Q2 2023 Teck Resources Limited Earnings Call

July 27, 2023

[music].

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Teck's Q2 2023 earnings release conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. To join the question queue, press Star, then one on your touchtone phone. Should anyone need assistance during the conference call, they may signal an operator by pressing Star, then zero. This call is being recorded on Thursday, 27 July 2023. I would now like to turn the conference over to Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis. Please go ahead.

Ladies and gentlemen, thank you for standing by and welcome to <unk> second quarter 2023 earnings release Conference call.

At this time all participants are in listen only mode. Later, we will conduct a question and answer session.

She joined the question queue Press Star then one on your Touchtone phone.

Should anyone need assistance during the conference call. They may signal, an operator by pressing Star then zero.

This conference call is being recorded on Thursday July 27 2023.

I would now like to turn the conference over to Fraser Phillips Senior Vice President Investor Relations and strategic analysis. Please go ahead.

Fraser Phillips: Thanks, Caitlin. Good morning, everyone, and thank you for joining us for Teck's Q2 2023 conference call. Please note, today's call contains forward-looking statements, and various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statements. Please refer to slide 2 for the assumptions underlying our forward-looking statements. In addition, we will reference various non-GAAP measures throughout this call. Explanations and reconciliations regarding these measures can be found in our MD&A and the latest press release on our website. Jonathan Price, our CEO, will begin today's call with highlights from our second quarter results. Crystal Prystai, our CFO, will follow with additional color on the quarter. Then Jonathan will conclude the call today with an update on our copper growth strategy. Of course, we will then have open the lines to questions.

Thanks, Julien good morning, everyone and thank you for joining us protect second quarter 2023 conference call.

Please note today's call contains forward looking statements from various risks and uncertainties may cause actual results to vary Teck does not assume the obligation to update any forward looking statements.

Please refer to slide two for the assumptions under underlying our forward looking statements. In addition, we will reference various non-GAAP measures throughout this call explanations and reconciliations regarding these measures can be found in our MD&A and the latest press release on our website.

Jonathan price, our CEO will begin today's call with highlights from our second quarter results Christopher <unk>, our CFO will follow with additional color on the quarter.

Then Jonathan will conclude the call today.

With an update on our copper growth strategy and of course, we will then.

Open the lines to questions with that I will turn the call over to Jonathan.

Fraser Phillips: With that, I'll turn the call over to Jonathan.

Jonathan Price: Thank you, Fraser, and good morning, everyone. Now, before we get into the Q2 results, I'd like to begin by taking a moment to say that we are deeply saddened by the fatalities that occurred in May 2023 at our Cerro Blanco operations. Health and safety is a core value at Teck, and we are focused on our goal of every single person going home to their families safe and healthy each and every day. We undertook a thorough investigation, and learnings from the investigation are being shared across Teck and with our industry peers to help prevent future incidents. Moving now to the highlights for the Q2 on slide 4. Overall, we maintained positive momentum through the Q2, with achievements across all 4 pillars of our value creation strategy. First, we made significant investments in copper growth.

Thank you Fraser and good morning, everyone.

But before we get into the second quarter results I'd like to begin by taking a moment to say that we are deeply saddened by the fatality that occurred in May 2023 at our CRO border Blanka operations.

Health and safety is a core value of tech and we are focused on our goal of every single person going home to their families safe and healthy each and everyday.

We undertook a thorough investigation and learnings from the investigation are being shared across tech and with our industry peers to help prevent future incidents.

So moving now to the highlights for the second quarter on slide four.

Overall, we maintained positive momentum through the second quarter with achievements across all four pillars of our value creation strategy.

First we made significant investments in copper growth.

Jonathan Price: We achieved a major milestone at QB2 with the first sale of copper concentrate, and we are advancing ramp up towards full production rates later this year. We also continued to progress our copper growth pipeline, and we achieved another major milestone with the receipt of regulatory approval from the Peruvian Environmental Authority for our Zafranal project. The team did a fantastic job throughout the process, and we are very pleased to have the permit in hand. For San Nicolás in Mexico, we closed the joint venture transaction with Agnico Eagle in the quarter, and the new project management team finalized the EIA permit application in June. Second, our continued focus on execution at our operations drove strong financial performance. We generated $1.5 billion in adjusted EBITDA and ended the quarter with $7 billion of liquidity.

We achieved a major milestone at QB two with the first sale of copper concentrate and we are advancing ramp up towards full production rates later this year.

We also continued to progress our copper growth pipeline and we achieved another major milestone with the receipt of regulatory approval from the Peruvian Environmental Authority <unk> project.

Team did a fantastic job throughout the process and we are very pleased to have the permits in hand.

And for some Nicolas in Mexico, we closed the joint venture transaction with Agnico Eagle and the quarter on the New project management team finalized the EIA permit application in June .

Second our continued focus on execution on our operations drove strong financial performance, we generated $1 5 billion and adjusted EBITDA and ended the quarter with $7 billion of liquidity.

Jonathan Price: Third, our strong financial performance enabled us to return cash to shareholders while continuing to strengthen our balance sheet. We paid our quarterly base dividend, repurchased CAD 85 million of Class B shares through the NCIB, and repaid the first biannual installment on the QB2 project finance facility. Finally, we advanced our governance and sustainability initiatives. We made a step change in the advancement of our governance structure with the completion of the plan of arrangement to implement the sunset of the multiple voting rights attached to the Class A common shares. We also marked the 1-year anniversary of Teck becoming the first mining company globally to commit to the goal of becoming nature positive by 2030 with a CAD 10 million donation to the Chilean Nature Fund. This will help protect a critical global biodiversity area.

Third our strong financial performance enabled us to return cash to shareholders, while continuing to strengthen our balance sheet.

We paid our quarterly base dividend repurchased $85 million of class B shares through the NCI.

And repaid the first biannual installments on the <unk> project Finance facility.

And finally, we advanced our governance and sustainability initiatives.

We've made a step change in the advancement of our governance structure with the completion of the plan of arrangement to implement a subset of the multiple voting rights attached to the class a common shares.

We also marked the one year anniversary of <unk>, becoming the first mining company globally to commit to the goal of becoming nature positive by 2030 with a $10 million donation to the Chilean nature Fund.

This will help protect our critical global biodiversity area.

Jonathan Price: Since the launch of our Nature Positive program, I am particularly proud that Teck has helped conserve over 51,500 hectares, which is equivalent to 4.5 times the size of the city of Vancouver. Further, we are pleased that Trail became the first standalone zinc processing site globally to be awarded the Zinc Mark based on 32 responsible production criteria, including GHG emissions, community health, and respect for indigenous people's rights. We were honored to be named one of Corporate Knights' Best Corporate Citizens in Canada for the 17th consecutive year. Now, looking at our progress at QB2 on slide five. As noted earlier, we achieved a major milestone at QB2 with the first shipment and sale of copper concentrate in Q2. Line one is operating well as per expectations, and line two is now in commissioning.

Since the launch of our nature positive program I am, particularly proud that tech is help conserve over 51500 hectares, which is equivalent to four five times the size of the city of Vancouver.

Further we are pleased that trial became the first standalone zinc processing sites globally to be awarded the zinc market based on 32 responsible production criteria, including <unk> emissions community health and respect for indigenous Peoples' rights.

And we were honored to be named one of corporate Knights best corporate citizens in Canada for the 17th consecutive year.

Looking at our progress at <unk> on slide five.

As noted earlier, we achieved a major milestone in Q2 with the first shipment and sale of copper concentrate in the second quarter.

Line, one is operating well as pure expectations on line two is now and commissioning.

Jonathan Price: The concentrate pipeline, concentrate filter plant and storage systems at the port are now in operation. Due to delays in construction and commissioning, we have updated our QB2 2023 production guidance to 80,000 to 100,000 tons, but continue to expect to be operating at full production rates by the end of the year. Total QB 2023 production guidance has been revised to 90,000 to 110,000 tons, which includes 10,000 tons of cathode. Our project capital cost guidance of $8 to 8.2 billion remains unchanged. With that, I will hand it over to Crystal for additional color on the quarter.

The concentrate pipeline concentrate filter plant and storage systems at the port and now in operation.

Due to delays in construction and commissioning we have updated our Q2 2023 production guidance to 80000 to 100000 tons, but continue to expect to be operating at full production rates by the end of the year.

So total QB 2023 production guidance has been revised to 90 to 110000 tonnes, which includes 10000 tons of cathode.

Our project capital cost guidance of eight to $8 $2 billion remains unchanged.

And with that I will hand, it over to crystal for additional color on the quarter.

Crystal Prystai: Thank you, Jonathan. I'm gonna start on slide 7 with our financial results for the quarter. As Jonathan noted, we delivered solid financial performance in the quarter, driven by robust commodity prices and steelmaking coal sales. Overall, adjusted EBITDA was $1.5 billion and adjusted profit attributable to shareholders was $643 million, or $1.22 per share on a diluted basis. We paid $65 million in quarterly base dividends, completed $85 million in share buybacks, and reduced our debt through the first semi-annual repayment on our QB2 project finance facility of $147 million US. We've outlined the key drivers of our profitability on slide 8. Adjusted EBITDA was $1.5 billion in Q2.

