Teck Resources Limited Class A · TSX:TECK.A
Teck Resources Limited Class A — BMO Global Metals & Mining Conference 2015
82 slides from Teck Resources Limited Class A's conference presentation, Feb 24, 2015
Slide 1: BMO Global Metals & Mining Conference
GLOBAL METALS & MINING CeOUNGE TE SR SEONECUE one. | g =< a ee ew ' =< & 7 iM ; BMO ®& Capital Markets February 24, 2015
Slide 2: Forward Looking Information
Forward Looking Information Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario)
Slide 3: Forward Looking Information
Forward Looking Information Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but are not limited to: unanticipated developments in business and economic conditions in the principal markets for Teck’s products or in the su
Slide 4: Agenda
Agenda Teck Overview Commodity Market Observations Teck Update 4
Slide 5: About Us
About Us Canada’s Largest Diversified Natural Resources Company # 1 Producer of steelmaking coal in North America Top ten copper miner in the # 2 Seaborne exporter of Americas steelmaking coal globally #3 zinc miner in the Building an world energy business Implementing a Safety is our core comprehen
Slide 6: Attractive Portfolio Of Long-Life Assets & Resources
Attractive Portfolio Of Long-Life Assets & Resources Focused on the Americas & Low Risk, Stable Jurisdictions Strong Resource Position With Sustainable Long-Life Assets Coal Resources >100 years Copper Resources >30 years Zinc Resources >20 years Energy Resources >50 years Producing through multiple
Slide 7: The Value of Our Diversified Business Model
The Value of Our Diversified Business Model Cash Operating Profit 2014 2015 Leverage to Strong Commodities Production Unit of Estimated Estimated Guidance1 Change Profit 2 EBITDA2 Coal 27 Mt US$1/tonne $21M /$1∆ $32M /$1∆ Base Copper Coal Metals ~60% ~1/3rd Copper 350 kt US$0.01/lb $5M /$.01∆ $8M /$
Slide 8: Agenda
Agenda Teck Overview Commodity Market Observations Teck Update 8
Slide 9: China's Growth: Less is More!
China’s Growth: Less is More! In absolute terms, China’s GDP growth is approximately double that of 10 years ago GDP Increment at 2005 Constant Prices in RMB 3,500 15% Incremental GDP in 2015 is 3,000 13% expected to be similar to 11% 2,500 last year, in absolute terms 9% 2,000 • 2014: RMB 2.95 tril
Slide 10: Met Coal Market Rebalancing; Higher Prices in C$ Terms
Met Coal Market Rebalancing; Higher Prices in C$ Terms Coal Prices By Currency Argus FOB Australia • ~30 Mt cutbacks announced, slowly 160 being implemented 150 • Require additional cutbacks to AUS$ 140 achieve market balance $ / tonne 130 • US coal production high end of cost CDN$ curve and no curr
Slide 11: Copper Surplus Forecast Declining
Copper Surplus Forecast Declining Wood Mackenzie Forecast Wood Mackenzie Forecast Refined Copper Surplus 2014 Refined Copper Surplus 2015 900 900 800 800 700 700 600 600 Thousand Tonnes Thousand Tonnes 500 500 400 400 300 300 200 200 100 100 0 0 Apr-12 Oct-12 Feb-13 Apr-13 Oct-13 Feb-14 Apr-14 Oct-1
Slide 12: Zinc Inventories Declining
Zinc Inventories Declining LME Zinc Stocks - 11 Years LME Zinc Stocks – Since Dec 2012 120¢ 250¢ 1,400 1,200 1,200 100¢ 1,100 200¢ 1,000 80¢ 1,000 thousand tonnes 150¢ thousand tonnes 800 900 60¢ US¢/lb US¢/lb 100¢ 600 800 40¢ 400 700 50¢ 200 20¢ 600 0¢ 0 0¢ 500 2003 2004 2005 2006 2007 2008 2009 20
Slide 13: Declining Drilling Activity Will Impact Oil Production
Declining Drilling Activity Will Impact Oil Production North American Weekly Oil Rig Count 2,000 Down • Surge in supply last ~5 563 rigs or 35% years primarily due to in twelve weeks US shale oil • Shale oil field decline # Oil Rigs 1,500 rates ~25% to 50%, compared to global average of 8% • Product
Slide 14: Agenda
Agenda Teck Overview Commodity Market Observations Teck Update 14
Slide 15: Controlling the Controllables
