour Relations Board

The Company and its former union, the National Automobile, Aerospace, Transportation and General Workers Union of Canada (the “CAW”), appeared before the British Columbia Labour Relations Board (“LRB”), which ruled on June 29, 2004 (the “Original Decision”) that the Company was entitled to contract 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 – the CAW, or the Christian Labour Association of Canada (“CLAC”), which represent Ledcor’s employees. Ledcor has a labour agreement in place with CLAC.

The CAW applied for leave and reconsideration of the Original Decision, on the basis that the joint venture formed to operate the Gibraltar mine has 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 can be counted, the LRB must be satisfied that the terms of the JV Agreement have been implemented and the necessary elements of a successorship have been established. The ballot boxes were ordered sealed by the LRB, and the original LRB panel, pending those determinations, will decide whether the vote results will be counted.

A series of submissions were made by the unions and the JV in December 2004 and January 2005. On February 16, 2005, the LRB ruled that the Taseko-Ledcor JV had proceeded as represented to the original LRB panel and that Taseko-Ledcor is the successor employer at Gibraltar. As a result, the ballots will be counted to determine which union will represent the employees.

Series A non-voting redeemable preferred shares

In October 2001, the Company’s subsidiary Gibraltar Mines Ltd. (“Gibraltar”) completed an arrangement agreement with Continental Minerals Corporation ("Continental"), which are British Columbia companies with certain management and directors in common with the Company. Under the terms of the arrangement agreement, among other things, Gibraltar paid $2.23 million cash and issued to Continental, 12,483,916 series A non-voting redeemable preferred shares in exchange for Continental’s interest in the Harmony Gold Project.

Gibraltar is obligated to redeem the series A preferred upon the sale of all or substantially all (80%) of the Harmony Gold Property (excluding options or joint ventures which do not result in the certain or immediate transfer of 80% of Gibraltar’s interest in the Harmony Gold Property), or upon the commencement of commercial production at the Harmony Gold Property (an “HP Realization Event”). Upon the occurrence of an HP Realization event, Gibraltar must redeem Gibraltar preferred shares by

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

distributing that number of Taseko common shares (“Taseko Shares”) equal to the paid-up amount (as adjusted) divided by a deemed price per Taseko Share, which will vary dependent on the timing of such HP Realization Event. At September 30, 2004, the paid up amount was approximately $62.77 million and the conversion rate was $4.39 per Taseko Share.

Market Trends

Copper prices strengthened throughout 2004. The average price for the year was about US$1.30 per pound, compared to US$0.81 per pound in 2003.

The price of molybdenum oxide also increased from US$7.60 per pound early in 2004 to US$34.00 per pound by calendar year end, averaging US$16.88 per pound for the year, well above its long term price of US$4.00 per pound.

Gold prices continued an overall uptrend in 2004. The average gold price for 2004 was US$410 per ounce, compared to US$364 per ounce in 2003.

The Company is subject to currency exchange rate risk. The prices of copper and molybdenum oxide are denominated in United States dollars and, accordingly, the Company’s revenues will be received in United States dollars. The Company’s operations are almost entirely paid for in Canadian dollars, which has recently shown strength against the United States dollar. The further strengthening in the Canadian dollar, if it continues, will negatively impact the profitability of the Company’s mining operations.

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.3 Selected Annual Information

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles, and are expressed in Canadian dollars except common shares outstanding.

		As at			As at		As at
		September 30			September 30		September 30
Balance Sheet		2004			2003		2002
Current assets	$	20,341,400		$	6,110,155	$	2,761,936
Mineral properties		3,000			28,813,296		28,813,296
Other assets		121,579,070			26,311,460		28,735,049
Total assets		141,923,470			61,234,911		60,310,281
Current liabilities		40,179,912			3,851,136		7,038,456
Other liabilities		101,807,000			32,700,000		32,700,000
Shareholders’ equity (deficit)		(63,442	)		24,683,775		20,571,825
Total shareholders’ equity & liabilities		141,923,470			61,234,911		60,310,281

		Year ended			Year ended			Year ended
		September 30			September 30			September 30
Operations		2004			2003			2002
Conference and travel	$	93,071		$	43,398		$	44,429
Consulting		251,790			178,104			133,672
Corporation taxes		45,352			76,135			577,228
Depreciation		723,249			711,170			714,065
Exploration		4,457,600			2,029,529			2,071,885
Interest and finance charges		499,294			201,942			507,790
Legal, accounting and audit		458,238			169,356			334,492
Office and administration		599,450			292,853			247,061
Premium paid for acquisition of Gibraltar
Reclamation Trust Limited Partnership		5,095,249			–			–
Property investigation		141,067			–			–
Refinery project		–			500,000			1,698,826
Restart project		14,982,008			–			–
Shareholder communication		657,342			74,687			90,835
Trust and filing		88,530			21,113			36,802
Interest and other (income)		(5,154,209	)		(721,480	)		(551,842	)
Gain on sale of property, plant and equipment		–			(131,638	)		(1,314	)
Income taxes		23,744,000			–			–
Write down of mineral property acquisition costs		28,810,296			–			600,000
Stock-based compensation		5,172,244			65,344			–
Loss for the period		80,664,571			3,510,513			6,503,929
Accretion expense		977,705			888,823			808,021
Basic and diluted loss per share	$	(1.09	)	$	(0.09	)	$	(0.24	)
Weighted average number of
common shares outstanding		75,113,426			46,984,378			30,338,098

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.4 Results of Operations

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 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, and (e) expenses totaling $15.0 million related to the restart of the Gibraltar mine.

