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Modelling Workshop – Teck Resources Limited

Teck Resources Limited · Nov 4, 2015 · 145 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Modelling Workshop – Teck Resources Limited – slide 1
    Modelling Workshop November 4, 2015
  2. Modelling Workshop – Teck Resources Limited – slide 2
    Agenda Overview Greg Waller, VP, Investor Relations & Strategic Analysis Base Metal Pricing & Concentrate Contracts Michael Schwartz, Manager, Market Research Base Metal Operations Greg Waller, VP, Investor Relations & Strategic…
  3. Modelling Workshop – Teck Resources Limited – slide 3
    Overview The Value of Our Diversified Business Model Cash Operating Profit YTD Q3 2015 2015 Leverage to Commodities & FX1 Production Unit of Estimated Estimated Guidance2 Change Profit 3 EBITDA3 Copper Coal 27 Mt US1/tonne 21M…
  4. Modelling Workshop – Teck Resources Limited – slide 4
    Overview Cost of Sales Total Cost of Sales1 Transportation Operating Cost Breakdown 19% Labour 42% Supplies 31% Operating Energy 17% Costs Depreciation & Other 10% 47% Amortization 20% Total 100% Concentrate…
  5. Modelling Workshop – Teck Resources Limited – slide 5
    Overview Analyst Estimates Analyst Earnings Estimates 2014 Objectives 0.40 To help model accuracy To reduce variance in 0.30 earnings estimates 0.20 Observations No consistent under or 0.10 over estimation Significant…
  6. Modelling Workshop – Teck Resources Limited – slide 6
    Overview Analyst Revenue Scenarios 2016F Revenue at Current Prices 2016F Revenue at 25% Higher Prices 7 10 Range: 7,200-8150 Range: 8,201-9,438 Mean: 7,599 9 Mean: 8,829 6 8 5 7 Frequency 6 Frequency 4 5 3 4 2 3…
  7. Modelling Workshop – Teck Resources Limited – slide 7
    Overview Interactive Analyst Centre 8
  8. Modelling Workshop – Teck Resources Limited – slide 8
    Overview Production & Site Cost Guidance Actual 2014 Current 2015 Guidance Steelmaking Coal Coal production 26.7 Mt 25-26 Mt Coal site costs C54 /t1 Coal transportation costs C38 /t Combined coal costs C92 /t C83-86 /t Combined…
  9. Modelling Workshop – Teck Resources Limited – slide 9
    Overview Current 2015 Capital Expenditures Guidance Major New Mine Capitalized (M) Sustaining Enhancement Development Sub-total Stripping Total Coal 75 30 - 105 395 500 Copper 200 15 105 320 225 545 Zinc 180 - - 180 60 240 Energy - -…
  10. Modelling Workshop – Teck Resources Limited – slide 10
    Agenda Overview Greg Waller, VP, Investor Relations & Strategic Analysis Base Metal Pricing & Concentrate Contracts Michael Schwartz, Manager, Market Research Base Metal Operations Greg Waller, VP, Investor Relations & Strategic…
  11. Modelling Workshop – Teck Resources Limited – slide 11
    Base Metals Pricing & Concentrate Contracts Basic Concentrate Contract Total Payable Metals xx Less: Deductions Treatment Charges xx Refining Charges xx Total Deductions xx INVOICE VALUE xx 12 Invoice value = our reported…
  12. Modelling Workshop – Teck Resources Limited – slide 12
    Copper Pricing & Concentrate Contracts
  13. Modelling Workshop – Teck Resources Limited – slide 13
    Copper Concentrates Payable Copper Terms Typical Industry Contract Copper Content Copper Payment < 32% 96.5%; subject to minimum deduction of 1 unit, assuming a 28.6% Cu content 32% and < 38% 96.65% 38% 96.75% Payment based…
