Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (Teck)
today announced its unaudited fourth quarter results for 2022.
"We achieved a number of financial performance records in 2022,
driven by the continued strong commodity price environment and the
resilience of our teams, who successfully managed through
short-term production challenges in the fourth quarter,” said
Jonathan Price, CEO. “We are well positioned to execute on our
strategic priorities in 2023 and expect a transformational year
with the commissioning and ramp-up of our QB2 project."
Highlights
- Adjusted profit attributable to shareholders1 of $558 million
or $1.09 per share in Q4 2022 and a record $4.9 billion or $9.25
per share for the year.
- Profit from continuing operations attributable to shareholders
of $247 million or $0.48 per share in Q4 2022 and a record $4.1
billion or $7.77 per share for the year.
- Adjusted EBITDA1 was $1.3 billion in Q4 2022 and a record $9.6
billion for the year. Profit before tax from continuing operations
was $594 million in Q4 2022 and $6.6 billion for the year.
- We generated cash flows from operations of $8.0 billion in the
year, ending the year with a cash balance of $1.9 billion. Our
liquidity as at February 20, 2023 is $8.2 billion, including $2.8
billion of cash.
- We have continued to de-lever our balance sheet, purchasing and
redeeming US$1.0 billion of our notes between January 2022 and
February 2023.
- On February 18, 2023, the Board approved a $0.625 per share
dividend, including a $0.50 per share supplemental dividend,
payable on March 31, 2023 to shareholders of record on March 15,
2023, and authorized up to a $250 million share buyback.
- At QB2, we are in commissioning of Line 1 at the concentrator
and making final preparations to feed ore to the mills.
- Our QB2 capital cost guidance remains unchanged from our
previous disclosures.
- In Q4 2022, our copper business unit gross profit declined by
44% from a year ago due to a decrease in the average realized
copper price to US$3.72 per pound and lower sales volumes.
- In Q4 2022, our zinc business unit gross profit decreased by
74% from a year ago primarily due to a decline in the average
realized zinc price to US$1.38 per pound and the impact of the
extended major maintenance activities on the KIVCET boiler at our
Trail Operations.
- Gross profit in our steelmaking coal business unit decreased by
42% in Q4 2022 compared to the same period last year due to a
decrease of 21% in realized steelmaking coal prices, a two-month
plant outage at our Elkview Operations and the impact of extreme
weather events in December on our logistics chain.
- We completed the sale of our interest in Fort Hills to Suncor
Energy Inc. (Suncor) and TotalEnergies EP Canada Ltd.
(TotalEnergies) for aggregate gross proceeds of approximately $1
billion in cash on February 2, 2023. We do not anticipate any tax
payable on the disposal.
- Our High Potential Incident Frequency for the full year 2022
was the lowest ever at a rate of 0.10, down 23% compared to
2021.
- We were named to the S&P Dow Jones Sustainability World
Index for the 13th consecutive year and recognized as the #1
company in the Metals and Mining sector. We were recognized in
January as one of the 2022 Global 100 Most Sustainable Corporations
by Corporate Knights.
- Teck Resources Limited announced today the reorganization of
its business to separate Teck into two independent, publicly-listed
companies: Teck Metals Corp. and Elk Valley Resources Ltd. We also
announced a proposed six-year sunset for the multiple voting rights
attached to the Class A common shares of Teck. Please refer to our
separate news releases with respect to these matters.
Note:
- This is a non-GAAP financial measure or ratio. See “Use of
Non-GAAP Financial Measures and Ratios” for further
information.
Financial Summary Q4 2022
Financial Metrics(CAD$ in millions, except per
share data) |
Q4 2022 |
Q4 2021 |
Revenue |
$ |
3,140 |
$ |
4,196 |
Gross profit |
$ |
1,154 |
$ |
2,114 |
Gross profit before
depreciation and amortization1 |
$ |
1,538 |
$ |
2,489 |
Profit from continuing
operations before taxes |
$ |
594 |
$ |
2,246 |
Adjusted EBITDA1 |
$ |
1,333 |
$ |
2,521 |
Profit from continuing
operations attributable to shareholders |
$ |
247 |
$ |
1,534 |
Adjusted profit attributable
to shareholders1 |
$ |
558 |
$ |
1,377 |
Basic earnings per share from
continuing operations |
$ |
0.48 |
$ |
2.88 |
Diluted earnings per share
from continuing operations |
$ |
0.47 |
$ |
2.83 |
Adjusted basic earnings per
share1 |
$ |
1.09 |
$ |
2.58 |
Adjusted diluted earnings per share1 |
$ |
1.07 |
$ |
2.54 |
Note:
- 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
- QB2 is in commissioning of Line 1 at the concentrator and
making final preparations to feed ore to the mills. Our focus
continues to be on system completion and handover as part of the
continuous commissioning and ramp-up plan through 2023.
