23 slides from Teck Resources Limited Class A's earnings presentation, Oct 27, 2010
Slide 1: Third Quarter 2010 Investor Conference Call and Webcast
Third Quarter 2010 Investor Conference Call and Webcast October 27, 2010
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 These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially. These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditi
Slide 4: Speakers
Q3 Investor Conference Call Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 4
Slide 5: 3rd Quarter 2010 Highlights: Strong Operating Results
3rd Quarter 2010 Highlights Strong Operating Results Revenues $2,520 million Operating Profit $1,228 million (before Depreciation & Amortization) Earnings $331 million (attributable to shareholders) Adjusted Earnings $467 million EBITDA $912 million 5
Slide 6: 3rd Quarter 2010 Highlights: Strong Business Fundamentals
3rd Quarter 2010 Highlights Strong Business Fundamentals • Andacollo achieved commercial production • Premium coal contracted for Q4 at ~US$209/t • Copper prices increasing • Debt refinanced at historical low interest rates • Reduced future interest expense 6
Slide 7: Comparative Earnings
Comparative Earnings ($ millions, net of taxes) Q3 ‘10 Q3 ‘09 Q2 ‘10 Earnings attributable to Shareholders as Reported $331 $609 $260 Asset Sales & Other (127) (3) – F/X (gains) losses on net debt (26) (311) 42 Derivative (gains) losses (51) (16) 16 Financing items & Impairment charges 340 84 6 Tax
Slide 8: Q3 Guidance
Q3 Guidance Guidance met except for coal sales Red Dog zinc con sales 170kt 170 kt Coal sales 5.8 to 6.2 Mt (revised 5.2-5.5Mt) X 5.5 Mt Coal pricing US $195/t to $200/t $200/t Coal costs ~C$90/t site & port for 2010 On track Copper production and costs On track Settlement adjustments Posi
Slide 9: Coal
Coal Q3 Q3 Q2 2010 2009 2010 Coal – Mt Production 5.5 5.3 6.0 Sales 5.5 5.7 6.4 Average Price (US$/t) 200 137 182 (C$/t) 208 152 186 Site Costs (C$/t) 62 54 56 Transportation Costs (C$/t) 33 30 31 Financial Results C$ millions Revenue 1,150 869 1,196 Operating Profit 622 389 634 (Before Depreciation
Slide 10: Teck / CP Rail - Agreement
Teck / CP Rail - Agreement • 10-year rail agreement • Agreement commences April 1, 2011 • Applicable to the five mines located in southeast BC • Provides visibility for growth strategy for seaborne export 10
Slide 11: Copper
Copper Q3 Q3 Q2 Copper in Concentrate (kt) 2010 2009 2010 Production ex. CDA 44 50 46 Sales 48 58 46 Copper Cathode (kt) Production 23 26 24 Sales 23 28 24 Moly in Concentrate (M lbs) Production 2.2 1.9 1.6 Sales 1.9 2.1 2.0 Financial Results C$ millions Revenue 639 642 499 Operating Profit 306 308
Slide 12: Carmen de Andacollo Update
Carmen de Andacollo Update • Commercial production achieved effective Oct 1, 2010 • Current average plant throughput 53kt of ore per day • Design capacity is 55Kt per day, plant has operated above target for a number of consecutive days • Ramp-up period completed in seven months • Final project cost
Slide 13: Zinc
Zinc Q3 Q3 Q2 2010 2009 2010 Zinc in concentrate – kt Production 162 182 167 Sales 193 191 101 Refined Zinc – kt Production 69 56 71 Sales 70 59 70 Lead in Concentrate – kt Production 27 32 31 Sales 86 72 3 Refined Lead – kt Production 17 19 20 16 19 23 Sales Financial Results C$ millions Revenue 73
Slide 14: Red Dog Update
Red Dog Update • Aqqaluk mining Aqqaluk Pit - October 2010 underway • Ore to mill Q3 • New water discharge permit process continues • Current water discharge under existing permit 14
Slide 15: Speakers
Q3 Investor Conference Call Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 15
Slide 16: 3rd Quarter 2010 - Cash Changes
3rd Quarter 2010 - Cash Changes $Millions Cash Flow from Operations 818 Working Capital Changes (88) Capital Expenditures / Investments (227) Increase in Debt 52 Non-controlling Interests (9) Exchange, Discontinued Ops & Other (127) Cash & STI Decrease 419 Cash at quarter end $1,177 16
Slide 17: Final Pricing Revenues
Final Pricing Revenues Outstanding from Q2 & Settled in Q3 Valued Settled Revenue Adj. (C$ M) M lbs US$/lb M lbs US$/lb Before Tax* After Tax* Copper 90 $2.96 85 $3.33 (30) Zinc 112 $0.77 107 $0.88 (4) Total $34 $21 Adjustments on Settlements within Q3 $62 $41 Total Final Pricing Adjustments Q3 $96
Slide 18: Debt Maturity Profile
Debt Maturity profile 2,000 1,750 2002 & 2005 Notes Average Life of Debt 8.4 Years US$ Millions 1,500 2009 Notes Average Coupon 9.4% 1,250 Annual Interest Expense US$ 580 M 1,000 750 500 250 0 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 ~ '33 '34 '35 '36 '37 '38 '39 '40 2,000 2002 & 2005 Not
Slide 19: Q4 Guidance
Q4 Guidance Factors to consider • Red Dog zinc & lead sales 190 kt • CY 2010 coal sales 23.0 to 23.8 Mt • Coal pricing US $200/t to $205/t • Coal costs ~C$57/t site, ~C$33/t tpt for 2010 • $68 million charge for debt refinancing • Copper production and costs at HVC & CdA • Settlement adjustments 19
Slide 20: Speakers
Q3 Investor Conference Call Speakers Ron Millos SVP Finance & CFO Don Lindsay President & CEO 20
Slide 21: Project Developments
Project Developments • Quebrada Blanca Copper Concentrate ‒ Proceeding to feasibility • Relincho Copper Mine ‒ Pre-feasibility study expected mid-year 2011 • Galore Creek Copper Mine ‒ Pre-feasibility expected Q2 2011 • Frontier / Equinox Oil Sands Mine Projects ‒ Pre-feasibility and regulatory appl
Slide 22: Summary
Summary Strong balance sheet Strong cash flow Coal Production increasing Copper Production increasing Development Projects advancing 22
Slide 23: Third Quarter 2010 Investor Conference Call and Webcast
Third Quarter 2010 Investor Conference Call and Webcast October 27, 2010