26 slides from Teck Resources Limited Class A's earnings presentation, Jul 29, 2011
Slide 1: Second Quarter 2011 Investor Conference Call and Webcast
Second Quarter 2011 Investor Conference Call and Webcast July 29, 2011
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: Forward Looking Information
Forward Looking Information The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but are not limited to: adverse developments in business and economic conditions in the pri
Slide 4: Speakers
Q2 Investor Conference Call Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 4
Slide 5: Highlights: Strong Business Fundamentals
Highlights Strong Business Fundamentals • Record quarterly revenue, gross profit, EBITDA* • $3.4 billion cash balance after dividends • Strong free cash flow will continue to build cash • Strategic US$2.0 billion notes offering (July 5th) • Q3 Premium HCC benchmark price US$315/t * Normalized EBITDA
Slide 6: Q2 Highlights
Q2 Highlights Revenues up 27%, Gross Profit * up 31% Revenues $ 2,796 million Gross Profit $ 1,427 million (before depreciation & amortization) Profit $ 756 million (attributable to shareholders) EBITDA $ 1,461 million *before depreciation & amortization 6
Slide 7: Q2 2011 Profit
Q2 2011 Profit Earnings per Share (C$) 1.25 $1.12 Adjusted Profit 1.00 +90% Q2 2011 Q2 2010 0.75 $0.59 Profit ($millions) $663 $347 0.50 0.25 EPS - Basic $1.12 $0.59 Diluted $1.12 $0.59 0.00 Q2 2011 Q2 2010 7
Slide 8: Adjusted Profit
Adjusted Profit ($ millions, net of taxes) Q2 ’11 Q2 ’10 Q1 ’11 Profit attributable to $ 756 $ 283 $ 461 Shareholders as reported Asset Sales & Other (113) – (8) F/X (gains) losses 2 42 (7) Derivative (gains) losses (8) 16 4 Collective Agreement Charge 26 – – Financing items & Impairment charges – 6
Slide 9: Coal
Coal Q2 Q2 Q1 Coal - Mt 2011 2010 2011 Production 5.8 6.0 4.4 Sales 5.6 6.4 5.0 Average Price (US$/t) 272 182 207 (C$/t) 264 186 206 Site Costs (C$/t) 73* 56 76 Transportation Costs (C$/t) 33 31 34 Financial Results C$ millions Revenue 1,471 1,196 1,019 Gross Profit 844 638 477 (before depreciation
Slide 10: Coal – Mining: Moving More Material
Coal – Mining Moving More Material 12.0 90 11.0 Total Material mined (000’s) 10.0 70 Strip Ratio 9.0 8.0 50 7.0 Total material mined Clean Coal Strip ratio (BCMW/MTCC) 6.0 30 • Higher strip ratio (clean coal) • Record amount of material moved during Q2 • Increase in number of trucks & increase in tr
Slide 11: Copper
Copper Q2 Q2 Q1 2011 2010 2011 Copper in Concentrate (kt) Production1 62 53 57 Sales1 60 52 56 Copper Cathode (kt) Production 18 24 18 Sales 17 24 17 Moly in Concentrate (M lbs) Production 2.3 1.6 1.9 Sales 2.2 2.0 2.4 Financial Results C$ millions Revenue 749 574 773 Gross Profit 427 347 469 (befor
Slide 12: Andacollo: Increasing Throughput
Andacollo Increasing Throughput • Andacollo Concentrator improvement plan: – Small crusher to feed pebble crusher (August ‘11) – Increase SAG motor capacity by 10% (Q3 ‘11) – Installation of a 20 ktpd pre-crusher plant (Q1 ‘12) • Estimated cost approximately US$15 million • Recoveries continue to be
Slide 13: Quebrada Blanca – Dealing with Challenging Conditions
Quebrada Blanca – Dealing with Challenging Conditions Wall Failure – Dec ‘10 Challenges • Wall Failures • Abnormal Weather • Change from Heap Leach to Dump Leach Operation Initiatives • Push Back South Wall Winter Rains – Jan ‘11 • Ripios re-leaching • Upgrade SX Plant Winter Snow – Jul ‘11 13