- Our QB2 construction capital cost guidance remains unchanged
from our prior disclosure.
- We continue to expect QB2 to reach full capacity by end of
2023. As a result of recent changes to IFRS, we are required to
recognize sales proceeds and related costs associated with products
sold during the ramp-up and commissioning phase of QB2 through
earnings rather than capitalizing these amounts. We expect this to
increase our unit operating costs1 for QB2 during ramp-up. Once QB2
is running at full production rates, we expect the average net cash
unit costs1 will be between US$1.40 per pound and US$1.60 per
pound.
- Copper production from 2024 to 2026 is expected to be between
545,000 and 640,000 tonnes per year, including QB2.
Note:1. This is a non-GAAP financial measure or
ratio. See “Use of Non-GAAP Financial Measures and Ratios” for
further information.
Sustainability leadership
- Teck is currently ranked #1 in the Metals and Mining Industry
on the S&P Corporate Sustainability Assessment, #3 in the
Diversified Metals industry by Sustainalytics, #1 among North
America Metals and Mining Companies by Moody's ESG and ranked AA by
MSCI for ESG performance.
- We announced a long-term clean power purchase agreement with
AES Andes to provide 1,069 Gigawatt hours per year of energy that
will result in QB2 having 100% clean renewable power starting in
2025.
Guidance
- On January 30, 2023, we disclosed our 2023 guidance. Guidance
disclosed in this news release is unchanged from our previous
disclosures.
- Summary guidance for 2023 is outlined below and our usual
guidance tables, including three-year production guidance, can be
found on pages 27 — 32 of Teck’s full fourth quarter results for
2022 at the link below.
2023 Guidance – Summary |
Current |
Production
Guidance |
|
Copper (000’s tonnes) |
390 - 445 |
Zinc (000’s tonnes) |
645 - 685 |
Refined zinc (000’s tonnes) |
270 - 290 |
Steelmaking coal (million tonnes) |
24.0 - 26.0 |
Sales Guidance –
Q1 2023 |
|
Red Dog zinc in concentrate sales (000’s tonnes) |
165 - 185 |
Steelmaking coal sales (million tonnes) |
6.0 - 6.4 |
Unit Cost
Guidance |
|
Copper net cash unit costs (US$/lb.)1 |
1.60 - 1.80 |
Zinc net cash unit costs (US$/lb.)1 |
0.50 - 0.60 |
Steelmaking coal adjusted site cash cost of sales
(CAD$/tonne)1 |
88 - 96 |
Steelmaking coal transportation costs (CAD$/tonne) |
45 - 48 |
Note:
- 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 fourth quarter results for
2022.
