28 slides from Teck Resources Limited Class A's earnings presentation, Oct 24, 2012
Slide 1: Third Quarter 2012 Investor Conference Call and Webcast
Third Quarter 2012 Investor Conference Call and Webcast October 24, 2012
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
Q3 Investor Conference Call Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 4
Slide 5: Q3 2012 Highlights
Q3 2012 Highlights • Record quarterly copper production • Cash balance $3.9 billion • Capital spend deferrals Subsequent to quarter-end: • Completed Red Dog shipping season • Redemption of final tranche of outstanding high-yield debt 5
Slide 6: Q3 2012 Highlights: Increasing volumes, strong cash flow
Q3 2012 Highlights Increasing volumes, strong cash flow Revenues $ 2,505 Million Gross Profit $ 933 million (before depreciation & amortization) Profit $ 180 million (attributable to shareholders) Adjusted Profit $ 349 million (attributable to shareholders) EBITDA $ 721 million 6
Slide 7: Adjusted Profit
Adjusted Profit ($ millions, net of taxes) Q3 ’12 Q3 ’11 Q2 ’12 Profit attributable to $ 180 $ 814 $ 268 Shareholders as reported Asset sale gains (22) (24) (19) Foreign exchange (gains) losses 2 15 13 Derivative (gains) losses (48) (63) 12 Collective agreement charge 9 – 38 Debt redemption 196 – –
Slide 8: Coal
Coal Q3 Q3 Q2 Coal - Mt 2012 2011 2012 Production 6.3 6.0 5.7 Sales 5.5 6.1 6.7 Average Realized Price (US$/t) 193 286 202 (C$/t) 194 279 203 Site Costs (C$/t) 77 70 77 Transportation Costs (C$/t) 37 31 37 Financial Results C$ millions Revenue 1,077 1,717 1,362 Gross Profit 445 1,094 596 (before dep
Slide 9: Coal Update
Coal Update • Production to meet market demand • Completed Elkview plant upgrade • Q4 benchmark price for premium coal settled at US$170/t • Q4 Coal sales contracted 6.2Mt at US$163/t; includes carryover tonnes • Quintette feasibility complete 9
Slide 10: Quintette Feasibility Study
Quintette Feasibility Study • Capital cost: C$858 million Teck Coal Quintette vs. Others (US$/tonne of installed capacity) • Clean coal production: 3.5mtpa; lower CSR hard coking coal 700 • C1 costs / tonne expected to be 600 Quintette inline with current operations 500 • Life of Mine: 12 years 400
Slide 11: Neptune Coal Terminal Update
Neptune Coal Terminal Update • Assembly / setup of new stacker reclaimer on schedule • 12.5mtpa nominal throughput capacity anticipated spring 2013 • Feasibility to increase capacity to 18.5mt expected Q4 2012; potential upgrades include: ‒ 2nd rail car dumper & conveyance system ‒ New rail track wi
Slide 12: Rail Improvement Update
Rail Improvement Update Growing Percentage of Longer Trains (150+ car trains vs. trains less than150 cars) • Since 2009, loading performance has improved by approximately <150 Car Trains 150+ Car Trains 9% on an annualized basis 100% 90% • Increase in employees and 80% locomotives (CP) 70% 60% • Lon
Slide 13: Copper
Copper Q3 Q3 Q2 2012 2011 2012 Copper in Concentrate (kt) Production 84 63 72 Sales 81 68 67 Copper Cathode (kt) Production 15 14 18 Sales 15 17 18 Moly in Concentrate (M lbs) Production 3.4 2.8 3.2 Sales 3.0 2.6 3.3 Financial Results C$ millions Revenue 763 808 731 Gross Profit 362 439 342 (before
Slide 14: Copper Update
Copper Update • Record copper production of 99kt Rolling 4-Quarter Contained in Concentrate & Cathode • Antamina production +33%: 360 ‒ Q3 average ~133ktpd, up 31% vs. Record copper same period last year production 335 • Highland Valley: ‒ Production up 38% YoY from 310 higher grades and recoveries
Slide 15: Highland Valley Copper Update
Highland Valley Copper Update • Mill modernization project progressing on schedule ‒ Concrete work is well advanced ‒ Steel structure assembly and major equipment installation began during the 3rd quarter • Project includes new floatation and pebble crushing plants • Project scheduled for completion
