39 slides from Teck Resources Limited Class A's earnings presentation, Jul 24, 2024
Slide 1: Second Quarter 2024 Conference Call
Change photo SECOND QUARTER 2024 CONFERENCE CALL July 24, 2024
Slide 2: Caution Regarding Forward-Looking Statements
CAUTION REGARDING FORWARD-LOOKING STATEMENTS Both these slides and the accompanying oral presentation contain certain forward-looking information and forward-looking statements as defined in applicable securities laws (collectively referred to as forward-looking statements). These statements relate
Slide 3: Agenda
AGENDA Second Quarter 2024 Highlights Second Quarter 2024 Results EVR Transaction Use of Proceeds Portfolio Transformation Closing Remarks and Q&A 3
Slide 4: Second Quarter 2024 Highlights
SECOND QUARTER 2024 HIGHLIGHTS Jonathan Price President and Chief Executive Officer 4
Slide 5: Q2 2024 Highlights
Q2 2024 HIGHLIGHTS Transformed to a pure-play energy transition metals company • Closed the sale of the remaining interest in the steelmaking coal business (EVR) on July 11 th − Received cash proceeds of US$7.3 billion, subject to customary closing adjustments • Announced the largest cash return to
Slide 6: QB Ramp-up Continued in Q2 2024
QB RAMP-UP CONTINUED IN Q2 2024 Higher quarter-on-quarter QB copper production • QB copper production was 51.3 kt vs. 43.3 kt in Q1 2024 • Robust plant design and construction supports debottlenecking • Achieved the first molybdenum production and sales, in line with plan • Ramp-up of molybdenum pla
Slide 7: QB Outlook
QB OUTLOOK Guidance updated for 2024;continue to expect full throughput rates by year end Outlook and Illustrative Annual Operating EBITDA* (C$B) Updated 2024 Guidance Status Q2 2024 Update +$0.5 Complete port construction Achieved Completed in Q1 2024 US$5.00/lb Cu Potential to generate >$5B by end
Slide 8: Second Quarter 2024 Results
SECOND QUARTER 2024 RESULTS Crystal Prystai Senior Vice President and Chief Financial Officer 8
Slide 9: Q2 2024 Financial Performance
Q2 2024 FINANCIAL PERFORMANCE • Solid quarterly performance reflects: Q2 2024 vs. Q2 2023 − Record copper production and strong Gross profit before D&A* Gross profit copper prices − Strong steelmaking coal sales volumes $1.8B +0% $1.2B -18% − Higher depreciation, amortization and finance expense due
Slide 10: Q2 2024 Profitability
Q2 2024 PROFITABILITY Profitability ($M) Controllable Non-Controllable Adjusted EBITDA* Adjusted $1,670 217 EBITDA* 124 $1,479 93 55 204 (121) (4) (80) 666 431 39 253 805 658 Adjusted EBITDA Volumes Operating Costs Other Costs Price Foreign Exchange Pricing Adjustment Adjusted EBITDA Q2 2023 Q2 2024
Slide 11: Copper Business Unit
COPPER BUSINESS UNIT Record quarterly copper production; record high spot copper price Performance in Q2 2024 vs. Q2 2023 Highlights in Q2 2024 vs. Q2 2023 Realized Production Sales Revenue Net Cash Gross Gross Profit • Record copper production, up 71% driven by Price Unit Cost* Profit* Margin* QB r
Slide 12: Zinc Business Unit
ZINC BUSINESS UNIT Another strong quarter at Red Dog Performance in Q2 2024 vs. Q2 2023 Highlights in Q2 2024 vs. Q2 2023 Realized Production Concentrate Sales Concentrate Revenue Net Cash Gross Gross Profit • At Red Dog, increased zinc and lead production Price Unit Cost* Profit* | Refined | Refine
Slide 13: Steelmaking Coal Business Unit (EVR)
STEELMAKING COAL BUSINESS UNIT (EVR) Very strong sales and continued strong prices Performance in Q2 2024 vs. Q2 2023 Highlights in Q2 2024 vs. Q2 2023 Adjusted Site Cash Gross • Sales at the top end of guidance of 6.0-6.4 Mt Realized Price Cost of Sales* Gross Profit US$ | C$ Production Sales Reven
Slide 14: EVR Transaction Use of Proceeds
EVR TRANSACTION USE OF PROCEEDS Crystal Prystai Senior Vice President and Chief Financial Officer 14
Slide 15: Completed the Steelmaking Coal Sale
