24 slides from Teck Resources Limited Class A's earnings presentation, Oct 27, 2011
Slide 1: Third Quarter 2011 Investor Conference Call and Webcast
Third Quarter 2011 Investor Conference Call and Webcast October 27, 2011
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 Highlights: Quarterly Profits $814 Million
Q3 Highlights Quarterly Profits $814 Million • New records for each of quarterly revenues, gross profits, pre-tax profits & EBITDA* • $4.5 billion cash balance currently • Strong free cash flow will continue to build cash • Record Material Movement in Coal Mines * Normalized Profits & EBITDA removin
Slide 6: Q3 Highlights: Revenues up 40%, Adjusted Profit up 64%
Q3 Highlights Revenues up 40%, Adjusted Profit * up 64% Revenues $ 3,380 million Gross Profit* $ 1,814 million (before depreciation & amortization) Adjusted Profit $ 742 million (attributable to shareholders) EBITDA $ 1,660 million *before depreciation & amortization 6
Slide 7: Adjusted Profit
Adjusted Profit ($ millions, net of taxes) Q3 ’11 Q3 ’10 Q2 ’11 Profit attributable to $814 $ 316 $ 756 Shareholders as reported Asset Sales & Other (24) (127) (113) F/X (gains) losses 15 (26) 2 Derivative (gains) losses (63) (51) (8) Collective Agreement Charge – – 26 Financing items & Impairment c
Slide 8: Coal
Coal Q3 Q3 Q2 Coal - Mt 2011 2010 2011 Production 6.0 5.5 5.8 Sales 6.1 5.5 5.6 Average Realized Price (US$/t) 285 200 272 (C$/t) 279 208 264 Site Costs (C$/t) 70 61 73* Transportation Costs (C$/t) 31 33 33 Financial Results C$ millions Revenue 1,717 1,150 1,471 Gross Profit 1,094 625 844 (before de
Slide 9: Coal – Record Material Moved
Coal – Record Material Moved Key to Achieving Coal Production Targets 78 Strike Impact QoQ: +11% • Past the peak of higher strip Material Moved YoY: +24% ratio (clean coal) 74 Average Material Teck Coal Material Moved (millions of BCM) 70 • Record amount of material 66 mBCM moved during Q3 (+11% 66
Slide 10: Coal – Lower Production Costs
Coal – Lower Production Costs Positive Trend Expected to Continue C$/tonne 80 • Increased capacity to move -10% vs. waste and expose coal 1H 2011 75 C$76 • Productivity benefits from C$73* larger mobile equipment fleet 70 C$70 • Staffing improvements 65 helping to increase efficiency 60 Q1 Q2 Q3 * E
Slide 11: Copper
Copper Q3 Q3 Q2 2011 2010 2011 Copper in Concentrate (kt) Production1 63 56 62 Sales1 68 58 60 Copper Cathode (kt) Production 14 23 18 Sales 17 23 17 Moly in Concentrate (M lbs) Production 2.8 2.2 2.3 Sales 2.6 1.9 2.2 Financial Results C$ millions Revenue 808 566 749 Gross Profit 439 306 427 (befor
Slide 12: Andacollo Plant Upgrade – Status of Steps Completed
Andacollo Plant Upgrade – 2 of 3 Steps Completed • Andacollo Concentrator optimization plan: Small crusher to feed pebble crusher (completed) Increase SAG motor capacity by 10% (completed) Installation of a 20 ktpd pre-crusher plant (Q1 ‘12) • Estimated cost approximately US$15 million 12
Slide 13: Highland Valley Copper Mill Modernization Project
Highland Valley Copper Mill Modernization Project • Improve copper recoveries by approximately 2% • Increase mill throughput by 10% over the life-of-mine • Targeted completion date: Q4 ‘13 During the quarter • New 5-year labour agreement • Completed 2-year waste stripping and buttress project 13
Slide 14: Antamina Expansion
Antamina Expansion • Primary production facility over 80% complete; overall project more than 70% complete • Ball mill run successfully during pre-operational testing • Additional ore anticipated Q1 2012 • Ore throughput increasing 30% during first half of 2012 14
Slide 15: Zinc
Zinc Q3 Q3 Q2 Zinc in Concentrate (kt) 2011 2010 2011 Production 164 162 166 Sales 194 193 99 Refined Zinc (kt) Production 73 69 71 Sales 69 70 72 Lead in Concentrate (kt) Production 19 27 22 Sales 46 86 – Refined Lead (kt) Production 20 17 21 Sales 21 16 22 Financial Results C$ millions Revenue 855
Slide 16: Trail Operations #4 Furnace Project
Trail Operations #4 Furnace Project • Increasing capacity to recycle end-of-life electronic waste • New slag fuming furnace • New settling furnace • Increase recovery of by- products (copper, gold, silver, etc) • Environmental benefit 16
Slide 17: Speakers
Q3 Investor Conference Call Speakers Don Lindsay President & CEO Ron Millos SVP Finance & CFO 17
Slide 18: Q3 2011 – Cash Changes
Q3 2011 – Cash Changes $Millions Cash Flow from Operations 1,302 Working Capital Changes 81 Capital Expenditures / Investments (432) Proceeds from investments & other 63 Debt principal and interest payments (97) Debt Issue 1,907 Dividends Paid (177) Fx translation & Other 299 Cash & STI Increase 2,9
Slide 19: Final Pricing Adjustments
Final Pricing Adjustments Settlement Outstanding at Outstanding at Adjustment (C$ M) June 30, 2011 Sept 30, 2011 Before Tax* Copper 150 M lbs $4.22 US$/lb 149 M lbs $3.24 US$/lb -$152 Million Zinc 103 M lbs $1.05 US$/lb 210 M lbs $0.87 US$/lb -$23 Million Lead - M lbs $ - US$/lb 61 M lbs $0.93 US$/l
Slide 20: Strong Financial Position
Strong Financial Position December September Target 2010 2011 Range Debt to Debt + Equity* 36% 29% < 30% Net Debt to 31% 14% n/a Net Debt + Equity Debt / EBITDA 2.0x 1.7x < 2.5x EBITDA / Interest 6.1x 9.8x > 6.0x * Bank credit facility covenant requires D / D+E be less than 50% Mid Triple-B Ratings
Slide 21: Speakers
Q3 Investor Conference Call Speakers Ron Millos SVP Finance & CFO Don Lindsay President & CEO 21
Slide 22: Project Developments
Project Developments • Frontier / Equinox Oil Sands Mine Projects DBM Complete and regulatory application expected Q4 2011 • Andacollo Expansion Preliminary engineering expected Q4 2011 • Quintette Coal Mine Feasibility Study expected Q1 2012 • Quebrada Blanca Phase II Feasibility study expected ear
Slide 23: Summary
Summary Positioning for upcoming capital expenditures Strong cash flow & increasing cash balance Coal production increasing Copper production increasing Development projects advancing 23
Slide 24: Third Quarter 2011 Investor Conference Call and Webcast
Third Quarter 2011 Investor Conference Call and Webcast October 27, 2011