Controlling the Controllables • Solid performance – met or exceeded guidance - Record coal production - Record throughput at Antamina - Record zinc production at Red Dog • Significantly reduced controllable operating costs and planned capex • Maintained a strong balance sheet 15
Slide 16: Delivering Results in Cost Management
Delivering Results in Cost Management Copper Cash Costs1 Steelmaking Coal All-In Site Costs 2.50 80 76 2.08 69 70 2.00 1.80 19 60 18 1.50 ~$1.50 50 US$/lb net of 40 C$/t 1.00 by- 30 57 product 51 0.50 credits 20 10 0.00 0 2012 2015 Guidance (Mid) 2012 2015 Guidance (Mid) 2 Operating Capitalized Stri
Slide 17: Fort Hills' Economics Robust
Fort Hills’ Economics Robust1 $70 WTI & $90 WTI & Fort Hills Free Cash Flow Yield4 Potential Contribution $0.80 $0.90 from Fort Hills CAD/USD CAD/USD Sensitivity to WTI Price 25% Teck’s share of annual production 13 Mbpa 13 Mbpa (36,000 bpd) Estimated netback2 ~$54/bbl ~$63/bbl 20% Estimated operati
Slide 18: Strong Balance Sheet & Liquidity
Strong Balance Sheet & Liquidity Liquidity of >C$5B, including C$2B cash and undrawn US$3B line of credit Investment Grade Rating • Debt-to-debt-plus-equity of 31% $3,000 • US$300M of notes due to end of 2016 • Weighted average maturity ~14 years $2,000 ~US$1.75 B • Weighted average coupon (interest
Slide 19: Fort Hills Capex Well Supported By Free Cash Flow & Liquidity
Fort Hills Capex Well Supported By Free Cash Flow & Liquidity Effect of Disclosed Sensitivities ∆ 2014A Estimated On Free Cash Flow2 (before Fort Hills Capex)1 Sensitivity 2014A Current3 to Spot EBITDA1 1600 CAD/USD $1.10 $1.25 $0.15 $52M /$0.01∆ 1400 +$201 Oil – WTI $93.00 $52.75 ($40.25) $5M ($568
Slide 20: Summary
Summary Attractive portfolio of long-life assets & resources Good leverage to strong zinc & copper markets Executing well & controlling the controllables Solid financial position Investment grade credit rating 20
Slide 21: BMO Global Metals & Mining Conference
GLOBAL METALS & MINING CeOUNGE TE SR SEONECUE one. | g =< a ee ew ' =< & 7 iM ; BMO ®& Capital Markets February 24, 2015
Slide 22: Teck Additional Information
Teck Additional Information
Slide 23: Diversified Global Customer Base
Diversified Global Customer Base China North 26% America Europe 20% 18% Asia excl. China 33% Latin America 3% Diversified Portfolio of Key Commodities Coking coal Zinc Moly Germanium Copper Lead Silver Indium 23 Source: Teck Resources Limited; 2014 revenue
Slide 24: Solid Delivery Against 2014 Guidance
Solid Delivery Against 2014 Guidance Original Guidance Actual Results Steelmaking 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
Slide 25: 2015 Production & Site Cost Guidance
2015 Production & Site Cost Guidance Actual 2014 2015 Guidance Steelmaking Coal Coal production 26.7 Mt 26.5-27.5 Mt Coal site costs C$54 /t1 C$49-53 /t Coal transportation costs C$38 /t C$37-40 /t Combined coal costs C$92 /t C$86-93 /t Combined coal costs US$84 ~US$69-74 /t2 Copper Copper productio
Slide 26: 2015 Capital Expenditures Guidance
2015 Capital Expenditures Guidance Major New Mine Capitalized ($M) Sustaining Enhancement Development Sub-total Stripping Total Coal $100 $45 $ - $145 $490 $635 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 $775 $
Slide 27: Significant Benefits from Low Oil Prices
Significant Benefits from Low Oil Prices Low oil price benefits Teck overall in the near-term • Reduces operating costs by hundreds of millions of dollars annually1 • Accompanied weaker Canadian dollar improves EBITDA by hundreds of millions of dollars annually2 Reduces budget and schedule pressure
Slide 28: Collective Agreements
Collective Agreements Operation Expiry Dates Line Creek In Negotiations - May 31, 2014 Coal Mountain In Negotiations - December 31, 2014 Antamina July 23, 2015 September 30, 2015 Carmen de Andacollo December 31, 2015 Elkview October 31, 2015 October 30, 2015 Quebrada Blanca November 30, 2015 January
Slide 29: Share Structure & Principal Shareholders
Share Structure & Principal Shareholders Teck Resources Limited March 3, 2014 Shares Held Percent Voting Rights Class A Shareholdings Temagami 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
