bank of america merrill lynch 21st annual canada mining
TRANSCRIPT
21st Annual Canada Mining ConferenceSeptember 11, 2015
Forward Looking Information
Both these slides and the accompanying oral presentations contain certain forward-looking statements within the meaning of the United States PrivateSecurities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario). Forward-looking statementsinvolve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Teck to bematerially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-lookingstatements include statements relating to long-life assets, our level of liquidity, expectation that we will be able to realize further cost reductions in 2015,statements regarding our credit rating, the availability of or credit facilities and other sources of liquidity, expectation that Teck will have a cash balance of$1 billion at the end of 2015, management’s expectations with respect to executing Teck’s long-term strategy, reserve and resource life estimates, 2015production guidance, 2015 estimated profit and estimated EBITDA, projected costs for our business units, expectations regarding the Corridor project,statements regarding the production and economic expectations for the Fort Hills project, including but not limited to free cash flow projections, estimatednetback, operating margin, Alberta oil royalty, net margin, pre-tax cash flow, Teck’s share of go-forward capex, and the expectation that Fort Hills isexpected to have significant free cash flow wide across a range of WTI prices, Fort Hills capital cost projections, management’s expectations withrespect to production, demand and outlook in the markets for coal, copper, zinc and energy, and potential benefits of LNG use in haul trucks.
These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially, which are described inTeck’s public filings available on SEDAR (www.sedar.com) and EDGAR (www.sec.gov). In addition, the forward-looking statements in these slides andaccompanying oral presentation are also based on assumptions, including, but not limited to, regarding general business and economic conditions, thesupply and demand for, deliveries of, and the level and volatility of prices of, zinc, copper and coal and other primary metals and minerals as well as oil,and related products, the timing of the receipt of regulatory and governmental approvals for our development projects and other operations, our costs ofproduction and production and productivity levels, as well as those of our competitors, power prices, continuing availability of water and power resourcesfor our operations, market competition, the accuracy of our reserve estimates (including with respect to size, grade and recoverability) and the geological,operational and price assumptions on which these are based, conditions in financial markets, the future financial performance of the company, our abilityto attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studies on our expansion projects, ourcoal and other product inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for our operations andexpansions, our ongoing relations with our employees and business partners and joint venturers. Management’s expectations of mine life are based onthe current planned production rates and assume that all resources described in this presentation are developed. Certain forward-looking statements arebased on assumptions regarding the price for Fort Hills product and the expenses for the project, as disclosed in the slides. Assumptions regardingliquidity are based on the assumption that Teck’s current credit facilities remain fully available. Assumptions regarding our targeted cash balance arebased on current foreign exchange rates and assume that Teck’s 2015 guidance for production, costs and capital expenditures are met. Assumptionsregarding Fort Hills also include the assumption that project development and funding proceed as planned. Assumptions regarding our potential reserveand resource life assume that all resources are upgraded to reserves and that all reserves and resources could be mined. The foregoing list ofassumptions is not exhaustive. Assumptions regarding the Corridor project include that the transaction closes as planned and that the project is built andoperated in accordance with the conceptual preliminary design from a preliminary economic assessment.
2
Forward Looking Information
Factors that may cause actual results to vary materially include, but are not limited to, changes in commodity and power prices, changes in marketdemand for our products, changes in interest and currency exchange rates, acts of foreign 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, costescalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances orother job action, adverse weather conditions and unanticipated events related to health, safety and environmental matters), union labour disputes,political risk, social unrest, failure of customers or counterparties to perform their contractual obligations, changes in our credit ratings, unanticipatedincreases in costs to construct our development projects, difficulty in obtaining permits, inability to address concerns regarding permits of environmentalimpact assessments, and changes or further deterioration in general economic conditions. We will not achieve the maximum mine lives of our projects,or be able to mine all reserves at our projects, if we do not obtain relevant permits for our operations. Our Fort Hills project is not controlled by us andconstruction and production schedules may be adjusted by our partners. The Corridor project will be jointly owned. The effect of the price of oil onoperating costs will be affected by the exchangerate between Canadian and U.S. dollars.
Statements concerning future production costs or volumes are based on numerous assumptions of management regarding operating matters and onassumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, thatoperating 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 that there are no material unanticipated variations in the cost of energy orsupplies.
We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning assumptions,risks and uncertainties associated with these forward-looking statements and our business can be found in our Annual Information Form for the yearended December 31, 2014, filed under our profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) under cover of Form 40-F.
3
Agenda
Teck Overview & Strategy
Commodity Market Observations
Teck Update
4
• Headquartered in Vancouver, Canada, with operations in the Americas
• Strategy focused on long life assets in stable jurisdictions
• Sustainability: Key to managing risks and developing opportunities
Strong Resource Position1
With Sustainable Long-Life AssetsCoal Resources ~100 years
Copper Resources ~30 years
Zinc Resources ~15 years
Energy Resources ~50 years
Attractive Portfolio of Long-Life Assets
1. Reserve and resource life estimates refer to the mine life of the longest lived resource in the relevant commodity assuming production at planned rates and in some cases development of as yet undeveloped projects. See the reserve and resource disclosure in our most recent Annual Information Form, available on SEDAR and EDGAR, for additional detail regarding underlying assumptions.
5
Teck has good leverage to stronger zinc and copper markets, and benefits from the weaker Canadian dollar
The Value of Our Diversified Business Model
Cash Operating Profit 1H2015
Coal38%
Copper62%
Zinc38%
Base Metals
62%
Production Guidance1
Unit of Change
Estimated Profit 2
EstimatedEBITDA2
Coal 27 Mt US$1/tonne $21M /$1∆ $32M /$1∆
Copper 350 kt US$0.01/lb $5M /$.01∆ $8M /$.01∆
Zinc 935 kt US$0.01/lb $8M /$.01∆ $12M /$.01∆
$C/$US C$0.01 $32M /$.01∆ $52M /$.01∆
2015 Leverage to Commodities & Fx
1. Based on mid-point of 2015 guidance ranges at the start of the year. Current mid-point of guidance ranges are 25.5 Mt coal and 345kt copper. Zinc includes 650kt of zinc in concentrate and 285kt of refined zinc.
2. Based on $1.20 CAD/USD, and budgeted commodity prices. The effect on our profit and EBITDA will vary with commodity price and exchange rate movements, and commodity sales volumes .
