Teck Resources Limited Class A · TSX:TECK.A
Teck Resources Limited Class A — Global Metals and Mining Conference 2023
57 slides from Teck Resources Limited Class A's conference presentation, February 2023
Slide 1: Unlocking Value for Teck Resources Shareholders
Unlocking Value for Teck Resources Shareholders Separation of Teck Metals and Elk Valley Resources February 2023 Global Metals and Mining Conference 1
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements Both these slides and the accompanying presentation contain certain forward-looking information and forward-looking statements as defined in applicable securities laws (collectively referred to as forward-looking statements). These forward-looking stateme
Slide 3: Separation Creates Two World-Class Companies
Separation Creates Two World-Class Companies Unlocking the value of Teck Resources • Teck Metals to realize its full potential as a premier, growth-oriented producer of energy transition metals • EVR established as a pure-play, high-margin steelmaking coal producer • Teck Metals retains steelmaking
Slide 4: Investment Landscape has Changed
Investment Landscape has Changed Copper’s critical role in the energy transition drives premium valuation Growth and reduced cash flow volatility through commodity diversification High-quality seaborne steelmaking coal continues to be a key input to steel and the low-carbon transition Before Today •
Slide 5: Positioning Teck Metals for the Future
Positioning Teck Metals for the Future Premier metals company with industry-leading copper growth Teck Metals • Teck Resources becomes Teck Metals • High-quality, low-cost base metals producer in the Americas • Industry-leading, well-funded copper growth portfolio that is significantly undervalued r
Slide 6: World-Class Canadian Steelmaking Coal Company
World-Class Canadian Steelmaking Coal Company Long-life assets drive significant long-term value Elk Valley Resources (EVR) • Pure-play steelmaking coal company with high-quality, long-life assets with top-tier margins • Nippon Steel and POSCO transactions simplify structure and validate EVR valuati
Slide 7: Transaction Structure
Transaction Structure EVR Common Equity • Teck shareholders receive 1 EVR share for every Pathway to full financial separation 10 Teck shares (subject to Dutch auction process), plus cash Transition Capital Structure (TCS) a. Gross Revenue Royalty (“Royalty”) 87.5% 100% • Royalty payments based on c
Slide 8: EVR Cash Flow Waterfall
EVR Cash Flow Waterfall TCS supports resilience and returns to shareholders Resiliency of EVR Cash Flow Capital Environmental Preferred Share from Operations Expenditures Stewardship Trust Dividends1 Transition Capital Structure (87.5% to Teck Metals) 90% Gross Revenue Preferred Share Royalty Redemp
Slide 9: Transition Capital Structure
Transition Capital Structure Structure leveraged to HCC prices provides flexibility and resiliency to EVR Illustrative Sensitivity of Cumulative TCS Proceeds Structure Economics to LT HCC Pricing Assumptions ($B, 100% basis) ~$34B Preferred Royalty • TCS is estimated to be fully paid in ~11 years1 a
Slide 10: Sunset for Class A Shares Modernizes Capital Structure
Sunset for Class A Shares Modernizes Capital Structure Dual Class Amendment Effective Date of the Dual Class Amendment New Class A • Sunsets increasingly a common feature of dual class 1 common share structures Class A • Multiple voting rights eliminated in year 6 1 common share + • Not conditional
Slide 11: Transaction Timeline and Approvals
Transaction Timeline and Approvals Announcement Record Date Annual and Closing EVR Shares for Meeting Special Meeting Date Begin Trading1 21 7 26 February March April May June 2023 Shareholder approvals (Subject to regulatory approval) a. Separation Subject to 66 2/3% approval by Class A and B share
Slide 12: Separation Creates Two World-Class Companies
Separation Creates Two World-Class Companies Unlocking value for Teck Resources shareholders • Teck Metals retains steelmaking coal cash flows during transition period to fund copper growth and realize its full potential • Provides investors choice of businesses with unique fundamentals and value pr
Slide 13: Appendix: Transaction Details
Appendix Transaction Details Global Metals and Mining Conference
Slide 14: Proposed Transaction