Thank you Jonathan.

Let's start on slide seven with our financial results for the quarter.

Jonathan noted, we delivered solid financial performance in the quarter, driven by a robust commodity prices and steelmaking coal sales.

Overall, adjusted EBITDA was $1 5 billion and adjusted profit attributable to shareholders was $643 million or $1 22 per share on a diluted basis.

We paid $65 million in quarterly base dividend completed $85 million in share buybacks and reduced our debt through the first semiannual repayment on our <unk> project finance facility of $147 million U S.

We've outlined the key drivers of our profitability on slide eight.

Adjusted EBITDA was $1 5 billion in the second quarter.

Crystal Prystai: Compared to the same period in 2022, the decrease was primarily driven by lower prices for our principal products, which were at historically high levels last year, particularly for steelmaking coal. Lower prices were partially offset by a weaker Canadian dollar. Lower copper sales volumes, continued inflationary pressures on our unit costs, and the sale of Fort Hills also had a negative impact on our Q2 EBITDA compared to last year. Looking ahead, we remain highly focused on managing our controllable operating expenditures. While diesel and other fuel costs have materially declined from last year, we continue to experience inflationary pressures in the cost of key supplies, including mining equipment, tires, and contractors. Our underlying mining drivers remain relatively stable, and the continued pressures on certain input costs are already reflected in our 2023 sustaining capital and annual unit cost guidance, which are unchanged.

Compared to the same period in 2022, the decrease was primarily driven by lower prices for our principal products, which were at historically high levels last year, particularly for steelmaking coal.

Lower prices were partially offset by a weaker Canadian dollar.

Lower copper sales volumes continued inflationary pressures on our unit costs.

Bill of Fort Hills.

Also had a negative impact on our Q2 EBITDA compared to last year.

Looking ahead, we remain highly focused on managing our controllable operating expenditures.

While diesel and other fuel costs have materially declined from last year, we continue to experience inflationary pressures in our cost of key supplies, including mining equipment tires and contractors.

Our underlying mining drivers remained relatively stable and the continued pressures on certain input costs are already reflected in our 2023 sustaining capital and annual unit cost guidance, which are unchanged.

Crystal Prystai: Looking now at each of our business units in more detail and starting with Copper on slide 9. Copper production of 64,000 tons was 10% lower than the same period last year, reflecting expected lower grades as well as unplanned maintenance at Highland Valley and reduced milling rates in response to cyclone impacts at Antamina. Copper production in H2 of the year is expected to be strong, with our annual Copper production guidance excluding QB2 unchanged. Net cash unit costs were higher than the same quarter last year due to lower production and higher consumable costs, particularly for power, as well as higher maintenance costs. We expect Copper unit costs to be within our annual cost guidance range, with higher production in H2 of the year. Importantly, we achieved the first sale of copper concentrate at QB2 in the quarter.

Looking now at each of our business units in more detail and starting with copper on slide nine.

Copper production of 64000 tons was 10% lower than the same period last year, reflecting expected lower grades as well as unplanned maintenance at Highland Valley and reduced milling rates in response to cyclone impacts at asking me now.

Copper production in the second half of the year is expected to be strong with our annual copper production guidance, excluding <unk> unchanged.

Net cash unit costs were higher than the same quarter last year due to lower production and higher consumable cost, particularly for power as well as higher maintenance costs.

We expect copper unit costs to be within our annual cost guidance range with higher production in the second half of the year.

Importantly, we achieved our first sale of copper concentrate at <unk> in the quarter.

Crystal Prystai: Looking forward, as Jonathan mentioned earlier, line one is operating well and line two is in commissioning. We continue to expect QB2 to reach full production rates by the end of 2023. However, recent changes to IFRS require us to recognize sales proceeds and related costs associated with products sold during ramp-up and commissioning through our earnings. Historically, we and others in the industry would have capitalized these amounts during ramp-up through to commercial production. We expect this change in accounting treatment to increase our unit operating costs for QB2 during ramp-up. As a result, we do not anticipate generating significant gross profit from QB2 in Q3, despite the expected ramp-up in production rates.

Looking forward as Jonathan mentioned earlier line, one is operating well and line two is in commissioning.

We continue to expect <unk> to reach full production rates by the end of 2023.

However.

Some changes to I for us require us to recognize sales proceeds and related costs associated with products sold during ramp up and commissioning through our earnings.

Historically, we and others in the industry would have capitalized these amounts during ramp up through to commercial production.

We expect this change in accounting treatment to increase our unit operating cost for QB two during ramp up.

As a result, we do not anticipate generating significant gross profit from <unk> in the third quarter. Despite the expected ramp up in production rates.

Crystal Prystai: As Jonathan noted earlier, we updated our full year production guidance for QB2 to 80,000 to 100,000 tons from 140,000 to 170,000 tons. As a result, our total annual copper guidance has been updated to 330,000 to 375,000, from 390,000 to 445,000 tons. Our previously disclosed QB2 production guidance for 2024 to 2026 is unchanged. Turning now to zinc on slide 10. Red Dog zinc production of 134,000 tons decreased by 7% compared to last year as a result of lower grades as expected in the mine plan, as well as reduced power system availability. Red Dog zinc production is expected to improve in H2.

As Jonathan noted earlier, we updated our full year production guidance for Q2 to 80000 to 100000 tons from 140 to 170000 tons.

As a result, our total annual copper guidance has been updated to 330 to 375000 from 390000 to 445000 tons.

Our previously disclosed <unk> production guidance for 2024 to 2026 is unchanged.

Turning now to think on slide 10.

Red dog zinc production of 134000 tons decreased by 7% compared to last year as a result of lower grades as expected in the mine plan as well as reduced power system availability.

Red Dog zinc production is expected to improve in the second half of the year.

Crystal Prystai: At Trail, refined zinc production was impacted by the planned roaster shutdown and the commissioning of the automated circuit to produce zinc. Refined lead production was impacted by unplanned KIVCET boiler repairs. Net cash unit costs were higher than the same period last year and above our annual guidance range for 2023, primarily due to the timing of sales. Our annual unit cost guidance for the year is unchanged. Red Dog shipping season commenced on 4 July, and looking forward, we expect Red Dog zinc and concentrate sales of 240,000 to 280,000 tons in Q3, reflecting the normal seasonality of our sales. For the full year, we have updated our guidance for lead production at Red Dog to 95,000 to 110,000 tons, from 110,000 to 125,000 tons.

At trail refined zinc production was impacted by the planned roaster shutdown and the commissioning of the automated circuit to produce zinc.

Refined lead production was impacted by unplanned chipset boiler repairs.

Net cash unit costs were higher than the same period last year and above our annual guidance range for 2023, primarily due to the timing of sales our annual unit cost guidance for the year is unchanged.

Red Dog shipping season commenced on July 4th and looking forward, we expect red dog zinc in concentrate sales of 240000 to 280000 tonnes in Q3, reflecting the normal seasonality of our sales.

For the full year, we have updated our guidance for led production at Red Dog to 95000 to 110000 tons from 110000 to 125000 tons.

Crystal Prystai: As a result of our decision to advance the KIVCET boiler replacement at Trail from 2026 into 2024, we expect lower by-product production and related profitability next year. Turning now to slide 11. Strong performance and cash flow generation from our high margin steelmaking coal operations in Q2 further reinforced the inherent value of this business. While prices decreased from all-time record highs in Q2 last year, they remained strong and significantly above the long-term average. Production of 5.8 million tons was 9% higher than the same period last year, reflecting the timing of maintenance outages and improvements in productivity and reliability, despite intermittent plant reliability challenges in the quarter. The logistics chain performed well during Q2, drawing down steelmaking coal inventories to low levels as anticipated.

As a result of our decision to advance the chipset boiler replacement at trail from 2026 into 2024, we expect lower byproduct production and related profitability next year.

Turning now to slide 11.

Strong performance in cash flow generation from our high margin steelmaking coal operations in the second quarter further reinforce the inherent value of this business.

While prices decreased from all time record highs in Q2 last year, they remain strong and significantly above the long term average.

Production of $5 8 million tonnes was 9% higher than the same period last year.

<unk>, the timing of maintenance outages and improvements in productivity and reliability, despite intermittent plant reliability challenges in the quarter.

The logistics chain performed well during the second quarter, drawing down steelmaking coal inventories to low levels as anticipated.