6
Agenda
Teck Overview & Strategy
Commodity Market Observations
Teck Update
7
Steelmaking Coal Will Slowly Rebalance
• Excess supply continues to pressure prices & margins• US exports ~2.5 times above historical average• Reduced imports into China, although some evidence of destocking• Stronger fundamentals ex-China
Tighter Market ex-China in 2015US Steelmaking Coal Exports (ex. Canada)
0
10
20
30
40
50
60
70
2000-2009 average: 23 Mt
2010-2014 average: 55 Mt
Source: GTIS, CRU
Mt
Mt
Annual Change in Demand (ex-China), Less Annual Change in Seaborne Exports
8
Disruptions Continue in Copper
Significant Copper Mine Production Disruptions Copper Concentrate TC/RC
plotted to July 2015
plotted to July 2015
Source: Teck, CRU
0¢
10¢
20¢
30¢
40¢
50¢
60¢
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Standard Spot High Grade SpotRealised TC/RC
-950
-859-776
-851
-945
-584
-839
-973
-831
-968
-815-1,000
-900
-800
-700
-600
-500
-400
-300
-200
-100
02005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2015YTD
Thou
sand
tonn
es
9
Spot TCs vs. Realized Annual TCs
LME Zinc Stocks – Since Dec 2012
Zinc Market Poised for Change
• Supply situation fundamentally unchanged
• Growth in zinc demand expected to outpace supply
• Recent decline in demand growth caused inventory drawdown to slow
• Terminal markets absorbing unreported stock flows
4005006007008009001,0001,1001,200
50¢
60¢
70¢
80¢
90¢
100¢
110¢
120¢
Stocks Price
US
¢/lb
thou
sand
tonn
es
plotted to August 19, 2015
$0
$100
$200
$300
$400
$500
$600
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Spot Annual Realised
US$
/dm
t
plotted to July 2015Source: Teck, CRU10
Agenda
Teck Overview & Strategy
Commodity Market Observations
Teck Update
11
Strengthening Our Financial Position
• Ongoing focus on cost management and operational performance− Announced coal production curtailments for Q3 − Maintained annual coal cost guidance
• Gross profit1 improved in all business units in Q2• Significantly enhanced liquidity to >$6.5B2
• Streaming transaction to enhance liquidity
1. Before depreciation and amortization.2. As of July 22, 2015.12
0.00
0.50
1.00
1.50
2.00
2.50
2012 2013 2014 1H2015
Before by-product creditsAfter by-product credits
US$
/lb
0
10
20
30
40
50
60
70
80
90
2012 2013 2014 1H2015
Operating Capitalized Stripping
C$/
t
Delivering Results in Cost Management
Copper Cash Costs3
Achieved significant unit cost reductions, and expect further reductions in 2015
Steelmaking Coal All-In Costs1
2
1. All-in costs are site costs, inventory write-downs and capitalized stripping, excluding depreciation. 2. Operating costs are site costs and inventory write-downs.3. By-product credits currently reduce cash costs by ~US$0.25/lb.13
Investment Grade Credit Rating
S&P Moody’s Fitch DBRS
BBB+ Baa1 BBB+ BBB (high)
BBB Baa2 BBB BBBnegative
BBB-negative
Baa3negative
BBB-stable BBB (low)
BB+ Ba1 BB+ BB (high)
BB Ba2 BB BB
Inve
stm
ent
Gra
deN
on-In
vest
men
t G
rade
Supported by:• Diversified business model• Low risk jurisdictions• Low cost assets• Conservative financial policies• Significant cost reductions• Capital discipline• Achieving production guidance• Production curtailments in coal• Dividend cut• Streaming transaction
Constrained by:• Debt-to-EBITDA metric, due to weak prices
Ratings reflect the current economic environment
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Total Liquidity1
151. As at July 22, 2015.2. Assumes current commodity prices, CAD$/USD$ exchange rate of 1.25 and Teck’s 2015 guidance for production, costs and
capital expenditures.
Significantly Enhanced Liquidity
Expect to achieve year-end cash balance of $1B2
1.5
3.8
1.5
0
1
2
3
4
5
6
7
C$
billio
n
Original Revolving Credit Facility
Cash Balance
AdditionalRevolvingCredit Facility
~6.8Credit Facilities• Availability not impacted
by credit rating
• One financial covenant− 50% debt to debt+equity− 32% currently
• Minimal pricing grid impact
• Equity ~$10Bn > required for 50% debt to debt+equity
Existing Business Generating Free Cash Flow
Liquidity of $6.8B provides >3x coverage for expected remaining Fort Hills capital expenditure of $1.8B
1. Free Cash Flow is Net Cash from Operations, before changes in Working Capital, less Investing activity, not including Fort Hills capital expenditures, not including proceeds from sales of investments, less debt interest paid and distributions to minority interests.
Cost management delivering improvements in Free Cash Flow, despite weakening price environment
(300)
(200)
(100)
-
100
200
1H 13 2H 13 1H 14 2H 14 1H 15
C$ M
illio
ns
Free Cash Flow - Before Fort Hills Capex
16
Source: Teck 1. Estimates are based on exchange rates as shown, expected bitumen netbacks, and operating costs of C$25 per barrel (including
sustaining capital of C$3-5 per barrel). 2. Per barrel of bitumen.3. Go-forward capital is the go-forward amount from the date of the Fort Hills sanction decision (October 30, 2013), denominated in
Canadian dollars and on a fully-escalated basis. 4. Pre-tax free cash flow yield during capital recovery period.
The Fort Hills project is expected to have significant free cash flow yield across a range of WTI prices
Fort Hills Free Cash Flow Yield4
Sensitivity to WTI PricePotential Contribution
from Fort Hills US$60 WTI
& $0.80 CAD/USD
US$80 WTI & $0.90
CAD/USD
Teck’s share of annual production (36,000 bpd) 13 Mbpa 13 Mbpa
Estimated netback2 ~$43/bbl ~$55/bbl
Estimated operating margin2 ~$18/bbl ~$30/bbl
Alberta oil royalty – Phase 1 (prior to capital recovery) 2 ~$2/bbl ~$3/bbl
Estimated net margin2 ~$16/bbl ~$27/bbl
Annual pre-tax cash flow ~$258 M ~$335 M
Teck’s share of go-forward capex3 ~$2,940 M ~$2,940 M
Free cash flow yield4 ~9% ~11%
Fort Hills Project Economics Are Robust1
0%
5%
10%
15%
20%
25%
$50 $60 $70 $80 $90 $100 $110 $120
WTI US$/bbl
C$0.80/US$
C$0.90/US$
Free
Cas
h Fl
ow Y
ield
17
Corridor Project -Building a Better Project Together
• Teck and Goldcorp have combined Relincho and El Morro projects and formed a 50 / 50 joint venture companyo Committed to building strong, mutually beneficial relationships
with stakeholders and communities
• Capital smart partnership o Shared capital, common infrastructureo Shared risk, shared rewards
• Benefits of combining projects include:o Longer mine lifeo Lower cost, improved capital efficiencyo Reduced environmental footprinto Enhanced community benefitso Greater returns over either standalone project
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Corridor Project Summary
Initial Capital
$3.0 - $3.5billion
Copper Production1
190,000tonnes per year
Gold Production1
315,000ounces per year
Mine Life
32+years
Copper in Reserves2
16.6billion pounds
Gold in Reserves2
8.9million ounces
Note: Conceptual based on preliminary design from the PEA1. Average production rates are based on the first full ten years of operations2. Total copper and gold contained in mineral reserves as reported separately by Teck and Goldcorp; refer to Appendix A in Additional Information.3. Capital estimate for Phase 1a based on preliminary design shown in 2015 dollars on an unescalated basis
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Source: “Project Location.” -28.395839, -70.486738, 4679ft. Google Earth.February 8, 2015. April 23, 2015.
Desalination
Desalination
Power
Mine and Mill
Mine
Port
Relincho Site
El MorroSite
Before Project Corridor – Duplicate infrastructure
Pipelines
Power Line
and Mill
Pipelines:Water
Pipelines: Water &
ConcentrateTailings
Tailings
Power
Port
20
Source: “Project Location.” -28.395839, -70.486738, 4679ft. Google Earth.February 8, 2015. April 23, 2015.