Slide 14: Antamina Expansion
Antamina Expansion • Ore throughput increasing 30% over the first half of 2011 • Project 63% complete; estimated cost remains US$1.3Bn • New SAG & ball mills in place, new copper & zinc floatation cells in place • Additional ore anticipated Q1 2012 14
Slide 15: Galore Creek
Galore Creek Pre-feasibility Study Completed Large Copper/Gold Resource • Reserves: 6.8 B lbs Cu, 5.5 M ozs Au • Avg Annual Production: 320 M lbs Cu & 208,000 oz Au • 18 year mine life with significant upside Project concept simplified: • Mining in the Galore Valley • Processing in the West More Val
Slide 16: Zinc
Zinc Q2 Q2 Q1 Zinc in Concentrate (kt) 2011 2010 2011 Production 166 167 166 Sales 99 101 129 Refined Zinc (kt) Production 71 71 72 Sales 72 70 73 Lead in Concentrate (kt) Production 22 31 21 Sales – 3 – Refined Lead (kt) Production 21 20 23 Sales 22 23 20 Financial Results C$ millions Revenue 576 4
Slide 17: Energy
Energy • Fort Hills – Phase I bitumen production planned for mid 2016 • Frontier and Equinox – Design Basis Memorandum (DBM) complete – Regulatory application late 2011 • Lease 421 – Seismic program completed Q1 2011 • Wintering Hills Windfarm – On schedule, expected to be complete by the end of 201
Slide 18: Speakers
Q2 Investor Conference Call Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 18
Slide 19: Q2 2011 – Cash Changes
Q2 2011 – Cash Changes $Millions Cash Flow from Operations 1,207 Working Capital Changes (586) Capital Expenditures / Investments (325) Proceeds from investments & other 134 Debt principal and interest payments (152) Non-controlling Interests (7) Exchange & Other (3) Cash & STI Increase 268 Cash at
Slide 20: Working Capital Breakdown
Working Capital Breakdown • Factoring of Receivables • Outstanding Receivables – Higher commodity prices • Inventories Higher – Prices, volumes and costs • Payables – Timing of royalty & tax payments 20
Slide 21: Final Pricing Adjustments
Final Pricing Adjustments Settlement Outstanding at Outstanding at Adjustment (C$ M) March 31, 2011 June 30, 2011 Before Tax* Copper 128 M lbs $4.27 US$/lb 150 M lbs $4.22 US$/lb -$10 Million Zinc 116 M lbs $1.06 US$/lb 103 M lbs $1.05 US$/lb -$1 Million Silver 3.1 M oz $38 US$/oz 2.5 M oz $35 US$/o
Slide 22: Debt & Recent Notes Offering
Debt & Recent Notes Offering O ve r al l D e b t M a tu r i ty Pr o fi l e 1,500 Weighted average term to maturity: 13.7 Years 1,200 US$ (000's) 900 600 300 - Su c c e ssfu l U S$ 2 .0 B N o te s O ffe r i ng ‘BBB’ Average Rate Histogram • Teck’s average funding yield is 4th percentile over the last
Slide 23: Speakers
Q2 Investor Conference Call Speakers Ron Millos SVP Finance & CFO Don Lindsay President & CEO 23
Slide 24: Project Developments
Project Developments • Quintette Coal Mine Feasibility Study expected Q3 2011 • Relincho Copper Mine Pre-feasibility study expected Q3 2011 • Andacollo Expansion Feasibility study expected Q4 2011 • Quebrada Blanca Copper Concentrate Feasibility study expected early 2012 • Galore Creek Copper Mine P
Slide 25: Summary
Summary Positioning for upcoming capital expenditures Strong cash flow & increasing cash balance Coal production increasing Copper production increasing Development projects advancing 25
Slide 26: Second Quarter 2011
Second Quarter 2011 Investor Conference Call and Webcast July 29, 2011