Crystal Prystai: Q2 sales volumes were 6.2 million tons within our guidance range and similar to last year. We were pleased to enter into a long-term rail agreement with Canadian Pacific Kansas City Limited to support the efficient movement of our high-quality, low-emission steelmaking coal to global customers through 2026. We also announced jointly a unique collaboration to pioneer hydrogen locomotive technology, which supports our climate action plan and the objective of achieving net zero by 2050. Looking forward, we expect Q3 sales of 5.6 to 6 million tons, reflecting planned shutdowns at two of our operations and our low inventory levels. We expect slightly elevated transportation costs in Q3, reflecting the utilization of alternate port capacity to minimize the impact of the BC port worker strike in July.

Second quarter sales volumes were $6 2 million tonnes within our guidance range and similar to last year.

We were pleased to enter into a long term rail agreement with Canadian Pacific, Kansas City limited to support the efficient movement of our high quality low emission steelmaking coal to global customers through 2026.

We also announced jointly a unique collaboration to pioneer hydrogen locomotive technology, which supports our climate action plan and the objective of achieving net zero by 2050.

Looking forward, we expect Q3 sales of five 6% to 6 million tons, reflecting planned shutdowns at two of our operations and our low inventory levels.

We expect slightly elevated transportation costs in the third quarter, reflecting the utilization of alternate port capacity to minimize the impact of the BC Port Workers' strike in July .

Crystal Prystai: Nonetheless, we anticipate transportation costs to decline in H2 due to lower demurrage costs. As a result, our annual transportation cost guidance is unchanged. We expect our annual production to be at the lower end of our previously disclosed guidance range of 24 to 26 million tons. Moving now to slide 12, our financial position remains strong. Our liquidity is currently $7 billion, including $1.7 billion of cash. In Q2, we purchased approximately 1.6 million Class B shares for $85 million and paid our quarterly base dividend of $0.125 per share. We also reduced our debt through the first semi-annual repayment of $147 million on the QB2 project finance facility. We continue to maintain investment-grade credit ratings from S&P, Moody's, and Fitch.

Nonetheless, we anticipate transportation costs to decline in the second half of the year due to lower demurrage costs as a result of our annual transportation cost guidance is unchanged.

We expect our annual production to be at the lower end of our previously disclosed guidance range of 24 to 26 million tons.

Moving now to slide 12, our financial position remains strong our liquidity is currently 7 billion, including $1 7 billion of cash.

In Q2, we purchased approximately $1 6 million class B shares for $85 million and paid our quarterly base dividend of $12.05 per share.

We also reduced our debt through the first semiannual repayment of $147 million U S. On the <unk> project Finance facility.

We continue to maintain investment grade credit ratings from S&P, Moody's and Fitch.

Crystal Prystai: Looking ahead, in accordance with our capital allocation framework, we remain focused on balancing our investment growth against returning capital to shareholders while maintaining a strong balance sheet. With that, I'll turn it back over to Jonathan.

Looking ahead in accordance with our capital allocation framework, we remained focused on balancing our investment and growth against returning capital to shareholders, while maintaining a strong balance sheet.

And with that I'll turn it back over to Jonathan.

Jonathan Price: Thanks, Crystal. Now, I would like to take a moment to touch on our progress on advancing our strategy to create value for shareholders. First and foremost, the board and senior management remains focused on delivering the tremendous value inherent in our base metals and steelmaking coal businesses. The exciting potential we see is a testament to the incredible work our teams have done to position each business for sustainable long-term success. The board continues to evaluate paths to unlock the full potential of our unparalleled copper growth pipeline and create significant value and opportunity for our shareholders and all stakeholders. The previously announced Teck continues to engage with a number of parties that have expressed interest in our steelmaking coal business. These expressions of interest demonstrate the broad recognition of the quality of Teck's high margin, long-life steelmaking coal assets.

Thanks Crystal.

Now I would like to take a moment to touch on our progress on advancing our strategy to create value for shareholders.

First and foremost the board and senior management remains focused on delivering the tremendous value inherent in our base metals in steelmaking coal businesses.

The exciting potential we see is a testament to the incredible work our teams have done to position each business for sustainable long term success.

The board continues to evaluate path to unlock the full potential of our unparalleled copper growth pipeline and create significant value and opportunity for our shareholders and all stakeholders.

The previously announced tech continues to engage with a number of parties that have expressed interest in our steelmaking coal business.

These expressions of interest demonstrates the broad recognition of the quality of tax high margin long life steelmaking coal assets.

Jonathan Price: The board and special committee are pleased with the progress we have been making to date. As we continue to move through this comprehensive and competitive review, we are focused on arriving at an outcome that maximizes value for shareholders and ensures a sustainable future for the benefit of our employees, local communities, and indigenous peoples. Our steelmaking coal business is best in class, underpinned by a high-quality reserve base with top quartile margins and a record of free cash flow generation through various commodity cycles. This business is positioned to capitalize on the global supply gap from existing mine depletion and a lack of new projects coming into production. The core business fundamentals are robust. I highlight this only to underscore our commitment to delivering the right value for our highly profitable and resilient steelmaking coal operations.

The Board and Special Committee are pleased with the progress we have been making to date.

As we continue to move through this comprehensive uncompetitive review, we are focused on arriving at an outcome that maximizes value for shareholders and ensures a sustainable future for the benefit of our employees local communities and indigenous peoples.

Our steelmaking coal business is best in class underpinned by our high quality reserve base with top quartile margins on our record of free cash flow generation through various commodity cycles.

This business is positioned to capitalize on the global supply gap from existing mine deflation and a lack of new projects coming into production.

Core business fundamentals are robust.

I highlight this only to underscore our commitment to delivering the right value for a highly profitable and resilient steelmaking coal operations we.

Jonathan Price: We will transact only if the benefits to our shareholders and other stakeholders are clear. Now, we don't intend to provide any other detail regarding the ongoing review at this time, but we'll continue to provide updates as appropriate. Turning to slide 15, driving organic growth through development of our copper project pipeline remains critical to our value creation journey. As I mentioned earlier, we continue to ramp up our flagship QB2 project, demonstrating its ability to operate consistently to plan and significantly accelerating our copper production profile. Our pipeline of additional projects is full of high-quality assets in stable jurisdictions, and the portfolio is at an advanced state of readiness given our deliberate pre-investment. We have the opportunity to double copper production in the near term and double it again by the end of the decade to drive substantial new intrinsic value.

We will transact only if the benefits to our shareholders and other stakeholders are clear.

But we don't intend to provide any other detail regarding the ongoing review at this time, but we will continue to provide updates as appropriate.

Yeah.

So turning to slide 15, driving organic growth through development of our copper project pipeline remains critical to our value creation journey.

I mentioned earlier, we continue to ramp up our flagship <unk> project, demonstrating its ability to operate consistently to plan on significantly accelerating our copper production profile.

Our pipeline of additional projects is full of high quality assets in stable jurisdictions on the portfolio is this an advanced state of readiness, given our deliberate pretty investment.

We have the opportunity to double our copper production in the near term and double it again by the end of the decade to drive substantial new intrinsic value.

Jonathan Price: We will always remain disciplined in balancing the pursuit of growth with returning capital to investors in line with our capital allocation framework. Now, looking at our near-term copper projects in more detail. We have five significant near-term projects to drive additional copper-focused growth, all located in well-established mining jurisdictions. San Nicolás, QBME, Zafranal, NewRange, and Galore Creek. These are diversified by jurisdiction and scale, with all projects significantly less complex than QB2. In addition, they are forecasted to be low-cost operations and in many cases already de-risked through strategic partnerships. As I mentioned earlier, we significantly advanced these projects in Q2 with receipt of regulatory approval for Zafranal, close of the JV with Agnico Eagle, and finalized the permit documentation for submission for San Nicolás.

But we will always remain disciplined in balancing that pursuit of growth with returning capital to investors in line with our capital allocation framework.

Now looking at our near term copper projects in more detail.

We have five significant near term projects to drive additional copper focused growth all located in well established mining Jewish.

Nicholas <unk> does that for now new range on Galore Creek.

These are diversified by jurisdiction and scale with all projects significantly less complex in <unk>.

In addition to our forecast it to be low cost operations and in many cases already derisked through strategic partnerships.

As I mentioned earlier, we significantly advance these projects in the second quarter with receipt of regulatory approval for <unk> now and close of the JV with Agnico Eagle and finalize the permit documentation for submission for San Nicolas.

Jonathan Price: On slide 17, Teck is pursuing an active portfolio management approach to our growth pipeline, maximizing optionality and value. With numerous sanction windows within the next 3 years, we'll be in a position to drive substantial additional growth from these development projects before the end of the decade. For each of these projects, we have significant work underway to advance development, including resource definition, engineering and design, and permitting and stakeholder engagement. We are progressing projects towards the earliest possible sanction date. We have de-risked project delivery financially and operationally through a partnership approach, such as our approach for the development of QB. It is important to note that this is an unconstrained view of our copper growth. In prioritizing our growth options, we will consider multiple investment criteria, including financial returns, balance sheet capacity, and financing options, project readiness, project development capacity, and the social, political, and environmental context.

On slide 17 Tech is pursuing an active portfolio management approach to our growth pipeline maximizing optionality and value.

