Teck (TECK) Q2 2025 Earnings Call Transcript

From what the evidence shows, Image source: The Motley Fool

Additionally, EDTCALL PARTICIPANTSChief Executive Officer — Jonathan PriceChief Financial Officer — Crystal PrystaiSenior Vice President, Base Metals — Shehzad BharmalVice President, jects — Ian AndersonNeed a quote from one of our analysts (which is quite significant)

The ship loader outage at QB’s port facility, announced June 2, is expected to extend into the first half of 2026, forcing the company to rely on alternative shipping arrangements resulting in an incremental impact on net cash unit cost, expected to be apximately $0. 10 per pound

CEO Price acknowledged a fatality at the Antamina mine, noting the event led to a one-week site shutdown in the quarter and lower duction from that operation

In contrast, 10 per pound, with remediation work targeted for completion by year-end

Additionally, Moreover, 4 billion (raised from a prior CAD1, amid market uncertainty. 8 billion–CAD2 billion estimate) due to contingencies, inflation, and accelerated curement, as announced with the sanction of the Highland Valley Copper mine life extension ject

Sustainability and Safety: High-potential incident frequency rate for controlled operations was 0. 09 in the first half of 2025, below the 2024 performance of 0. 12; recognized for the nineteenth consecutive year as a "Best 50 Corporate Citizen" in Canada by Corporate Knights in 2025

Growth jects gress: Sanction readiness targeted by year-end for both Zafranal (Peru) and San Nicolas (Mexico) copper jects; Zafranal is more advanced in permitting and construction readiness

Additionally, However, QB Optimization Potential: Mill optimization and debottlenecking could increase throughput by 15%-25%, according to company statements; planning underway with DIR permit application expected in the second half of the year

Nevertheless, SUMMARYTeck Resources (TECK -8. 99%) reported a year-over-year increase in adjusted EBITDA for Q2 2025 and highlighted a robust capital return gram, with apximately 70% of its authorized buyback executed as of Q2 2025 (fascinating analysis), considering recent developments

Strategic ject advances were noted across the portfolio, with Zafranal and San Nicolas targeted for sanction readiness and all major labor agreements now secured through multi-year terms

CEO Price stated, The ject extends the core assets to 2046, with average annual copper duction of 132,000 tonnes over the life of the mine

Ship loader repairs at the QB port are as of Q2 2025, with capital cost estimates pending full damage assessment, and insurance recovery is being pursued, according to Anderson: we do have insurance coverage, and that includes interruption

The planned transition to steady-state operations at QB will mark a one-time milestone ing completion of TMF work, after which long-term duction is expected to stabilize, with the company targeting design rates by the end of 2025, amid market uncertainty. “showcase [QB] as a tier-one asset. ”CFO Prystai reported, “We have now $2. 2 billion or apximately 70% of our $3

INDUSTRY GLOSSARYTMF (Tailings Management Facility): An engineered structure for storing the byducts (tailings) of mining operations, critical for operational continuity and environmental compliance

However, QB (Quebrada Blanca): Teck Resources Limited’s large-scale copper mining complex in Chile, subject to expansion and operational ramp-up

However, MLE (Mine Life Extension): A capital ject that extends the operational life of an existing mine through new development and infrastructure (which is quite significant)

DIR (Declaración de Impacto Ambiental): The environmental impact statement submission required for permitting new or expanded mining activities in certain jurisdictions

Full Conference Call TranscriptJonathan Price: Okay

Thank you, Emma, and good morning, everyone

Now before we get into the quarter, I would to take a moment to acknowledge the incident earlier on Tuesday at one of our peers' operations in the Northwest of our vince of British Columbia (noteworthy indeed)

Additionally, Our thoughts are with the three workers that remain in the underground work area as well as their families, friends, and colleagues, and the emergency response teams

Moreover, And we hope for their safe and speedy rescue

Nevertheless, Overall, we are advancing our strategy of copper growth, while returning cash to holders

On the other hand, We had strong performance in our zinc segment, with Red Dog sales above our guidance range and a significant imvement in our zinc net cash unit costs

As well as another quarter of fitability and cash generation at Trail

Across our established operations, duction is on track to meet our annual guidance (something worth watching), amid market uncertainty

On the other hand, Whilst the team is working hard to achieve this, we acknowledge that there could be risk from possible external factors or, of course, any delay from the TMS development work