Mine
Tailings
Desalination
Port
Mine and Mill
Project Corridor – Common infrastructure
Conveyor & Utilities
Power Pipelines:Water
Pipeline
Power LineConveyor & UtilitiesRoad
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Copper Development Projects in theAmericas
Corridor is one of the largest open pit copper development projects in the Americas on the basis of copper contained in Proven and Probable Reserves
-
5,000
10,000
15,000
20,000
25,000
Rad
omiro
Tom
ic
Cor
ridor
El A
rco
Que
brad
aB
lanc
a II
Que
llave
co
Agu
a R
ica
Rel
inch
o
El M
orro
Cas
ino
Sch
aft C
reek
Gal
ore
Cre
ek
Rio
Bla
nco
Cop
per E
quiv
alen
t in
Res
erve
s (M
lbs)
Copper-equivalent contained in Reserves (Mlbs)(North & South American Copper Projects)
Note: Copper equivalent reserves calculated using $3.25/lb Cu and $1,200/oz Au. Does not include copper resource projects that are currently in construction Source: SNL Metals & Mining, Thomson One Analytics, and company disclosures.
22
Capital Smart – Phased Development
Phase 1aInitial Production of Relincho ores
Phase 1bTransition to El Morro ores
Phase 2Transition to Relincho ores
• Low cost to first ore; high grade, low strip starter pit
• Initial mill throughput of ~90 ktpd
• Transition to higher grade El Morro ore
• Mill throughput of ~110 ktpd due to softer ore
• Option to blend ores and expand throughput
• Transition back to Relincho ore once El Morro is depleted
• Potential expansion to a mill throughput of 175 ktpd
Phase 1 development concept is a single line mill (90 -110 ktpd) which produces higher metal production than either standalone project
Average production of 190,000 tonnes copper and 315,000 ounces gold per year over first 10 years of operation
Note: Conceptual based on preliminary design from the PEA
Phased Development
23
Summary
Attractive portfolio of long-life assets & resources
Good leverage to base metals markets
Ongoing focus on cost management and operational performance
Significantly enhanced financial position to >$6.5B in liquidity
Corridor Project a “Capital Smart” partnership
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Additional Information
• In 2011, we launched our formal sustainability strategy
• Organized around 6 focus areas representing our most material sustainability challenges and opportunities
• Set short-term (2015) and long-term (2030) goals and vision for each area
• On track to achieve all of our 2015 goals this year
Our Sustainability Strategy
27
Received the PDAC 2014 Environmental and Social Responsibility Award
Best 50 Corporate Citizens in Canada 2015
On the Dow Jones Sustainability World Index five years in a row
One of top 100 most sustainable companies in the world and one of Canada’s most sustainable companies
Top 50 Socially Responsible Corporations in Canada
Received the Globe Foundation Environment Award in 2014
28
External Recognition
Diversified Portfolio of Key Commodities
NorthAmerica
20%Europe
18%
LatinAmerica
3%
China26%
Asia excl. China33%
Source: Teck; 2014 revenue29
Diversified Global Customer Base
Coking coal CopperZinc LeadMoly SilverGermanium Indium
Original Guidance Actual ResultsSteelmaking Coal
Coal production 26–27 Mt 26.7 Mt Record coal production
Coal site costs C$55-60 /t C$54 /t1
Coal transportation costs C$38-42 /t C$38 /t
Combined coal costs C$93-102 /t C$92 /t
Combined coal costs US$84-92 /t US$84 /t
Copper
Copper production 320–340 kt 333 kt Record thru-put at Antamina
Copper cash unit costs2 US$1.70-190 /lb US$1.65 /lb
Zinc
Zinc in concentrate production3 555-585 kt 660 kt Record at Red Dog
Refined zinc production 280–290 kt x 277 kt Higher production 2H14(1H14: 133 kt; 2H14 143 kt)
Capital Expenditures4 $1,905M $1,498M Significant capex reduction
Solid Delivery Against 2014 Guidance
1. Including inventory adjustments.2. Net of by-product credits.3. Including co-product zinc production from our copper business unit.4. Excluding capitalized stripping.
30
Actual 2014 Current 2015 GuidanceSteelmaking Coal
Coal production 26.7 Mt 25-26 MtCoal site costs C$54 /t1 C$49-53 /tCoal transportation costs C$38 /t C$37-40 /tCombined coal costs C$92 /t C$86-93 /tCombined coal costs US$84 ~US$69-74 /t2
CopperCopper production 333 kt 340-350 ktCopper cash unit costs3 US$1.65 /lb US$1.45-1.55 /lb
ZincZinc in concentrate production4 660 kt 635-665 ktRefined zinc production 277 kt 280–290 kt
Production & Site Cost Guidance
1. Including inventory adjustments.2. At $1.25 CAD/USD.3. Net of by-product credits.4. Including co-product zinc production from our copper business unit.
31
($M) SustainingMajor
EnhancementNew Mine
Development Sub-totalCapitalized Stripping Total
Coal $100 $45 $ - $145 $425 $570
Copper 200 15 105 320 225 545
Zinc 180 - - 180 60 240
Energy - - 910 910 - 910
Corporate 10 - - 10 - 10
TOTAL $490 $60 $1,015 $1,565 $710 $2,275
Total capex of ~$1.6B, plus capitalized stripping
2014A $511 $165 $822 $1,498 $715 $2,213
Current 2015 Capital Expenditures Guidance
32
CoalWell established with capital efficient growth options
Strong platform combined with diverse portfolio of options allows us to be selective in terms of commodity and timing
Completed In Construction Pre-Sanction
CopperStrong platform with substantial growth options
ZincWorld-class resource combined with integrated assets
EnergyBuilding a new business through partnership
Trail Acid Plant
HVC Mill Optimization
Pend Oreille Restart
Fort Hills
Elk Valley Brownfield (4 Mpta)
Staged Growth Pipeline
Red Dog Satellite Orebodies
San Nicolas (Cu-Zn)
Elk Valley Brownfield (up to 10 Mpta)
Quintette/Mt. Duke
Frontier
Lease 421
QB Phase 2
Relincho
MesabaZafranal
HVC/Antamina Brownfield
Galore/Schaft Creek
Cirque
Growth Options
33
Operation Expiry DatesLine Creek In Negotiations - May 31, 2014Coal Mountain In Negotiations - December 31, 2014Antamina In Negotiations - July 23, 2015
Carmen de Andacollo September 30, 2015December 31, 2015
Elkview October 31, 2015
Quebrada BlancaOctober 30, 2015
November 30, 2015January 31, 2016
Fording River April 30, 2016Highland Valley Copper September 30, 2016Trail May 31, 2017Cardinal River June 30, 2017Quintette April 30, 2018
Collective Agreements
34
Note: Based on public filings
Teck Resources LimitedMarch 3, 2015
Shares Held Percent Voting RightsClass A ShareholdingsTemagami Mining Company Limited 4,300,000 45.97% 28.62%SMM Resources Inc (Sumitomo) 1,469,000 15.71% 9.78%Caisse de depot et placement du Quebec 1,587,600 16.97% 10.57%Public 1,996,870 21.35% 13.29%
9,353,470 100.00% 62.27%Class B SharesTemagami Mining Company Limited 860,000 0.15% 0.06%SMM Resources Inc (Sumitomo) 295,800 0.05% 0.02%Caisse de depot et placement du Quebec 8,603,197 1.52% 0.57%China Investment Corporation (Fullbloom) 101,304,474 17.87% 6.74%Public 455,788.822 80.41% 30.34%
566,852,293 100.00% 37.73%Total SharesTemagami Mining Company Limited 5,160,000 0.90% 28.68%SMM Resources Inc (Sumitomo) 1,764,800 0.31% 9.80%Caisse de depot et placement du Quebec 10,190,797 1.77% 11.14%China Investment Corporation (Fullbloom) 101,304,474 17.58% 6.74%Public 457,785,692 79.45% 43.63%
576,205,763 100.00% 100.00%
Share Structure & Principal Shareholders
35
• Common corporate structure in Canada
• May not confirm to typical governance expectations, but can still have strong governance practices
• Family-controlled issuers can benefit from a longer-term outlook and unique governance structure
Source: The Impact of Family Control on the Share Price Performance of Large Canadian Publicly-Listed Firms (1998-2012) by Clarkson Centre for Board Effectiveness (Rotman School of Management, University of Toronto)
Canadian family-controlled issuers outperformed peers over the past 15 years, greatly benefitting minority shareholders
Cumulative Average Growth Rate
Family-Controlled Public Issuers
36
