Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (Teck)
today announced its unaudited third quarter results for 2022.
“In the third quarter, we delivered another consecutive quarter
of strong financial results, while returning cash to shareholders
and maintaining a robust balance sheet. We also recently announced
three value generating transactions that advance our strategy of
pursuing industry-leading copper growth and rebalancing our
portfolio of high-quality assets to low carbon metals," said
Jonathan Price, Chief Executive Officer. "Thanks to our resilience
and financial strength, we remain well-positioned to manage through
any near-term pressures arising from an overall economic slowdown,
while staying focused on advancing our copper growth strategy and
returning cash to shareholders."
Highlights
- Adjusted profit attributable to shareholders1 was $923 million
or $1.77 per share in Q3 2022.
- Our strong financial results in Q3 2022 were offset by the
impairment of our interest in Fort Hills, described below, and as a
result, we recorded a loss attributable to shareholders of $195
million or $0.37 per share.
- On October 26, 2022, we announced an agreement to sell our
21.3% interest in the Fort Hills Energy Limited Partnership (Fort
Hills) and certain associated downstream assets to Suncor Energy
Inc. (Suncor) for gross proceeds of approximately $1 billion in
cash, subject to customary closing adjustments reflecting a
November 1, 2022 effective date. The transaction value is
consistent with the current outlook for the Fort Hills business
reflected in the most recent in-depth review of Fort Hills
conducted by Suncor and the resulting long-range plan for the
project. As a result of the sale agreement, we recorded an
after-tax, non-cash impairment charge of $952 million in the third
quarter of 2022.
- Adjusted EBITDA1 was $1.9 billion in Q3 2022. We recorded a
loss before taxes of $76 million in Q3 2022. Over the last twelve
months we have generated $10.8 billion in adjusted EBITDA1 and $7.2
billion of profit before taxes.
- In Q3 2022, we completed $730 million (US$564 million) in Class
B subordinate voting share buybacks pursuant to our normal course
issuer bid. We also returned $64 million to shareholders in Q3
through our regular quarterly base dividend.
- At QB2, we continue to focus on system completion and handover
to support pre-operation and commissioning work, with a focus on
the sub-systems required to produce first copper from Line 1 which
we continue to target for late this year. However, if productivity
impacts persist this will be delayed into January 2023.
- Our revised QB2 capital cost guidance is US$7.4 to US$7.75
billion based on our current foreign exchange assumptions, cost
pressures related to weather and subsurface conditions, COVID-19
impacts and other factors. This is an increase from our prior
guidance of US$6.9 to US$7.0 billion.
- Executing on our copper growth strategy, in Q3 2022, we
announced agreements with PolyMet Mining Corporation (PolyMet) to
advance PolyMet's NorthMet Project and our Mesaba mineral deposit
in a 50:50 joint venture, and with Agnico Eagle Mines Limited to
form a 50:50 joint venture to advance the San Nicolás copper-zinc
project.
- Our copper business unit gross profit declined by 50% from a
year ago, primarily due to an 18% decrease in average realized
copper prices to US$3.49 per pound and a 12% decrease in sales
volumes to 67,300 tonnes due to the timing of shipments.
- Our zinc business unit gross profit increased 9% from a year
ago primarily reflecting a 45% increase in zinc sales volumes of
235,200 tonnes from Red Dog, and a 6% increase in average realized
zinc prices of US$1.44 per pound.
- Our steelmaking coal business unit gross profit increased by
37% from a year ago primarily as a result of favourable steelmaking
coal prices. Realized steelmaking coal prices averaged US$304 per
tonne in Q3 and sales volumes were 5.6 million tonnes. Our
significant investment in Neptune Bulk Terminals materially reduced
the impact that the recently-resolved labour action at Westshore
Terminals would otherwise have had on our Q3 steelmaking coal sales
volumes.
- While our underlying key mining drivers remain relatively
stable, like others in the industry, we continue to face
inflationary cost pressures. Inflationary pressures have increased
our operating costs by 14% compared to the same period last year,
approximately half of which relates to an increase in diesel
costs.
- In late September, our Elkview steelmaking coal operation
experienced a structural failure of its plant feed conveyor and as
a result, we estimate a reduction in our 2022 steelmaking coal
production of approximately 1.5 million tonnes. We have
substantially completed the sourcing of materials and labour to
conduct the replacement and expect the Elkview plant to restart
production in late November.
- Our liquidity is strong at $8.3 billion as at October 26, 2022,
including $2.9 billion of cash. Our US$4.0 billion
sustainability-linked revolving credit facility is undrawn, and
there are no major debt maturities until 2030.
Note:1. This is a non-GAAP financial measure or
ratio. See “Use of Non-GAAP Financial Measures and Ratios” for
further information.