  14. Modelling Workshop – Teck Resources Limited – slide 14
    Copper Concentrates Payable Silver & Gold Terms Typical Industry Contracts Silver Content In Copper Concentrate Silver Payment < 30 gms/dmt None 30 gms/dmt 90% Gold Content in Copper Concentrate Gold Payment < 1 gms/dmt None 1…
  15. Modelling Workshop – Teck Resources Limited – slide 15
    Copper Concentrates Annual Contract Terms Treatment Charge Refining Charge Price Total TC/RC Year (TC) in US/dmt (RC) in US/lb Part. in US/lb 2006 95 9.5 Yes 24.4 2007 60 6.0 No 15.4/ 2008 45 4.5 No 11.5 2009 75 7.5 No 19.2 2010…
  16. Modelling Workshop – Teck Resources Limited – slide 16
    Copper Concentrates Treatment Charge & Copper Refining Charge (TC/RC) Historic Copper TC/RC 60 TC/RC is a deduction from payable copper 50 includes price participation in 2006 Theoretically represent what it take to 40 convert…
  17. Modelling Workshop – Teck Resources Limited – slide 17
    Copper Concentrates Payable Metals Example Assumptions (Based on typical industry terms) Price (US) Assay / Content Copper (Cu) 5,500 /mt 27% Silver (Ag) 15.00 /tr oz 150 gms/dmt Gold (Au) 1,100.00 /tr oz 2 gms/dmt Payment Per…
  18. Modelling Workshop – Teck Resources Limited – slide 18
    Copper Concentrates Invoice Value Example (US) Total Payable 1,560.50 Less: Deductions Base Treatment Charge 107.00 Refining Charge: Copper 573 payable lbs x 10.7 /lb 61.31 Silver 4.3 payable tr oz x 40 /tr oz 1.72 Gold 0.06…
  19. Modelling Workshop – Teck Resources Limited – slide 19
    Copper Concentrates Total TC/RC Share of Value Total TC/RC as a Percentage of Payable Example 14% Case 12% 10% TC (US/dmt) 8% 6% 4% 2% 5,500 6,000 6,500 7,000 7,500 8,000 8,500 Copper Price (US/t) TC US60/dmt…
  20. Modelling Workshop – Teck Resources Limited – slide 20
    Copper Metal Historic Copper Metal Prices Daily Copper Prices & Stocks 500 1400 450 1200 400 thousand tonnes 350 1000 US/lb 300 800 250 600 200 150 400 100 200 50 0 0 2003 2004 2005 2006 2007 2008 2009 2010…
  21. Modelling Workshop – Teck Resources Limited – slide 21
    Copper Metal Historic Copper Metal Premiums Historic Copper Metal Premium 250 Metal premium is charged by a metal producer to a customer Theoretically to cover the cost of shipping 200 US/tonne metal to a customer (i.e.…
  22. Modelling Workshop – Teck Resources Limited – slide 22
    Zinc Concentrate Contracts
  23. Modelling Workshop – Teck Resources Limited – slide 23
    Zinc Concentrates Payable Zinc & Silver Terms Typical Industry Contracts Zinc Content Zinc Payment < 53.3% Deduct 8 units 53.3% 85% Silver Content In Zinc Concentrate Silver Payment 93.3 gms/dmt (3 tr.oz) None 93.3 gms/dmt (3…
  24. Modelling Workshop – Teck Resources Limited – slide 24
    Zinc Concentrates Annual Contract Terms Benchmark Price Basis Year Treatment Charge In US/t (TC) in US/dmt 2010 272.50 2,500 2011 229.00 2,500 2012 191.00 2,000 2013 211.00 2,000 2014 223.00 2,000 2015 245.00 2,000 Spot…
  25. Modelling Workshop – Teck Resources Limited – slide 25
    Zinc Concentrates Treatment Charge (TC) Historic Zinc TC TC is a deduction from payable zinc 600 Theoretically what it take to convert a tonne of concentrates into metal 500 Market driven/negotiated commercial term 400 Charged…
  26. Modelling Workshop – Teck Resources Limited – slide 26