Teck has been a strong investment in recent years
Long-term investments in Teck have outperformed non-family and materials firms
Family-Controlled Public Issuers;Teck Share Price Performance
Source: The Impact of Family Control on the Share Price Performance of Large Canadian Publicly-Listed Firms (1998-2012) by Clarkson Centre for Board Effectiveness (Rotman School of Management, University of Toronto)37
Teck Stock Price vs. Bloomberg Commodity Price Index (2000-present)
Commodity Prices Impact Stock Price
$0
$10
$20
$30
$40
$50
$60
$70
80
100
120
140
160
180
200
220
240
260
Bloomberg Commodity Index (Left Axis) Teck (Right Axis) Plotted to July 21,2015
38
Corridor ProjectAppendix A: Reserve and Resource Disclosure
The following mineral reserve and resource information is as at December 31, 2014. All mineral resources disclosed below are reported exclusive of mineral reserves. El Morro — Reserves (100% basis) (1)(3)(5)
El Morro — Resources (100% basis)(1)(2)(4)(5)
Notes: 1) All Mineral Reserves and Mineral Resources have been estimated in accordance with the CIM Definition Standards. 2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.3) Goldcorp has estimated El Morro mineral reserves assuming commodity prices of US$1,300 per ounce of gold and US$3.00 per pound of
copper. 4) El Morro’s mineral resources are estimated using commodity prices of US$1,500 per ounce of gold and US$3.50 per pound of copper.5) The mineral reserves and mineral resources are reported at a 0.2% Copper equivalent cut-off grade, with 67.3% gold recovery and 86.6%
copper recovery.
Grade Contained Metal
CategoryTonnes (millions) Gold (g/t) Copper (%) Gold (millions of
ounces)Copper (millions of pounds)
Proven 321.81 0.56 0.55 5.82 3,876.59Probable 277.24 0.35 0.43 3.10 2,626.36Proven + Probable 599.05 0.46 0.49 8.92 6,502.95
Grade Contained Metal
CategoryTonnes (millions) Gold (g/t) Copper (%) Gold (millions of ounces) Copper (millions of pounds)
Measured 19.79 0.53 0.51 0.34 223.33Indicated 72.56 0.38 0.39 0.88 630.00Inferred 678.07 0.30 0.35 6.45 5190.00
39
Corridor ProjectAppendix A: Reserve and Resource Disclosure
The following mineral reserve and resource information is as at December 31, 2014. All mineral resources disclosed below are reported exclusive of mineral reserves. Relincho — Reserves (1)(2)(3)
Relincho — Resources (1)(2)(3)(4)(5)
Notes: 1) All Mineral Reserves and Mineral Resources have been estimated in accordance with the CIM Definition Standards. 2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.3) Teck has estimated Relincho mineral reserves and resources assuming commodity prices of US$2.80 per pound of copper and US$13.70
per pound of molybdenum. 4) Mineral resources are reported separately from, and do not include that portion of the mineral resources reported as reserves. 5) Mineral Resources are contained within a conceptual ultimate pit shell defined with Measured, Indicated and Inferred blocks using the
same economic and technical parameters as used for mineral reserves and are reported considering a variable cut-off grade based on a marginal value of US$5.59/t.
Grade Contained MetalCategory Tonnes (millions) Copper (%) Molybdenum (%) Copper (millions of
pounds)Molybdenum (millions of pounds)
Proven 435.30 0.38 0.016 3,646.75 153.55Probable 803.80 0.37 0.018 6,556.70 318.97Proven + Probable 1,239.10 0.37 0.017 10,106.65 464.36
Grade Contained Metal Category Tonnes (millions) Copper (%) Molybdenum (%) Copper (millions of
pounds)Molybdenum (millions of pounds)
Measured 79.90 0.27 0.009 475.60 15.85Indicated 317.10 0.34 0.012 2,376.89 83.89Inferred 610.80 0.38 0.013 5,117.02 175.06
40
Corridor ProjectAppendix A: Reserve and Resource Disclosure Cont’d
These tables use the terms “Measured”, “Indicated” and “Inferred” Resources. United States investors are advised that while suchterms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. A significant amount of exploration must be completed in order to determine whether an Inferred Mineral Resource may be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis offeasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.
The projected mine life of the combined project from the PEA is based on mineral reserves only and does not include other mineral resources. The financial analysis under the PEA of Project Corridor assumed commodity prices of US$1,200 per ounce of gold, US$3.25 per pound of copper and US$10.00 per pound of molybdenum. The projected mine life of the combined project and other results of the PEA disclosed in this news release have been reviewed and approved by Gil Lawson, P.Eng., Vice President of Geology and Mine Planning, Goldcorp and Rodrigo Marinho, P.Geo., Technical Director, Reserve Evaluation, Teck, each of whom is a qualified person as defined under NI 43-101.
41
Economic Outlook
Source: NBS & CEIC.
Lower GDP growth rate on a higher base = strong absolute growth
In absolute terms, China’s GDP growth is approximately double that of 10 years ago
China’s Growth: Less is More!
43
• Incremental GDP in 2015 is expected to be similar to last year, in absolute terms• 2014: ~RMB3,764 billion• 2015: ~RMB3,824 billion
• Nature of growth changing from fixed asset intensive to more consumer spending, impacting material consumption growth-1%
1%
3%
5%
7%
9%
11%
13%
15%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
The increase of GDP at 2010 constant pricesin RMB (bn)
Increment of GDP, Rmb bn (lhs) GDP real growth (rhs)
RM
B Bi
llion
China
Japan
Korea
0
10
20
30
40
50
60
70
80
90
100
1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008
%
Source: Dragonomics
With the right policies, China still has the potential to boost incomes
China’s GDP ~20% of the US’s on a per capital basis in 2010
Substantial Economic Growth Requires Decades to Achieve
Per Capita GDP Relative to the US at PPP
44
Country
20-Year Period Beginning When Country’s
Per Capital GDP Was 21% of US’s
Average Annual GDP Growth Rate
Over a 20-Year Period
Japan 1951-1971 9.2
Singapore 1967-1987 8.6
Taiwan 1975-1995 8.3
Korea 1977-1997 7.6
Other Asian economies show that China could continue to grow significantly for some time
Substantial Potential For Continuous Robust Growth in China
45
Steelmaking CoalBusiness Unit & Markets
80
90
100
110
120
130
140
150
$ / t
onne
AUS$
Stronger US dollar favours producers outside of the US
Source: Argus, Bank of Canada
• >40 Mt cutbacks announced, slowly being implemented
• Require additional cutbacks to achieve market balance
• US coal production high end of cost curve and no currency benefit
Coal Prices By CurrencyArgus FOB Australia
CDN$
US$
Met Coal Market Slowly Rebalancing; FX Assisting Producers Outside USA
plotted to August 18, 2015
47
Traditional Steel Markets
• China slowing
• JKT overall stable
• EU slight growth
Rest of the World
• India good growth
• Brazil stable
• US slowing
Monthly Hot Metal Production
Source: WSA, based on data reported by countries monthly; NBS
Mt
Update to Jul 2015
Global Hot Metal Production
JKT
India
Europe
USA
0
3
6
9
12
15
Dec
-09
Mar
-10
Jun-
10
Sep
-10
Dec
-10
Mar
-11
Jun-
11
Sep
-11
Dec
-11
Mar
-12
Jun-
12
Sep
-12
Dec
-12
Mar
-13
Jun-
13
Sep
-13
Dec
-13
Mar
-14
Jun-
14
Sep
-14
Dec
-14
Mar
-15
45 55 65 75
China
Brazil
48
Crude Steel Production Continues to Grow
Crude steel production to grow at ~1.5-2.5% CAGR between 2014 and 2019
Ex-China seaborne demand for steelmaking coal is forecasted to increase
by ~25 Mt in the same period
Crude Steel Production 2014-2019Crude Steel Production 2014 (Mt)
Global 1,662 (+1.2% YoY)
China 823 (+0.9% YoY)
Global, ex-China 839 (+1.5% YoY)
JKT 205 (+3% YoY)
Europe1 208 (+1.3% YoY)
India 83 (+2.3% YoY)
Source: WSA, NBS, Wood Mackenzie (December 2014 & Jun 2015 updates), CRU (May 2015 update)1. Europe includes 12 countries.