Slide 30: Family-Controlled Public Issuers
Family-Controlled Public Issuers • Common corporate structure in Cumulative Average Growth Rate 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 structu
Slide 31: Family-Controlled Public Issuers; Teck Share Price Performance
Family-Controlled Public Issuers; Teck Share Price Performance Teck has been a strong Long-term investments in Teck have investment in recent years outperformed non-family and materials firms Source: The Impact of Family Control on the Share Price Performance of Large Canadian Publicly-Listed Firms
Slide 32: Returned Cash To Shareholders
Returned Cash To Shareholders Annualized Dividend Payout • Aim to pay a sustainable dividend that $0.90 $0.80 grows commensurate with growth in $0.70 earnings and cash flow $0.60 $0.50 - Since January 2013, semi-annual $0.40 payment of $0.45; annualized $0.90 $0.30 $0.20 • Normal Course Issuer Bid i
Slide 33: Teck Economic Outlook
Teck Economic Outlook
Slide 34: Substantial Economic Growth Requires Decades to Achieve
Substantial Economic Growth Requires Decades to Achieve Per Capita GDP Relative to the US at PPP % China’s GDP is ~20% of the 100 US’s on a per capital basis Japan 90 80 70 60 Korea 50 40 30 20 China 10 0 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 With the right policies, China stil
Slide 35: Substantial Potential For Continuous Robust Growth in China
Substantial Potential For Continuous Robust Growth in China 20-Year Period Average Annual GDP Beginning When Country’s Growth Rate Country Per Capital GDP Was 21% of US’s Over a 20-Year Period Japan 1951-1971 9.2 Singapore 1967-1987 8.6 Taiwan 1975-1995 8.3 Korea 1977-1997 7.6 China* 2008-2028 8.0 O
Slide 36: Room for Further Development in China
Room for Further Development in China Per Capita GDP, Relative to the US China Annual Per Capita GDP by Region 100 80,000 90 70,000 80 60,000 70 50,000 60 RMB 50 40,000 40 30,000 30 20,000 20 10 10,000 0 0 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
Slide 37: Room for Further Development in China
Room for Further Development in China 2 Urbanization Rate Comparison China Annual Urbanization Rate 100 60% 90 80 50% 70 % of Total Population 40% 60 50 30% % 40 20% 30 20 10% 10 0 0% 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 1997 1998 1999 2000 2001 2002 2003 2004 2
Slide 38: Room for Further Development in China
Room for Further Development in China 3 Capital Stock Per Capita Chinese Railways Remain Crowded (US$ at constant 2005 prices) $140 6 40 $120 US$ (Thousands) $100 $80 35 5 $60 $40 30 $20 $0 4 25 Thousand kilometers 2010 2010 1930 2009 China China at PPP US 3 20 % Capital Stock Per Capita 15 (US$ at
Slide 39: Global Urbanization
Global Urbanization China and India Leading the Way • Despite China’s rapid urbanization over Urbanization Rates the past decade (to 54.77% in 2014), it is 90% still lower than the Western world who are 80% all ~80% 70% - China’s current urbanization rate is 60% comparable to Japan’s in the 1950s 50
Slide 40: Steelmaking Coal Business Unit & Markets
Steelmaking Coal Business Unit & Markets
Slide 41: Global Hot Metal Production
Global Hot Metal Production A Look Back and Forward Hot Metal Production Growth 1,350 • China’s hot metal production continues 1,150 to grow - 2004: 258 Mt 950 - 2014: 712 Mt, representing 2.5x the 2004 level and ~60% of global output Mt - 2019E (CRU International) ~840 Mt 750 • Excluding China, glo
Slide 42: Steel Production Growing Globally
Steel Production Growing Globally Monthly Steel Production 75 65 China Traditional Steel Markets 55 45 • China slower growth 16 EU • Japan stable 14 12 • South Korea good growth Mt 10 Japan 8 USA Outside of Asia 6 South Korea 4 • Europe still weak 2 • US good growth 0 Update to December2014 42 Sourc
Slide 43: Chinese Steel Industry Moving to the Coast