With numerous sanction windows within the next three years, we'll be in a position to drive substantial additional growth from these development projects before the end of the decade.

For each of these projects, we have significant work underway to advanced development, including resource definition engineering and design and permit.

Boulder engagement.

We are progressing projects towards the earliest possible sanction data.

We have derisked product delivery financially and operationally through a partnership approach such as our approach for the development of QB.

It is important to note that this is an unconstrained view of our copper growth.

In prioritizing our growth options, we will consider multiple investment criteria.

Including financial returns.

Sheet capacity and financing options project readiness project development capacity on the <unk>.

Social political and environmental context.

Jonathan Price: Importantly, each of these projects will have to compete for capital with the rest of the business and demonstrate and generate strong returns. While permitting is a major gating factor in determining potential sanction dates, we are largely in control of project timing. We will continue to apply our disciplined capital allocation framework that balances growth with returns to shareholders. Overall, Teck's copper growth pipeline is well-positioned to maximize optionality and value. In closing on slide eighteen, I want to reiterate our objective to responsibly create value for shareholders. That is my job, first and foremost. If there is one conclusion that I hope our shareholders will take away from this call, it is that everything we do at Teck is designed to further that goal of responsible value creation.

Importantly, each of these projects will have to compete for capital with the rest of the business.

Demonstrate and generate strong returns.

Well permitting is a major gating factor in determining potential sanction dates we are largely in control of project timing.

We will continue to apply our disciplined capital allocation framework that balances growth with returns to shareholders.

Overall, teck's copper growth pipeline is well positioned to maximize optionality and value.

In closing on slide 18, I want to reiterate our objective to responsibly create value for shareholders.

That is my job first and foremost.

And if there was one conclusion that I hope our shareholders will take away from this call. It is that everything we do at Tek is designed to further that goal of responsible value creation.

Jonathan Price: This is our North Star as we explore a range of options to unlock the full potential of our world-class base metals business and evaluate any transaction for our high-margin steelmaking coal business. It is also our focus as we continue to execute against our copper growth strategy while continuing to balance growth with cash returns to shareholders. We remain strongly committed to our purpose, values, and to being a responsible corporate actor with good business practices. We are steadfast in our belief that behaving responsibly and thoughtfully enhances value. Operating the right way makes Teck a partner of choice, minimizes disruptions to our operations, and opens new opportunities for our company and our stakeholders. Teck is a fantastic company with an incredibly bright future. There is undoubtedly more work to do, and we remain both confident and excited about the potential for Teck in the future.

This is our north star as we explore a range of options to unlock the full potential of our world class base metals business.

Evaluate any transaction for our high margin steelmaking coal business.

It is also a focus as we continue to execute against our copper growth strategy, while continuing to balance growth with cash returns to shareholders.

And we remain strongly committed to our purpose and values and to being a responsible corporate sector with good business practices. We are steadfast in our belief that behaving responsibly and thoughtfully enhances value.

Operating the right way makes tech a partner of choice to minimize disruptions to our operations and opens new opportunities for our company and our stakeholders.

<unk> is a fantastic company with an incredibly bright future.

There is undoubtedly more work to do and we remain both confident and excited about the potential for teck in the future.

Jonathan Price: Thank you. Operator, please open the line for questions.

Thank you operator, please open the line for questions.

Operator: Certainly. To join the question queue, please press star then one on your touchtone telephone. You'll hear a tone acknowledging your request. We ask that you please limit yourself to one question and one follow-up. If you're using a speakerphone, please ensure you lift the handset before pressing any keys. If you wish to remove yourself from the question queue, you may press star then two. The first question is from Orest Wowkodaw with Scotiabank. Please go ahead.

Certainly to join the question queue. Please press Star then one on your Touchtone telephone.

You'll hear a tone acknowledging your request.

Ask that you please limit yourself to one question and one follow up.

If you're using a speaker phone. Please ensure you lift the handset before pressing any Keith.

If you wish to remove yourself from the question queue you May press.

More than two.

The first question is from <unk> <unk> with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi, good morning. I was wondering if we can get some more color on the QB2 progress. We saw you disclosed production of only 3,000 tons in Q2, yet the comment was made in the presentation that Line 1 is operating well per expectations. Can you give us an update on what the status of Line 1 is and sort of what the issues have been?

Hi, Good morning, I was wondering if we can get some more color on the QB two progress we thought you disclosed production of only 3000 tons in.

In Q2, yet the comment was made in the presentation that line. One is operating well per expectations can you give us an update on what the status of line one is.

Sort of what the issues have been.

Jonathan Price: Yeah. Thanks very much for the question, Orest. I'm gonna hand that one off to Red.

Yes, thanks very much for the question, so I'm going to hand that one off to read.

Red Conger: Hey, good morning, Orest. We've had some delays in construction and commissioning in Q2 that we've addressed. Things like, you know, the required rework, some adjustments and modifications, not uncommon. You know, as you know, we've been building and commissioning this thing all along with the thought in mind of, you know, long-term reliable performance. You know, we've addressed things rather than patch them. Now that we've got it, you know, actually up and running strong in June and sending concentrate down to the port, getting it filtered, getting it off to market, we have all of those things in place now. Those adjustments and modifications that we made on line one have all been made on line two.

Hey, good morning, Laura.

We've had some delays in the.

In construction and commissioning in the second quarter that we've addressed.

Things like.

The required rework some from adjustments and modifications not not uncommon.

As you know with them.

Building and commissioning this thing all along with the thought in mind, the long term reliable performance. So.

We've address things rather than.

And then package them and so now that now that we've got are actually up and running.

Strong in June and selling concentrate down to the port getting it filled or getting a feeling it off to market. We have all of those things in place now.

And those those adjustments and modifications that we made online one have all been made online too. So we're we're commissioning relying too narrow width.

Red Conger: We're, you know, we're commissioning line 2 now with the full knowledge of everything that we addressed on line 1, and that is going very, very smooth. Very positive for us. We're, you know, we're in a situation now where the H2 of the year, the productions are gonna be heavier weighted toward the Q4 than the Q3, but very confident that we'll be at full production rates by the end of the year.

Full knowledge.

Of everything that we addressed online one and that is going very very smooth.

Very positive for us so we're.

We're in a situation now where the.

Second half of the year the productions are going to be heavier weighted towards the fourth quarter than the third quarter, but.

Very confident that we'll be at full production rates by the end of the year.

Orest Wowkodaw: Just on that, Red, can you give us an idea of where throughput is right now on line one in terms of tons per day?

Just on that can you give us the idea of where throughput is right now on line more in terms of tonnes per day.

Red Conger: Yeah, no. We've hit design capacities for periods of time. You know, as you commission all of this equipment like the concentrate pipeline and the filter plant, you know, we have to adjust throughput as we're commissioning those components. You know, we don't have a lot of storage space either at altitude or at the port, so the throttle as we commission these other components is throughput. When you know, when everything's wide open and running, it runs very strong according to design, and we're very excited about the performance of the plant. Now, in these adjustments that we made in Q2, not uncommon. There were no fatal flaws. Like, you know, everything was sized appropriately and powered appropriately.

Yes.

Hit design capacity for periods of time so.

As you Commission all of this equipment like the.

The concentrate pipeline in the filter plan we have.

To adjust.

Throughput is we're commissioning those those components.

We don't have a lot of storage space either.

The.

At altitude or port so the throttle as we commission. These other components as throughput, but when when everything is wide open and running it runs very strong according to design and we're very.

I'm excited about the performance.

The plan.

Adjustments that we made in the second quarter are not uncommon there were no.

Fatal flaws that everything was sized appropriately empowered.

Red Conger: Those are all, you know, significant checks for us that, you know, that give us the confidence that this thing will perform as designed. We've seen it for periods of time performing as designed. As, you know, as we get everything else commissioned, it, you know, you'll just have more and more of those days strung together, you know, and that's how our forecast is built.

Appropriately so those are all significant shops for us.

That gives us the confidence that.

This thing will perform as designed we've seen it for periods of time performing as designed and.

As we get everything else Commission.

I'll just have more and more of those days.

Stronger together.

Our forecast is built.

Orest Wowkodaw: Just finally, Red, what gives you the confidence though that, I mean, since things are delayed and you've cut guidance for this year, what gives you the confidence of the 2024 guidance, which I assume is the low end of that three-year of 285,000 tons? Like, are you seeing any constraints that will impact the ramp up next year?

And just finally, what gives you the confidence though that I mean since things are delayed and you've kept guidance for this year what gives you the confidence.

Of the 2020 for guidance.

Which I assume it's the low end of that three year of 285000 tonnes like are.

Are you seeing any constraints that will impact the ramp up next year.

Red Conger: No, not at all. If we did see constraints, Orest, we'd be, you know, flagging those, signaling those. Again, I wanna repeat, the plant is very well designed. It performs as designed. We've, you know, made a lot of adjustments that are, you know, for the long-term benefit of the operation. You know, we're not patching things or leaving things to be modified in the future. You know, we identified them in Q2, addressed them and the run of line one in June and July indicates that all of that is very strong, very sound, very solid.