Proposed Transaction Teck Resources will split into Teck Metals and Elk Valley Resources • Teck Resources shareholders will receive 0.1 share of EVR per share of Teck and cash, with opportunity to elect to Terms maximize the amount of cash or shares they receive, subject to proration, through a Dutc
Slide 15: Transition Capital Structure
Transition Capital Structure Gross Revenue Royalty (“Royalty”) • Royalty payments based on coal revenue subject to free cash flow (FCF) and minimum cash balance limitations • Quarterly payments expected to be equal to 90% of EVR FCF 87.5% • Payable until the later of: Transition Capital Structure Te
Slide 16: Summary Gross Revenue Royalty Terms
Summary Gross Revenue Royalty Terms • The Royalty will terminate at the later of: Gross Revenue Royalty (i) Once an aggregate of $7.0 billion in Royalty payments have been made to the Royalty Holders, and (“Royalty”) Terms (ii) December 31, 2028 • Royalty payment will be equal to 60% of gross revenu
Slide 17: Summary Preferred Equity Terms
Summary Preferred Equity Terms • Two preferred equity classes with combined redemption value of $4.4B (i) First Preferred class (with tax basis for Teck Metals) in the amount of $1.5B Preferred Equity (ii) Second Preferred class (without tax basis for Teck Metals) in the amount of $2.9B Both classes
Slide 18: Related Transactions
Related Transactions NSC investment and consolidation of EVR minority interests Overview • NSC to exchange its 2.5% minority interest in Elkview for 1% of EVR common shares and the TCS, and additional investment of $1B cash to increase its interest in EVR common shares • Top 10 steel producer global
Slide 19: Tax Summary
Tax Summary Tax considerations for Teck Metals and EVR Teck Metals EVR • Nominal one-time net tax charge • UCC1 pool at inception Setup • CDE1 of $2.0B deductible in 2024 and future years — $1.65B transferred from Teck Resources • CDE deductible at 30% per year on a declining balance — Deductible at
Slide 20: Dual Class Amendment
Dual Class Amendment Current Shares Outstanding1 • Each Teck Class A to be exchanged for one new Class A Class A Class B Common Shares Subordinate Voting Shares and 0.67 Class B share • At the 6-year anniversary, multiple voting rights of Class A 7.8M 506.3M are eliminated when new Class A shares ar
Slide 21: Teck Metals
Teck Metals Global Metals and Mining Conference
Slide 22: Value Proposition
Value Proposition Teck Metals Premier base metals portfolio of scale with near-term doubling of copper production Industry-leading copper growth and significant resource optionality, anchored by QB2 High-quality, low-cost and long-life operations situated in well-established mining jurisdictions in
Slide 23: A Premier Global Base Metals Miner
A Premier Global Base Metals Miner Teck Metals Peer leading copper growth Long life assets in well-established mining jurisdictions Inferred +285ktpa 29 2021A to 2024E, anchored by QB2 Measured and indicated 38 Proven and Probable Top 20 producer today 20 Potential to become top 10 Mineral Reserves
Slide 24: Transformational Growth Rebalances Portfolio to Copper
Transformational Growth Rebalances Portfolio to Copper Teck Metals Industry-leading, Well-Funded Growth Portfolio Transformation Towards Base Metals Base Metals Steelmaking Coal 103% 44% 80% 100% 20% 56% Copper Peers5 8% Cu Production Growth 2022A – 2026E1 Five Year Average Illustrative with QB2 at
Slide 25: Industry-Leading Copper Growth
Industry-Leading Copper Growth Teck Metals Near Term (2023-2028) Medium Term (2029-2033) Future Potential (2034+) Industry-leading suite +450% Schaft Creek of options diversified (100%) ~2.2 Mt by geography, scale, Nueva Mesaba Future QB +350% Unión (50%) ~1.9 Mt time to development (50%) Expansions
Slide 26: Capital Allocation Framework
Capital Allocation Framework Teck Metals Cash Flow Sustaining Base Supplemental Shareholder from Operations Capital Dividend Distributions includes cash flow from including stripping $0.50 per share minimum 30% available cash flow RETURNS Transition Capital Structure, interest and finance charges, l
Slide 27: Strong Financial Position
Strong Financial Position Teck Metals Strong Balance Sheet Debt Maturity Ladder2 (US$M) QB2 Project Finance Facility Corporate Notes Liquidity1 Cash1 Net Debt to Adjusted EBITDA2 797 $8.2B $2.8B 0.6x 480 402 294 per year 396 395 367 336 Returns to Shareholders and Debt Repaid in 2022 147 Share Buyba
Slide 28: Teck Valuation Multiples vs Peers