Chinese Steel Industry Moving to the Coast 900 70% 800 65% 700 600 60% Heilongjiang 500 Ansteel Baiyunquan Project 55% Mt • Phase 1 (~ 5.4 Mt pig iron, 5.2 Mt crude 400 Jilin steel and 5 Mt steel products) in 2013. 300 Xinjiang50% • Phase 2 (5.4 Mt BF) planned but no 200 Laioning progress yet. 45% I
Slide 44: China's Domestic Coking Coal Production
China’s Domestic Coking Coal Production China’s Domestic Coking Coal Production 2013-2014 60 20% Annual production flat at ~530 Mt 50 15% Shanxi coal production to be 40 limited in future 10% • Environment pressures Mt 30 5% • No new projects to be permitted 20 before 2020 10 0% • Permitted producti
Slide 45: Further Cuts Needed in the Coal Market
Further Cuts Needed in the Coal Market Seaborne Metallurgical Coal Margin Curve at Spot Price of US$115/t • ~30 Mt of production cuts announced - Slightly less than half Teck implemented by year end • Margin curve shows around one third of seaborne met coal is operating at negative margin1 - Implies
Slide 46: Growing Steelmaking Coal Imports to China
Growing Steelmaking Coal Imports to China China's Coking Coal Imports China Rolling 12-Month Coking Coal Imports and Stock Change at Ports 100 2019F1: 96 Mt 70 90 60.0 60 80 50 47.7 70 60 40 Mt Mt 50 30 40 30 20 15.4 14.8 13.2 20 10 6.6 10 0 0 May-10 Jul-09 Jul-14 Feb-09 Mar-11 Oct-10 Apr-13 Feb-14
Slide 47: We Are a Leading Steelmaking Coal Supplier To Steel Producers Worldwide
We Are a Leading Steelmaking Coal Supplier To Steel Producers Worldwide High quality, consistency, reliability, long-term supply Asia excl. China North ~50% America Europe China ~5% ~15% ~25% Latin America ~5% 47 Source: Teck Resources Limited; 2014
Slide 48: Premium Steelmaking Coal Product
Premium Steelmaking Coal Product Hard Coking Coal Benchmark Price 88% Average realized price discount to benchmark is a function of: 350 96% 93% 1. Product mix: over 90% is hard 300 coking coal 250 94% 92% 2. Carry over sales volumes 200 3. Direction of quarterly benchmark US$ / tonne 150 prices and
Slide 49: Coking Coal Strength
Coking Coal Strength High Quality Hard Coking Coal 80 U.S.A. • Around the world, and Canada Other Australia Teck HCC (hard coking) especially in China, blast 70 Australia Japan and Canada furnaces are getting larger South Africa Teck HCC and increasing PCI rates 60 Japan U.S.A. • Coke requirements f
Slide 50: Steelmaking Coal Costs
Steelmaking Coal Costs Total Cash Cost 2015 vs. 2014 120 2014 2015E* 105 (US$/t) ($1.10 ($1.25 100 CAD/USD) CAD/USD) 89 Site1 $49 $41 80 Transportation 35 $31 US$/t 60 IFRS Total $84 $72 40 IFRS Capitalized Stripping $15 $15 Costs Full Cash Cost $99 $86 20 Sustaining Capex $6 $3 0 2014 2015E Total C
Slide 51: Capacity Grown to 28 Mt
Capacity Grown to 28 Mt Material Moved Quarterly Coal Production 80 8 7 70 6 Millions of BCM Million Tonnes 60 5 4 50 3 2 40 1 30 0 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10
Slide 52: Potential for Further Capacity Growth
Potential for Further Capacity Growth Potential Production Increase Scenarios Given Teck’s large resource base, 50 there are a number of options available or under study to allow 40 production growth as the market requires: Production (Mt) • Quintette restart (up to 4 Mtpa) 30 • Coal Mountain Phase
Slide 53: >75 Mt of West Coast Port Capacity Planned
>75 Mt of West Coast Port Capacity Planned Teck Portion at 40 Mt Westshore Terminals • Teck is largest customer at 19 Mt West Coast Port Capacity • Large stockpile area 40 • Recently expanded to 33 Mt • Planned growth to 36 Mt 35 3 30 Neptune Coal Terminal Million Tonnes (Nominal) 25 • Exclusive to
Slide 54: LNG for Haul Trucks Project
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 Fu
Slide 55: Copper Business Unit & Markets
Copper Business Unit & Markets
Slide 56: Copper Prices & Stocks
Copper Prices & Stocks LME Daily Copper Prices & Stocks 500¢ 1000 400¢ 800 thousand tonnes US¢/lb 300¢ 600 200¢ 400 100¢ 200 0¢ 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 plotted to LME Stocks Price February 6, 2015 56 Source: LME