WEBCAST
Teck will host an Investor Conference Call to discuss its
Q4/2022 financial results at 8:00 AM Eastern time, 5:00 AM Pacific
time, on February 21, 2023. 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 Attributable to Shareholders and Adjusted Profit
Attributable to Shareholders
|
Three months ended December 31, |
Year endedDecember 31, |
(CAD$ in millions) |
|
20221 |
|
|
20212 |
|
|
20224 |
|
|
20212 |
|
|
|
|
|
|
Profit attributable to
shareholders1 |
$ |
247 |
|
$ |
1,487 |
|
$ |
4,089 |
|
$ |
2,868 |
|
Add (deduct) on an after-tax
basis: |
|
|
|
|
Asset impairment |
|
— |
|
|
(150 |
) |
|
952 |
|
|
(150 |
) |
Loss on debt purchase |
|
(4 |
) |
|
— |
|
|
42 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
7 |
|
|
(16 |
) |
|
115 |
|
|
124 |
|
Environmental costs |
|
203 |
|
|
19 |
|
|
99 |
|
|
79 |
|
Inventory write-downs (reversals) |
|
(2 |
) |
|
8 |
|
|
36 |
|
|
2 |
|
Share-based compensation |
|
67 |
|
|
32 |
|
|
181 |
|
|
94 |
|
Commodity derivatives |
|
(18 |
) |
|
10 |
|
|
(25 |
) |
|
15 |
|
Loss from discontinued operations for the nine months ended
September 30, 20223 |
|
— |
|
|
— |
|
|
(791 |
) |
|
— |
|
Other |
|
58 |
|
|
(13 |
) |
|
175 |
|
|
25 |
|
|
|
|
|
|
Adjusted profit
attributable to shareholders |
$ |
558 |
|
$ |
1,377 |
|
$ |
4,873 |
|
$ |
3,057 |
|
|
|
|
|
|
Basic earnings per
share1 |
$ |
0.48 |
|
$ |
2.79 |
|
$ |
7.77 |
|
$ |
5.39 |
|
Diluted earnings per
share1 |
$ |
0.47 |
|
$ |
2.74 |
|
$ |
7.63 |
|
$ |
5.31 |
|
Adjusted basic
earnings per share |
$ |
1.09 |
|
$ |
2.58 |
|
$ |
9.25 |
|
$ |
5.74 |
|
Adjusted diluted
earnings per share |
$ |
1.07 |
|
$ |
2.54 |
|
$ |
9.09 |
|
$ |
5.66 |
|
|
|
|
|
|
Notes:
- Amounts for the three months and year ended December 31, 2022
are for continuing operations only.
- Amounts for the three months and year ended December 31, 2021
are as previously reported.
- Adjustment required to remove the effect of discontinued
operations for the nine months ended September 30, 2022.
- Adjustments for the year ended December 31, 2022 are the nine
months ended September 30, 2022 as previously reported plus the
three months ended December 31, 2022 for continuing
operations.
Reconciliation of Basic Earnings per share to Adjusted
Basic Earnings per share
|
Three months ended December 31, |
Year endedDecember 31, |
(Per share amounts) |
|
20221 |
|
|
20212 |
|
|
20224 |
|
|
20212 |
|
|
|
|
|
|
Basic earnings per
share1 |
$ |
0.48 |
|
$ |
2.79 |
|
$ |
7.77 |
|
$ |
5.39 |
|
Add (deduct): |
|
|
|
|
Asset impairment |
|
— |
|
|
(0.28 |
) |
|
1.81 |
|
|
(0.28 |
) |
Loss on debt purchase |
|
(0.01 |
) |
|
— |
|
|
0.08 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
0.01 |
|
|
(0.03 |
) |
|
0.22 |
|
|
0.23 |
|
Environmental costs |
|
0.40 |
|
|
0.04 |
|
|
0.19 |
|
|
0.15 |
|
Inventory write-downs (reversals) |
|
— |
|
|
0.01 |
|
|
0.07 |
|
|
— |
|
Share-based compensation |
|
0.13 |
|
|
0.06 |
|
|
0.34 |
|
|
0.18 |
|
Commodity derivatives |
|
(0.04 |
) |
|
0.02 |
|
|
(0.05 |
) |
|
0.03 |
|
Loss from discontinued operations for the nine months ended
September 30, 20223 |
|
— |
|
|
— |
|
|
(1.51 |
) |
|
— |
|
Other |
|
0.12 |
|
|
(0.03 |
) |
|
0.33 |
|
|
0.04 |
|
|
|
|
|
|
Adjusted basic
earnings per share |
$ |
1.09 |
|
$ |
2.58 |
|
$ |
9.25 |
|
$ |
5.74 |
|
|
|
|
|
|
Reconciliation of Diluted Earnings per share to Adjusted
Diluted Earnings per share
|
Three months ended December 31, |
Year ended December 31, |
(Per share amounts) |
|
20221 |
|
|
20212 |
|
|
20224 |
|
|
20212 |
|
|
|
|
|
|
Diluted earnings per
share1 |
$ |
0.47 |
|
$ |
2.74 |
|
$ |
7.63 |
|
$ |
5.31 |
|
Add (deduct): |
|
|
|
|
Asset impairment |
|
— |
|
|
(0.28 |
) |
|
1.78 |
|
|
(0.28 |
) |
Loss on debt purchase |
|
(0.01 |
) |
|
— |
|
|
0.08 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
0.01 |
|
|
(0.03 |
) |
|
0.21 |
|
|
0.23 |
|
Environmental costs |
|
0.39 |
|
|
0.04 |
|
|
0.18 |
|
|
0.15 |
|
Inventory write-downs (reversals) |
|
— |
|
|
0.01 |
|
|
0.07 |
|
|
— |
|
Share-based compensation |
|
0.13 |
|
|
0.06 |
|
|
0.34 |
|
|
0.18 |
|
Commodity derivatives |
|
(0.03 |
) |
|
0.02 |
|
|
(0.05 |
) |
|
0.03 |
|
Loss from discontinued operations for the nine months ended
September 30, 20223 |
|
— |
|
|
— |
|
|
(1.48 |
) |
|
— |
|
Other |
|
0.11 |
|
|
(0.02 |
) |
|
0.33 |
|
|
0.04 |
|
|
|
|
|
|
Adjusted diluted
earnings per share |
$ |
1.07 |
|
$ |
2.54 |
|
$ |
9.09 |
|
$ |
5.66 |
|
|
|
|
|
|
Notes:
- Amounts for the three months and year ended December 31, 2022
are for continuing operations only.