Management does not believe there has been a fundamental change in the nature of the Harmony Gold Property; however, during the 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.

The Company has accrued a tax provision of a subsidiary company of $23.7 million in the accompanying financial statements. This 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 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. 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 completed taxation year, nor has any taxation authority assessed the amount or any portion thereof as payable.

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 Project. The expenditures include the cost of standby 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.

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 earning a listing on the American Stock Exchange.

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.5 Summary of Quarterly Results

The following summary is presented in Canadian dollars except common shares outstanding.

	Sep 30,		Jun 30,		Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,		Dec 31,
	2004		2004		2004		2003		2003		2003		2003		2002
Current assets	20,341,400		22,503,985		31,197,299		12,393,240		6,110,155		6,931,542		4,590,814		5,817,311
Mineral properties	3,000		28,813,296		28,813,296		28,813,296		28,813,296		28,813,296		28,813,296		28,813,296
Other assets	121,579,070		37,453,575		29,025,131		26,258,435		26,311,460		26,232,419		26,069,484		26,355,556
Total assets	141,923,470		88,770,856		89,035,726		67,464,971		61,234,911		61,977,257		59,473,594		60,986,163
Current liabilities	40,179,912		4,082,614		1,411,538		3,786,070		3,851,136		3,490,173		3,571,875		4,053,587
Other liabilities	101,807,000		32,700,000		32,700,000		32,700,000		32,700,000		32,700,000		32,700,000		32,700,000
Shareholders’ equity	(63,442	)	51,988,242		54,924,188		30,978,901		24,683,775		25,787,084		23,201,719		24,232,576
Total shareholders’ equity  and liabilities	141,923,470		88,770,856		89,035,726		67,464,971		61,234,911		61,977,257		59,473,594		60,986,163
Expenses:
Conference and travel	11,689		19,062		22,051		40,269		4,449		12,492		6,962		19,495
Consulting	56,450		94,875		(10,462	)	110,927		30,118		40,309		58,011		49,666
Corporation taxes	14,184		20,000		11,168		–		101,308		(44,911	)	11,594		8,144
Deprecation	181,430		181,434		180,407		179,978		179,559		176,617		176,617		178,377
Exploration	(2,587,961	)	3,939,477		975,538		2,130,546		607,301		449,458		687,681		285,089
Interest and finance charges	18,138		452,616		9,201		19,339		124,213		25,952		28,590		23,187
Laboratory and other
services	732,054		–		–		(732,054	)	–		–		–		–
Legal, accounting and audit	325,567		92,940		22,913		16,818		40,526		53,960		18,272		56,598
Office and administration	88,512		199,224		189,976		121,738		98,580		78,827		63,676		51,770
Premium paid for GRTLP	–		–		5,095,249		–		–		–		–		–
Property investigation	4		–		–		141,063		(47,805	)	37,071		10,734		–
Refinery project	–		–		–		–		–		500,000		–		–
Restart project	14,982,008		–		–		–		–		– 500,000		–		–
Salaries and benefits	–		–		–		–		–		–		–		–
Shareholder
communications	34,142		18,694		530,704		73,802		7,833		4,223		39,104		23,527
Trust and filing	53,052		13,842		17,241		4,395		1,250		8,421		10,698		744
Interest and other (income)	(4,464,851	)	(228,670	)	(325,399	)	(135,289	)	(129,811	)	(353,537	)	64,623		(302,755	)
Gain on sale of property
plant and equipment	–		–		–		–		–		–		(131,638	)	–
Income taxes	23,744,000		–		–		–		–		–		–		–
Write down of mineral
property acquisition costs	28,810,296		–		–		–		–		–		–		–
Stock-based compensation	2,035,178		1,526,084		296,686		1,314,296		65,344		–		–		–
Loss for the period	64,033,892		6,329,578		7,015,273		3,285,828		1,082,865		988,882		1,044,924		393,842
Accretion expense on
convertible debenture	245,431		244,091		242,752		245,431		888,823		–		–		–
Basic and diluted loss per
share	(0.74	)	(0.08	)	(0.10	)	(0.06	)	(0.04	)	(0.02	)	(0.02	)	(0.01	)
Weighted average number
of common shares
outstanding (thousands)	87,368		71,384		65,005		57,481		46,984		44,660		40,173		34,057

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.6 Liquidity

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 received funding pursuant to a $17 million non-interest-bearing convertible debenture financing by Boliden Westmin (Canada) Ltd. Taseko has the right and the intention to convert the debenture into common shares. Accordingly, under Canadian accounting standards, the $17 million debenture is classified as equity on the Company's balance sheet.

Reclamation deposits totaling approximately $17.6 million including interest, are to be used at a later 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 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.