COMPLETED THE STEELMAKING COAL SALE Achieved a full and direct separation • Closed the sale of the remaining interest in Elk Valley Resources (EVR) on July 11th, 2024 − Glencore acquired a 77% interest in EVR − Teck received transaction proceeds of US$7.3 billion, subject to customary closing adjust
Slide 16: Capital Allocation Framework Guides Use of Proceeds
CAPITAL ALLOCATION FRAMEWORK GUIDES USE OF PROCEEDS Commitment to return 30-100% of available cash flow to shareholders* Balancing growth with cash returns to shareholders while maintaining a strong balance sheet Cash Flow Sustaining Base Supplemental from Operations Capital Dividend Shareholder aft
Slide 17: Use of Steelmaking Coal Sale Proceeds
USE OF STEELMAKING COAL SALE PROCEEDS • Cash returns to shareholders: ~C$3.5B authorized in total − Share buyback of up to C$2.75B plus previously authorized C$500M share buyback − Supplemental dividend of ~C$250 million or C$0.50/share • Debt reduction: up to US$2.0B − Completed an upsized cash ten
Slide 18: Resilient Balance Sheet
RESILIENT BALANCE SHEET US$1.4B in notes tendered; now in a net cash position NET CASH TERM NOTES CREDIT CASH as at July 23, 2024 POSITION OUTSTANDING RATINGS as at July 23, 2024 as at July 23, 2024 as at July 23, 2024 Investment $8.7B $2.9B US$1.1B grade Notes Outstanding (US$M) 253 183 188 197 167
Slide 19: Portfolio Transformation
PORTFOLIO TRANSFORMATION Jonathan Price President and Chief Executive Officer 19
Slide 20: Transformed into a Pure-Play Energy Transition Metals Company
TRANSFORMED INTO A PURE-PLAY ENERGY TRANSITION METALS COMPANY February 2023 February 2023 April 2023 May 2023 March 2024 July 2024 Sold our Formed Formed Implemented Completed Completed interest in NewRange San Nicolás sunset for QB2 sale of Fort Hills Cu-Ni JV Cu-Zn JV Class A shares construction s
Slide 21: Premium Base Metals Portfolio
PREMIUM BASE METALS PORTFOLIO Our commodity mix is now 100% base metals Copper Operations Zinc Operations 2025 Guidance: 550-620 kt2 2025 Guidance: 555-615 kt2 2022A 2025 Quebrada Blanca Red Dog Revenue Consensus Revenue1 (%) (Cu-Mo-Ag | Chile | 60%) (Zn-Pb-Ag | USA | 100%) With ramp-up in 2024; exp
Slide 22: Industry-Leading Copper Growth
INDUSTRY-LEADING COPPER GROWTH Pathway to increase copper production by a further 30% starting as early as 2028 Value-Accretive Near-Term Copper Projects 30% growth to ~8001 ktpa Quebrada Blanca Optimization & Debottlenecking (Cu-Mo-Ag | Brownfield | Chile | 60%) 550-620 435-500 Optimizes value from
Slide 23: Continuing to Create Value for Shareholders
CONTINUING TO CREATE VALUE FOR SHAREHOLDERS Transformed portfolio to focus on energy transition metals Driving best-in-class performance and project delivery capability Completed QB2 independent review; incorporating learnings into projects Expanding and optimizing high-quality operating assets Focu
Slide 24: Value Creation
Driven by our purpose and values, we will grow to RESPONSIBLE become one of the world’s leading providers of responsibly-produced energy transition metals GROWTH AND VALUE CREATION Balancing growth with cash returns to shareholders Our strategy is focused around four pillars: METALS FOR THE VALUE-DR
Slide 25: Q&A
Q&A 25
Slide 26: Appendix
APPENDIX 26
Slide 27: Value-Accretive Near-Term Copper Projects
VALUE-ACCRETIVE NEAR-TERM COPPER PROJECTS Well-funded, low capital-intensity projects with sanctioning as early as 2025 QB Optimization Highland Valley Zafranal San Nicolás & Debottlenecking Mine Life Extension (Cu-Mo-Ag | Brownfield | Tarapacá | 60%) (Cu-Mo | Brownfield | British Columbia | 100%) (
Slide 28: Short-Term Copper Market Fundamentals
SHORT-TERM COPPER MARKET FUNDAMENTALS Concentrate tightness accelerates in Q2; potential for further cuts in Q3/Q4 • 2023 global mine production below market Annual Production Losses1 (Mt) expectations by >2.7 Mt Actual Production Annualized Loss Lost Production • Net mine growth in last 5 years ~1.