No no not at all.

We did see constrained source, we'd be we'd be flagging those signals.

Those the.

Again, I want to repeat that.

<unk> is very well designed.

It performs as designed.

<unk>.

We've made a lot of adjustments that are for the long term benefit of.

The operation we're not.

Patching things or more leasing seems to be modified in the future where <unk> identified them in.

In the second quarter addressed them in.

And the run of line one in June and July indicates that all of that is very strong very sound very solid.

Orest Wowkodaw: Thanks, Red. Good luck.

Thanks, Brad Good luck.

Okay.

Jonathan Price: Yeah. Thanks, Red. Orest, just, you know, to reiterate overall, you know, the reduction in guidance that we've communicated today is due to delays in construction and commissioning, not ramp up. It's that gives us the confidence that we will achieve full rates of production before the end of this year. That again is why we don't expect any impact or carry over into 2024, and why we've retained that guidance.

Yes, Thanks Ryan.

To reiterate overall the reduction in guidance that we've communicated today is due to delays in construction and commissioning not ramp up.

It's that that gives us the confidence that we will achieve full rates of production before the end of this year.

That again is why we don't expect any impact or carryover into 2024.

Retained that guidance.

Operator: The next question is from Carlos De Alba with Morgan Stanley. Please go ahead.

The next question is from Carlos de Alba with Morgan Stanley . Please go ahead.

Carlos De Alba: Yeah. Thank you. Good morning, everyone. Just on QB2, also, when do you expect the operations to turn profitable, you know, given everything that was discussed, in the previous question?

Got it. Thank you good morning, everyone just on QB two.

So.

When do you expect the operation to turn profitable and.

Can you give it given everything that was discussed.

In the previous question.

Jonathan Price: Yeah. Carlos, thanks very much for that question. I'll turn that one over to Crystal, please.

Yes, thanks, very much for that question I'll turn that one over to Crystal. Please.

Red Conger: Hi, Carlos. Thanks for the question. I think as we've indicated as a result of you know the change in accounting treatment where we have to record the results through our earnings right from sort of get go rather than waiting until we've achieved commercial production has an impact on our profitability. We haven't really commented on or guided to what that may look like. I think you know we do expect QB2 to be up to those full production rates by the end of the year and expect to be generating free cash flow into 2024. That accounting treatment is really you know gonna preclude us from generating substantial profitability in 2023.

Crystal Prystai: Hi, Carlos. Thanks for the question. I think as we've indicated as a result of you know the change in accounting treatment where we have to record the results through our earnings right from sort of get go rather than waiting until we've achieved commercial production has an impact on our profitability. We haven't really commented on or guided to what that may look like. I think you know we do expect QB2 to be up to those full production rates by the end of the year and expect to be generating free cash flow into 2024. That accounting treatment is really you know gonna preclude us from generating substantial profitability in 2023.

Hi, Carlos Thanks for the question I think as we've indicated as a result of.

The change in accounting treatment, where we have to record.

The results through our earnings rate from sort of get go rather than waiting until we've achieved commercial production has an impact on our on our profitability.

We haven't really commented on or guided to what that May look like I think we do expect Q2 to be up to those full production rates by the end of the year.

And expect to be generating free cash flow into into 2024, but that accounting treatment is really going to preclude us from generating substantial profitability in 2023.

Carlos De Alba: All right. Understood. Thank you, Crystal. On the expansion of QV2 now, the mill expansion, given the recent changes that haven't become law yet but might become law soon, that increase the tax royalty for copper operations in Chile, have you now under this new paradigm, this new scenario, analyzed the possibility of moving ahead with this operation or with this expansion? Because I'm not so sure, and if you could remind us, that'd be great, if the tax stability agreement that you have for QV2 also applies to this expansion or it doesn't.

Understood. Thank you Chris.

Crystal and so on.

On the expansion of <unk> to now the mill expansion given the.

The recent changes.

Having become law, yet but might become.

Loss soon and that increase the taxes royalty for copper operations in Chile.

Have you now on there has been this new paradigm in this new scenario.

<unk> is the possibility of moving ahead with this operation with this expansion was I'm not so sure.

If you could remind us that'd be great.

The taxes don't necessarily mean that you have with QB. Two also applies to these expansion already Dawson.

Jonathan Price: Yeah, good question, Carlos. You know, we assume that the bill that's been announced will be passed into law, and therefore, of course, we've modeled the impact on that across all of our operations and future projects in Chile. We have a stability agreement in place at Carmen de Andacollo, which runs through to 2027. As you know, we have a 15-year stability agreement for QV2. Now, the design for the QV mill expansion or QVME is designed to be an expansion of QV2, not a separate project. For that reason, we think it should achieve the same tax stability protection as QV2. You know, that will ultimately be definitively tested through our engagement with government.

Yes, good question Carlos.

We assume that the.

Bill that's been announced will be passed into law and therefore of course, we've modeled the impacts on that across all of our operations and future projects in Chile.

We have a stability agreement in place to comment on the coil, which runs through to 2027.

As you know we have a 15 year stability agreement for <unk> to now the design for the <unk> mill expansion on television.

Is.

Designed to be an expansion as <unk> not a separate project.

For that reason, we think it should achieve the same tax stability protection as <unk>.

That will ultimately be definitively tested through our engagement with government.

Jonathan Price: Either way, Carlos, as we look at the economics of QVME, with or without the stability agreement, it looks attractive. Of course, it looks more attractive if we have the cover of that agreement, and that's something we're working through now. The permit application that we submitted in Q1 of this year for QVME is running along very well. You know, we've had, you know, questions and queries from the relevant authorities that we've reverted on, and we see that moving along exactly as we would expect. Very pleased with progress there so far.

But either way call us as we look at the economics of <unk> with or without the stability agreement. It looks attractive of course, it looks more attractive if we have the counter of that agreement and that's something we're working through now.

The permit application that we submitted in the first quarter of this year <unk> is running along very well and we've had.

Questions inquiries from the relevant authorities that we revert it on and we see that moving along exactly as we would expect so I'm very pleased with progress so far.

Réal Foley: Thanks, Jonathan. If I may squeeze just one more on QB2. Any comments on the port and the jetty, and when would you expect that part of the project to be ready for you to ship concentrate out of the country?

Carlos De Alba: Thanks, Jonathan. If I may squeeze just one more on QB2. Any comments on the port and the jetty, and when would you expect that part of the project to be ready for you to ship concentrate out of the country?

Thanks, Jonathan if I may squeeze just one more on <unk>.

<unk> any comments on the port on the J D.

Where would you suspect that part of the project to be ready for you to ship concentrate out of the country.

Jonathan Price: Yeah, let me pass that one back to Red.

Yes, let me pass that went back to red.

Red Conger: Yeah, Carlos, first of all, a nod to our marketing and logistics team. They've got a great set of alternate programs for us to truck concentrate out of the port. We've already proved that out. It's working well. We've got a strong sales mechanism in place in the interim. The jetty work is progressing. We're wrestling away this construction project from the wild Pacific Ocean, and it's been quite an interesting project for all of us. We're making progress and, you know, should be shipping concentrate out of our own port facility by the end of the year.

Yes, Carlos first of all just.

Not to our marketing and logistics team they've got a great set of alternatives.

Programs for us to.

Truck concentrate out of the port we've already proved that out if it's working well and so we've got a strong sales mechanism.

Place.

The interim.

The jetty work is progressing.

Were wrestling a way to do this.

This construction project from the Wild Pacific Ocean and spin.

It's been quite an interesting project for all of us.

We're making progress and should be shipping concentrate out of our own port facility by the end of the year.

Réal Foley: Great. Thank you very much, Red. Good luck with everything.

Carlos De Alba: Great. Thank you very much, Red. Good luck with everything.

Great. Thank you very much alright, good luck with everything.

Red Conger: Thanks, Carlos.

Thanks Carlos.

Operator: The next question is from Lucas Pipes with B. Riley Securities. Please go ahead.

The next question is from Lucas pipes with B Riley Securities. Please go ahead.

Lucas Pipes: Thank you very much, operator. Good morning, everyone. Jonathan, I really appreciated your comments on the strategic side earlier today. I know there is a process. I just wondered if you could maybe frame up a preference on the steelmaking coal side, a partial sale, where would that fit in strategically? Would that solve the objectives that you've laid out? Thank you very much for your color on that.

Thank you very much operator, and good morning, everyone.

Jonathan really appreciated your comments on the strategic side earlier today and I know there is not there there is a process, but I just wondered if you could maybe frame up.

<unk>.

On the on the steelmaking coal side.

A partial sale where would that fit in strategically with that solved.

The objectives that you've laid out thank you very much for your color on that.