Teck Valuation Multiples vs Peers EV/NTM EBITDA Global Diversifieds Copper Equities 11.1x Feb 2023: 7.1x Feb 2023: 4.8x Q4 2022: 6.7x Q4 2022: 4.7x 7.6x 7.3x 6.9x Q3 2022: 4.2x Q3 2022: 3.3x Q2 2022: 4.0x Q2 2022: 3.1x 5.6x 5.2x 4.8x 4.8x 4.8x 4.4x 4.3x 4.7x 4.2x Peer 1 Peer 2 TECK.B Peer 6 Peer 3 P
Slide 29: Teck Metals Sensitivity
Teck Metals Sensitivity Sensitivity of 2023 Profit Attributable to Shareholders and EBITDA1 Estimated Effect on Under the Transition Profit Attributable Estimated Effect Capital Structure on a full 2023 Mid-Range to Shareholders3 on EBITDA3 Production Estimates2 Change ($ in millions) ($ in millions
Slide 30: Elk Valley Resources
Elk Valley Resources Global Metals and Mining Conference
Slide 31: Value Proposition
Value Proposition Elk Valley Resources World’s second largest exporter of seaborne steelmaking coal World-class Canadian steelmaking coal producer with high margin operations and demonstrated through-the-cycle cash flow generation Significant equity value accretion potential over time as Transition
Slide 32: World-Class Canadian Steelmaking Coal Producer
World-Class Canadian Steelmaking Coal Producer Elk Valley Resources #2 Global exporter of HCC Premium pricing through diversification 2022 market share1 Teck 2022 steelmaking BHP 12% coal revenue %2 Americas 5% Other Asia 40% Europe 10% EVR 9% 291 Mt Anglo 5% Global seaborne India 15% met coal marke
Slide 33: Committed to Leading ESG Performance
Committed to Leading ESG Performance Elk Valley Resources Environmental Strong Practices and Elk Valley Water Quality Climate and Nature Stewardship Trust Ethics Plan Commitments • Fully fund reclamation and • Maintain existing policies and • Improve the health of the • Target net-zero operations by
Slide 34: Environmental Stewardship Trust
Environmental Stewardship Trust Long-term objective to achieve full cash funding to support environmental obligations • Creation of an Environmental Stewardship Trust (EST) to fully fund long-term environmental obligations EST Contributions ‒ Annual contributions of $50M, increasing by $5M per annum
Slide 35: Proposed EVR Board of Directors
Proposed EVR Board of Directors Elk Valley Resources Jane Bird is a Senior Business Advisor at Bennett Jones LLP, providing advice to private and public sector clients on the development and execution of infrastructure projects. Ms. Bird has over 20 years of experience leading significant projects i
Slide 36: Resilient HCC Price Over Time
Resilient HCC Price Over Time Consensus long-term estimates consistently below 5Y rolling average by 22% since 2000 Metallurgical Coal Prices (Argus Premium FOB Australia quarterly average, US$/t) 700 Expanding demand Over investment Increasing demand Supply shortage Strong growth in demand for Afte
Slide 37: Flexible Operating Strategy Drives Resiliency
Flexible Operating Strategy Drives Resiliency Profitability through all pricing environments Realized Coal Price vs Teck Coal Business Unit EBITDA2 EBITDA EBITDA Realized Coal Price (US$/t) 10Y Annual Avg $8.0 $355 $400 >$2.5B $7.0 $350 $6.0 $300 $5.0 $209 $250 $187 EBITDA (C$B) $4.0 $174 $164 $200
Slide 38: Detailed EVR Cash Flow Waterfall
Detailed EVR Cash Flow Waterfall Structured for resilience TCS payments are not required if cash balance is below $250M; ensures resiliency during periods of low steelmaking coal prices Cash Flow from Operations Capital Environmental Preferred Equity Cash Top-Up after interest and finance Expenditur
Slide 39: Copper Market Outlook
Copper Market Outlook Global Metals and Mining Conference
Slide 40: Copper Mine Outlook
Copper Mine Outlook Significant demand growth projected, driven by energy transition Copper Mine Production and Demand1 (kt) • Supply expected to peak in 2025 due to declining grades, 36,000 protracted permitting timelines, and underinvestment 13.2 Mt 30,000 mine supply gap projected • Long-term pro
Slide 41: Copper Mine Supply Expected to Peak in 2024
Copper Mine Supply Expected to Peak in 2024 Production remains challenged Global Copper Mine Production1 (kt contained) • Long permitting timelines and lack of investment 2021-2023 2023-2025 2025-2027 impacting long term supply 25,000 +1,520 kt +1,510 kt (410) kt • Mine production expected to increa
Slide 42: Long Term Copper Metal Demand Growth
Long Term Copper Metal Demand Growth Copper enables decarbonization through renewables and electrifications Total Copper Demand1 (Mt) • Under an International Energy Agency (IEA) 1.5˚C Non-Energy Transition Specific Electric Vehicles scenario, demand growth >20 Mt expected by 2035 Solar Wind Storage