Financial Summary Q3 2022
Financial Metrics(CAD$ in millions, except per
share data) |
Q3 2022 |
Q3 2021 |
Revenue |
$ |
4,669 |
|
$ |
3,970 |
|
Gross
profit |
$ |
1,881 |
|
$ |
1,662 |
|
Gross
profit before depreciation and amortization1 |
$ |
2,374 |
|
$ |
2,093 |
|
Profit
(loss) before taxes |
$ |
(76 |
) |
$ |
1,354 |
|
Adjusted
EBITDA1 |
$ |
1,901 |
|
$ |
2,096 |
|
Profit
(loss) attributable to shareholders |
$ |
(195 |
) |
$ |
816 |
|
Adjusted
profit attributable to shareholders1 |
$ |
923 |
|
$ |
1,015 |
|
Basic
earnings (loss) per share |
$ |
(0.37 |
) |
$ |
1.53 |
|
Diluted
earnings (loss) per share |
$ |
(0.37 |
) |
$ |
1.51 |
|
Adjusted
basic earnings per share1 |
$ |
1.77 |
|
$ |
1.91 |
|
Adjusted diluted earnings per share1 |
$ |
1.74 |
|
$ |
1.88 |
|
Note:1. This is a non-GAAP financial measure or ratio. See “Use
of Non-GAAP Financial Measures and Ratios” for further
information.
Key Updates
Executing on our copper growth strategy – QB2 a
long-life, low-cost operation with major expansion
potential
- Focus continues to be on sub-system handover and
pre-operational testing across all areas.
- Completed commissioning of the 220kV transmission line and
final testing of the main sub-station switchgear at the
Concentrator.
- Well advanced in commissioning of the pre-treatment area of the
desalination plant and well advanced in pre-operational testing of
the reverse osmosis units in the desalination plant.
- Completed hydrotests of the water supply pipeline and
hydrotesting of the pump stations where pre-operational testing is
underway.
- All sub-systems for Ball Mill No. 1 and SAG Mill No. 1 are in
in pre-operational testing.
- Completed the ore stockpile dome and installation of all the
in-plant conveyor belts.
- Completed the 12km long tailings launder and commenced
hydrotesting of the water pipelines in the tailings management
facility.
- Click here for a photo gallery and click here for a video of
construction progress on QB2.
Steelmaking Coal Strategy
- Our annual steelmaking coal production capacity across our four
operating mines in the Elk Valley is approximately 26 to 27 million
tonnes, and we operated at those levels for most of the period from
2014 to 2019. Over the past three years, external challenges, and
more recently, reliability issues at Elkview, have impacted our
ability to operate at those levels. These include severe
weather-related events including rain, flooding, extreme cold and
wildfire events in 2021, and the COVID-19 pandemic and associated
ongoing global disruption to supply chains and labour availability.
As a result, to better reflect the increasing frequency of these
adverse events and associated risk of impacts to our operations we
have reduced our three-year production guidance commencing in 2023
from 26 to 27 million tonnes to 25 to 26 million tonnes.
Safety and sustainability
leadership
- Our High Potential Incident Frequency remained low at a rate of
0.10 year to date in 2022.
- We announced a $5 million investment to expand our partnership
with UN Women, providing economic empowerment and training for
Indigenous women and youth in northern Chile.
- We recently reached an agreement with SAAM Towage to deploy two
electric tug boats at Neptune Bulk Terminals, which will reduce
transportation-related greenhouse gas emissions and will mark the
first electric tugs operating in Canada.
Guidance
- We have updated our 2022 annual guidance for steelmaking coal
production volumes to reflect the impact of the plant feed conveyor
failure at Elkview, outlined above. We have also updated our 2022
annual guidance for transportation unit costs1 for our steelmaking
coal business unit, our copper and refined zinc production
guidance, and our capital cost guidance for QB2, as outlined in
summary below. Our usual guidance tables, including three-year
production guidance, can be found on pages 31 – 36 of Teck’s full
third quarter results for 2022 at the link below.
- QB2 copper production is expected to ramp up during 2023
following commissioning of the QB2 project. We now expect copper
production to be in the range of 170,000 and 300,000 tonnes per
year for 2023 to 2025, from the previously disclosed range of
245,000 to 300,000 tonnes per year, with 2023 at the lower end of
the guidance range.
- Like others in the industry, we continue to face inflationary
cost pressures, which have increased our operating costs by 14%
compared to the same period last year. Approximately half of the
operating cost increase relates to diesel costs at our operations
and in our transportation costs. The increases in the cost of
certain key supplies, including mining equipment, fuel, tires and
explosives, are being driven largely by price increases for
underlying commodities such as steel, crude oil and natural gas.
While our underlying key mining drivers such as strip ratios and
haul distances remain relatively stable, inflationary pressures on
diesel prices and other key input costs, as well as profit-based
compensation and royalties continue to put upward pressure on our
unit cost1 guidance through the balance of 2022.
