Teck Reports Unaudited Annual and Fourth Quarter Results for 2020

Notes:
1. Non-GAAP Financial Measure. See “Use of Non-GAAP Financial Measures” section for further information.
2. See “Use of Non-GAAP Financial Measures” section for reconciliation.

• In Q4 2020, we recorded a non-cash, pre-tax impairment of $597 million (after-tax $438 million) on our interest in Fort Hills.
• Liquidity of $6.5 billion as at February 17, 2021.

Key Updates
Executing on our copper growth strategy – QB2 a long-life, low-cost operation with major expansion potential

• Through Q4 2020, the project continued its staged ramp up of the construction workforce to pre-COVID-19 levels in line with our plans developed in Q2 2020.
  • The project continues to enhance its protocols for, and management of, COVID-19;
  • Work is progressing across the project in line with our current plan;
  • Achieved our target of overall project progress of 40% at year end, and;
  • First production is expected in the second half of 2022, but is dependent on our continued ability to successfully manage through the impacts of COVID-19, among other things.
• We have updated our estimate of the overall COVID-19 related project costs based on our current assumptions arising from the suspension and impacts to construction productivity seen to date under our COVID-19 protocols.
  • The estimated impact, including expensed costs and additional camp space, is expected to be approximately US$450 to US$500 million (excluding interest), an increase of approximately US$50 million over our previous guidance.
• Click here for photos of construction progress on QB2.

Operational resilience in the face of a global pandemic

• Despite ongoing challenges associated with COVID-19, in the second half of 2020 our operations performed in line with plan and without significant impacts carrying over to our 2021 operating plans.
  • All of our business units achieved H2 2020 production and sales guidance.
  • Our zinc, steelmaking coal and energy business units achieved H2 2020 unit cost guidance and our copper business unit achieved H2 2020 net unit cost guidance.
  • In 2020, our safety performance metrics were at their lowest, representing our safest year on record.

Increasing margins – not volumes – in our steelmaking coal business

• Steelmaking coal adjusted site cash cost of sales decreased in the fourth quarter to $58 per tonne, ahead of plan due to:
  • Elkview plant expansion;
  • The closure of our higher cost Cardinal River Operations;
  • Declining strip ratios, as planned;
  • Benefits of our cost reduction program; and
  • RACE21^TMinitiatives.
• We completed construction and pre-commissioning of the Elkview saturated rock fill in the fourth quarter, on schedule and below budget.
• The Neptune Bulk Terminals (Neptune) upgrade project to secure a lower cost, more reliable supply chain for our steelmaking coal is in the final phase of construction.
  • All major equipment has been installed and work activity is focused on final mechanical installations and completion of electrical and control systems. Significant new facilities have already been placed into operation and are performing to plan.
  • The surge in COVID-19 infections that started in Q4 has impacted both cost and schedule on the project, although first steelmaking coal is still expected to be handled through the new double dumper in early Q2 2021. The total cost of the project before the impact of COVID-19 is expected to be approximately 10% above our previous estimate and costs associated with COVID-19 impacts since the onset of the pandemic are estimated to be an additional $80 to $100 million.

Strong financial position

• We have US$3.7 billion available on our US$4.0 billion revolving credit facility and our US$1.0 billion revolving credit facility is undrawn as at February 17, 2021. These facilities are committed to November 2024 and June 2022, respectively. Neither facility has an earnings or cash flow based financial covenant, a credit rating trigger or a general material adverse effect borrowing condition.
• Since the launch of our cost reduction program at the beginning of Q4 2019, we have realized approximately $355 million in operating cost and $710 million in capital cost reductions. These reductions are against our expected spending that was contemplated at the end of June 2019. Our cost reduction program is now complete and reductions are included in our operating plans and guidance.

Safety and sustainability leadership

• Health and Safety is a core value for Teck. We are deeply saddened by the fatality that took place in January 2021 at our Red Dog operations. Our investigation of the incident is ongoing.
• We were named to the S&P 2020 Dow Jones Sustainability World Index for the 11th consecutive year and recognized as the industry leader in Metals and Mining. We were also recognized in January as one of the 2021 Global 100 Most Sustainable Corporations by Corporate Knights.
• We were named to the Forbes World’s Best Employers 2020 list, Canada’s Top Employers for Young People 2021 and as one of Canada’s Top 100 Employers for the fourth consecutive year by Mediacorp Canada’s Top Employer’s program.
• We were named to the 2021 Bloomberg Gender-Equality Index for the fourth straight year.
• Guidance
• Summary guidance for 2021 is outlined below and our usual guidance tables, including three-year production guidance, can be found on pages 36 — 39 of Teck’s full fourth quarter results for 2020 at the link below.

Read More: https://www.teck.com/news/news-releases/2021/teck-reports-unaudited-annual-and-fourth-quarter-results-for-2020