    Zinc Concentrates Treatment Charge - Price Participation Escalator / Example Pricing Basis Price De-escalator Calculation (US) Participation (US) (US/t) Add escalator Add 9/dmt At 2,300, escalator is 27 base price of 2,000/t…
  27. Modelling Workshop – Teck Resources Limited – slide 27
    Zinc Concentrates Payable Zinc Example Assumptions (Based on typical industry terms) Price (US) Assay / Content Zinc (Zn) 1,800 /mt 55% Silver (Ag) 15.00 /tr.oz 5 tr.oz/dmt Payment Per Dmt (US) Terms Calculation 85% of Zn…
  28. Modelling Workshop – Teck Resources Limited – slide 28
    Zinc Concentrates Invoice Value Example (US) Total Payable 862.50 Less: Deductions Base Treatment Charge 245.00 Price Participation 2,000 - 1,800 = 200 (6.50) (De-escalator) x 3.25/1 = Total Deductions (238.50) INVOICE VALUE (CIF…
  29. Modelling Workshop – Teck Resources Limited – slide 29
    Zinc Concentrates Total TC Share of Value Total TC as a Percentage of Payable 33% Example 31% Case 29% TC (US/dmt) 27% 25% 23% 21% 19% 17% 15% 1,600 1,700 1,800 1,900 2,000 2,100 2,200 Zinc Price (US/t) TC…
  30. Modelling Workshop – Teck Resources Limited – slide 30
    Zinc Metal Historic Zinc Metal Prices Daily Zinc Prices & Stocks 250 1,800 1,600 200 1,400 thousand tonnes 1,200 US/lb 150 1,000 800 100 600 400 50 200 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011…
  31. Modelling Workshop – Teck Resources Limited – slide 31
    Zinc Metal Historic Zinc Metal Premiums Metal premium is charged by a metal producer to a customer Historic Zinc Metal Premiums Theoretically to cover the cost of shipping 400 metal to a customer (i.e. transportation, 350…
  32. Modelling Workshop – Teck Resources Limited – slide 32
    Lead Concentrate Contracts
  33. Modelling Workshop – Teck Resources Limited – slide 33
    Lead Concentrates Payable Lead & Silver Terms Typical Industry Contracts Lead Content Lead Payment 60% Deduct 3 units 60% 95% Silver Content In Lead Concentrate Silver Payment 50 gms/dmt None 50 gms/dmt 95% 34
  34. Modelling Workshop – Teck Resources Limited – slide 34
    Lead Concentrates Annual Contract Terms Benchmark Price Basis Year Treatment Charge In US/t (TC) in US/dmt 2010 220 2,000 2011 230 2,500 2012 215 2,000 2013 215 2,000 2014 215 2,000 2015 223 2,000 Spot 2015 180 Flat No…
  35. Modelling Workshop – Teck Resources Limited – slide 35
    Lead Concentrates Treatment Charge (TC) TC is a deduction from payable lead Historic Lead TC Theoretically what it take to convert a 450 tonne of concentrates into metal 400 Market driven/negotiated commercial term 350 Charged…
  36. Modelling Workshop – Teck Resources Limited – slide 36
    Lead Concentrates Treatment Charge - Price Participation Escalator / Example Pricing Basis Price De-escalator Calculation (US) Participation (US) (US/t) Add escalator Add 6/dmt At 2,500, escalator is 30 base price of 2,000/t…
  37. Modelling Workshop – Teck Resources Limited – slide 37
    Lead Concentrates Payable Lead Example Assumptions (Based on typical industry terms) Price (US) Assay / Content Lead (Pb) 1,800 /mt 54% Silver (Ag) 15.00 /tr oz 455 gms/dmt Payment Per Dmt Terms Calculation (US) 95% of Pb…
  38. Modelling Workshop – Teck Resources Limited – slide 38
    Lead Concentrates Invoice Value Example (US) Total Payable 1,113.00 Less: Deductions Base Treatment Charge 223.00 Price Participation 2,000 - 1,800 = 200 (8.00) (De-escalator) x 4/1 = 13 payable tr oz Silver Refining Charge 15.60…