- As a result of the agreement to sell our interest in Fort
Hills to Suncor with an effective date of November 1, 2022, we will
no longer provide guidance for our Energy Business Unit. We expect
the results from our interest in Fort Hills to be reported as a
discontinued operation beginning in the fourth quarter of
2022.
- While we continue to expect our capital expenditures for 2023
to be lower than 2022, with the increase in QB2 capital guidance
and continued inflationary pressures, we no longer expect a
reduction of $2 billion compared to 2022 projected spending levels.
We will issue 2023 capital expenditure guidance with our usual
annual guidance in February, 2023.
Note:1. This is a non-GAAP financial measure or ratio. See “Use
of Non-GAAP Financial Measures and Ratios” for further
information.
2022 Guidance – Summary |
Previous |
Change |
Current |
Production Guidance |
|
|
|
Copper (000’s tonnes) |
273 - 290 |
— |
273 - 290 |
Zinc (000’s tonnes) |
630 - 665 |
— |
630 - 665 |
Refined zinc (000’s tonnes) |
270 - 285 |
(13) - (18) |
257 - 267 |
Steelmaking coal (million tonnes) |
23.5 - 24.0 |
(1.5) - (1.5) |
22.0 - 22.5 |
Sales Guidance – Q4
2022 |
|
|
|
Red Dog zinc in concentrate sales (000’s tonnes) |
|
|
130 - 150 |
Steelmaking coal sales (million tonnes) |
|
|
5.0 - 5.4 |
Unit Cost Guidance |
|
|
|
Copper net cash unit costs (US$/lb.)1 |
1.48 - 1.58 |
— |
1.48 - 1.58 |
Zinc net cash unit costs (US$/lb.)1 |
0.37 - 0.43 |
— |
0.37 - 0.43 |
Steelmaking coal adjusted site cash cost of sales
(CAD$/tonne)1 |
87 - 92 |
— |
87 - 92 |
Steelmaking coal transportation costs (CAD$/tonne) |
43 - 46 |
3 - 3 |
46 - 49 |
Note:1. This is a non-GAAP financial measure or ratio. See “Use
of Non-GAAP Financial Measures and Ratios” for further
information.
Click here to view Teck’s full third quarter results for
2022.
WEBCAST
Teck will host an Investor Conference Call to discuss its
Q3/2022 financial results at 11:00 AM Eastern time, 8:00 AM Pacific
time, on October 27, 2022. A live audio
webcast of the conference call, together with supporting
presentation slides, will be available at our website at
www.teck.com. The webcast will be archived at www.teck.com
Reference:
Fraser Phillips, Senior Vice President, Investor Relations and
Strategic Analysis: 604.699.4621
Chris Stannell, Public Relations Manager: 604.699.4368
USE OF NON-GAAP FINANCIAL MEASURES AND
RATIOS
Our financial results are prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board. This document refers to a
number of non-GAAP financial measures and non-GAAP ratios which are
not measures recognized under IFRS and do not have a standardized
meaning prescribed by IFRS or by Generally Accepted Accounting
Principles (GAAP) in the United States.
The non-GAAP financial measures and non-GAAP ratios described
below do not have standardized meanings under IFRS, may differ from
those used by other issuers, and may not be comparable to similar
financial measures and ratios reported by other issuers. These
financial measures and ratios have been derived from our financial
statements and applied on a consistent basis as appropriate. We
disclose these financial measures and ratios because we believe
they assist readers in understanding the results of our operations
and financial position and provide further information about our
financial results to investors. These measures should not be
considered in isolation or used in substitute for other measures of
performance prepared in accordance with IFRS.
Adjusted profit attributable to shareholders –
For adjusted profit attributable to shareholders, we adjust profit
(loss) attributable to shareholders as reported to remove the
after-tax effect of certain types of transactions that reflect
measurement changes on our balance sheet or are not indicative of
our normal operating activities.
EBITDA – EBITDA is profit before net finance
expense, provision for income taxes, and depreciation and
amortization.
Adjusted EBITDA – Adjusted EBITDA is EBITDA
before the pre-tax effect of the adjustments that we make to
adjusted profit attributable to shareholders as described
above.
Adjusted profit attributable to shareholders, EBITDA, and
Adjusted EBITDA highlight items and allow us and readers to analyze
the rest of our results more clearly. We believe that disclosing
these measures assists readers in understanding the ongoing cash
generating potential of our business in order to provide liquidity
to fund working capital needs, service outstanding debt, fund
future capital expenditures and investment opportunities, and pay
dividends.
Gross profit before depreciation and
amortization – Gross profit before depreciation and
amortization is gross profit with depreciation and amortization
expense added back. We believe this measure assists us and readers
to assess our ability to generate cash flow from our business units
or operations.
