19 slides from Teck Resources Limited Class A's earnings presentation, Jul 28, 2016
Slide 1: Second Quarter 2016 Results
Second Quarter 2016 Results July 28, 2016
Slide 2: Forward Looking Information
Forward Looking Information Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario).
Slide 3: Continued Focus on Cost Management And Operating Execution
Continued Focus on Cost Management And Operating Execution • Continuing to deliver on cost management • Lowered unit cost guidance in Coal and Copper • Increased production guidance in Coal, Copper, and Zinc • Extended near-term debt maturities and credit lines • Increased year-end cash balance targ
Slide 4: Quarterly Financial Results
Quarterly Financial Results Q2 2016 Results Revenues $ 1.7 Billion Gross profit $ 536 Million (before depreciation & amortization)* EBITDA* $ 468 Million Profit $ 15 Million (attributable to shareholders) Adjusted Profit $ 3 Million (attributable to shareholders)* $0.01/share 4 * Non-GAAP financial
Slide 5: Q2 2016 Operational Highlights
Q2 2016 Operational Highlights Steelmaking Coal1,2 Copper2,3 Unit Cost of Sales down US$11/t C1 Unit Costs down US$0.15/lb Total Cash Unit Costs down US$15/t Total Cash Unit Costs down US$0.21/lb Coal Total Cash Unit Costs1 (US$/tonne) Copper Total Cash Unit Costs3 (US$/lb) 13% 19% 81 1.69 Stripping
Slide 6: Maintaining Stripping Levels in Coal
Maintaining Stripping Levels in Coal Total Material Moved & Coal Production 90,000 8,000 80,000 7,000 70,000 Material Moved (000 BCMs) 6,000 • Maintaining material moved 60,000 5,000 relative to production Production (000 50,000 4,000 • Q3 2015 reflects production 40,000 ) 3,000 curtailments 30,000
Slide 7: Steelmaking Coal Quarterly Results
Steelmaking Coal Quarterly Results Sales (Mt) Realized Price (C$/tonne) Revenue (C$M) 0.2 8% 11% 6.5 6.3 116 107 764 678 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Production (Mt) Unit Cost of Sales1 (C$/tonne) Gross Profit2 (C$M) 8% 8% 0.1 Total 83 76 6.6 6.7 215 198 Transport 36 34 Inventory
Slide 8: Copper Quarterly Results
Copper Quarterly Results Sales (kt) Realized Price (US$/lb) Revenue (C$M) 5 22% 27% 2.76 704 97 92 2.15 517 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Production (kt) C1 Unit Costs1 (US$/lb) Gross Profit2 (C$M) 2 xx% 10% 35% 93 91 317 1.49 206 1.34 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Q2 2015 Q2 201
Slide 9: Zinc Quarterly Results
Zinc Quarterly Results Zinc Sales (kt) Zinc Realized Price (US$/lb) Revenue (C$M) Conc1 Refined 4 6 3% 13% 88 92 530 544 78 0.98 72 0.85 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Zinc Production (kt) Lead Production (kt) Gross Profit2 (C$M) Conc1 Refined Conc1 Refined 6 8% 2 5
Slide 10: Fort Hills Project Status & Progress
Fort Hills Project Status & Progress • Construction has surpassed 60% • No direct impact of forest fire • Suncor will update on cost & schedule impact at year end 10 Source: Suncor. Ore Processing Plant, July 2016..
Slide 11: Positive Developments in Steelmaking Coal
Positive Developments in Steelmaking Coal Coal Price Assessments China Steel and Coal Production 160 • China’s 2-year high steel production in June’16 140 • China 3mo. coking coal imports Mar- June annualized ~60 Mt 120 $ / tonne • China coking coal production declining due to operating days restric
Slide 12: Chinese Zinc Concentrate Supply Declining
Chinese Zinc Concentrate Supply Declining Concentrate Supply Shrinking Spot and Benchmark TCs Tighten 700 $300 600 $250 500 $200 400 $150 kt 300 $100 200 100 $50 Down ~40% 0 $0 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 2011 2012 2013 2014 2015 2016 Concs imports Mine production Spot Annual An
Slide 13: Cash Flow
Cash Flow Cash Changes in Q2 2016 4000 1,624 1,567 3500 3000 $ Millions 2500 325 339 2000 122 74 29 $1,485 89 35 1500 $1,271 1000 500 0 Cash - start Cash flow Issuance of Repayment PP&E, incl. Capitalized Proceeds Debt interest Dividends Other Cash - end of of quarter from debt of debt Fort Hills st
Slide 14: Quarterly Pricing Adjustments
Quarterly Pricing Adjustments Simplified Pricing Adjustment Model Outstanding at Outstanding at Quarterly Pricing Price Mar. 31, 2016 Jun. 30, 2016 Adjustments Change 100 Q1 2012 Pre-tax Settlement Adjustment (C$M) Mlbs US$/lb Mlbs US$/lb US$/lb C$M 50 Q1 2016 Q3 2012 Q2 2014 Q3 2013 Copper 230 2.19
Slide 15: Extended Near-Term Maturities - No Substantial Bond Maturities for 5 Years
Extended Near-Term Maturities - No Substantial Bond Maturities for 5 Years • Extended the maturity of US$1.0 billion of our US$1.2 billion credit facility by two years from June 2017 to June 20191 • Issued US$1.25 billion of 5 year and 8 year senior unsecured notes • Purchased US$1.25 billion of not
Slide 16: Strong Financial Position; Including >C$5.4 in Liquidity
Strong Financial Position; Including >C$5.4 in Liquidity1 • Cash balance of ~C$1.4B1 • Substantial credit facilities3: Letters of Credit Letters of Credit Total Amount ($M) Commitment Maturity Limit ($M) Issued ($M) Available ($M) US$3,000 Committed July 2020 US$1,000 Undrawn US$3,000 US$1,0004 Comm
Slide 17: Updated 2016 Production & Cost Guidance
Updated 2016 Production & Cost Guidance Updated 2015 Results 2016 Guidance Steelmaking Coal Production 25.3 Mt 26-27 Mt Site costs $45/t $42-46/t Capitalized stripping $16/t $11/t1 Transportation costs $36/t $33-35/t Total cash unit costs2 $99/t $86-92/t US$76/t3 US$66-71/t3 Copper Production 358 kt
Slide 18: Positioned to Emerge Stronger from this Cycle
Positioned to Emerge Stronger from this Cycle • Production growth from Fort Hills • No operating assets sold • No equity dilution • Maintaining strong liquidity • Reducing debt, managing maturities Result is higher production per share 18
Slide 19: Second Quarter 2016 Results
Second Quarter 2016 Results July 28, 2016