  39. Modelling Workshop – Teck Resources Limited – slide 39
    Lead Concentrates Total TC Share of Value Total TC as a Percentage of Payable 25% Example 24% Case 23% 22% TC (US/dmt) 21% 20% 19% 18% 17% 16% 15% 1,600 1,700 1,800 1,900 2,000 2,100 2,200 Lead Price (US/t) TC…
  40. Modelling Workshop – Teck Resources Limited – slide 40
    Lead Metal Historic Lead Metal Prices Daily Lead Prices & Stocks 200 500 180 450 160 400 140 350 120 300 100 250 80 200 60 150 40 100 20 50 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LME…
  41. Modelling Workshop – Teck Resources Limited – slide 41
    Lead Metal Historic Lead Metal Premiums Metal premium is charged by a metal producer to a customer Historic Lead Metal Premiums Theoretically to cover the cost of shipping 500 metal to a customer (i.e. transportation, 450…
  42. Modelling Workshop – Teck Resources Limited – slide 42
    Conclusion
  43. Modelling Workshop – Teck Resources Limited – slide 43
    Base Metals Pricing & Concentrate Contracts Things to Keep in Mind We report contained copper, zinc, lead & moly Peers may report payable Copper, zinc and lead refined metals are sold basis LME price, plus a premium The LME cash…
  44. Modelling Workshop – Teck Resources Limited – slide 44
    Base Metals Pricing & Concentrate Contracts Additional Data Sources Wood Mackenzie and CRU both report monthly activity on TC/RCs, TCs and premiums in their monthly monitors for copper, lead & zinc concentrates. CRU also has a…
  45. Modelling Workshop – Teck Resources Limited – slide 45
    Agenda Overview Greg Waller, VP, Investor Relations & Strategic Analysis Base Metal Pricing & Concentrate Contracts Michael Schwartz, Manager, Market Research Base Metal Operations Greg Waller, VP, Investor Relations & Strategic…
  46. Modelling Workshop – Teck Resources Limited – slide 46
    Copper Mines Simplified Models
  47. Modelling Workshop – Teck Resources Limited – slide 47
    Base Metal Operations Overview of Simplified Models for Copper Cathode Producer e.g. Quebrada Blanca Concentrate Producer e.g. Highland Valley Antamina Modelling Issues Ore mix & grades; mine life 48
  48. Modelling Workshop – Teck Resources Limited – slide 48
    Base Metal Operations Production Modelling Ore milled (tonnes) x head grade (%) x recovery (%) = Production (tonnes) 2014 Examples: Highland Valley Red Dog Antamina Copper-only ore 35,107 Copper-zinc ore 15,343 Tonnes milled…
  49. Modelling Workshop – Teck Resources Limited – slide 49
    Base Metal Operations Model Copper Cathode Producer; Quebrada Blanca - Annual 2012 2013 2014 Revenues (C millions) 499 422 375 Sales (000's tonnes) 62.2 55.3 48.9 Reported in our financials Metal Prices & Fx Rate Copper US/lb 3.61…
  50. Modelling Workshop – Teck Resources Limited – slide 50
    Base Metal Operations Model Copper Cathode Producer; Quebrada Blanca - Quarterly Q1 14 Q2 14 Q3 14 Q4 14 2014 Revenues (C millions) 98 92 91 94 375 Sales (000's tonnes) 12.4 12.3 11.9 12.3 48.9 Reported in our financials Metal…
  51. Modelling Workshop – Teck Resources Limited – slide 51
    Base Metal Operations Model Copper Concentrate Producer; Highland Valley - Annual 2012 2013 2014 Revenues (C millions) 1,012.0 882.0 943.0 Metal Prices Copper 3.61 3.32 3.11 Reported in our financials Moly 13.00 10.00 11.50 US/C…