Unit costs – Unit costs for our steelmaking
coal operations are total cost of goods sold, divided by tonnes
sold in the period, excluding depreciation and amortization
charges. We include this information as it is frequently requested
by investors and investment analysts who use it to assess our cost
structure and margins and compare it to similar information
provided by many companies in the industry.
Adjusted site cash cost of sales – Adjusted
site cash cost of sales for our steelmaking coal operations is
defined as the cost of the product as it leaves the mine excluding
depreciation and amortization charges, out-bound transportation
costs and any one-time collective agreement charges and inventory
write-down provisions.
Total cash unit costs – Total cash unit costs
for our copper and zinc operations includes adjusted cash costs of
sales, as described below, plus the smelter and refining charges
added back in determining adjusted revenue. This presentation
allows a comparison of total cash unit costs, including smelter
charges, to the underlying price of copper or zinc in order to
assess the margin for the mine on a per unit basis.
Net cash unit costs – Net cash unit costs of
principal product, after deducting co-product and by-product
margins, are also a common industry measure. By deducting the co-
and by-product margin per unit of the principal product, the margin
for the mine on a per unit basis may be presented in a single
metric for comparison to other operations.
Adjusted cash cost of sales – Adjusted cash
cost of sales for our copper and zinc operations is defined as the
cost of the product delivered to the port of shipment, excluding
depreciation and amortization charges, any one-time collective
agreement charges or inventory write-down provisions and by-product
cost of sales. It is common practice in the industry to exclude
depreciation and amortization as these costs are non-cash and
discounted cash flow valuation models used in the industry
substitute expectations of future capital spending for these
amounts.
Adjusted operating costs – Adjusted operating
costs for our energy business unit is defined as the costs of
product as it leaves the mine, excluding depreciation and
amortization charges, cost of diluent for blending to transport our
bitumen by pipeline, cost of non-proprietary product purchased and
transportation costs of our product and non-proprietary product and
any one-time collective agreement charges or inventory write-down
provisions.
Adjusted basic earnings per share – Adjusted
basic earnings per share is adjusted profit attributable to
shareholders divided by average number of shares outstanding in the
period.
Adjusted diluted earnings per share – Adjusted
diluted earnings per share is adjusted profit attributable to
shareholders divided by average number of fully diluted shares in a
period.
Adjusted site cash cost of sales per
tonne – Adjusted site cash cost of sales
per tonne is a non-GAAP ratio comprised of adjusted site cash cost
of sales divided by tonnes sold. There is no similar financial
measure in our consolidated financial statements with which to
compare. Adjusted site cash cost of sales is a non-GAAP financial
measure.
Profit (Loss) Attributable to Shareholders and Adjusted
Profit Attributable to Shareholders
|
Three months ended September 30, |
Nine months ended September 30, |
(CAD$ in millions) |
|
2022 |
|
|
2021 |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Profit (loss)
attributable to shareholders |
$ |
(195 |
) |
$ |
816 |
$ |
3,051 |
|
$ |
1,381 |
|
Add (deduct) on an after-tax
basis: |
|
|
|
|
Asset impairment |
|
952 |
|
|
— |
|
952 |
|
|
— |
|
Loss on debt purchase |
|
— |
|
|
— |