49
Destocking Impacts Chinese Coal Imports
2014 imports down by <10% after port inventory drawdownsLow 2015 imports offset by stock drawdowns at sample end users
Coking Coal Stock at Ports and End Users
60.0
15.413.2
75.4
47.7
14.8
6.9
68.8
0
10
20
30
40
50
60
70
80
Seaborne Landborne Stock changeat six ports
Import demand
Milli
on to
nnes
2013 2014
2014 China's Coking Coal Imports and Stock Change at Ports
4
6
8
10
12
14
16
Nov
-13
Dec
-13
Jan-
14Fe
b-14
Mar
-14
Apr
-14
May
-14
Jun-
14Ju
l-14
Aug
-14
Sep
-14
Oct
-14
Nov
-14
Dec
-14
Jan-
15Fe
b-15
Mar
-15
Apr
-15
May
-15
Jun-
15Ju
l-15
Milli
on to
nnes
Stock at six ports Stock at sample end users
Source: China Customs, Mysteel50
• Australian exports are almost flat Jun YTD
• Exports to China reduced
• Australian and Canadian exports to Europe pushing out US suppliers
• Exports to India are growing
US Steelmaking Coal Exports (June 2015 YTD)
Canada Steelmaking Coal Exports (June 2015 YTD)Australian Steelmaking Coal Exports (June 2015 YTD)
Steelmaking Coal Trade Rebalancing
Source: GTIS51
Source: Teck estimates based on public announcements* Production cuts are total market curtailments including sustaining cuts (mine idlings) and period cuts (guidance reductions).
Curtailments Production Curtailments By RegionCumulative Production Curtailments
• ~40 Mt cutbacks announced, slowly being implemented• Require additional cutbacks to achieve market balance• Low prices also impacting major players• US coal production high end of cost curve and no currency benefit
Steelmaking Coal Market Curtailments
52
Relocation to China’s coastline facilitates access to seaborne raw materials
Sources: NBS, CISA
Chinese Steel Industry Moving to the Coast
53
Xinjiang
Tibet
Qinghai
Sichuan
Inner Mongolia
Henan
Shanxi
GuangxiGuandong
Fujian
Zhejiang
Jiangsu
Shandong
Laioning
Jilin
Heilongjiang
GuizhouHunan
Hubei
Jiangxi
Anhui
ShaanxiGansu
Ningxia
Qinghai
Sichuan
Yunnan
Beijing
Hebei
WISCO Fangchenggang Project• Major infrastructure in place. WISCO Fangchenggang Steel
Company established in Sep to wholly manage the project.• Cold roll line to be commissioned in H1 2015. Other lines are
scheduled to start successively within the year.• Blast furnaces (BFs) in the originally approved plan. Billet
rolling line only at this time. No timeline for BFs currently.• Targeting 5 Mt steel products in 2016 and 10 Mt in 2017.
Baosteel Zhanjiang Project• Coke ovens for BF #1 commissioned in July 2015. • BF #1 will be commissioned as scheduled in September this
year.
Ningde Steel Base• Proposed but no progress yet.
Ansteel Baiyunquan Project• Phase 1 (~ 5.4 Mt pig iron, 5.2 Mt crude
steel and 5 Mt steel products) in 2013.• Phase 2 (5.4 Mt BF) planned but no
progress yet.
Capital Steel Caofeidian Project• Planned 20 Mtpa steel capacity. • Phase 1 (10 Mt) completed in 2010.• Phase 2, planned with the investment of ~
US$7 billion, is kicked off soon in late Aug and scheduled to be completed by 2018. Capacity: hot metal 8.9Mt, crude steel 9.4Mt, steel products 9.0Mt.
Shandong Steel Rizhao Project• Planned 21.35 Mt crude steel. • Phase 1 (8.5 Mt) approved in Feb 2013• Construction started in Sep 2014 and
scheduled to commission by the end of 2016.
40%
45%
50%
55%
60%
65%
70%
0100200300400500600700800900
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Milli
on to
nnes
Total Coastal Coastal %
China Met Coal Still Struggling
Government support for domestic coal producers• Import tax increase (Australia exempt under FTA)• Export tax reduction
- Not large enough to stimulate exports• Resource tax reform
- Higher rates in larger coal producing provinces• Overall, changes not meaningfully supportive
Shanxi logistics improving• Improved road transport efficiency (eliminating inspections)• Extra-provincial trade fees cancelled• Improved rail transportation capacity
China’s supportive actions are preventing a meaningful price recovery
54
China Met Coal Still Struggling (cont.)
• Chinese coal companies are in heavy debt, with asset liability ratio now at 67% vs. <60% in 2010-2012
• Coal mines successfully lowered costs relative to 2014 by cutting wages, raising productivity, and improving product quality, but further reductions unlikely
• The Government is accelerating elimination of small mines (capacity <90 kt/a)o Little impact on coal supply short term, as small mines account for <10% of China’s
total coal capacity.