- Amounts for the three months and year ended December 31, 2021
are as previously reported.
- Adjustment required to remove the effect of discontinued
operations for the nine months ended September 30, 2022.
- Adjustments for the year ended December 31, 2022 are the nine
months ended September 30, 2022 as previously reported plus the
three months ended December 31, 2022 for continuing
operations.
Reconciliation of EBITDA and Adjusted
EBITDA
|
Three months ended December 31, |
Year ended December 31, |
(CAD$ in millions) |
|
20221 |
|
|
20212 |
|
|
20224 |
|
|
20212 |
|
|
|
|
|
|
Profit before taxes1 |
$ |
594 |
|
$ |
2,208 |
|
$ |
6,565 |
|
$ |
4,532 |
|
Finance expense net of finance
income |
|
23 |
|
|
53 |
|
|
150 |
|
|
210 |
|
Depreciation and amortization |
|
384 |
|
|
404 |
|
|
1,674 |
|
|
1,583 |
|
|
|
|
|
|
EBITDA |
|
1,001 |
|
|
2,665 |
|
|
8,389 |
|
|
6,325 |
|
|
|
|
|
|
Add (deduct): |
|
|
|
|
Asset impairment |
|
— |
|
|
(215 |
) |
|
1,234 |
|
|
(215 |
) |
Loss on debt purchase |
|
(5 |
) |
|
— |
|
|
58 |
|
|
— |
|
QB2 variable consideration to IMSA and ENAMI |
|
(13 |
) |
|
(27 |
) |
|
188 |
|
|
141 |
|
Environmental costs |
|
272 |
|
|
26 |
|
|
128 |
|
|
108 |
|
Inventory write-downs (reversals) |
|
(3 |
) |
|
11 |
|
|
50 |
|
|
1 |
|
Share-based compensation |
|
88 |
|
|
43 |
|
|
236 |
|
|
125 |
|
Commodity derivatives |
|
(24 |
) |
|
15 |
|
|
(35 |
) |
|
22 |
|
Loss from discontinued operations for the nine months ended
September 30, 20223 |
|
— |
|
|
— |
|
|
(811 |
) |
|
— |
|
Other |
|
17 |
|
|
3 |
|
|
131 |
|
|
66 |
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
1,333 |
|
$ |
2,521 |
|
$ |
9,568 |
|
$ |
6,573 |
|
|
|
|
|
|
Notes:
- Amounts for the three months and year ended December 31, 2022
are for continuing operations only.
- Amounts for the three months and year ended December 31, 2021
are as previously reported.
- Adjustment required to remove the effect of discontinued
operations for the nine months ended September 30, 2022.
- Adjustments for the year ended December 31, 2022 are the nine
months ended September 30, 2022 as previously reported plus the
three months ended December 31, 2022 for continuing
operations.