|
46 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
12 |
|
|
97 |
|
108 |
|
|
140 |
|
Environmental costs |
|
7 |
|
|
49 |
|
(104 |
) |
|
60 |
|
Inventory write-downs (reversals) |
|
15 |
|
|
— |
|
38 |
|
|
(6 |
) |
Share-based compensation |
|
26 |
|
|
28 |
|
114 |
|
|
62 |
|
Commodity derivatives |
|
(4 |
) |
|
10 |
|
(7 |
) |
|
5 |
|
Other |
|
110 |
|
|
15 |
|
117 |
|
|
38 |
|
|
|
|
|
|
Adjusted profit
attributable to shareholders |
$ |
923 |
|
$ |
1,015 |
$ |
4,315 |
|
$ |
1,680 |
|
|
|
|
|
|
Basic earnings (loss)
per share |
$ |
(0.37 |
) |
$ |
1.53 |
$ |
5.74 |
|
$ |
2.60 |
|
Diluted earnings
(loss) per share |
$ |
(0.37 |
) |
$ |
1.51 |
$ |
5.64 |
|
$ |
2.56 |
|
Adjusted basic
earnings per share |
$ |
1.77 |
|
$ |
1.91 |
$ |
8.12 |
|
$ |
3.16 |
|
Adjusted diluted
earnings per share |
$ |
1.74 |
|
$ |
1.88 |
$ |
7.98 |
|
$ |
3.11 |
|
|
|
|
|
|
Reconciliation of Basic Earnings (Loss) per share to
Adjusted Basic Earnings per share
|
Three months ended September 30, |
Nine months ended September 30, |
(Per share amounts) |
|
2022 |
|
|
2021 |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Basic earnings (loss)
per share |
$ |
(0.37 |
) |
$ |
1.53 |
$ |
5.74 |
|
$ |
2.60 |
|
Add (deduct): |
|
|
|
|
Asset impairment |
|
1.82 |
|
|
— |
|
1.79 |
|
|
— |
|
Loss on debt purchase |
|
— |
|
|
— |
|
0.09 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
0.02 |
|
|
0.18 |
|
0.20 |
|
|
0.26 |
|
Environmental costs |
|
0.01 |
|
|
0.09 |
|
(0.20 |
) |
|
0.11 |
|
Inventory write-downs (reversals) |
|
0.03 |
|
|
— |
|
0.07 |
|
|
(0.01 |
) |
Share-based compensation |
|
0.05 |
|
|
0.05 |
|
0.21 |
|
|
0.12 |
|
Commodity derivatives |
|
(0.01 |
) |
|
0.02 |
|
(0.01 |
) |
|
0.01 |
|
Other |
|
0.22 |
|
|
0.04 |
|
0.23 |
|
|
0.07 |
|
Adjusted basic
earnings per share |
$ |
1.77 |
|
$ |
1.91 |
$ |
8.12 |
|
$ |
3.16 |
|
|
|
|
|
|
Reconciliation of Diluted Earnings (Loss) per share to
Adjusted Diluted Earnings per share
|
Three months ended September 30, |
Nine months ended September 30, |
(Per share amounts) |
|
2022 |
|
|
2021 |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Diluted earnings
(loss) per share |
$ |
(0.37 |
) |
$ |
1.51 |
$ |
5.64 |
|
$ |
2.56 |
|
Add (deduct): |
|
|
|
|
Asset impairment |
|
1.80 |
|
|
— |
|
1.76 |
|
|
— |
|
Loss on debt purchase |
|
— |
|
|
— |
|
0.09 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
0.02 |
|
|
0.18 |
|
0.20 |
|
|
0.26 |
|
Environmental costs |
|
0.01 |
|
|
0.09 |
|
(0.19 |
) |
|
0.11 |
|
Inventory write-downs (reversals) |
|
0.03 |
|
|
— |
|
0.07 |
|
|
(0.01 |
) |
Share-based compensation |
|
0.05 |
|
|
0.05 |
|
0.21 |
|
|
0.11 |
|
Commodity derivatives |
|
(0.01 |
) |
|
0.02 |
|
(0.01 |
) |
|
0.01 |
|
Other |
|
0.21 |
|
|
0.03 |
|
0.21 |
|
|
0.07 |
|
|
|
|
|
|
Adjusted diluted
earnings per share |
$ |
1.74 |
|
$ |
1.88 |
$ |
7.98 |
|
$ |
3.11 |
|
|
|
|
|
|
Reconciliation of Net Debt to Adjusted EBITDA
Ratio
|
(A)Twelve months endedDecember 31,2021 |
(B)Nine monthsendedSeptember 30,2021 |
(C)NinemonthsendedSeptember30, 2022 |
(A-B+C)Twelve monthsended September 30, 2022 |
|
|
|
|
|
Profit (loss) before taxes |
$ |
4,532 |
|
|
$ |
2,324 |
|
$ |
5,037 |
|
$ |
7,245 |
|
|
Finance expense net
of finance income |
|
210 |
|
|
|
157 |
|
|
146 |
|
|
199 |
|
|
Depreciation and amortization |
|
1,583 |
|
|
|
1,179 |
|
|
1,394 |
|
|
1,798 |
|
|
EBITDA |
$ |
6,325 |
|
|
$ |
3,660 |
|
$ |
6,577 |
|
$ |
9,242 |
|
|
|
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
|
|
Asset impairment (recovery) |
|
(215 |
) |
|
|
— |
|
|
1,234 |
|
|
1,019 |
|
|
Loss on debt purchase |
|
— |
|
|
|
— |
|
|
63 |
|
|
63 |
|
|
QB2 variable consideration to IMSA and ENAMI |
|
141 |
|
|
|
168 |
|
|
201 |
|
|
174 |