Slide 43: Zinc Market Outlook
Zinc Market Outlook Global Metals and Mining Conference
Slide 44: Zinc Concentrate Outlook
Zinc Concentrate Outlook Long term supply lags demand Zinc Mine Production and Demand1 (kt) • Declining production at higher costs/lower grades from 35,000 7.2 Mt existing mines and under investment in exploration 30,000 mine supply 25,000 gap projected by 2040 • 60% of demand tied to protection of
Slide 45: Zinc Mine Supply Expected to Peak in 2025
Zinc Mine Supply Expected to Peak in 2025 Underinvestment and rising costs drive projected fall in mine production Global Zinc Mine Production1 (kt contained) • Mine production projected to fall 1.1 Mt by 2030 2021-2023 2023-2025 2025-2027 ‒ Represents a ~2.0 Mt shortfall to expected smelter +1,370
Slide 46: Long Term Zinc Demand
Long Term Zinc Demand Tied to production of steel Zinc Demand1 (Mt) • 60% of zinc concentrate demand from galvanizing Non-Energy Transition Specific Electric Vehicles Solar Wind Storage steel, which extends service life and makes 25.0 infrastructure more sustainable 20.0 • Decarbonization will be st
Slide 47: Steelmaking Coal Market Outlook
Steelmaking Coal Market Outlook Global Metals and Mining Conference
Slide 48: Steel Essential for Economic Growth in a Low-Carbon World
Steel Essential for Economic Growth in a Low-Carbon World World’s Enables Suited for Essential to largest metal low-carbon a circular lifting global market today energy system economy living standards Steel is widely used and hard to Fundamental to renewable Easily recyclable (e.g., without Middle c
Slide 49: Steel Demand is Robust Through 2050 in all IEA Scenarios
Steel Demand is Robust Through 2050 in all IEA Scenarios Standard Growth Scenario Finished steel demand, billion tonnes International Energy Agency (IEA) SDS1 2.5 2.1 2.1 • Industrialized growth in India and 2.0 2.0 South East Asia 1.8 Developing • China plateaus until 2030 before converging 1.5 Ind
Slide 50: Increasing Industry Costs Support Strong HCC Outlook
Increasing Industry Costs Support Strong HCC Outlook 90th Percentile Costs Support FOB Australia Prices1 Significant Shift in HCC Cost Curve from 2020 to 20222 US$/t 50th Percentile 90th Percentile $500 FOB Australia Estimated 90th Percentile Cost $300 2020 84 111 2022 146 171 $400 $250 D 74% 54% $2
Slide 51: Planned Blast Furnace Capacity Set to Grow
Planned Blast Furnace Capacity Set to Grow Asian blast furnace capacity continues to grow South-East Asia1 Blast Furnace Capacity1 (Mt) Financial commitments being made for multi-decade • Expansions total 30 Mtpa • Greenfield projects total 30 Mtpa 200 traditional steelmaking • >20 Mtpa of new coke
Slide 52: High-Quality Steelmaking Coal for Low-Carbon Transition
High-Quality Steelmaking Coal for Low-Carbon Transition Global Seaborne Coking Coal Outlook1 (Mt) Fundamentals Remain Tight Australia Supply India Demand • Potentially small surplus / balanced market until 2024 300 Canada Supply Total World Demand 250 ROW Supply • Supply growth constrained and expec
Slide 53: Seaborne HCC Demand Expected to Increase
Seaborne HCC Demand Expected to Increase Global Seaborne HCC Demand1 (Mt) • Demand expected to increase 46 Mt by 2030, driven by 220 growth from India and SE Asia 200 180 ‒ India to account for ~60% of the growth (+28 Mt) 160 ‒ Southeast Asia +22 Mt 140 ‒ China -11 Mt 120 100 • Strong high-quality c
Slide 54: Chinese HCC Imports Expected to Remain Resilient
Chinese HCC Imports Expected to Remain Resilient 2021 ex-Australia seaborne imports up to new record high of 34 Mt Chinese HCC Imports1 (Mt) Ex-Australian Australian Imports Mongolian Imports • China committed to decarbonizing steel, with a peak by 80 Australian 2025 and carbon neutrality by 2060 70
Slide 55: Non-GAAP Financial Measures and Ratios
Non-GAAP Financial Measures and Ratios Global Metals and Mining Conference
Slide 56: Non-GAAP Financial Measures and Ratios
Non-GAAP Financial Measures and Ratios Our financial results are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. This presentation includes reference to certain non-GAAP financial measures and non-GAAP ratios,
Slide 57: For Further Information
For Further Information Teck.com/separation investors@teck.com 1.877.759.6226 or 604.699.4257 Global Metals and Mining Conference
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