Teck Resources Limited Q1 FY2025 earnings call

• Macro Environment: Acknowledged volatility and uncertainty but noted robust fundamentals for copper and zinc. Supply constraints in the industry, but new demand opportunities emerging.
• QB Project: Successfully achieved completion testing under the $2.5 billion project finance facility. Production impacted by extended shutdowns, power outage, and weather. Expect to extend maintenance shutdowns in Q2 and Q3 for tailings facility work but on track for full production ramp-up by year-end.
• Operational Performance: Established operations like Highland Valley, Carmen de Andacollo, and Trail had strong performance. Trail operations generated strong profitability from byproducts.
• Safety and Sustainability: Strong safety performance with high potential incident frequency rate at 0.05. Released 24th annual sustainability report.
• Capital Allocation: Committed to returning cash to shareholders through share buybacks and dividends, with $568 million returned year to date. Well-funded near-term copper projects with disciplined assessment.

Copper Segment

• In Q1 2025, gross profit before depreciation and amortization increased 90% to $704 million. Copper production rose 7% to 106,000 tons. Net cash unit costs improved to $2.04 US per pound. Annual copper production is expected to grow to 490,000 - 565,000 tons with net cash unit costs between $1.65 - $1.95 US per pound.

Zinc Segment

• Profitability in zinc improved significantly with a 79% increase in gross profit before depreciation and amortization to $225 million. Red Dog zinc concentrate sales of 91,000 tons were higher than the quarter's guidance range. Net cash unit cost improved to 59 cents US per pound. Full-year zinc concentrate production guidance remains 525,000 - 575,000 tons, refined zinc production 190,000 - 230,000 tons, and net cash unit costs 45 - 55 cents US per pound.

• Copper: Production expected to grow to 490,000 - 565,000 tons with net cash unit costs $1.65 - $1.95 US per pound.
• Zinc: Production and unit cost guidance unchanged, with zinc concentrate production 525,000 - 575,000 tons, refined zinc 190,000 - 230,000 tons, and net cash unit costs 45 - 55 cents US per pound.
• QB: Production guidance 230,000 - 270,000 tons, net cash unit costs $1.80 - $2.50 US per pound, towards the higher end of guidance.

• Macro Uncertainty: Threat of global economic downturn, geopolitical tensions, inflation, and supply chain disruptions pose risks.
• Trade Tariffs: Potential impact of tariffs and retaliatory trade measures, though not expected to materially impact business currently but could weigh on global economic growth and metals demand.
• QB Project Risks: Delays in tailings facility development impacting production in short term, but no issues with dam integrity.

Q: Questions on QB, pushing back sustainable full production to end of year and impact on Q2 and Q3 outages.

A: Jonathan Price said QB expected to deliver 230,000 - 270,000 tons guidance, with additional tailings work causing Q2 and Q3 outages but confident to end year at steady state.

Q: On next copper project approval in current macro environment and management bandwidth.

A: Jonathan Price said long-term fundamentals for copper and zinc strong, projects smaller in scope, low complexity, manageable for organization.

Q: Feedback on QB independent testing and duration of QB shutdown after power outage.

A: Jonathan Price said no improvement feedback on testing, QB shut down for couple of days with recovery taking couple of days, total around four days.

Q: Zinc sales tariffs and redirection of material.

A: Jonathan Price said no material impact expected from tariffs, commercial team working on options, no inbound import risk.

Q: QB optimization and DEER permit.

A: Jonathan Price said existing permit allows 10% optimization, DEER permit submission in July, approval expected in following July for debottlenecking.

Q: QB stabilization and geotechnical issue.

A: Jonathan Price said geotechnical issue behind us, clays and transition ores affecting recovery, but expecting improvements through year.

Q: Trail profitability and upcoming presidential election impact.

A: Crystal Prystai said Trail profitability to continue with byproduct contribution, Jonathan Price said election expected to have supportive outlook for resource industry in Canada.