|
|
Environmental costs |
|
108 |
|
|
|
82 |
|
|
(144 |
) |
|
(118 |
) |
|
Inventory write-down (reversals) |
|
1 |
|
|
|
(10 |
) |
|
53 |
|
|
64 |
|
|
Share-based compensation |
|
125 |
|
|
|
82 |
|
|
148 |
|
|
191 |
|
|
Commodity derivatives |
|
22 |
|
|
|
7 |
|
|
(11 |
) |
|
4 |
|
|
Other |
|
66 |
|
|
|
63 |
|
|
114 |
|
|
117 |
|
|
Adjusted EBITDA |
$ |
6,573 |
|
(D) |
$ |
4,052 |
|
$ |
8,235 |
|
$ |
10,756 |
|
(E) |
|
|
|
|
|
|
|
Total debt at period end |
$ |
8,068 |
|
(F) |
|
|
$ |
7,962 |
|
(G) |
Less:
cash and cash equivalents at period end |
|
(1,427 |
) |
|
|
|
|
(2,638 |
) |
|
|
|
|
|
|
|
|
Net debt |
$ |
6,641 |
|
(H) |
|
|
$ |
5,324 |
|
(I) |
|
|
|
|
|
|
|
Debt to
adjusted EBITDA ratio |
|
1.2 |
|
(F/D) |
|
|
|
0.7 |
|
(G/E) |
Net Debt to
adjusted EBITDA ratio |
|
1.0 |
|
(H/D) |
|
|
|
0.5 |
|
(I/E) |
Equity attributable
to shareholders of the company |
|
23,005 |
|
(J) |
|
|
|
25,215 |
|
(K) |
Other financial
obligations |
|
257 |
|
(L) |
|
|
|
265 |
|
(M) |
Adjusted Net debt to capitalization ratio |
|
0.22 |
|
(H+L)/(F+J+L) |
|
|
0.17 |
|
(I+M)/(G+K+M) |
|
|
|
|
|
|
Reconciliation of EBITDA and Adjusted
EBITDA
|
Three months ended September 30, |
Nine months ended September 30, |
(CAD$ in millions) |
|
2022 |
|
|
2021 |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
Profit (loss) before
taxes |
$ |
(76 |
) |
$ |
1,354 |
$ |
5,037 |
|
$ |
2,324 |
|
Finance expense net of finance
income |
|
51 |
|
|
55 |
|
146 |
|
|
157 |
|
Depreciation and amortization |
|
493 |
|
|
431 |
|
1,394 |
|
|
1,179 |
|
|
|
|
|
|
EBITDA |
|
468 |
|
|
1,840 |
|
6,577 |
|
|
3,660 |
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
Asset impairment |
|
1,234 |
|
|
— |
|
1,234 |
|
|
— |
|
Loss on debt purchase |
|
— |
|
|
— |
|
63 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
40 |
|
|
97 |
|
201 |
|
|
168 |
|
Environmental costs |
|
9 |
|
|
67 |
|
(144 |
) |
|
82 |
|
Inventory write-downs (reversals) |
|
21 |
|
|
— |
|
53 |
|
|
(10 |
) |
Share-based compensation |
|
33 |
|
|
35 |
|
148 |
|
|
82 |
|
Commodity derivatives |
|
(7 |
) |
|
14 |
|
(11 |
) |
|
7 |
|
Other |
|
103 |
|
|
43 |
|
114 |
|
|
63 |
|
Adjusted EBITDA |
$ |
1,901 |
|
$ |
2,096 |
$ |
8,235 |
|
$ |
4,052 |
|
Reconciliation of Gross Profit Before Depreciation and
Amortization
|
Three months ended September 30, |
Nine months ended September 30, |
(CAD$ in millions) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
2021 |
|
|
|
|
|
|
Gross profit |
$ |
1,881 |
|
$ |
1,662 |
|
$ |
7,737 |
$ |
3,005 |
|
Depreciation and amortization |
|
493 |
|
|
431 |
|
|
1,394 |
|
1,179 |
|
Gross
profit before depreciation and amortization |
$ |
2,374 |
|
$ |
2,093 |
|
$ |
9,131 |
$ |
4,184 |
|
|
|
|
|
|
Reported as: |
|
|
|
|
Copper |
|
|
|
|
Highland Valley Copper |
$ |
140 |
|
$ |
292 |
|
$ |
603 |
$ |
688 |
|
Antamina |
|
245 |
|
|
252 |
|
|
801 |
|
708 |
|
Carmen de Andacollo |
|
(18 |
) |
|
59 |
|
|
58 |
|
165 |
|
Quebrada Blanca |
|
(9 |
) |
|
7 |
|
|
11 |
|
29 |
|
|
|
358 |
|
|
610 |
|
|
1,473 |
|
1,590 |
|
|
|
|
|
|
Zinc |
|
|
|
|
Trail Operations |
|
(14 |
) |
|
34 |
|
|
32 |
|
74 |
|
Red Dog |
|
424 |
|
|
333 |
|
|
881 |
|
549 |
|
Other |
|
6 |
|
|
(1 |
) |
|
2 |
|
10 |
|
|
|
|
|
|
|
|
416 |
|
|
366 |
|
|
915 |
|
633 |
|
Steelmaking
coal |
|
1,481 |
|
|
1,120 |
|
|
6,319 |
|
1,989 |
|
Energy |
|
119 |
|
|
(3 |
) |
|
424 |
|
(28 |
) |
Gross
profit before depreciation and amortization |
$ |
2,374 |
|
$ |
2,093 |
|
$ |
9,131 |
$ |
4,184 |
|
CAUTIONARY STATEMENT ON FORWARD-LOOKING
STATEMENTS
This news release contains certain forward-looking information
and forward-looking statements as defined in applicable securities
laws (collectively referred to as forward-looking statements).