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 taxes.

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 yet to be completed $7.5 million financing announced in February 2005, will be sufficient to cover operating costs and working capital during 2005.

1.7 Capital Resources

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.

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

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.

As of the date of this MD&A, the Company had approximately 16.7 million warrants outstanding, of which approximately 12.8 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 has chosen not to give notice due to variable market conditions, but maintains its right to do so in the future.

1.8 Off-Balance Sheet Arrangements

Gibraltar Engineering Services Limited Partnership

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. 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.

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 restart 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 start-up 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 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.

To facilitate the start-up transactions, five directors and officers of the Company personally guaranteed certain obligations (each as to one fifth) to third parties on behalf of the Company 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 value of $2.00 each.

In March 2004 Taseko elected to exercise its call rights for the GRT Partnership and issued 7,967,742 shares valued at $2.79 each. Certain directors and officers participated as investors in the GRT Partnership in the aggregate amount of $1,300,000, or about 8% of the financing. These directors and officers received shares as a consequence of Taseko exercising the call right. 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 entitlement held by the GRT Partnership.

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.9 Transactions with Related Parties

Hunter Dickinson Inc. (“HDI”) carries out investor relations, geological, corporate development, administrative and other management activities for, and incurs third party costs on behalf of the Company. Taseko reimburses HDI on a full cost-recovery basis.

Costs for services rendered by HDI to the Company increased to $807,000 in fiscal 2004 as compared to $254,000 in fiscal 2003, primarily related to the increased activity of the Company.

To facilitate the startup of the Gibraltar mine, certain directors and officers of the Company personally guaranteed certain obligations on behalf of the Company, for which they each received 45,000 shares of the Company (see item 1.8 above).

Certain directors and officers participated as investors in the GRT Partnership in the aggregate amount of $1.3 million (see item 1.8 above).

Tom Milner Enterprises Inc. is a private company controlled by a director of the Company that provides consulting services to the Company. During the year ended September 30, 2004, the Company paid approximately $115,000 to this private company.

1.10 Fourth Quarter

Results of operations

The Company’s loss increased to $64.0 million from $6.3 million in the third quarter of the year due to $13.1 million in restart expenses, a non-cash $23.7 million charge to income tax expense, and a non-cash $28.8 million write down of the Harmony Project.

A total of $13.1 million was spent on mine restart. Restart expenses of $1.9 million were incurred in the third quarter (beginning in June) but were included as exploration expenses (under site activities) in the third quarter statements. (As a result, exploration expenses have decreased from $7.1 million at the end of the third quarter to $5.2 million at year end, including a total of $44,430 spent on Prosperity and Harmony in the fourth quarter). Exploration expenditures in the fourth quarter of fiscal 2003 were $0.6 million.

The main restart expenditures were $6.4 million for stripping at the Pollyanna pit, $5.4 million for refurbishing the mill, $1.7 million for rehabilitating site infrastructure, and $0.9 million for administration.

Administrative costs in the fourth quarter were $2.8 million, an increase from $2.7 million in the fourth quarter of fiscal 2003. The increase is primarily related to a non-cash charge of $2.0 million for stock-based compensation, the accounting for which began in fiscal 2004.

1.11 Proposed Transactions

There are no proposed asset or business acquisitions or dispositions, other than those in the ordinary course, before the board of directors for consideration.

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.12 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

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

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.

1.13 Changes in Accounting Policies including Initial Adoption

The Company anticipates that it will change its accounting policy, effective next year, for asset retirement obligations, in accordance with new Canadian guidance.

1.14 Financial Instruments and Other Instruments

None.

1.15 Other MD&A Requirements

1.15.1 Other MD&A Requirements

Additional information relating to the Company, including the Company's Annual Information Form, is available on SEDAR at www.sedar.com.

1.15.2 Additional Disclosure for Venture Issuers Without Significant Revenue

Not applicable – the Company is not a "Venture Issuer".

TASEKO MINES LIMITED
YEAR ENDED SEPTEMBER 30, 2004

MANAGEMENT'S DISCUSSION AND ANALYSIS

1.15.3 Disclosure of Outstanding Share Data

The following details the share capital structure as at February 8, 2005, the date of this MD&A. These figures may be subject to minor accounting adjustments prior to presentation in future consolidated financial statements.

		Exercise
	Expiry date	price	Number	Number
Common shares				97,120,452
Share purchase options	May 9, 2005	$ 0.38	20,000
	July 29, 2005	0.25	50,000
	September 29, 2006	0.55	2,235,000
	September 20, 2005	0.81	35,000
	September 20, 2005	1.40	68,000
	September 20, 2005	1.65	60,000
	September 20, 2006	1.40	3,580,000
	September 29, 2006	1.36	1,973,200
	September 29, 2006	1.50	10,000	8,031,200
Warrants	January 8, 2006	0.40	375,000
	December 31, 2005	0.75	4,463,335
	March 10, 2005	2.25	3,900,000
	September 28, 2006	1.40	8,000,000	16,738,335
Preferred shares redeemable into Taseko Mines Limited common shares				12,483,916

The Company's auditors have not opined on this MD&A.