Jonathan Price: Yeah, thanks for the question, Lucas. You know, as we said previously, we were you know looking for a separation here of coal from the metals business, something that would be considered simpler and more direct. We have a range of parties engaged right now who've expressed interest in the steelmaking coal business. Of course, they have a range of proposed transactions that they're bringing forward. It's a good confirmation, as I mentioned before, of the value of that business. It's great that we have a competitive process that's running its course here. You know, our focus will be to maximize value for shareholders, of course, while also ensuring a sustainable future for the benefit of employees, communities, indigenous groups, et cetera.

Yes. Thanks for the question Lucas you know as we said previously we.

Looking for a.

A separation here of coal from the metals business something that would be considered a simpler and more direct.

We have a range of parties engaged right now who have expressed interest in the steelmaking coal business and of course, they have a range of proposed transactions.

Bringing forward.

It's a good confirmation as I mentioned before of the value of that business.

It's great that we have a competitive process that's running its course here.

Focus will be to maximize value for shareholders of course, while also ensuring a sustainable future for the benefit of employees communities indigenous groups et cetera.

Jonathan Price: You know, there will be a range of considerations that we have to bring to the table here as we make those decisions, to ensure we are taking care of all of those stakeholder groups appropriately. That is something that we're working through right now. We have deliberately sought to keep a very open mind here, with respect to what will create the greatest value. We do that through the lens of, you know, the perspectives of our shareholders, and we look forward to speaking to them again in the coming days, post the quarter, and I'm sure we'll learn more about their views in that regard. Look, we're working very diligently through this process.

There will be a range of considerations that we have to bring to the table here as we make those decisions to ensure we are taking care of all of our stakeholder groups appropriately.

And that is something that we're working through right. Now. So we have deliberately sought to keep a very open mind here with respect to what will create the greatest value, we do that through the lens of.

The perspectives of our shareholders and we look forward to speaking to them again in the coming days.

Post the quarter and I'm sure, we'll learn more about their views in that regard.

But look we're working very diligently through this process I don't want to say anything now to sort of prejudge or print.

Jonathan Price: I don't wanna say anything now to sort of prejudge or preempt what the outcome might be. We'll take the time to get this right and do the very best we can for our shareholders. Needless to say, we're not sitting on our hands, and we're progressing this as quickly as we can.

Might be.

We will take the time to get this right and do the very best we can for our shareholders, but needless to say, we're not sitting on our hands and wear with progressing this as quickly as we can.

Lucas Pipes: Thank you very much for that perspective. Thank you. I have a market related question on the coking coal side. Is Raul on the call as well?

Thank you very much for that perspective, thank you.

It's.

I Havent market related question on the coking coal side as well on that on the call. This fall.

Jonathan Price: Yes, Lucas. I mean, we made a change, as you know, recently in the organization. Raul, after many years of phenomenal contribution here at Teck, announced his retirement, and we appointed Ian Anderson as our new Chief Commercial Officer. Raul is on the line, and I'm sure he would love to talk to you about the current status and outlook for the met coal market. Raul, with that, over to you, please.

Yes, Lucas so I mean, we we made a change as you know recently in the organization real after many many many years of phenomenal contribution here at <unk> and obviously the requirement retirement, and we appointed Ian Anderson as our new Chief commercial officer.

<unk> is on the line and I'm sure would love to talk to you about the current status and outlook for the met coal market, so real without over to you. Please.

Réal Foley: All right.

Lucas Pipes: All right.

Lucas Pipes: Hey, Raul. I will miss your comments very much, and I wish you all the best in your retirement.

Alright.

I will Miss your commentary much and I wish you all the best in your retirement.

Réal Foley: Well, thanks a bunch, Jonathan. Lucas, really appreciate your comments. Just to give you a short insight into our outlook for steelmaking coal. I guess at a high level, if you look at demand side versus what is happening with coal production, hot metal production is up 60 million tons when you compare to 2019, pre-pandemic. When you do the same comparison for coal from the key exporters, it's actually down 35 million tons. That kind of puts in perspective the level of tightness that we're seeing in the market. Now, more specifically, steel prices are improving compared to the lows of last year. That's in response to better demand from various sectors. We are seeing some indications from China as well, and they are looking at policies to support the economy.

Well, thanks, a bunch Jonathan.

Lucas really really appreciate your comments.

So just just to give you.

Sure it inside into our outlook for steelmaking coal.

I guess at a high level, if you will.

Look at the demand side is what is happening with coal production.

Hot metal production is up 60 million tons, when you compare to 2019.

Pre pandemic.

When you do the same comparison for coal from the key exporters, it's actually down $35 million. So.

Kind of put in perspective.

Tightness that we're seeing in the market now.

More more specifically steel prices are improving compared to the lows of last year. That's in response to better demand from various sectors.

We are seeing some.

Indications from China, as well and we are looking at policies to support the economy.

Réal Foley: In India, steel production is also continuing to increase towards the government's target of reaching 300 million tons of installed capacity by 2030, 2031. On the coal supply side, supply is still struggling. It's still down compared to last year. That's the fourth consecutive year of reduction in terms of seaborne exports. It remains overall a tight market, and as a result, pricing is continuing to be substantially above the long-term average going back to 2010.

India steel production and also continuing to increase towards the government's guidance, reaching 300 million contact installed capacity by 2000 32021.

And then on the coal supply side.

Supply is.

Still struggling still down compared to last year and that's the fourth consecutive year of reduction in terms of seaborne exports.

James.

Overall, the market is all pricing is continuing to be substantially above.

Our long term average going back.

Yes.

Yeah.

Lucas Pipes: Réal, I really appreciate that, and I hope you keep an eye on the coking coal markets even after October. Again, best of luck in retirement. Thank you.

Okay.

Real.

I really appreciate that and I hope you keep an eye on on the coking coal markets. Even after October again best of luck in retirement. Thank you.

Réal Foley: Thanks a bunch, Lucas.

Thanks, a bunch of Lucas.

Operator: The next question is from Liam Fitzpatrick with Deutsche Bank. Please go ahead.

The next question is from Liam Fitzpatrick with Deutsche Bank. Please go ahead.

Yeah.

Liam Fitzpatrick: Hi, everyone. Just one quick one from myself, just on the EVR sale process. I appreciate it's difficult to give much color, but there's a lot of interest in this at the moment. In terms of timing, is it your hope or your expectation that, you know, before the next set of numbers in October, that we could get a fuller update in terms of your next steps on this business?

Hydro one.

<unk>.

Quick one for myself just on the ECR sale process I appreciate it's difficult to give much color, but there's a lot of interest in this environment in terms of timing is it your hope for your expectation that before the next set of numbers in October that.

We could get a fuller update in terms of your next steps on the students.

Jonathan Price: Yeah. Thanks for the question, Liam. You know, we are working on this very actively right now. We're engaged with multiple counterparties. As you would imagine, there's a, you know, a detailed data room and due diligence process that's working its way through, which we will run to its conclusion. As I said before, we're not, you know, sort of sitting on our hands here. We're taking a very active and diligent approach to moving this forward as quickly as we can, but also ensuring that we, you know, take time as we need it to deliver the best outcome here for shareholders and stakeholders. I won't commit right now to timing, Liam, 'cause of course, that's also a function of the counterparties on the other side of this process.

Yes. Thanks for the question Lee and we are working on this very actively right now we are engaged with multiple counterparties as you would imagine there's a deep.

A detailed.

Data room, and due diligence process, that's working its way through which.

Which we will run through its conclusion as I said before.

Sort of sitting on our hands here, we're taking a very active and diligent approach to moving this forward as quickly as we can.

But also ensuring that we take time as we needed to deliver the best outcome for shareholders and stakeholders. So I won't commit right now to timing Liam because of course vessels are a function of the counterparties on the other side.

Jonathan Price: Suffice to say, we've been very active and continue to be very active in this work.

Of this process, but suffice to say, where we've been very active and continue to be very active in this work.

Jonathan Price: Suffice to say, we've been very active and continue to be very active in this work.

Liam Fitzpatrick: Okay. Understood. Thanks for the color.

Okay understood. Thanks for the color.

Yes.

Operator: The next question is from Lawson Winder with Bank of America Securities. Please go ahead.

The next question is from Lawson Winder with Bank of America Securities. Please go ahead.

Lawson Winder: Thank you, operator, and good morning Jonathan, Brad, Crystal, and hello Réal, and also congratulations on your retirement. I just wanted to hopefully ask a follow-up on the coal separation again. Just based on your conversations with potential interested minority interest, is it getting to the point where the minority interest could actually add up to a majority stake in coal?

Thank you operator, and good morning, John and Brad Crystal in rail and also congratulations on your retirement I just wanted to.

Hopefully ask a follow up on the coal separation again just.

Based on your conversations with.

With potential interested minority interest is it getting to the point where.

The minority interest could actually add up to a majority stake in coal.