Slide 57: Copper Concentrate TC/RC
Copper Concentrate TC/RC Copper Concentrate TC/RC 60¢ 50¢ TC/RC – Nominal US¢/lb 40¢ 30¢ 20¢ 10¢ 0¢ 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 plotted to Spot Realised TC/RC January 2015 57 Source: CRU
Slide 58: Copper Production Disruptions Continue
Copper Production Disruptions Continue Copper Disruptions 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 0 -100 -171 Thousand tonnes contained copper -200 -300 -384 -297 -400 -500 -524 -600 -700 -776 -800 -851 -831 -859 -900 -950 -945 -941 -947 -930 -1,000 58 Source: ICSG, Wood M
Slide 59: China Expected to Add Almost As Much to Global Demand
China Expected to Add Almost As Much to Global Demand in the Next 15 Years as the Past 25 Years Annual Growth Rate of Chinese Copper … But Will Add Significantly Consumption to Slow Dramatically… in Additional Tonnage Terms 30% 1,400 Annual Avg. 13% 1,200 25% Annual Avg. 505mt/yr growth 1,000 Thousa
Slide 60: China's Copper Imports Remain Strong
China’s Copper Imports Remain Strong China Now Accounts for >49% of Global Copper Consumption 1,000 900 800 000’s tonnes (content) 700 600 500 400 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Cathode Concs Scrap Blister/Semis 60 Source: Antaike
Slide 61: China Copper Imports Continue to Grow
China Copper Imports Continue to Grow Copper Concentrates Net Imports Refined Copper Net Imports 350 3,500 400 3,500 300 3,000 350 3,000 250 2,500 300 2,500 250 200 2,000 2,000 200 150 1,500 1,500 150 100 1,000 100 1,000 50 500 50 500 0 0 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb M
Slide 62: Zinc Business Unit & Markets
Zinc Teck Business Unit & Markets
Slide 63: Zinc Prices & Stocks
Zinc Prices & Stocks LME Daily Zinc Prices & Stocks 250¢ 1,400 1,200 200¢ 1,000 thousand tonnes US¢/lb 150¢ 800 600 100¢ 400 50¢ 200 0¢ 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 plotted to Stocks Price Feb 6, 2015 63 Source: LME
Slide 64: Zinc Treatment Charges
Zinc Treatment Charges Zinc Spot TCs vs. Realized Annual TCs $600 $500 $400 US$/dmt $300 $200 $100 $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 plotted to Spot Annual Realised January 2015 64 Source: Teck, CRU
Slide 65: Significant Zinc Mine Reductions
65 -600 -500 -400 -300 -200 -100 0 Century Rampura Agucha Lisheen Perseverance Red Dog Pomorzany 2013-2017 Brunswick Zyryanovsk Mae Sod Paragsha Angas Source: ICSG, Wood Mackenzie Teck, Company Reports -600 -500 -400 -300 -200 -100 0 Century Rampura Agucha Significant Zinc Mine Reductions; Lisheen S
Slide 66: Future Potential for Zinc Consumption
Future Potential for Zinc Consumption % Galvanized Steel of Crude Production • In 2014 China produced over 822 20% 19% million tonnes of crude steel and 52 18% million tonnes of galvanized steel sheet 16% 14% • In 2014 the US produced 88 million tonnes of crude steel and over 16 12% million tonnes o
Slide 67: Energy Business Unit & Markets
Energy Business Unit & Markets
Slide 68: Diesel & Crude Oil Prices
Diesel & Crude Oil Prices Diesel Prices vs. WTI Prices 2007-2014 $160 Average Diesel Premiums: $120 2007-2014: C$0.22/litre 2011-2014: C$0.27/litre $140 $100 $120 $80 WTI (US$/bbl) $100 CAD$ cents/L $80 $60 $60 $40 $40 $20 $20 $- $- Jan-07 May-08 Sep-09 Feb-11 Jun-12 Nov-13 Mar-15 WTI (US/bbl) (rhs)
Slide 69: Declining Drilling Activity Will Impact Production
Declining Drilling Activity Will Impact Production North American Weekly Oil Rig Count • Surge in supply last ~5 2,000 years primarily due to US shale oil • Shale oil field decline # Oil Rigs rates ~25% to 50%, 1,500 compared to global average of 8% • Production correction likely to occur relatively
Slide 70: The Real Value of Long-Life Assets
The Real Value of Long-Life Assets Fort Hills Project Indicative Rolling NPV1 • 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
Slide 71: Building An Energy Business