  52. Modelling Workshop – Teck Resources Limited – slide 52
    Base Metal Operations Model Copper Concentrate Producer; Highland Valley - Annual (cont.) 2012 2013 2014 Operating Costs 445 438 484 Distribution Costs 37 34 40 Total Costs 482.0 472.0 524.0 Reported in our financials Operating…
  53. Modelling Workshop – Teck Resources Limited – slide 53
    Base Metal Operations Model Copper Concentrate Producer; Highland Valley - Quarterly Q1 14 Q2 14 Q3 14 Q4 14 2014 Revenues (C millions) 224 266 229 224 943 Metal Prices Copper 3.19 3.08 3.17 3.00 3.11 Reported in our financials Moly…
  54. Modelling Workshop – Teck Resources Limited – slide 54
    Base Metal Operations Model Copper Concentrate Producer; Highland Valley - Quarterly (cont.) Q1 14 Q2 14 Q3 14 Q4 14 2014 Operating Costs 107 121 114 142 484 Distribution Costs 9 11 10 10 40 Total Costs 116 132 124 152 524 Reported…
  55. Modelling Workshop – Teck Resources Limited – slide 55
    Base Metal Operations Antamina Modelling Issues - Ore Mix & Grade 2013 2014 Tonnes milled (000's) Copper-only ore 32,468 69% 35,107 70% Milled ore mix must equal Copper-zinc ore 14,571 31% 15,343 30% reserves mix over mine life…
  56. Modelling Workshop – Teck Resources Limited – slide 56
    Base Metal Operations Antamina Modelling Issues - Mine Life Mineral Reserves At December 31, 2014 Proven Probable Total Tonnes Grade Tonnes Grade Tonnes Grade Ore (000's) (%) (000's) (%) (000's) (%) Mix Copper Operating at 138 ktpd…
  57. Modelling Workshop – Teck Resources Limited – slide 57
    Base Metal Operations Copper Cash Costs 1H 2015 HVC CMA QB CdA DP BU Sales (kt) 67.0 36.3 22.3 35.6 6.8 168.0 Optg Profit Method OP before D&A (CM) 205 200 45 72 0 522 Fx C/US 1.24 1.24 1.24 1.24 1.24 1.24 OP before D&A (USM) 165…
  58. Modelling Workshop – Teck Resources Limited – slide 58
    Base Metal Operations Copper Unit Costs 1H 2015 Excludes Capitalized stripping Sustaining capital 59
  59. Modelling Workshop – Teck Resources Limited – slide 59
    Zinc Mines Simplified Models
  60. Modelling Workshop – Teck Resources Limited – slide 60
    Base Metal Operations Model Zinc Concentrate Producer; Red Dog - Annual 2012 2013 2014 Revenues (C millions) 892 874 1240 Metal Prices Zinc - average 0.88 0.87 0.98 Reported in our financials Lead 0.94 0.97 0.95 US/C 1.00 0.97…
  61. Modelling Workshop – Teck Resources Limited – slide 61
    Base Metal Operations Model Zinc Concentrate Producer; Red Dog - Annual (cont.) 2012 2013 2014 Lead Con Value US/t con Lead Payable 1,053 1,087 1,064 Treatment Charge (world terms) 200 175 175 Calculated based on PP 4 8 6 benchmark…
  62. Modelling Workshop – Teck Resources Limited – slide 62
    Base Metal Operations Model Zinc Concentrate Producer; Red Dog - Annual (cont.) 2012 2013 2014 Total Revenues (C millions) 892 874 1240 Operating Costs 212 222 252 Distribution Costs 107 109 135 Royalties 137 125 215 Total Costs…
  63. Modelling Workshop – Teck Resources Limited – slide 63
    Base Metal Operations Red Dog Seasonality Operates 12 months; ships 4 months Shipments to inventory in Canada and Europe; Direct sales to Asia Zinc Sales 65% Q3/Q4 35% Q1/Q2 Lead Sales 100% Q3/Q4 0% Q1/Q2 64
  64. Modelling Workshop – Teck Resources Limited – slide 64