Jonathan Price: Yeah. Thanks for the question, Lawson. You know, there is a lot of interest whether that's for the whole of the business or for components of the business. You know, as you know previously with the transaction we'd announced earlier in the year for separation, Nippon Steel were active and keen at that point in time with respect to their interest. You know, again, there are a number of structures that we're looking at here and a number of different forms of transaction that we will have to compare and trade off against one another. I'm not gonna preempt that now by sort of commenting on what will be more or less attractive because, of course, there's far more to it than just valuation.

Yeah. Thanks, Thanks for the question.

<unk>.

There is a lot of interest whether that's for the whole of the business all four components of the business as you know previously.

With the transaction, we announced earlier in the year for separation.

On steel.

Active and <unk> at that point in time with respect to to their interest again, there are a number of structures that we're looking at here in a number of different forms of transaction that we will have to compare and trade off against one another.

Not going to preempt that nobody quite sort of commenting on what will be more or less attractive because of course, there's far more to it than just the valuation as you know in these circumstances the allocation of risk.

Jonathan Price: As you know, in these circumstances, there's the allocation of risk, and there's the long-term implications for the business beyond the transaction, all of which we have to be cognizant of in the decision-making process. Suffice to say, there is significant interest, and it's broad-based in terms of where that interest is coming from.

And as the long term implications for the business beyond the transaction all of which we have to be cognizant of in the decision making process, but suffice to say there is significant interest in its broad based in terms of where that interest is coming from.

Lawson Winder: Okay. Thanks very much. Maybe just my follow-up would be on Chile. So you've highlighted again that the QBME feasibility study is expected to be completed in H2. My question then would be, would you expect that to be released with Q3 2023 results? Then assuming the economics are as compelling as you currently believe they are, is the regulatory environment in Chile sufficiently comfortable with that to move ahead whether or not you have the same tax benefits as the existing S-agreement with QB2?

Okay. Thanks, very much and then and then maybe just my follow up would be on Chile.

So you highlighted again that the <unk> feasibility study is expected to be completed in the second half and so.

My question that would be would you expect that to be released with Q3 'twenty three resolved and then assuming the economics are.

As compelling as you currently believes they are.

Is the regulatory environment in Chile.

Are you sufficiently comfortable with that to move ahead, whether or not you have.

You have the.

The same tax benefits as the existing.

Okay, Great and then with kidney chip.

Jonathan Price: Yeah. Lawson, you know, we are working through the completion of that feasibility study, which we hope to have done, you know, in the H2 this year. It certainly will be done by the end of the year. In parallel, of course, we need to get the permit or the amendment to the existing permit to allow us to construct this project. Those two things are outstanding before we would make any sanction decision. I'm actually gonna hand over to Amparo just to give you a bit of a lay of the land with respect to the regulatory environment right now. Amparo is our vice president covering South America. At the highest level, I would just say we're pretty comfortable with it based on what we see.

Yes.

We are working through the completion of the fees.

Feasibility study, which we hope to have done in the second half of this year. So.

It certainly will be done by the end of the year in parallel of course, we need to get the permit or.

The amendment to the existing tenant to allow us to construct this project. So those two things are outstanding before we would make any sanction decision I am actually going to hand over to <unk> just to give you a bit of a lay of the land with respect to the regulatory environment right now.

Vice president covering.

South America is the highest level I would just say, we're pretty comfortable with it based on what we see but let me invite John Pollok will add some color to that.

Jonathan Price: Let me invite Amparo to add some color to that.

Bryce Adams: Okay, good morning, everybody. Yes, as Jonathan said, the regulatory process of the DIA, which is declaration of impact, study is going underway. The process has been smooth. We are now preparing the second round of answers, so we don't foresee any issues impacting the approval of that DIA.

Amparo Cornejo: Okay, good morning, everybody. Yes, as Jonathan said, the regulatory process of the DIA, which is declaration of impact, study is going underway. The process has been smooth. We are now preparing the second round of answers, so we don't foresee any issues impacting the approval of that DIA.

Okay. Good morning, everybody and guests as Jonathan said, the regulatory process of the DAA, which is declaration of impact is that it is clearly underway.

The process has been smooth and we are now preparing the second round of answers. So we don't foresee any issues impacting the approval of that DAA.

Lawson Winder: Okay, fantastic. Thank you both for those responses.

Okay fantastic. Thank you both of those responses.

Jonathan Price: Thanks, Lawson Winder.

Thanks, a lot.

Operator: The next question is from Chris LaFemina with Jefferies. Please go ahead.

The next question is from Chris <unk> with Jefferies. Please go ahead.

Chris LaFemina: Thank you, operator. Guys, thanks for taking my question. I have actually a couple of questions on QB2. One is just maybe more of an accounting question. For the CapEx budget or guidance for the project is unchanged at $8.2 billion. In your investing activities table in the earnings release, you show QB2 project CapEx, and you show the ramp up CapEx. Does the CapEx for the project include the ramp up CapEx? That's my first question.

Thank you operator, guys. Thanks for taking my question I have actually a couple of questions on QB. Two one is just maybe more of an accounting question and the so the capex budget or guidance for the project is unchanged at $18 $2 billion.

Our investing activities table in there.

Our earnings release, you show QB two project Capex and you show the ramp up Capex does the Capex for the project include the ramp up Capex. That's my first question.

Jonathan Price: Crystal, that's one for you.

Crystal last one for you yeah. Thanks, Jonathan Thanks, Chris There is a portion of of project capital that is related to that but that separate bucket of capital that we've categorized there.

Crystal Prystai: Yes. Thanks, Jonathan. Thank you, Chris. There is a portion of project capital that is related to ramp up, but that separate bucket of capital that we've categorized there is really in relation to the accounting treatment and how we have to look at those costs that we're incurring during that sort of commissioning phase and breaking those out between what goes into inventory versus what goes into cost of sales, and what should continue to go into capital. So those aren't included in the project piece. When we develop that project capital budget, there is obviously some, you know, capital associated with ramp up that was built into that. This is really in relation to the accounting treatment.

Really in relation to the accounting treatment and how we have to look at those costs that we're incurring during that sort of commissioning phase and breaking those out between what goes into inventory versus what goes into cost of sales and what what should continue to go into it into capital. So those arent included in the in the project piece, but when we develop that project.

If at all.

There is obviously something you know our capital associated with ramp up that was built into that but this is really in relation to the accounting treatment.

Chris LaFemina: Okay. The ramp up CapEx, I mean, obviously we're very close to commissioning, but if the ramp up takes longer than you expect today, ramp up CapEx would obviously continue to rise. We should not look at that as being additive to the project CapEx. In other words, that's just basically pre-commercial production operating costs instead of being capitalized for your own account.

Okay. So the ramp up capex.

Honestly, we're very close to commissioning.

It takes longer than you expect today ramp up Capex would obviously continue to rise, but we should not look at that as being additive to the project Capex in other words, that's just basically pre commercial production operating costs that are being capitalized you're selling today.

Crystal Prystai: Yes, that's the right way to think about it. We don't guide to that number. I don't expect that number to be, you know, substantially higher than what we've incurred already, given, as you know, we're, you know, largely through the ramp up phase.

Yes, that's the right way to think about it and we don't guide to that number but I don't expect that number to be substantially higher than what we've incurred already given as you know.

Largely through the ramp up phase.

Chris LaFemina: Got it. Thanks. I'm sorry, I just wasn't sure exactly how that worked. My second question is-

Got it thanks, I'm, sorry, I wasn't sure exactly how that worked my second question.

Crystal Prystai: No, it's okay.

Chris LaFemina: If we look at.

Crystal Prystai: Yeah, good. Sorry.

Yeah.

Chris LaFemina: If we look at QB2 in its entirety and consider the delays and some of the CapEx increases over the life of the project, would the project, assuming that you hit all your targets going forward in terms of production, operating costs, and CapEx going forward, would it meet your hurdle rate based on your copper price assumptions, or do you need the mill expansion now, which is obviously a much higher returning project, for the project in its entirety to actually meet your hurdle rate? Does QB2 in and of itself meet your hurdle rate based on what you've built so far and what you expect to happen going forward?

Okay Alright.

If we look at if we look at QB, two and its entirety and we consider the.

The delays in some of the Capex increases over the life of the project.

With the project assuming that you hit your targets going forward in terms of production and operating costs and Capex going forward would it meet your hurdle rate based on your copper price assumption or do you need the mill expansion now, which is obviously a much higher returning project.

Project in its entirety to actually meet your hurdle rate cubic.

<unk> in and of itself meet your hurdle rate based on what you've built so far and what you expect to happen going forward.

Jonathan Price: Yeah. Thanks, Chris. Of course, you know, one of the major changes that's occurred since we started building the project is the long term outlook for copper prices. You know, when this was sanctioned and based on the returns we communicated at the time, we were using $3.15 for the long term copper price here. Now there's, you know, a range of views as to what that price should be in future, but I think everybody recognizes that that wouldn't be sufficient to incentivize the capacity that we're going to need to even go some way to filling the expected gap between supply and demand a few years out.