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 Mined bitumen is in Teck’s ‘sweet spot’ 71
Slide 72: World Class Energy Reserves & Resources
World Class Energy Reserves & Resources Bitumen Reserves Teck’s Share World-Class (million bbl) Energy Proved Reserves & Resources Probable Proved Plus Probable 1 Fort Hills 414 194 608 Contingent Bitumen Resources2 Project Teck’s Share (million bbl) Low Best High Low Best High 1 Fort Hills 0 128 75
Slide 73: Fort Hills Is One of the Best Undeveloped Oil Sands Mining Leases
Fort Hills Is One of the Best Undeveloped Oil Sands Mining Leases Strip Ratio vs. Ore Grade • >3 billion bbls of proven plus probable 12 reserves of bitumen - Production 180,000 barrels per day (bpd) of bitumen 11.5 Fort Hills - Teck’s share is significant at 36,000 bpd; equivalent to 13 million bar
Slide 74: Fort Hills Is Part Of A New Breed Of Mineable Oil Sands Projects
Fort Hills Is Part Of A New Breed Of Mineable Oil Sands Projects Legacy Oil Sands Mining Projects (~30 Years Ago) Diluted Bitumen Synthetic Oil (Doesn’t meet commercial pipeline specs) Naphtha froth treatment process Mine & Extraction On-Site Upgrader Simple Refinery ($10-15B) Oil Sands Mining Proje
Slide 75: Fort Hills' Project Operator Has A Proven Track Record
Fort Hills’ Project Operator Has A Proven Track Record Project Bitumen Capacity1 Suncor is the largest operator in the oil sands Millennium/North Steepbank Mine 310-330 kb/d and has been developing projects in close Firebag In Situ Stages 1-4 180 kb/d proximity to Fort Hills for 50 years MacKay Rive
Slide 76: Minimizing Execution Risk In The Fort Hills Project
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 Suncor has completed 4 • Balanced manpower profile projects of ~$20 billion over last
Slide 77: Competitive Costs for Fort Hills
Competitive Costs1 for Fort Hills Fully Escalated Capital Cost Per Flowing Barrel Go-Forward Capital2 Project Capital: ~C$13.5 billion $140 Full project cost Teck Capital: including spent to date: Costs in C$ Thousands per Barrel/day $120 C$84 • Fully-escalated capital investment: ~C$2.94B over four
Slide 78: Bitumen Netback Calculation Model
Bitumen Netback Calculation Model Typical Diluted Bitumen Bitumen Netback Calculation Example* (Dilbit) Blend Western Canadian Select $90 (WCS) at Hardisty $80 US$75.00 C$75.00 $70 $60 C$56.50 ~25% $50 Diluent $40 $30 ~75% $20 Bitumen $10 $0 Bitumen WTI Netback US$60 C$42.75 US$75 C$56.50 US$90 C$70
Slide 79: Heavy Oil Price Differential
Heavy Oil Price Differential West Texas Intermediate (WTI) & WTI-WCS Differential Western Canadian Select (WCS) Prices $120 $45 $40 $100 $35 $80 $30 $25 US$/barrel US$/barrel $60 $20 $40 $15 $10 $20 $5 $0 $0 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-1 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Plotted t
Slide 80: Competitive Bitumen Margins
Competitive Bitumen Margins1 Typical Bitumen Producer Low Quartile Cost Copper Mine Netback2 LME Price $56.50/bbl US$2.50/lb Cash Margin 56% Cash Margin 50% $31.50 Margin US$1.25 Margin Cash Costs Cash Costs $25.00 US$1.25 Fort Hills’ cash margins are expected to be comparable to the lowest cost min
Slide 81: Logistics Solutions Planned Between Fort Hills, Edmonton and Hardisty
Logistics Solutions Planned Between Fort Hills, Edmonton and Hardisty Fort Hills Nominal Teck Mine Terminal Pipeline/Terminal Operator Capacity Capacity (kbpd) (kbpd) Northern Courier TransCanada 202 40.4 Hot Bitumen East Tank Northern Courier Suncor 292 58.4 Farm- Blending Hot Bitumen Pipeline Wood
Slide 82: Multiple Options To Reach International Markets From Western Canada
Multiple Options To Reach International Markets From Western Canada Common Carriage Pipeline • No take or pay commitments • When pipe capacity is constrained, access to capacity Markets may be apportioned and netback prices are discounted • US Mid- Continent • US Gulf Contract Carriage Pipeline Coas
Teck Resources — BMO Global Metals & Mining Conference 2015 on 6ix