Teck Resources Limited Class A · TSX:TECK.A
Teck Resources Limited Class A — Global Metals, Mining & Steel Conference 2014
22 slides from Teck Resources Limited Class A's conference presentation, May 13, 2014
Slide 1: Global Metals, Mining & Steel Conference
Global Metals, Mining & Steel Conference May 13, 2014
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 Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but are not limited to: unanticipated developments in business and economic conditions in the principal markets for Teck’s products or in the su
Slide 4: Agenda
Agenda Teck Overview Commodity Market Observations Teck Update 5
Slide 5: Canada's Largest Diversified Mining Company
Canada’s Largest Diversified Mining Company Lower Risk & Sustainable Business # 1 Producer of steelmaking coal in North America # 2 Seaborne exporter of steelmaking coal Top ten copper miner in the Americas #3 Zinc miner Building an energy business 6
Slide 6: Attractive Portfolio Of Long-Life Assets & Resources
Attractive Portfolio Of Long-Life Assets & Resources Focused on the Americas; Lower Risk Jurisdictions Strong Resource Position Frontier & L421 (Advanced Projects) With Sustainable Long-Life Assets Red Dog Fort Hills Quintette (Advanced Project) Coal Resources >100 years Cardinal River Highland Vall
Slide 7: The Value of Our Diversified Business Model
The Value of Our Diversified Business Model Cash Operating Profit 2014E Copper Base Teck has good leverage to Coal Metals stronger copper and zinc markets Zinc Base metals are expected to generate around two-thirds of cash operating profit in 2014 Source: Analysts Consensus Estimates 8
Slide 8: Agenda
Agenda Teck Overview Commodity Market Observations Teck Update 9
Slide 9: Current Coal Prices Unsustainable
STEELMAKING COAL - MARKETS Current Coal Prices Unsustainable Argus Assessment vs. Quarterly Benchmark 330 280 230 $ / tonne 180 • Continued oversupply pushed 130 pricing to multi-year lows 80 • ~Half of global seaborne exports are negative margin Quarterly Contract Settlement Argus FOB Australia at
Slide 10: Estimates of A Copper Supply Surplus Are Declining
COPPER - MARKETS Estimates of A Copper Supply Surplus Are Declining Forecast 2014 Copper Surplus Production in Chile Declining 800 2,500 7,000 700 6,000 2,000 600 Thousand tonnes 5,000 500 k tonnes 1,500 4,000 400 3,000 300 1,000 2,000 200 500 100 1,000 0 0 0 Feb-13 Nov-13 Dec-13 Feb-14 Aug-13 Sep-1
Slide 11: Zinc Deficit Developing; Large Inventory Declining
ZINC - MARKETS Zinc Deficit Developing; Large Inventory Declining Reported Metal Stocks1 Developing Deficit is A Consensus View2 (LME, SHFE, Producer, Consumer & Merchant) Reported Stocks Days of Consumption 1,000 2,500 70 500 Inflection point 60 2,000 50 0 kt kt 1,500 40 (500) 30 1,000 (1,000) 20 (
Slide 12: Agenda
Agenda Teck Overview Commodity Market Observations Teck Update 13
Slide 13: We are a Leading Steelmaking Coal Supplier to Steel Producers Worldwide
We are a Leading Steelmaking Coal Supplier to Steel Producers Worldwide High quality, consistency, reliability, long-term supply North Asia excl. China America Europe China ~50% ~5% ~15% ~25% Latin America ~5% 14 Source: Teck Resources Limited; 2013
Slide 14: Declining Steelmaking Coal Cash Costs from 2012-2014E
Declining Steelmaking Coal Cash Costs from 2012-2014E Steelmaking Coal All-In Site Cost Profile 90.00 80.00 76.50 73.17 70.00 19.50 15.67 Modest site cost increase 60.00 expected in 2014 50.00 Site costs expected to be C$/tonne down ~4% over the past two 40.00 years (2012-2014E) 30.00 57.00 57.50 20
Slide 15: Increasing Zinc Exposure Pend Oreille Restart
Increasing Zinc Exposure Pend Oreille Restart Expected Production 44 ktpa 10 km • Low capital / high return project - Capex: US$45M - ROI >30% assuming zinc price of $1/lb - Payback period: 2.5 years • Corporate synergies enhance project economics - e.g. transportation, germanium, iron balance, t/c
Slide 16: Building an Energy Business
Building an Energy Business Strategic diversification Large truck & shovel mining projects World-class resources Long-life assets Mining-friendly jurisdiction Competitive margins Minimizing execution risk Tax effective Mined bitumen is in Teck’s ‘sweet spot’ 17
Slide 17: Minimizing Execution Risk In The Fort Hills Project
Minimizing Execution Risk In The Fort Hills Project • Cost-driven schedule - “Cheaper rather than sooner” • Disciplined engineering approach - majority of project has completed Engineering Design Specification • “Shovel Ready” - significant site work including camp and infrastructure started • Globa
Slide 18: Operating Cost & Capex Reductions
Operating Cost & Capex Reductions • Exceeded initial goals of our cost reduction program - Realized $345M in ongoing annual operating cost savings to date • Increasing efforts to reduce operating costs and capex - Targeting $200M in additional annual operating cost reductions - Reducing sustaining a
Slide 19: Strong Balance Sheet
Strong Balance Sheet* Investment Grade Credit Rating of Mid-BBB $3,000 US$300M of notes due to end of 2016 ~US$2.2B* • Weighted Average Maturity 15.2 years $2,000 • Weighted Average Interest (Coupon) Rate 4.8% • Annual Interest (Coupon) Payments US$346M US$M • Note Maturities Average US$600M $1,000
Slide 20: Returning Cash To Shareholders
Returning Cash To Shareholders Annualized Dividend Payout • Vision of steady & sustainable growth $0.90 $0.80 • Progressive dividend policy $0.70 - Aims to set dividend at a sustainable level, $0.60 taking into account the commodity price outlook $0.50 and our capex profile $0.40 - Current dividend:
Slide 21: Summary
Summary Good leverage to strong copper & zinc markets Attractive portfolio of long-life assets & resources Intensified cost reductions efforts Managing capital prudently Returning cash to shareholders 22
Slide 22: Global Metals, Mining & Steel Conference
Global Metals, Mining & Steel Conference May 13, 2014
Teck Resources — Global Metals, Mining & Steel Conference 2014 on 6ix