Slide 29: Long-Term Copper Market Fundamentals
LONG-TERM COPPER MARKET FUNDAMENTALS Significant demand growth; constrained supply; higher prices • Copper exploration spending under pressure for Long-Term Total Copper Demand2 (Mt) last 10 years, 2023 a 4-year low point Non-Energy Transition Specific Energy Transition • Near-term quality mine proj
Slide 30: Short-Term Zinc Market Fundamentals
SHORT-TERM ZINC MARKET FUNDAMENTALS Mine closures pushed market into concentrate tightness • Low zinc prices forced mine closures last year Drivers of 2024 Concentrate Deficit1 (kt) Mine supply … and will weaken • Raw material shortages and weak economics weakened 2% a further 0.6% in impacting smel
Slide 31: Long-Term Zinc Market Fundamentals
LONG-TERM ZINC MARKET FUNDAMENTALS Weak prices and underinvestment are expected to drive longer-term shortages • Lack of investment in new mines expected to Long-Term Total Zinc Demand1 (Mt) slow mine growth by 2026 Zone of Balance Zinc Balance Zinc Supply Zinc Demand • Quality and viability of new
Slide 32: Copper Guidance
COPPER GUIDANCE Includes Quebrada Blanca Copper in Concentrate Production1,2 (kt) Net Cash Unit Costs*,1,3 (US$/lb) Quebrada Blanca Highland Valley Antamina (22.5%) Carmen de Andacollo 1.90-2.30 550-620 550-620 530-600 (was 1.85-2.25) 435-500 1.87 (was 465-540) 50-60 50-60 45-55 80-90 90-100 85-95 1
Slide 33: Zinc Guidance
ZINC GUIDANCE Zinc in Concentrate Production1,2 (kt) Net Cash Unit Costs*,1,3 (US$/lb) Red Dog Sales1,4 (kt) Red Dog Antamina (22.5%) 0.55-0.65 250-290 644 0.55 565-630 555-615 104 45-60 0.44 465-525 95-105 55-65 400-445 540 520-570 35-45 460-510 410-460 365-400 54 2023 2024E 2025E 2026E 2027E 2022
Slide 34: Sensitivities
SENSITIVITIES Estimated Effect of Changes on our Annualized Profitability1 ($M) Estimated Effect on 2024 Adjusted Profit (Loss) Mid-Range from Continuing Operations Estimated Effect on Production Attributable to Shareholders3 Adjusted EBITDA*, 3 Estimates2 Changes ($ in millions) ($ in millions) US$
Slide 35: Settlement Pricing Adjustments
SETTLEMENT PRICING ADJUSTMENTS Simplified Settlement Pricing Adjustment Model for Total Reported Settlement Pricing Adjustments Base Metals (Pre-tax settlement pricing adjustment C$M) (Pre-tax settlement pricing adjustment C$M) 300 Quarterly Outstanding at Outstanding at Pricing 230 June 30, 2024 Ma
Slide 36: Modelling Guidance for EVR Sale
MODELLING GUIDANCE FOR EVR SALE Balance Sheet Assets Liabilities Add: Add: • EVR cash proceeds • Transaction tax liability to be paid in Q1 2025 Subtract: Subtract: • EVR property, plant and equipment • Provisions and other liabilities • Other assets, including net working capital and ‒ Decommission
Slide 37: Modelling Guidance for EVR Sale
MODELLING GUIDANCE FOR EVR SALE Income Statement Cash Flow Statement • Q3 EVR results to closing date reflected on the • Q3 EVR results to closing date reflected on the cash income statement as profit from discontinued flow statement as net cash from discontinued operations activities • Expect incre
Slide 38: Endnotes
ENDNOTES SLIDE 7: QB OUTLOOK SLIDE 33: ZINC GUIDANCE 1. QB illustrative EBITDA at midpoint of 2025-2027 production guidance of 285-310kt, midpoint of net cash unit costs of 1. As at July 23, 2024. See Teck’s Q2 2024 press release for further details. US$1.40-1.60/lb, assuming US$21/lb molybdenum and
Slide 39: Non-GAAP Financial Measures and Ratios
NON-GAAP FINANCIAL Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International MEASURES Accounting Standards Board. This presentation includes reference to certain non-GAAP financial measures and non-GAAP ratios, which are n