Slide 16: Zinc
Zinc Q3 Q3 Q2 Zinc in Concentrate (kt) 2012 2011 2012 Production 145 164 149 Sales 157 194 79 Refined Zinc (kt) Production 74 73 69 Sales 75 69 69 Lead in Concentrate (kt) Production 22 19 24 Sales 46 46 – Refined Lead (kt) Production 21 20 22 Sales 22 21 21 Financial Results C$ millions Revenue 664
Slide 17: Red Dog Update
Red Dog Update • Sales volume impacted by adverse weather conditions • Shipping season complete Oct 19th: ‒ Zinc: 950kt (-6% YoY) ‒ Lead: 175kt (+22% YoY) • Higher silica and lower ore grades resulted in lower zinc production • Improved recoveries and less weathered ore resulted in higher lead produ
Slide 18: Speakers
Q3 Investor Conference Call Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 18
Slide 19: Q3 2012 – Cash Changes
Q3 2012 – Cash Changes $Millions Cash Flow from Operations* 741 Working Capital Changes (154) Capital Expenditures, Investments (497) Debt Issuance 1,747 Debt principal and interest payments (1,170) Dividends Paid (234) Distributions to non-controlling interests, FX & Other (144) Cash & STI Increase
Slide 20: Final Pricing Adjustments
Final Pricing Adjustments Settlement Outstanding at Outstanding at Adjustment (C$ M) June 30, 2012 September 30, 2012 Before Tax Copper 171 M lbs $3.44 US$/lb 169 M lbs $3.74 US$/lb $54 Million Zinc 93 M lbs $0.84 US$/lb 184 M lbs $0.95 US$/lb $12 Million Other (moly, silver, lead, etc.) -$11 Millio
Slide 21: Commodity Price and Settlement Adjustments
Commodity Price and Settlement Adjustments Quarterly Price Change vs. Settlement Adjustment 250 • Commodity price change 200 R² = 0.9786 drives settlement adjustment Pre-tax Settlement Adjustment ($ millions) 150 100 Q1 2012 • Q3 vs. Q2: 50 Q3 2012 ‒ Relatively stable price, 0 Q2 2011 Q4 201 particu
Slide 22: Teck Resources – Strong Balance Sheet
TECK RESOURCES – STRONG BALANCE SHEET Interest Expense Reduced by US$250M Dec 31, 2012 • Only US$323M due to end of 2016 Pro-forma $3,000 • Weighted Average Maturity 16.5 years • Weighted Average Interest (Coupon) Rate 4.8% • Annual Interest (Coupon) Payments US$346M $2,000 • Note roll-overs average
Slide 23: Capital Spend Program Update
Capital Spend Program Update Sustaining & Other Development Sustaining Development Copper 195 110 Coal 350 180 Zinc 90 110 Energy (incl. Fort Hills Investment) - 208 Corporate 25 - $660 $608 Major Project Spending Quintette 120 QB Phase II 195 HVC Mill Expansion & extension stripping 250 Antamina Ex
Slide 24: Speakers
Q3 Investor Conference Call Speakers Ron Millos SVP Finance & CFO Don Lindsay President & CEO 24
Slide 25: Opex Reduction and Capital Spending Deferrals
Opex Reduction and Capital Spending Deferrals QB Phase 2: Operating Costs ‒ SEIA re-filing $200 million reduction Quintette: ‒ Environmental permitting Capital Spending Relincho: 2012 Deferrals: ‒ Local infrastructure projects Trail: • $300 million ‒ Number 4 slag furnace deferred 2013 Deferrals: Fo
Slide 26: Project Developments
Project Developments • Neptune Terminal Expansion Feasibility study to 18mtpa expected Q4 2012 • Quintette Coal Mine Permit approval expected H1 2013 • Relincho Copper Mine Feasibility study post Q1 2013 • Fort Hills Phase I Project sanction decision expected 2013 • QB Phase 2 SEIA re-file expected
Slide 27: Summary
Summary Well positioned during economic uncertainty No change in long-term outlook Increased copper production Coal production adjusting to market demand Prudent capital spend program 27
Slide 28: Third Quarter 2012 Investor Conference Call and Webcast
Third Quarter 2012 Investor Conference Call and Webcast October 24, 2012