• Cash Proceeds from Sale: $7.3 billion from the sale of the steelmaking coal business.
• Adjusted EBITDA: $1.7 billion, a 13% increase from the same period last year.
• Record Copper Production: 51,300 tonnes in the second quarter, up from 43,300 tonnes in the previous quarter.
• Gross Profit from QB: $284 million before depreciation and amortization in the first half of the year.
• Revised Copper Production Guidance: 200,000 to 235,000 tonnes for the full year.
• Revised Molybdenum Production Guidance: 1,800 to 2,400 tonnes for the full year.
• Net Cash Unit Cost Guidance for QB: Revised to USD2.25 to USD2.55 per pound.
• Shareholder Returns: $346 million returned in the quarter, including $282 million in share buybacks and $64 million in dividends.
• Realized Copper Price: USD4.44 per pound in the second quarter.
• Debt Reduction Program: Up to USD2 billion, with USD1.4 billion of public notes purchased.
• Net Cash Position: CAD2.9 million following the sale of EVR.

• Warning! GuruFocus has detected 4 Warning Sign with TECK.

Release Date: July 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Teck Resources Ltd (NYSE:TECK) successfully closed the sale of its steelmaking coal business, receiving $7.3 billion in cash proceeds, positioning the company to focus on energy transition metals.
• The company reported a 13% increase in adjusted EBITDA to $1.7 billion, driven by record quarterly copper production.
• Teck Resources Ltd (NYSE:TECK) achieved significant milestones in its copper growth portfolio, including advancements in the permitting processes for the Highland Valley Mine Life Extension and San Nicolas.
• The company announced the largest cash return to shareholders in its history, with approximately $3.5 billion in total share buybacks and dividends.
• Teck Resources Ltd (NYSE:TECK) is on track to become a top 10 global copper producer, with plans to double copper production and further increase it by 30% starting as early as 2028.

Negative Points

• Teck Resources Ltd (NYSE:TECK) revised its full-year copper and molybdenum production guidance downward due to lower than planned ore grades and mine access issues.
• The company experienced higher operating costs, particularly in the QB operations, due to alternative shipping arrangements and ramp-up of the molybdenum plant.
• There were recurring failures with a pulley in a key overland conveyor at QB, although these have largely been mitigated.
• The company's net cash unit cost guidance for QB was revised upward, reflecting increased costs.
• Teck Resources Ltd (NYSE:TECK) faced challenges with geotechnical issues affecting access to higher-grade areas, impacting production guidance for the second half of the year.

Q & A Highlights

Q: Can you provide more details on the localized geotechnical issue at QB2 and its impact on copper grades for the second half of the year? A: Jonathan Price, CFO, explained that the geotechnical issue is related to access to higher-grade areas due to a ramp issue. Shehzad Bharmal, SVP of Operations, added that the issue is being addressed with reorientation and additional support, expecting minimal impact on 2025 and 2026 grades. The second half of 2024 will see slightly lower grades, but full access is expected by early next year.

Q: Regarding your near-term growth projects, in what order will they be prioritized, and what are the key attributes for ranking them? A: Jonathan Price, CFO, stated that projects are managed as a portfolio with different risk-return characteristics. Highland Valley's mine life extension is prioritized due to its timeline, with Zafranal and San Nicolas following, depending on study outcomes. The focus is on balancing risk and reward.

Q: Can you clarify the capital requirements for sustaining capital and capitalized stripping, and how does this relate to development CapEx for 2025? A: Jonathan Price, CFO, mentioned that the $1 billion to $1.2 billion range is for sustaining capital and capitalized stripping. Development CapEx for projects in advanced stages is around $500 million annually, expected to continue through 2025.

Q: What are the key findings from the independent review of the QB project, and do you have the right team in place for future growth? A: Jonathan Price, CFO, confirmed that Teck is building a world-class project management team. Karla Mills, Head of Project, highlighted learnings such as increased geotechnical drilling and conservative assumptions on labor productivity and inflation. These are being integrated into future projects.

Q: What is the outlook for the zinc market, considering current TC/RC levels and global smelter output? A: Ian Anderson, Chief Commercial Officer, noted that zinc is in deficit due to mine shutdowns and disruptions. Low TCs reflect this deficit, with stable premiums in finished metal. A slight deficit is expected for 2024 and the first half of 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.