19 slides from Teck Resources Limited Class A's earnings presentation, Feb 15, 2017
Slide 1: Fourth Quarter 2016 Results
Fourth Quarter 2016 Results February 15, 2017
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: Capitalizing on the Turn in the Cycle
Capitalizing on the Turn in the Cycle • Continuing to execute for higher production per share − No equity dilution − No operating assets sold − Investing in production growth from Fort Hills − Maintaining strong liquidity − Reducing debt & managing maturities • Record quarterly results • Generating
Slide 4: Financial Results Overview
Financial Results Overview Q4 2016 2016 Revenue $3.6 billion $9.3 billion Gross profit $2.0 billion $3.8 billion before depreciation & amortization* Profit $697 million $1.0 billion attributable to shareholders EBITDA* $1.6 billion $3.4 billion Adjusted profit $930 million $1.1 billion attributable
Slide 5: Solid Delivery Against 2016 Guidance
Solid Delivery Against 2016 Guidance Guidance Results Steelmaking Coal Production 25-26 Mt 27.6 Mt Record production Site costs $45-49/t $43/t Capitalized stripping $11/t1 $10/t Transportation costs $35-37/t $34/t Total cash unit costs2,3 $91-97/t $89/t4 Lower unit costs US$69-73/t US$67/t
Slide 6: Steelmaking Coal Earnings Potential
Steelmaking Coal Earnings Potential Coal Annual EBITDA & Cash Flow Potential* 5,000 4,500 4,000 3,500 C$ Million 3,000 2017 Guidance Mid-Point Upside 2,500 Coal production (Mt) 27.5 28 Unit Cost of Sales (C$/t): 2,000 Site (C$/t) 48 46 Transportation (C$/t) 36 35 Unit Cost of Sales (C$/t) 84 81 1,50
Slide 7: Steelmaking Coal Quarterly Results
Steelmaking Coal Quarterly Results Sales (Mt) Realized Price (C$/tonne) Revenue (C$M) Record 156% 0.4 176% sales 277 6.9 6.5 1,933 108 701 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Production (Mt) Unit Cost of Sales1,2 (C$/tonne) Gross Profit2,3 (C$M) Record 0.9 9% 582% production Total 78 85
Slide 8: Copper Quarterly Results
Copper Quarterly Results Sales (kt) Realized Price (US$/lb) Revenue (C$M) 9% 13% 30 105 619 2.40 540 2.21 75 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Production (kt) C1 Unit Costs1,2 (US$/lb) Gross Profit2, 3 (C$M) 6% 11% xx% 24 1.45 226 96 203 1.37 72 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015
Slide 9: Quebrada Blanca 2 is a Potential Tier 1 Asset
Quebrada Blanca 2 is a Potential Tier 1 Asset • Top 15 copper producer globally • Development capital costs reduced significantly to US$4.7B • Attractive capital intensity • Change in scope, including revised tailings facility • Initial mine life of 25 years uses only ~25% of known reserves & resour
Slide 10: Zinc Quarterly Results
Zinc Quarterly Results Zinc Sales (kt) Zinc Realized Price (US$/lb) Revenue (C$M) Conc1 Refined 1 51% 33% 5 222 223 1.13 84 1,083 79 814 0.75 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Zinc Production (kt) Lead Production (kt) Gross Profit2 (C$M) Conc1 12 Refined Conc1 Refined 6
Slide 11: Fort Hills Project Status & Progress
Fort Hills Project Status & Progress • Majority of areas progressing to plan • Construction >76% complete at year end 2016 • 2 of 6 areas turned over to Operations (Mining and Infrastructure) • First oil end of 2017 • Teck’s share of project costs to completion is $805M • Steady state production inc
Slide 12: Quarterly Pricing Adjustments
Quarterly Pricing Adjustments Simplified Pricing Adjustment Model Quarterly Outstanding at Outstanding at Pricing Price 100 Sep. 30, 2016 Dec. 30, 2016 Adjustments Change Q4 2016 Pre-tax Settlement Adjustment (C$M) 50 Q3 2016 Mlbs US$/lb Mlbs US$/lb US$/lb C$M Q1 2016 Q2 2014 Q3 2013 0 Q4 2013 Coppe
Slide 13: Cash Flow
Cash Flow Cash Changes in Q4 2016 3000 536 1,490 2500 417 113 2000 108 $ Millions 29 13 $1,407 1500 $1,113 1000 500 0 Cash - start Cash flow from Repayment of PP&E, incl. Fort Debt interest Capitalized Dividends paid Other Cash - end of quarter operations debt Hills and finance stripping of quarter
Slide 14: Leverage to Strong Coal & Zinc Markets
Leverage to Strong Coal & Zinc Markets 2017 Leverage to Commodities & FX Effect on Production Unit of Effect on Estimated Estimated Guidance1 Change EBITDA3,4 Profit3 $C/$US C$0.01 C$42M /$0.01∆ C$68M /$0.01∆ Coal 27.5 Mt US$1/tonne2 C$21M /$1∆ C$32M /$1∆ Copper 282 kt US$0.01/lb C$5M /$0.01∆ C$7M /
Slide 15: 2017 Production & Site Cost Guidance
2017 Production & Site Cost Guidance 2016 Results 2017 Guidance Steelmaking Coal Production 27.6 Mt 27-28 Mt Site costs $43/t $46-50/t Capitalized stripping $10/t $16/t1 Transportation costs $34/t $35-37/t Total cash costs2, 3 $89/t $97-103/t US$67/t US$74-79/t Copper Production 324 kt 275-290 kt C1
Slide 16: 2017 Capital Expenditures Guidance
2017 Capital Expenditures Guidance Major New Mine Capitalized ($M) Sustaining Enhancement Development Sub-total Stripping Total Steelmaking Coal 140 120 - 260 430 690 Copper 130 20 200 350 140 490 Zinc 210 15 20 245 50 295 Energy 50 - 675 725 - 725 TOTAL 530 155 895 1,580 620 2,200 Total capex of ~$
Slide 17: Debt Reduction Remains a Priority
Debt Reduction Remains a Priority Current Debt Portfolio1 Declining Debt Public notes outstanding US$6.1B 7.5 Average coupon 5.7% >US$1B Weighted average term to maturity ~13 years Reduction 7.0 Debt to debt-plus-equity ratio2,3 32% 6.5 US$ Billions Credit Rating 6.0 • Issuer credit ratings1 − S&P:
Slide 18: Looking Forward
Looking Forward • Generating strong free cash flow • Approaching first oil from Fort Hills and transition to 50-years of cash flow • Advancing small, high value capital projects • Reducing debt is a priority 18
Slide 19: Fourth Quarter 2016 Results
Fourth Quarter 2016 Results February 15, 2017