Earlier today, we announced that the board has sanctioned the Highland Valley Copper mine life extension ject in British Columbia for construction

This's foundational to our strategy to double copper duction by the end of the decade

Given the strong demand for copper as an energy transition metal, the ject will generate compelling returns

However, With an IRR far surpassing our cost of capital and secure access to this critical mineral for the next two decades

However, Finally, we are maintaining the resilience of the

Including through our strong balance sheet which enables us to navigate uncertainty and continue to create value

Nevertheless, Moreover, Turning to slide five

We continue to be committed to safety and sustainability, in today's market environment

Across the operations that we control, our high potential incident frequency rate remained low in the first half of the year at 0, in this volatile climate

I would to take a moment to acknowledge the fatality that occurred on April 22 at Antamina in which Teck Resources Limited holds a non-controlling interest (which is quite significant)

We're deeply saddened by this event and offer our condolences to the family, friends, and colleagues of the deceased

Teck Resources Limited fully participated in the investigation, which was led by the team at Antamina, and learnings will be d across our company and across the sector

It's the nineteenth consecutive year that we've received this recognition, which is based on an evaluation of up to 25 sustainability indicators including board diversity, resource efficiency, financial management, sustainable revenue, and sustainable investment

Furthermore, So now turning to QB on slide six (an important development)

Additionally, QB's second quarter performance was impacted by the TMF development work

We're advancing multiple TMF development initiatives to imve sand drainage rates and accelerate mechanical movements of sand to achieve steady-state operation

Furthermore, This work impacted mill online time in the quarter as previously disclosed

The planned post-QB2 construction pace of TMF development was based on design assumptions for sand drainage rates that have subsequently ven unachievable (noteworthy indeed), considering recent developments

Modifications to cyclones alone, while showing an imvement in sand drainage rates, were not sufficient to allow us to fully catch up on TMF development work in the quarter (an important development)

As a result, we are implementing a range of additional measures to imve sand drainage rates and accelerate the mechanical movements of sand

Including enhanced sand placement niques and optimization of the grind size concentrator

Importantly, the TMF development work and the transition from starter dam to regular sound lifts is a one-time milestone (fascinating analysis)

Furthermore, Related to the ramp-up of the operation

When it is, the TMS development work will be behind us for the life of the facility

Nevertheless, While the TMS development work will continue in Q3, we continue to target design rates

Additionally, By the end of the year (fascinating analysis)

Throughput increased from the prior quarter, and we expect to see consistent grades of apximately 0

Work is to imve recoveries by year-end, which will also be helped by more consistent mill run time

This analysis suggests that outage of the ship loader at QB's port facility announced on June 2 is expected to be ext into the first half of 2026

We have been successfully shipping concentrate through our alternative port arrangements and have maximized shipments to local customers so there has been no duction impact (which is quite significant)

Nevertheless, 10 per pound

We had a good step up in the molybdenum duction as a result of some key cess imvement initiatives implemented during the quarter (noteworthy indeed)

We expect to continue to see molybdenum duction imvements and we continue to target design throughput and recoveries at the moly plant by year-end (remarkable data)

Once we have the TMF development work, QB will be able to run at steady state, in light of current trends

Showcasing it as a tier-one asset will be a cornerstone of Teck Resources Limited's portfolio for generations

We continue to work on defining the most capital-efficient and value-accretive path for future growth of QB, in this volatile climate

The foundation of QB is its large long-life deposit, which can support multiple expansions

Furthermore, And it offers multiple potential paths to create value for our holders including assessing adjacencies or synergies with Coyoac (this bears monitoring), given the current landscape

What the data shows is operation also has the advantage of a very low strip ratio (quite telling)

Which enabled competitive all-in sustaining costs

We successfully achieved completion testing requirements under QB2. 5 dollars ject finance facility earlier this year, which vides independent verification confirming the robustness of design, construction, and operational capacity, given current economic conditions

Additionally, Taking all these factors into account, we are well positioned to generate significant future cash flows from this Tier one asset for decades to come (an important development)

Turning to the mine life extension at Highland Valley on slide seven

Highland Valley is Canada's largest copper mine, and a core asset in our portfolio

And we are excited to announce the sanction of the Highland Valley Copper mine life extension or HPC MLE ject, considering recent developments