• One KSOE met coal producer in northeastern China closed eight mines in June 2015 due to high cost and resource depletion
Chinese met coal production cuts progressing slowly,but heading in the right direction
55
We Are a Leading Steelmaking Coal Supplier To Steel Producers Worldwide
NorthAmerica
~5%Europe~15%China
~25%
High quality, consistency, reliability, long-term supply
Asia excl. China~50%
Source: Teck; 2014
LatinAmerica
~5%
Proactively realigning sales with changing market56
0
50
100
150
200
250
300
350
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
US$
/ to
nne
Teck Realized Price (US$) Benchmark Price
Average realized price discount to benchmark is a function of:
1. Product mix: >90% hard coking coal
2. Carry over sales volumes
3. Direction of quarterly benchmark prices and spot prices
- Q3 2015 benchmark for premium products is US$93/t
Average Realized Price
Premium Steelmaking Coal Product
Average realized price discount of ~8%
96%
88%
93%
94%92% YTD
90%
57
100
125
150
175
200
225
250
275
300
325
350
$ / to
nne
Argus FOB Australia Quarterly Contract Settlement
• Temporary closures in Q3 of ~3 weeks at all 6 mines to align production and inventories with market conditions
• Quarterly production reduced ~1.5 Mt
• Annual cost guidance maintained
• Capitalized stripping guidance reduced $65M to $425M (-$1.50/t)
• Meet all contracted and committed coal sales for its entire suite of products
Disciplined approach to managing production to market conditions andcost focus to ensure our mines are well-positioned when markets improve
Teck Response to Coal Market Conditions
Quarterly Benchmark vs. Argus Spot Price
58
0
20
40
60
80
100
120
2014 1H2015
US$
/t
Site Costs TransportationInventory Write-Down Capitalized StrippingSustaining Capital
106
84
Teck costs lower than most major competitors
Total Cash Cost 1H2015 vs. 2014
Steelmaking Coal Costs
59
US$/t2014
(C$1.10 /US$)
1H2015(C$1.24/US$)
Site1 $50 $39
Transportation 35 $29
IFRS Total $85 $68
Capitalized Stripping $15 $13
Full Cash Cost $100 $81
Sustaining Capex $6 $3
Total Cash Cost $106 $84
1. Includes inventory write-down.
IFRS Costs
Significant Long-Term Coal Growth Potential
Potential Production Increase ScenariosTeck’s large resource base supports several options for growth:• Quintette restart (up to 4 Mtpa)
fully permitted
• Brownfields expansions- Elkview expansion - Fording River expansion- Greenhills expansion
• Capital efficiency and operating cost improvements will be key drivers
-
10
20
30
40
50
Prod
uctio
n (M
t)
FRO GHO CMO EVO LCO
CRO QCO 28 Mt 40 Mt
Time Conceptual
Potential to grow production when market conditions are favourable60
>75 Mt of West Coast Port Capacity PlannedTeck Portion at 40 Mt
• Exclusive to Teck • Recently expanded to 12.5 Mt • Planned growth to 18.5 Mt
Westshore Terminals
Neptune Coal Terminal
Ridley Terminals
West Coast Port Capacity
• Current capacity: 18 Mt• Expandable to 25 Mt• Teck contracted at 3 Mt
• Teck is largest customer at 19 Mt• Large stockpile area• Recently expanded to 33 Mt• Planned growth to 36 Mt
Milli
on T
onne
s (N
omin
al)
Teck’s share of capacity exceeds current production plans, including Quintette
12.518
336
7
3
0
5
10
15
20
25
30
35
40
Neptune CoalTerminal
RidleyTerminals
WestshoreTerminals
Current Capacity Planned Growth
61
0%
20%
40%
60%
80%
100%
CO2 NOx Particulate SOxDiesel Natural Gas
LNG for Haul Trucks Project
• Pilot project underway to evaluate running Teck haul trucks on a blend of diesel and LNG- Expected to be running in 2015
• Has the potential to reduce our haul truck fleet fuel bill by $27M annually and lower our CO2 emissions by 35,000 tonnes per year
Comparison of Fuel Cost
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
LNG / Diesel Liter Diesel / LiterGas Cost Liquifaction Carbon Tax Delivery Diesel
Pric
e pe
r Lite
r
Comparison of Emissions
% o
f Die
sel E
mis
sion
s
62
• Around the world, and especially in China, blast furnaces are getting larger and increasing PCI rates
• Coke requirements for stable blast furnace operation are becoming increasingly higher
• Teck coals with high hot and cold strength are ideally suited to ensure stable blast furnace operation
• Produce some of the highest hot strengths in the world50 60 70 80 90 100
South Africa
Japan (Sorachl)
Japan(Yubarl)
U.S.A.Canada OtherTeck HCCAustraliaJapanSouth Africa
Australia(hard coking)and Canada
U.S.A.
Australia(soft coking)
10
20
30
40
50
60
70
80
Drum Strength Dl 30 (%)
CSR
Teck HCC
63
Coking Coal Strength
High Quality Hard Coking Coal
Copper Business Unit & Markets
Base Metal Stocks Low on Days Consumption
ZincExchange Stocks
17 days of consumption
CopperExchange Stocks
8 days of consumption
LeadExchange Stocks
7 days of consumption
Source: LME, ICSG, ILZSG* Charts as of August 21, 2015.
65
US¢
/lb
thou
sand
tonn
es
plotted to August 19, 2015
Source: LLME, ICSG, ILZSG
Copper Prices & Stocks
Daily Copper Prices & Stocks
0
200
400
600
800
1000
1200
1400
0¢
50¢
100¢
150¢
200¢
250¢
300¢
350¢
400¢
450¢
500¢
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
LME Stocks Comex SHFE Price
66
Significant Chinese Copper Demand Remains
…But Will Add Significantly in Additional Tonnage Terms
Annual Growth Rate of Chinese Copper Consumption to Slow Dramatically…
China expected to add almost as much to global demand in the next 15 years as the past 25 years
Source: CRU, Wood Mackenzie, Teck
-
200
400
600
800
1,000
1,200
1,400
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
0%
5%
10%
15%
20%
25%
30%
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030
Annual Avg. 12.7%
Annual Avg. 4.4%
Annual Avg. Growth330 Mt/yr
Annual Avg. Growth420 Mt/yr
Thou
sand
tonn
es
67
0100200300400500600700800900
1,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cathode Concs Scrap Blister/Semis
000’
s to
nnes
(con
tent
)
China Now Accounts for >49% of Global Copper Consumption
Source: NBS
China’s Copper Imports Volatile
Updated to June 2015
68
0
300
600
900
Jan-
13M
ar-1
3M
ay-1
3Ju
l-13
Sep-
13N
ov-1
3Ja
n-14
Mar
-14
May
-14
Jul-1
4Se
p-14
Nov
-14
Jan-
15M
ar-1
5M
ay-1
5Ju
l-15
0
300
600
900
Apr-1
4
May
-14
Jun-
14
Jul-1
4
Aug-
14
Sep-
14
Oct
-14
Nov
-14
Dec
-14
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
May
-15
Jun-
15
Jul-1
5
kt
Copper Market Balance Trending Down
Wood Mackenzie Forecast 2015 Refined Surplus
kt
Wood Mackenzie Forecast2016 Refined Surplus
Surplus only 1.3% of global demand in January 2015
plotted to July 2015
plotted to July 2015
Source: Wood Mackenzie69
• At 2.7% global demand growth, 680,000t of new supply needed each year
• Post 2016, production expected to decline ~280,000t per year
• Structural deficit starts in 2017
• Project developments slowed due to lower prices, higher capex, corporate austerity, permitting & availability of financing
