Teck Reports Unaudited Second Quarter Results for 2019

Press Release

• Updated capital allocation policy and increased share buy-back by $600 million to $1.0 billion
• B.C. Government has endorsed the use of saturated rock fills for water treatment at our steelmaking coal operations
• Implementing our RACE21^TM innovation-driven efficiency program to generate an initial $150 million in annualized EBITDA¹ improvements by the end of 2019

Vancouver, B.C. – Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (“Teck”) reported adjusted EBITDA² of $1.2 billion for the second quarter. Profit attributable to shareholders was $231 million ($0.41 per share) for the second quarter of 2019 compared with $634 million ($1.10 per share) a year ago. Adjusted profit attributable to shareholders^{1 2} was $459 million ($0.81 per share) compared with $653 million ($1.14 per share) a year ago.

“We achieved a number of important milestones in the second quarter that have put Teck in a strong position moving forward,” said Don Lindsay, President and CEO. “The B.C. Government endorsed saturated rock fills to treat water at our steelmaking coal operations, we updated our capital allocation framework to reflect our focus on returning additional cash to shareholders and we are accelerating our innovation-driven efficiency program RACE21™ and aim to generate annualized EBITDA improvements.”

“These measures are part of Teck’s straightforward strategy of running our operations safely, efficiently and sustainably to generate cash, successfully executing our QB2 Project and returning excess capital to shareholders,” added Lindsay.

Significant Items

• We have updated our capital allocation framework to reflect our intention to make additional returns to shareholders by supplementing our base dividend with at least an additional 30% of available cash flow1 through supplemental dividends and/or share repurchases.
• We announced that we will apply an additional $600 million to repurchase Class B subordinate voting shares, bringing the previously announced share buy-back under our normal course issuer bid to $1.0 billion. To date, we have repurchased approximately 18.8 million in shares for $552 million.
• The B.C. Government has endorsed saturated rock fills (SRFs) and we have received approval to begin construction to expand the SRF at our Elkview Operations. We estimate that over the long term, SRFs will significantly reduce capital and operating costs compared to active water treatment facilities of similar capacity.
• We expect to generate an initial $150 million in annualized EBITDA improvements by the end of 2019 through the implementation of our RACE21TM innovation-driven efficiency program. We continue to review additional initiatives and will provide guidance on further potential EBITDA improvements for 2020 in February 2020 along with our normal annual guidance.
• Profit attributable to shareholders was $231 million ($0.41 per share) in the second quarter compared with $634 million ($1.10 per share) a year ago. Adjusted profit attributable to shareholders was $459 million ($0.81 per share) compared with $653 million ($1.14 per share) in the second quarter of last year.
• EBITDA was $808 million in the second quarter compared with $1.4 billion in the second quarter of 2018. Our adjusted EBITDA in the second quarter totaled $1.2 billion compared with $1.4 billion last year.
• Gross profit was $1.1 billion in the second quarter compared with $1.2 billion a year ago. Gross profit before depreciation and amortization1 2 was $1.4 billion compared with $1.6 billion in the second quarter of 2018.
• Despite government-imposed production curtailments, our energy business unit had strong performance in the second quarter. Our share of Fort Hills EBITDA was $70 million compared with $22 million in the first quarter of this year and $13 million in the second quarter of last year.
• Consistent with our capital allocation framework, we announced that we will not proceed with the MacKenzie Redcap extension at our Cardinal River steelmaking coal operation and the operation will close in the second half of 2020. As a result of this decision, we have recorded an after-tax asset impairment charge in the second quarter of $109 million.
• Construction at QB2 continues to advance. Critical path construction activities are on track and the project continues to ramp-up civil and infrastructure activities with over 3,100 people actively working on site across the six major construction areas. First production is targeted for the fourth quarter of 2021.
• In May we signed a US$2.5 billion limited recourse project financing facility to fund the development of the QB2 Project, which is expected to close in the third quarter.
• We redeemed US$600 million of outstanding 8.5% notes due in 2024, reducing our outstanding notes to US$3.2 billion with no significant maturities until 2035. We recorded an after-tax charge of $166 million on the transaction.
• Our liquidity remains strong at $6.8 billion, including $1.6 billion in cash at July 24, 2019, of which $1.0 billion is on deposit in Chile for the development of the QB2 Project.
• We were recognized as one of the top companies in Canada for corporate citizenship, placing fourth on the Best 50 Corporate Citizens in Canada ranking by Corporate Knights. This marks the thirteenth consecutive year that we have been named to the Best 50.
• We have amended our 2019 capital expenditure guidance, operating cost guidance for our copper and zinc business units and production guidance in our steelmaking coal business unit. All changes are outlined in our Guidance tables on pages 32 to 35.

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.}

This management’s discussion and analysis is dated as at July 24, 2019 and should be read in conjunction with the unaudited consolidated financial statements of Teck Resources Limited (“Teck”) and the notes thereto for the three and six months ended June 30, 2019, the unaudited condensed financial statements of Teck and the notes theretofore the three months ended March 31, 2019 and with the audited consolidated financial statements of Teck and the notes thereto for the year ended December 31, 2018. In this news release, unless the context otherwise dictates, a reference to “the company” or “us,” “we” or “our” refers to Teck and its subsidiaries. Additional information, including our Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, is available on SEDAR at www.sedar.com.

This document contains forward-looking statements. Please refer to the cautionary language under the heading “CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION” below.

Profit and Adjusted Profit

			Three months ended June 30,		Six months ended June 30,
(CAD$ in millions)			2019	2018	2019	2018
Profit attributable to shareholders			$  231	$  634	$    861	$ 1,393
Add (deduct):
Debt prepayment option (gain) loss			(26)	15	(77)	24
Debt redemption loss			166	–	166	–
Asset impairment			109	–	109	–
Taxes and other			(21)	4	(32)	(11)
Adjusted profit attributable to shareholders1			$  459	$  653	$ 1,027	$ 1,406
Adjusted basic earnings per share1 2			$ 0.81	$ 1.14	$   1.82	$   2.45
Adjusted diluted earnings per share1 2			$ 0.81	$ 1.12	$ 1.80	$ 2.41

Investor Contact:
Fraser Phillips
Senior Vice President, Investor Relations & Strategic Analysis
604.699.4621
fraser.phillips@teck.com

Media Contact:
Marcia Smith
Senior Vice President, Sustainability and External Affairs
604.699.4616
marcia.smith@teck.com

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