Reconciliation of Gross Profit Before Depreciation and
Amortization
|
Three months ended December 31, |
Year ended December 31, |
(CAD$ in millions) |
|
2022 |
|
|
2021 |
|
2022 |
|
|
2021 |
|
|
|
|
|
Gross profit |
$ |
1,154 |
|
$ |
2,114 |
$ |
8,571 |
|
$ |
5,214 |
Depreciation and amortization |
|
384 |
|
|
375 |
|
1,674 |
|
|
1,487 |
|
|
|
|
|
Gross
profit before depreciation and amortization |
$ |
1,538 |
|
$ |
2,489 |
$ |
10,245 |
|
$ |
6,701 |
|
|
|
|
|
Reported as: |
|
|
|
|
Copper |
|
|
|
|
Highland Valley Copper |
$ |
135 |
|
$ |
195 |
$ |
738 |
|
$ |
883 |
Antamina |
|
220 |
|
|
284 |
|
1,021 |
|
|
992 |
Carmen de Andacollo |
|
15 |
|
|
44 |
|
73 |
|
|
209 |
Quebrada Blanca |
|
(3 |
) |
|
13 |
|
8 |
|
|
42 |
Other |
|
(3 |
) |
|
— |
|
(3 |
) |
|
— |
|
|
|
|
|
|
|
364 |
|
|
536 |
|
1,837 |
|
|
2,126 |
|
|
|
|
|
Zinc |
|
|
|
|
Trail Operations |
|
(50 |
) |
|
10 |
|
(18 |
) |
|
84 |
Red Dog |
|
179 |
|
|
273 |
|
1,060 |
|
|
822 |
Other |
|
— |
|
|
2 |
|
2 |
|
|
12 |
|
|
|
|
|
|
|
129 |
|
|
285 |
|
1,044 |
|
|
918 |
|
|
|
|
|
Steelmaking coal |
|
1,045 |
|
|
1,668 |
|
7,364 |
|
|
3,657 |
|
|
|
|
|
Gross profit before
depreciation and amortization |
$ |
1,538 |
|
$ |
2,489 |
$ |
10,245 |
|
$ |
6,701 |
|
|
|
|
|
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 proposed separation of our business into two
independent, publicly-listed companies; terms and conditions of the
Separation, including the expected distribution of EVR shares and
cash, available consideration election for shareholders and the
Transition Capital Structure to be retained by Teck; the timing for
completion of the Separation; the tax and accounting treatment for
the Separation; the proposed transaction to eliminate the multiple
voting rights attached to the Class A common shares; expectation
that QB2 will be a long-life, low-cost operation with major
expansion potential; QB2 capital cost guidance and development
capital spending in 2023; estimated timing of first copper from
Line 1 at QB2; expectation that QB2 will be commissioned in 2023
and production will ramp-up during the year; timing of progress and
milestones at our QB2 project, including system completion and
handover; expectation that QB2 will have 100% renewable power
beginning in 2025; execution of our Copper Growth strategy;
expectations regarding our QBME project, including the impact of
the project and associated timing expectations for permitting and
production; the closing of the transaction with Agnico Eagle Mines
Limited; timing of the Zafranal project SEIA, the San Nicolás
project feasibility study, the Highland Valley Copper feasibility
study and environmental permitting for HVC 2040, the Galore Creek
project prefeasibility study; timing for recovery of delayed fourth
quarter sales of steelmaking coal; timing for construction of the
Elkview AMC project and commencement of mining operations in the
Harmer area; the expectation that the Elkview AMC Project will
provide high quality steelmaking coal supporting a nine million
tonne per annum rate with top quartile operating margins; timing
and ability to advance the Fording River Extension; timing of
advancement and completion of the North Line Creek Phase 1, Fording
River North 1 Phase 3 and Fording River North 2 Phase 1 SRFs;
expectations for stabilization and reduction of the selenium trend
in the Elk Valley; expectations for total water treatment capacity;
projected spending, including capital and operating costs, from
2023-2024 on water treatment, water management and incremental
measures associated with the Direction; liquidity and availability
of borrowings under our credit facilities; our ability to obtain
additional credit for posting security for reclamation at our
sites; 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; our expectations
regarding inflationary pressures and increased key input costs,
including profit based compensation and royalties; expectations of
additional Class B subordinate voting share buybacks; 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.