    Base Metal Operations Model Zinc Concentrate Producer; Red Dog - Quarterly Q1 Q2 Q3 Q4 2014 Revenues (C millions) 208 147 459 426 1240 Metal Prices Zinc - average 0.92 0.94 1.05 1.01 0.98 Reported in our financials Lead 0.96 0.95…
  65. Modelling Workshop – Teck Resources Limited – slide 65
    Base Metal Operations Model Zinc Concentrate Producer; Red Dog - Quarterly (cont.) Q1 Q2 Q3 Q4 2014 Lead Con Value US/t con Lead Payable 1,076 1,064 1,109 1,020 1,067 Treatment Charge (world terms) 175 175 175 175 175 Calculated…
  66. Modelling Workshop – Teck Resources Limited – slide 66
    Base Metal Operations Model Zinc Concentrate Producer; Red Dog - Quarterly (cont.) Q1 Q2 Q3 Q4 2014 Total Revenues (C millions) 208 147 459 426 1240 Operating Costs 44 28 95 85 252 Distribution Costs 29 17 46 43 135 Royalties 32 9…
  67. Modelling Workshop – Teck Resources Limited – slide 67
    Trail Simplified Models
  68. Modelling Workshop – Teck Resources Limited – slide 68
    Base Metal Operations Model Trail Profit 1. Optimization of concentrates feed mix which generates the highest profitability from treatment charges, free metal, by-products 2. Maximize the utilization of assets whether its…
  69. Modelling Workshop – Teck Resources Limited – slide 69
    Base Metal Operations Model Trail Profit Modelling Issues 1. Revenue Trail Produces: Zinc Lead Reported products, and paid for in concentrates Silver Gold Specialty Metals Indium, Germanium etc. Unreported products, but not…
  70. Modelling Workshop – Teck Resources Limited – slide 70
    Base Metal Operations Model Smelter Revenue; Trail - Annual 2012 2013 2014 Revenues (C millions) 1,865 1,751 1,699 Metal Sales Zinc (000's tonnes) 287.4 294.1 276.9 Lead (000's tonnes) 88.3 85.2 77.9 Silver (million ounces) 22.9…
  71. Modelling Workshop – Teck Resources Limited – slide 71
    Base Metal Operations Model Smelter Cost of Sales; Trail - Annual 2012 2013 2014 Cost of sales (C millions) Concentrates 1,239 1,145 1,042 Operating costs 461 386 393 Reported in our Distribution costs 105 108 122 Depreciation and…
  72. Modelling Workshop – Teck Resources Limited – slide 72
    Base Metal Operations Model Smelter Revenue; Trail - Quarterly Q1 14 Q2 14 Q3 14 Q4 14 2014 Revenues (C millions) 392 450 438 419 1,699 Metal Sales Zinc (000's tonnes) 61.9 72.1 70.2 72.7 276.9 Lead (000's tonnes) 19.0 22.0 19.2 17.7…
  73. Modelling Workshop – Teck Resources Limited – slide 73
    Base Metal Operations Model Smelter Cost of Sales; Trail - Quarterly Q1 14 Q2 14 Q3 14 Q4 14 2014 Cost of sales (C millions) Concentrates 252 273 266 251 1042 Operating costs 95 98 98 103 394 Reported in our Distribution costs 29 30…
  74. Modelling Workshop – Teck Resources Limited – slide 74
    Agenda Overview Greg Waller, VP, Investor Relations & Strategic Analysis Base Metal Pricing & Concentrate Contracts Michael Schwartz, Manager, Market Research Base Metal Operations Greg Waller, VP, Investor Relations & Strategic…
  75. Modelling Workshop – Teck Resources Limited – slide 75
    Steelmaking Coal Multiple Price Assessments Metallurgical Coal Price Assessments vs. Quarterly Benchmark Price 305 255 / tonne 205 155 105 55 Platts FOB Semi Soft Quarterly Contract Settlement TSI Premium HCC…
  76. Modelling Workshop – Teck Resources Limited – slide 76
    Steelmaking Coal 90% Hard Coking Coal High Quality Product Mix 4,000 3,500 3,000 2,500 Mt 2,000 90% HCC 1,500 1,000 90% HCC 90% 500 HCC 0 Proven & Probable Reserves Measured & Indicated Resources Inferred…