These statements relate to future events or our future performance.
All statements other than statements of historical fact are
forward-looking statements. The use of any of the words
“anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”,
“will”, “project”, “predict”, “potential”, “should”, “believe” and
similar expressions is intended to identify forward-looking
statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements. These statements speak only as of the
date of this news release.
These forward-looking statements include, but are not limited
to, statements concerning: our focus and strategy; anticipated
global and regional supply, demand and market outlook for our
commodities; the potential impact of the COVID-19 on our business
and operations, including our ability to continue operations at our
sites and progress our projects and strategy; our ability to manage
challenges presented by COVID-19, including the effectiveness of
our management protocols implemented to protect the health and
safety of our employees; expectation of additional Class B
subordinate voting share buybacks; expectation that QB2 will be a
long-life, low-cost operation with major expansion potential; QB2
capital cost guidance and estimate of QB2 COVID-19 related capital
costs; size of estimated contingency for QB2; estimated timing of
first copper from Line 1 at QB2; expectation that QB2 will be
commissioned in 2023 and production will ramp-up in that year;
revised 2023 to 2025 copper production guidance; timing of progress
and milestones at our QB2 project; expectations regarding our QBME
project, including the impact of the project and associated timing
expectations; execution of our copper growth strategy; the closing
of the transactions with Polymet, Agnico Eagle, and Suncor;
timing of the Galore Creek project prefeasibility study; timing of
completion of the Trail major asset renewal process; 2022
production guidance for Trail and our zinc business unit; revised
2022 and three-year steelmaking coal production guidance; expected
timing of Elkview plant restart; expected fourth quarter
steelmaking coal sales and production cost estimates; timing of
completion of the Fording River North Saturated Rock Fill expansion
and related capacity increases, and expectations for total water
treatment capacity by the end of 2022; projected spending from
2022—2024 on water treatment, water management and incremental
measures associated with the Direction; our Energy business unit
2022 production and cost guidance; liquidity and availability of
borrowings under our credit facilities; and all guidance appearing
in this document including but not limited to the production,
sales, cost, unit cost, capital expenditure, and other guidance
under the heading “Guidance” and discussed in the various business
unit sections.
These statements are based on a number of assumptions,
including, but not limited to, assumptions disclosed elsewhere in
this document and assumptions regarding general business and
economic conditions, interest rates, commodity and power prices,
acts of foreign or domestic governments and the outcome of legal
proceedings, the supply and demand for, deliveries of, and the
level and volatility of prices of copper, coal, zinc and blended
bitumen and our other metals and minerals, as well as oil, natural
gas and other petroleum products, the timing of the receipt of
regulatory and governmental approvals for our development projects
and other operations, including mine extensions; our ability to
satisfy the closing conditions for our transactions with Polymet,
Agnico Eagle, and Suncor; positive results from the studies on
our expansion and development projects; our ability to secure
adequate transportation, including rail, pipeline and port
services, for our products; our costs of production and our
production and productivity levels, as well as those of our
competitors; continuing availability of water and power resources
for our operations; changes in credit market conditions and
conditions in financial markets generally, the availability of
funding to refinance our borrowings as they become due or to
finance our development projects on reasonable terms; our ability
to procure equipment and operating supplies in sufficient
quantities and on a timely basis; the availability of qualified
employees and contractors for our operations, including our new
developments and our ability to attract and retain skilled
employees; the satisfactory negotiation of collective agreements
with unionized employees; the impact of changes in Canadian-U.S.
dollar and other foreign exchange rates on our costs and results;
engineering and construction timetables and capital costs for our
development and expansion projects; the benefits of technology for
our operations and development projects, including the impact of
our RACE21™ program; environmental compliance costs; market
competition; the accuracy of our mineral reserve and resource
estimates (including with respect to size, grade and
recoverability) and the geological, operational and price
assumptions on which these are based; tax benefits and tax rates;
the outcome of our coal price and volume negotiations with
customers; the outcome of our copper, zinc and lead concentrate
treatment and refining charge negotiations with customers; the
resolution of environmental and other proceedings or disputes; our
ability to obtain, comply with and renew permits in a timely
manner; and our ongoing relations with our employees and with our
business and joint venture partners. Our Guidance tables include
footnotes with further assumptions relating to our guidance and
assumptions for certain other forward-looking statements
accompanying the statements in the document. The timing of the
Elkview plant restart assumes continued availability of materials
and labour to conduct the replacement of the plant feed
conveyor.