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, zinc and steelmaking coal
and our other metals and minerals, as well as oil, natural gas and
other petroleum products; the timing of the receipt of permits and
other regulatory and governmental approvals for our development
projects and other operations, including mine extensions; our
ability to complete the Separation, including obtaining receipt of
required approvals from the court, shareholders and the Toronto
Stock Exchange: the possibility that the Separation and the
transactions with NSC and POSCO will not be completed on the terms
and conditions, or on the timing, currently contemplated, and that
the transactions may not be completed at all, due to a failure to
obtain or satisfy, in a timely manner or otherwise, required
shareholder, regulatory and court approvals and other conditions of
closing necessary to complete the transactions or for other
reasons; the possibility of adverse reactions or changes in
business relationships resulting from the announcement or
completion of the Separation; risk that market or other conditions
are no longer favourable to completing the Separation; risks
relating to business disruption during the pendency of or following
the Separation and diversion of management time; risks relating to
tax, legal and regulatory matters; credit, market, currency,
operational, commodity, liquidity and funding risks generally and
relating specifically to the Separation, including changes in
economic conditions, interest rates or tax rates; and other risks
inherent to our business and/or factors beyond Teck’s control which
could have a material adverse effect on Teck or the ability to
consummate the Separation and transactions with NSC and POSCO; our
ability to obtain the required approvals for the proposed
transaction to eliminate the multiple votes rights attached to the
Class A common shares; our ability to satisfy the closing
conditions for our transaction with Agnico Eagle; positive results
from the studies on our expansion and development projects; our
ability to secure adequate transportation, including rail 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; availability
of letters of credit and other forms of financial assurance
acceptable to regulators for reclamation and other bonding
requirements; 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, Canadian dollar-Chilean Peso 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; closure costs; 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, licenses and
leases in a timely manner; our ongoing relations with our employees
and with our business and joint venture partners; and the impacts
of the COVID-19 pandemic on our operations and projects and on
global markets. 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.
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 are based on a CLP/USD rate range of 900 to 975, as
well as there being no further 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 construction, commissioning and
ramp-up 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. Assumptions regarding the
costs and benefits of our projects include assumptions that the
relevant project is constructed, commissioned and operated in
accordance with current expectations. Expectations regarding our
operations are based on numerous assumptions regarding the
operations. Our Guidance tables include disclosure and footnotes
with further assumptions relating to our guidance, and assumptions
for certain other forward-looking statements accompany those
statements within the document. Statements concerning future
production costs or volumes are based on numerous assumptions
regarding operating matters and on assumptions that demand for
products develops as anticipated, that customers and other
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 COVID-19 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.
Statements regarding anticipated steelmaking coal sales volumes and
average steelmaking coal prices depend on timely arrival of vessels
and performance of our steelmaking coal-loading facilities, as well
as the level of spot pricing sales. 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, the failure to obtain required
approvals in connection with the Separation; adverse reactions or
changes in business relationships resulting from the announcement
or completion of the Separation; changes in tax, legal or
regulatory matters or market or other condition such that it
conditions are no longer favourable to completing the Separation;
business disruptions prior to or following the Separation; changes
to our business and/or factors beyond Teck’s control that could
have a material adverse effect on Teck or the ability or desire to
consummate the Separation and transactions with NSC and POSCO; the
possibility that the proposed transaction to eliminate the multiple
voting rights attached to the Class A common shares may not be
completed on the terms and conditions, or on the timing, currently
contemplated, or at all, including due to the failure to obtain or
satisfy, in a timely manner or otherwise, required shareholder and
other approvals and other conditions of closing necessary; 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 labour, materials and equipment, government
action or delays in the receipt of government approvals, changes in
royalty or tax rates, 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 and related 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
or environmental impact assessments; difficulty satisfying the
closing conditions for our transaction with Agnico Eagle; and
changes or further deterioration in general economic conditions.
The amount and timing of capital expenditures is depending upon,
among other matters, being able to secure permits, equipment,
supplies, materials and labour on a timely basis and at expected
costs. 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. Certain of our other operations and projects are operated
through joint arrangements where we may not have control over all
decisions, which may cause outcomes to differ from current
expectations. 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, commissioning and
commercial production is dependent on, among other matters, our
continued ability to advance progress on construction,
commissioning and ramp-up as currently anticipated and 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.
Production at our Red Dog Operations 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. Sales to China may be
impacted by general and specific port restrictions, Chinese
regulation and policies, and normal production and operating risks.
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, assumptions 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, 2022,
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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