Forecast Copper Refined Balance
Long-Term Copper Mine Production Still Needed
Source: WM, CRU, ICSG, Teck
(3,000)
(2,500)
(2,000)
(1,500)
(1,000)
(500)
0
500
2012 2013 2014 2015 2016 2017 2018 2019 2020
Thou
sand
tonn
es
70
ZincBusiness Unit & Markets
Zinc Prices & Stocks
Source: LME, SHFE
Daily Zinc Prices & Stocks
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0¢
50¢
100¢
150¢
200¢
250¢
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
LME SHFE Price
US¢
/lb
thou
sand
tonn
es
plotted to August 19, 2015
72
Zinc Treatment Charges
Source: Teck, CRU
Zinc Spot TCs vs. Realized Annual TCs
$0
$100
$200
$300
$400
$500
$600
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Spot Annual Realised
US$
/dm
t
plotted to July 2015
73
Committed Supply Insufficient for Demand
Forecast Zinc Refined Balance
Source: Teck
• We expect mine supply increases to allow for growth in refined supply of 1.09 million tonnes between 2014 and 2020
• Over this same period we expect refined demand to increase 3.5 million tonnes
• Market in deficit since 2014, but large inventory has funded the deficit
• Metal market moving into significant deficit with further mine closures and inventories are depleting
(3,000)
(2,500)
(2,000)
(1,500)
(1,000)
(500)
0
500
2012 2013 2014 2015 2016 2017 2018 2019 2020
Thou
sand
tonn
es
74
LME Zinc Stocks – Since Dec 2012LME Zinc Stocks - 11 Years
Zinc Inventories Declining
Source: LME
400
500
600
700
800
900
1,000
1,100
1,200
50¢
60¢
70¢
80¢
90¢
100¢
110¢
120¢
Stocks Price
0
200
400
600
800
1,000
1,200
1,400
0¢
50¢
100¢
150¢
200¢
250¢
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Stocks Price
US
¢/lb
thou
sand
tonn
esplotted to
August 19, 2015
US
¢/lb
thou
sand
tonn
es
• LME stocks down ~730 kt over 24 months• Large inventory position still to work down but we were recently under 500kt for the
first time since early 2010• Large, sudden increases indicate there are also significant off-market inventories
flowing through the LME to consumers
plotted to August 19, 2015
75
China6%
USA 19%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Galvanized Steel as % Crude ProductionChina Zinc Demand 2014
Construction15%
Transportation 20%
Other 5%
Consumer Goods30%
Infrastructure30%
Chinese Zinc Demand to Outpace Supply
Source: Teck
If China were to galvanize crude steel at half the rate of the US using the same rate of zinc/tonne, a further 2.1 Mt would be added to global zinc consumption
76
Source: ICSG, Wood Mackenzie Teck, Company Reports
2013-2020 2013-2020
Significant Zinc Mine Reductions;Large Short-Term Losses, More Long Term
-500
-400
-300
-200
-100
0
Cen
tury
Ram
pura
Agu
cha
Lish
een
Skor
pion
Ros
eber
y
Red
Dog
Pom
orza
ny-O
lkus
z
Brun
swic
k
Cay
eli
Pers
ever
ance
0
100
200
300
400
500
Gam
sber
gM
cArth
ur R
iver
Bish
aKy
zyl-T
asht
ygsk
oeW
ensh
an D
ulon
gSi
ndes
ar K
hurd
Agua
s Te
nida
sTa
lviv
aara
Car
ibou
Rea
ctiv
atio
nSa
ngui
kou
Taife
ngM
ount
Isa
Sant
ande
rZa
war
Min
esPe
rkoa
Dud
dar
Gar
penb
erg
77
Monthly Chinese Zinc Mine Production
LME Zinc Stocks
Zinc Mine Production Remains Undersupplied Even With Lower Growth
Source: LME, NBS, CNIA
4005006007008009001,0001,1001,200
50¢
60¢
70¢
80¢
90¢
100¢
110¢
120¢
Stocks Priceplotted to
August 19, 2015
plotted to July, 2015
• Metal market in deficit
• LME stocks down >700 kt over 27 months; sub-500 kt recently for the first time since 2010
• ‘Off-market’ inventory position to work down also
• Large periodic increases indicate significant off-market inventories flowing through the LME to consumers
• Chinese zinc mine production is down in the last 27 months
0
1,000
2,000
3,000
4,000
5,000
6,000
0
100
200
300
400
500
600
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2014 2015
US
¢/lb
thou
sand
tonn
es
78
EnergyBusiness Unit & Markets
Global Oil Market to Rebalance
$0$20$40$60$80
$100$120$140
Jan-
10
May
-10
Sep
-10
Jan-
11
May
-11
Sep
-11
Jan-
12
May
-12
Sep
-12
Jan-
13
May
-13
Sep
-13
Jan-
14
May
-14
Sep
-14
Jan-
15
May
-15
US
$/bb
l
plotted to August 2015
Source: EIA Short-Term Energy Outlook, July 2015
Forecast
-3
0
3
6
8286909498
102
2010
-Q1
2011
-Q1
2012
-Q1
2013
-Q1
2014
-Q1
2015
-Q1
2016
-Q1
MM
bod
MM
bpd
Implied stock change and balance (right axis)World production (left axis)World consumption (left axis)
2014-2015: Price drop due market imbalance• Supply growing
− OPEC: highest ever production at 31.7 MMbpd; more supply from Iran & Iraq
− Non-OPEC: production growing faster than global demand; abnormally high US inventories
• Demand growth eased in 2014− Slowing growth (especially non-OECD)− Economic uncertainty in China
+2016: More balanced market expected• Demand growth stronger than non-OPEC production• Decline rates of existing fields require >5 Mbpd new
production annually
West Texas Intermediate (WTI) Price
World Production & Consumption Balance
80
Source: Shorecam, Net Energy
Narrower Heavy Oil Price Differential
Average Monthly WTI-WCS Differential • Western Canadian Select (WCS) is the benchmark price for Canadian heavy oil
• WCS differential to West Texas Intermediate (WTI) − Based on supply/demand, alternate feedstock
accessibility, refinery outages & export capability− Long-term differential of US$10-20/bbl− Narrowed in 2014/2015, due to:
• Export capacity growth • Rail capability increases • Short term production outages Q2 2015
− Improved export capability to mitigate volatility− Recent increase due to refinery and pipeline
interruptions
• Fort Hills bitumen will be produced via Paraffinic Froth Treatment (PFT), producing a better refinery feedstock
− Requires less diluent to meet pipeline specifications− Improves refinery productivity− Does not require investment in an upgrader
Fort Hills pricing expected to be at or near WCS
Long-term WTI-WCS differential
$15.69
$23.12
$16.65
Plotted toAugust 2015
$- $5
$10 $15 $20 $25 $30 $35 $40 $45
2010 2011 2012 2013 2014 2015
WCS Differential (US$/bbl)
81
Building An Energy Business
Strategic diversification
Large truck & shovel mining projects
World-class resources
Long-life assets
Mining-friendly jurisdiction
Competitive margins
Minimizing execution risk
Tax effective
82
Mined bitumen is in Teck’s ‘sweet spot’
• Significant value created over long term
• 60% of PV of cash flows beyond year 5
• IRR of 50-year project is only ~1% higher than a 20-year project
• Options for debottlenecking and expansion
50-year assets provide for superior returns operating through many price cycles
The Real Value of Long-Life Assets
Fort Hills Project Indicative Rolling NPV1
1. Indicative NPV assumes US$95 WTI, $1.05 Canadian/US dollar exchange rate, and costs as disclosed with the Fort Hills sanction decision (October 30, 2013).