In addition, assumptions regarding the Elk Valley Water Quality
Plan include assumptions that additional treatment will be
effective at scale, and that the technology and facilities operate
as expected, as well as additional assumptions discussed under the
heading “Elk Valley Water Management Update.” Assumptions regarding
QB2 include current project assumptions and assumptions regarding
the final feasibility study, estimates of future construction
capital at QB2 (including the range of COVID-19 capital costs) are
based on a CLP/USD rate range of 900 to 975, as well as there being
no unexpected material and negative impact to the various
contractors, suppliers and subcontractors for the QB2 project that
would impair their ability to provide goods and services as
anticipated during the suspension period or ramp-up of construction
activities. Statements regarding the availability of our credit
facilities are based on assumptions that we will be able to satisfy
the conditions for borrowing at the time of a borrowing request and
that the facilities are not otherwise terminated or accelerated due
to an event of default. Statements concerning future production
costs or volumes are based on numerous assumptions regarding
operating matters and on assumptions that counterparties perform
their contractual obligations, that operating and capital plans
will not be disrupted by issues such as mechanical failure,
unavailability of parts and supplies, labour disturbances,
interruption in transportation or utilities, adverse weather
conditions, and that there are no material unanticipated variations
in the cost of energy or supplies and may be further impacted by
reduced demand for oil and low oil prices. The foregoing list of
assumptions is not exhaustive. Events or circumstances could cause
actual results to vary materially.
Factors that may cause actual results to vary materially
include, but are not limited to, changes in commodity and power
prices, changes in market demand for our products, changes in
interest and currency exchange rates, acts of governments and the
outcome of legal proceedings, inaccurate geological and
metallurgical assumptions (including with respect to the size,
grade and recoverability of mineral reserves and resources),
unanticipated operational difficulties (including failure of plant,
equipment or processes to operate in accordance with specifications
or expectations, cost escalation, unavailability of materials and
equipment, government action or delays in the receipt of government
approvals, industrial disturbances or other job action, adverse
weather conditions and unanticipated events related to health,
safety and environmental matters), union labour disputes, impact of
COVID-19 mitigation protocols, political risk, social unrest,
failure of customers or counterparties (including logistics
suppliers) to perform their contractual obligations, changes in our
credit ratings, unanticipated increases in costs to construct our
development projects, difficulty in obtaining permits, inability to
address concerns regarding permits of environmental impact
assessments, difficulty satisfying the closing conditions for our
transactions with Polymet, Agnico Eagle, and
Suncor; and changes or further deterioration in general economic
conditions. Certain operations and projects are not controlled by
us; schedules and costs may be adjusted by our partners, and timing
of spending and operation of the operation or project is not in our
control. Current and new technologies relating to our Elk Valley
water treatment efforts may not perform as anticipated, and ongoing
monitoring may reveal unexpected environmental conditions requiring
additional remedial measures. QB2 costs, construction progress and
timing of first production is dependent on, among other matters,
our continued ability to successfully manage through the impacts of
COVID-19, including but not limited to absenteeism and lowered
productivity. QB2 costs may also be affected by claims and other
proceedings that might be brought against us relating to costs and
impacts of the COVID-19 pandemic. Red Dog production may also be
impacted by water levels at site. Unit costs in our copper business
unit are impacted by higher profitability at Antamina, which can
cause higher workers’ participation and royalty expenses. Share
buybacks depend on a number of additional factors that may cause
actual results to vary, including, the renewal of our ability to
acquire Class B Shares in the market through the normal course
issuer bid and in compliance with regulatory requirements, share
price volatility, negative changes to commodity prices,
availability of funds to purchase shares, alternative uses for
funds. Share repurchases are also subject to conditions under
corporate law.
The forward-looking statements in this news release and actual
results will also be impacted by the continuing effects of COVID-19
and related matters, particularly if there is a further resurgence
of the virus.
We assume no obligation to update forward-looking statements
except as required under securities laws. Further information
concerning risks and uncertainties associated with these
forward-looking statements and our business can be found in our
Annual Information Form for the year ended December 31, 2021, filed
under our profile on SEDAR (www.sedar.com) and on EDGAR
(www.sec.gov) under cover of Form 40-F, as well as subsequent
filings that can also be found under our profile.
Scientific and technical information in this quarterly report
regarding our coal properties, which for this purpose does not
include the discussion under “Elk Valley Water Management Update”
was reviewed, approved and verified by Jo-Anna Singleton, P.Geo.
and Robin Gold, P.Eng., each an employee of Teck Coal Limited and a
Qualified Person as defined under National Instrument 43-101.
Scientific and technical information in this quarterly report
regarding our other properties was reviewed, approved and verified
by Rodrigo Alves Marinho, P.Geo., an employee of Teck and a
Qualified Person as defined under National Instrument 43-101.
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