  77. Modelling Workshop – Teck Resources Limited – slide 77
    Steelmaking Coal Average Realized Price Historical Average Realized Prices 88% 350 Discount to the benchmark price 96% 93% 300 is a function of: 250 94% 1. Product mix: 90% hard coking coal 92% YTD 200 91% 2. Direction of…
  78. Modelling Workshop – Teck Resources Limited – slide 78
    Steelmaking Coal Simplified Annual Model Revenue 2012 2013 2014 Suggested Methodology Sales (Mt) 24.0 26.9 26.2 Assume sales=production; sales guidance given each quarter Average Realized Price: Benchmark Price (US/t) Quarterly…
  79. Modelling Workshop – Teck Resources Limited – slide 79
    Steelmaking Coal Simplified Annual Model Unit Costs (C/tonne) 2012 2013 2014 Suggested Methodology Unit costs: Site costs 57 50 51 Based on guidance Inventory write downs 0 1 3 Transportation 37 38 38 Based on guidance Total…
  80. Modelling Workshop – Teck Resources Limited – slide 80
    Steelmaking Coal Simplified Annual Model Total Costs (CM) 2012 2013 2014 Suggested Methodology Total Costs: Site costs 1,367 1,326 1,327 Calculate: Site costs (C/t) x sales (Mt) Inventory write downs 0 20 89 Calculate: Inventory…
  81. Modelling Workshop – Teck Resources Limited – slide 81
    Steelmaking Coal Simplified Annual Model Gross Profit (CM) 2012 2013 2014 Suggested Methodology Revenue 4,647 4,113 3,335 Calculate: Sales (Mt) x average realized price (C/t) Total cash costs 2,255 2,384 2,422 Calculate: Total…
  82. Modelling Workshop – Teck Resources Limited – slide 82
    Steelmaking Coal Simplified Quarterly Model Revenue FY Q1 Q2 Q3 Q4 Suggested Methodology 2014 Assume sales=production; sales guidance Sales (Mt) 6.2 6.8 6.7 6.5 26.2 given each quarter Average Realized Price: Quarterly in our…
  83. Modelling Workshop – Teck Resources Limited – slide 83
    Steelmaking Coal Simplified Quarterly Model Unit Costs FY (C/tonne) Q1 Q2 Q3 Q4 Suggested Methodology 2014 Unit costs: Site costs 52 53 50 48 51 Based on guidance Inventory write downs 5 2 3 4 3 Transportation 38 37 38 39 38…
  84. Modelling Workshop – Teck Resources Limited – slide 84
    Steelmaking Coal Simplified Quarterly Model Total Costs FY (CM) Q1 Q2 Q3 Q4 Suggested Methodology 2014 Total costs: Site costs 348 360 335 312 1,327 Calculate: Site costs (C/t) x sales (Mt) Calculate: Inventory write downs…
  85. Modelling Workshop – Teck Resources Limited – slide 85
    Steelmaking Coal Simplified Quarterly Model Gross Profit FY (CM) Q1 Q2 Q3 Q4 Suggested Methodology 2014 Calculate: Sales (Mt) x Average Realized Revenue 880 833 798 824 3,335 Price (C/t) Calculate: Total cash unit costs (CM) x…
  86. Modelling Workshop – Teck Resources Limited – slide 86
    Steelmaking Coal Remember Non-IFRS Costs Total Cash Cost YTD Q3 2015 vs. 2014 120 106 YTD 2014 100 US/t (C1.10 Q3 2015 / US) (C1.26 78 / US) 80 Site1 50 36 US/t 60 Transportation 35 28 IFRS 40 IFRS Total 85 64 Costs…
  87. Modelling Workshop – Teck Resources Limited – slide 87
    Agenda Overview Greg Waller, VP, Investor Relations & Strategic Analysis Base Metal Pricing & Concentrate Contracts Michael Schwartz, Manager, Market Research Base Metal Operations Greg Waller, VP, Investor Relations & Strategic…
  88. Modelling Workshop – Teck Resources Limited – slide 88