83
Fort Hills Is One of the Best Undeveloped Oil Sands Mining Leases
Ore grade is a function of the bitumen quantity in the deposit
TV:BIP is a ratio of the total volume of bitumen in place to the total volume of material required to be moved (like a strip ratio)
Strip Ratio vs. Ore Grade
Source: Teck
9.5
10
10.5
11
11.5
12
8910111213
Ore
Gra
de (w
t% b
itum
en)
TV:BIP
Fort Hills
Frontier
• >3 billion bbls of proven plus probable reserves of bitumen
- Production 180,000 barrels per day (bpd) of bitumen
- Teck’s share is significant at 36,000 bpd; equivalent to 13 million barrels per year (Mbpy)
• World-class resource- Average ore grade of 11.4%- Strip ratio of 1.5:1 and TV:BIP of 10.5
• Consistent production year-over-year through multiple decades
- Scheduled to produce first oil as early as Q4 2017
- Expect 90% of planned production capacity within 12 months
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Fort Hills Is Part Of A New Breed Of Mineable Oil Sands Projects
Mine & Extraction
Diluted Bitumen(Doesn’t meet commercial pipeline specs)
Heavy Crude Conversion Refinery With Coker
Simple RefineryOn-Site Upgrader($10-15B)
New mining projects produce clean, high-quality bitumen and receive a heavy oil price (discounted), but don’t have to invest in an upgrader
‘PFT’ Diluted Bitumen (Meets commercial pipeline specs)
Export Pipeline
Synthetic Oil
Legacy Oil Sands Mining Projects (~30 Years Ago)
Oil Sands Mining Projects Today
Naphtha froth treatment process
Paraffinic froth treatment ‘PFT’ process
Mine & Extraction
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Minimizing Execution Risk In The Fort Hills Project
• Cost-driven schedule- “Cheaper rather than sooner”
• Disciplined engineering approach
• “Shovel Ready” • Global sourcing of engineering
and module fabrication• Balanced manpower profileSuncor has completed 4
projects of ~$20 billion over last 5 years, all at or under budget
Benefiting from Suncor’s operational and project development experience
86
• Focusing on productivity improvements- Reduced pressure on skilled labour and contractors
• Benefiting from availability of fabricators for major equipment
• Seeking project cost reductions- Exploring performance improvements with
contractors and suppliers- Building cost savings and improved productivity
expectations into current contract negotiations- Reviewing all indirect costs
Lower Oil Price Environment Provides Opportunities for the Fort Hills Project
“Major projects in construction such as Fort Hills…will move forward as planned and take full advantage of the current economic environment.
These are long-term growth projects that are expected to provide strong returns when they come online in late 2017.”
- Suncor, January 13, 2015
Enhanced ability to deliver on time and on budget87
1. All costs and capital are based on Suncor’s estimates.2. Go-forward capital is the go-forward amount from the date of the Fort Hills sanction decision (October 30, 2013),
denominated in Canadian dollars and on a fully-escalated basis.
Competitive Costs1 for Fort Hills
Project Capital: ~C$13.5 billion
Teck Capital:• Fully-escalated capital investment:
~C$2.94B over four years (2014-2017), including earn-in of C$240M
• Estimated spending in 2015: C$850M of incurred costs, based on Suncor’s planned project spending
Operating & Sustaining Costs:• C$25 to $28/bbl total
• Sustaining C$3-5/bbl (included in above)
• Excludes diluent purchase
To be financed by a combination of cash balance, free cash flow and $3B unused line of credit
Fully EscalatedGo-Forward Capital2
$0
$20
$40
$60
$80
$100
$120
$140
Project 1 Project 2 Fort Hills
Cos
ts in
C$
Thou
sand
s pe
r Bar
rel/d
ay
Capital Cost Per Flowing Barrel
Full project cost including spent to date:
C$84
88
Source: Alberta Energy bitumen valuation methodology (http://www.energy.alberta.ca/OilSands/1542.asp)1. Estimates are based on exchange rates as shown, expected bitumen netbacks, operating costs of C$25 per barrel (including
sustaining capital of C$3-5 per barrel) and Phase 1 (pre-capital payout) royalties.
Cash Margin1 Calculation Example
Teck seeks to secure dedicated transportation capacity for Fort Hills volumes to key markets to minimize WCS discount
~75%Bitumen
~25%Diluent
Typical Diluted Bitumen (Dilbit) Blend
Western Canadian Select (WCS) at Hardisty
Example Scenarios
WTI Exchange(US$/C$)
BitumenNetback
Cash Margin1
US$50 $0.75 C$37 C$11
US$60 $0.80 C$43 C$16
US$70 $0.85 C$48 C$21
Fort Hills Bitumen Netback Calculation Model
$60 $60
$43
$16
$0
$10
$20
$30
$40
$50
$60
$70
$80
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Strategy for Diversified Market Access
Teck Marketing Plan for 50 kbpd Diluted Bitumen Blend
Cushing
Flanagan
Houston
Kitimat
HardistyEdmonton
Saint John
N.E. US
US Gulf Coast
Europe
Asia
TransCanada Energy East (Europe, Asia, US Gulf Coast, N.E. US)Teck can enter long-term commitments
Enbridge Northern Gateway (Asia)
Keystone XL (US Gulf Coast and export)Enbridge Flanagan South (US Gulf Coast)
Vancouver
TransMountain Pipeline (Asia)
Steele City
Asia
Europe
Asia
Superior
Sufficient export capacity in place, including pipeline and rail capacity• 3rd parties seeking to reduce committed pipeline
capacity, due production cuts
Seeking long term market access to US Gulf Coast and deep water ports • Secured 425 kbbls dedicated storage capacity at
Hardisty• Evaluating options to secure pipeline capacity:
− Keystone XL to US Gulf− Transmountain expansion to Vancouver− Energy East to East coast
90
Sufficient Transportation Capacity in Western Canada
Assumptions
• Fort Hills first oil late 2017
• Enbridge mainline capacity expansions move forward
• Two of the proposed new export pipelines are put in place between 2019-2022
− Providing incremental capacity of 1.0-1.6 MM bbls/day
− Based on three potential new pipelines:• TransMountain TMX• Keystone XL• Energy East
− Northern Gateway delayed
Source: CAPP (Canadian Association of Petroleum Producers), Lee& Doma, Teck
Sufficient pipeline & rail capacity to accommodate all production
2 New Pipelines
Western Canadian Transport Supply & Demand
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Milli
on b
bls/
day
2015 CAPP Supply Forecast 2014 CAPP Supply ForecastTotal Pipeline Total Pipe plus Rail
Con
stra
ined
P
ipe
&
Bal
ance
d R
ail Constrained Pipe &
Excess RailExcess PipeBalanced
Pipe
Constrained Pipe &
Balanced Rail
Enbridge Expansions
Fort Hills’ First Oil
91
East Tank Farm Blending w/Condensate
Committed Logistics Solutions in Alberta
Pipeline/Terminal OperatorPipelineCapacity(kbpd)
Teck Capacity(kbpd)
Status
Northern Courier Hot Bitumen TransCanada 202 40.4 Construction- ROW cleared, 30km complete
East Tank Farm - Blending Suncor 292 58.4 Construction- Civil construction and tank foundation work initiated
Wood Buffalo Blend Pipeline Enbridge 550 65.3 In service
Wood Buffalo Extension Enbridge 550 65.3 Regulatory - Permit application to be submitted by end of Q3 2015, ISD May 2017
Norlite Diluent Pipeline Enbridge 130 18.0 Regulatory - Permit and construction start-up expected in Q3, 2015. ISD May 2017
Hardisty Blend Tankage Gibsons 425kbbls 425kbbls Construction- Civil work ongoing, materials ordered: ISD May 2017
Wood BuffaloExtension
NorliteDiluent Pipeline
Cheecham Terminal
Hardisty Terminal
Wood Buffalo Pipeline
AthabascaPipeline
Edmonton Terminal
Fort HillsMine Terminal
Northern CourierHot Bitumen Pipeline
Teck
OptionsExport Pipeline
Rail
Local Market
Pipeline LegendBitumenBlendDiluentExistingNew
Kirby AthabascaTwin Pipeline
92