    Energy What Are The Oil Sands A natural mixture of sand, water, clay and heavy viscous oil called bitumen Unconsolidatednot rock Sand and water must be removed from the bitumen before it can be transported, upgraded or refined…
  89. Modelling Workshop – Teck Resources Limited – slide 89
    Energy Understanding the Terminology Petroleum is the general term for solid, liquid, or gaseous hydrocarbons Crude oil is a naturally occurring petroleum Bitumen is a type of crude oil that must be extracted via mining or in-situ…
  90. Modelling Workshop – Teck Resources Limited – slide 90
    Fort Hills Project
  91. Modelling Workshop – Teck Resources Limited – slide 91
    Energy Fort Hills By The Numbers1 Tecks Sanction Capital2 Tecks Estimated 2015 Spend Tecks Remaining Capital3 2.94 850 1.5 billion million billion Operating & Sustaining Costs3 Sustaining Capital3 Tecks Share of Production…
  92. Modelling Workshop – Teck Resources Limited – slide 92
    Energy Fort Hills Simplified Process Flowsheet Mining Ore Ore Preparation Reject Truck and Shovel Feeder/Crusher Feed Surge Ore Preparation Hydrotransport Paraffinic Froth Primary Extraction Treatment Solvent (PFT) Recovery…
  93. Modelling Workshop – Teck Resources Limited – slide 93
    Energy Fort Hills Bitumen Production & Blend Supply Estimated Fort Hills Production 60 60 Fort Hills Mine Project: Teck Share: 20% or 36 kbpd of bitumen Mine start-up: December 2017 50 50 90% production reached after 12 months…
  94. Modelling Workshop – Teck Resources Limited – slide 94
    Pricing & Quality
  95. Modelling Workshop – Teck Resources Limited – slide 95
    Energy Fort Hills Bitumen Netback Calculation Model Cash Margin1 Calculation Example 70 15.50 60 1.25 11 7-9 60 55.50 10 50 22 40 37 30 3 1-2 2-3 20 13 10-11 10 - Teck seeks to secure dedicated transportation capacity…
  96. Modelling Workshop – Teck Resources Limited – slide 96
    Energy Crude Oil Pricing Benchmarks Oil Sands Diluent Supply Natural Gas Liquids (C5+) Diluent pool of many qualities Priced as differential off WTI Location: Edmonton, Alberta Brent WCS Light Sweet Crude Oil Hardisty Global…
  97. Modelling Workshop – Teck Resources Limited – slide 97
    Energy Western Canadian Select (WCS) Average Monthly WTI-WCS Differential 45 Western Canadian Select (WCS) Is The Benchmark 40 23.12 Price For Canadian Heavy Oil At Hardisty, Alberta 35 30 WCS differential to West Texas Intermediate…
  98. Modelling Workshop – Teck Resources Limited – slide 98
    Energy Sufficient Transportation Capacity In Western Canada Western Canadian Transport Supply & Demand 8,000 2 New Pipelines 7,000 Assumptions Fort Hills First Oil 6,000 Fort Hills first oil late 2017 Enbridge Expansions…
  99. Modelling Workshop – Teck Resources Limited – slide 99
    Energy Diluent (C5+) Pricing Average Monthly WTI/Diluent (C5+) Differential Diluent (C5+) at Edmonton, Alberta Is The Benchmark 20 Contract For Diluent Supply For Oil Sands 15 Diluent (C5+) differential to West Texas Intermediate…
  100. Modelling Workshop – Teck Resources Limited – slide 100
    Energy Blend Cost Details Blend Cost Estimated 8-12 Per Barrel Of Bitumen Typical Diluted Bitumen (Dilbit) Blend Based On: Western Canadian Select 1) Acquisition of Diluent at Edmonton (WCS) at Hardisty Assuming US60 WTI price, plus…

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