Yes, Thanks, Chris.

Of course, one of the major changes that's occurred since we started building. The project is the the long term outlook for copper prices.

When this was sanctioned and based on the returns we communicated at the time, we were using $3 15 for the long term copper price here.

No there's a range of views as to what that price should be in future, but I think everybody recognizes that wouldn't be sufficient to incentivize the capacity that we're going to need.

So we even go somewhat fittingly expected gap between supply and demand a few years.

Jonathan Price: That's a long way of saying, you know, if you look at the additional CapEx that we've incurred, if you factor in, you know, some inflation in unit costs, which we of course have communicated as we updated our own unit costs for the market, you can still get a very strong return on QB2 using quite a reasonable copper price. The answer is yes, but, you know, in addition to seeing inflation in operating costs, exceedances in CapEx, you have to adjust the copper price assumption commensurately to go with that. It is still a project that looks good in its own right and doesn't require the mill expansion to make the economics work.

So that's a long way of saying.

If you look at the the additional capex that we've incurred if you factor in some inflation in unit costs, which we of course have communicated is really updated our own unit costs for the market.

You can still get a very strong return.

<unk> using quite a reasonable copper price.

So the answer is yes, but in addition to seeing inflation in operating costs exceeding soothing Capex you have to adjust the copper price assumption commensurately to go with that but it is still a project that looks good in its own right and it doesn't require that.

The mill expansion to make the economics work.

Chris LaFemina: That's perfect. Thank you for the help. I appreciate it. Good luck.

That's perfect. Thank you for the help I appreciate it and good luck.

Jonathan Price: Thank you, Chris.

Thank you Chris.

Operator: The next question is from Bryce Adams with CIBC. Please go ahead.

The next question is from Bryce Adams with CIBC. Please go ahead.

Bryce Adams: Yeah. Hi all. Thanks for the call. Wanted to ask on NewRange, listed as a copper growth opportunity on a few slides. So just an update on the permitting process. I think the water permit was revoked in May, but was that an air permit as well? A rundown on the permits there would be appreciated. If permitting is a current hurdle, should NewRange be moved from a near term to a longer term opportunity?

Yes.

Thanks for the call.

Want to ask on new range listed as a copper growth opportunity on a few slides.

So just an update on the permitting process I think the water permit was revoked in may but was that an air permit as well a rundown on the payments that would be appreciated and then if permitting is a current hurdle shouldn't you range be moved from a near term to a longer term opportunity.

Jonathan Price: Yeah, thanks for that, Bryce. I'm gonna hand you over to Tyler Mitchelson, who's our SVP of Copper Growth, and of course is very close to that situation with the permit you're referring to.

Yes, thanks for that Brian So I'm going to hand, you over to Tyler Mitchelson, who is our SVP of copper growths and of course is very close to the situation with dependent you're referring to.

Bryce Adams: Perfect.

Perfect.

Speaker 14: Hi, Bryce. Thanks for the question. Yeah, the 404 permit was the wetland permit, which is essentially the water discharge permit, and it was being contested in court. In the end, we got the decision in May that was revoked by the Army Corps of Engineers. Right now, taking a bit of a step back to understand what is the pathway forward to get that permit reinstated. There's multiple approach to that, including engagement with stakeholders, particularly the First Nations groups there, as well as the EPA, the Army Corps of Engineers, and state and federal regulators to understand what is our pathway forward from that. We don't have the definitive answer, but it is a critical permit for us to be able to move forward with the project.

Tyler Mitchelson: Hi, Bryce. Thanks for the question. Yeah, the 404 permit was the wetland permit, which is essentially the water discharge permit, and it was being contested in court. In the end, we got the decision in May that was revoked by the Army Corps of Engineers. Right now, taking a bit of a step back to understand what is the pathway forward to get that permit reinstated. There's multiple approach to that, including engagement with stakeholders, particularly the First Nations groups there, as well as the EPA, the Army Corps of Engineers, and state and federal regulators to understand what is our pathway forward from that. We don't have the definitive answer, but it is a critical permit for us to be able to move forward with the project.

<unk>. Thanks for the question, yes. The 404 permit was the wetlands permit which is essentially the water discharge permit.

It was being contested in court.

And in the end we got the decision in May that that was revoked by the Army Corps of engineers. So right now taking a bit of a step back to understand what is the pathway forward to get that permit reinstated. So there's a multiple approach to that including engagement with stakeholders, particularly the first nations groups there.

As well as the EPA and the Army Corps of engineering and state and federal regulators to understand what is our pathway forward from that.

So we don't have the definitive answer.

But it is a critical permit for us to be able to move forward with the project.

Speaker 15: Putting it all together, do you think that asset could be in production this decade, or is it going to next decade?

Bryce Adams: Putting it all together, do you think that asset could be in production this decade, or is it going to next decade?

So putting it all together do you think that it would be in that asset could be in production in this decade or does it go into next decade.

Speaker 14: Very difficult to say at this point in time. As has been stated by a number of people, this is a bit unprecedented in the US to actually revoke a permit in the context of no violations to the permit conditions or anything. We're in a bit of uncharted territory right now. Over the next few months we're gonna work through what is a pathway forward, and we'll be able to have a much better sense for what the timeline is on the project.

Tyler Mitchelson: Very difficult to say at this point in time. As has been stated by a number of people, this is a bit unprecedented in the US to actually revoke a permit in the context of no violations to the permit conditions or anything. We're in a bit of uncharted territory right now. Over the next few months we're gonna work through what is a pathway forward, and we'll be able to have a much better sense for what the timeline is on the project.

Very difficult to say at this point in time.

As this.

As we've stated by a number of people it is a bit unprecedented in the U S to actually revoke a permit in the context of no violations to the permit conditions in it or anything.

We're in a bit of uncharted territory right now so over the next few months, we're going to work through what is the pathway forward, we'll be able to have a much better sense for what the timeline is on the project.

Speaker 15: Okay. Sorry for cutting off, Jonathan.

Bryce Adams: Okay. Sorry for cutting off, Jonathan.

Okay, and sorry for that.

Jonathan Price: No, I was just gonna say, Bryce, I mean, I think, you know, similar to, you know, to many of the projects we have and this is, you know, common across every operator in the industry is that the permitting piece is, you know, one of the greatest uncertainties that to a certain extent is beyond our control. It's, you know, it's an advantage therefore to have multiple projects, because, you know, because of those timelines as you identify, we're, you know, therefore very happy to have the Zafranal permit in hand. We will submit the permit for San Nicolás shortly, and of course, we have the QBME permit in train as Amparo described and is moving along well.

No I was I was just going to say, Brian . So I think similar to many of the projects. We have and this is common across every operator in the industry as the permitting pieces.

Is one of the greatest uncertainties that to a certain extent is beyond our control.

It's it's an advantage therefore to have multiple projects.

Because because of those timelines as you identify with therefore very happy to have the.

Zephyr and alto in hand.

We will submit the tenant to sign Nicholas Schorsch.

Shortly and of course, we have the <unk>.

In train us on PARO described and it is moving along well.

Jonathan Price: Ultimately, even with permits in hand, we still then have to look at how we optimize the development of capital in such a way that it leaves space for return to shareholders, and that we're directing the organization's project capacity, project construction capacity at those things that will generate the highest returns. Just having a permit per se does not necessarily guarantee that any project would be the first cab off the rank because we will always take a portfolio perspective to the way we deliver the greatest value.

Ultimately even with permits in hand, we still then have to look at how we optimize the development.

I shouldn't have capital in such a way that it leaves space or return to shareholders and that were.

Directing the organization project capacity.

Construction capacity those things that will generate the highest returns so just having a permit to say theres not necessarily guarantee that any project would be the first cabo for rank because we will always take a portfolio perspective to the way we deliver the greatest value.

Speaker 15: Okay. Maybe just yeah, last one follow up on these projects. On that waterfall chart in slide 15, how do you like, when you're preparing that chart, which one do you put on the left? Is that, like, the most probable project to be advanced or is it just more random?

Bryce Adams: Okay. Maybe just yeah, last one follow up on these projects. On that waterfall chart in slide 15, how do you like, when you're preparing that chart, which one do you put on the left? Is that, like, the most probable project to be advanced or is it just more random?

Okay, maybe just last one follow up on these projects, but on that waterfall chart in slide 15.

How do you see.

When you're preparing that we're trying to put on the lift is that like the most probable project to be advanced or is it just more random.

Jonathan Price: Yeah, I mean, I wouldn't read into it necessarily in that first phase where you see those five projects of San Nicolás, QB Mill expansion, Zafranal, et cetera, 'cause of course, Zafranal is the one where we have a permit. At Zafranal we're, you know, redoing feasibility and we've got some engineering to be done. San Nicolás, we haven't yet put in the application for the permit and QB Mill expansion, of course, we're somewhere between the two. I wouldn't read into that too definitively in terms of the sequence in which these things happen. The point we're trying to communicate here is all of these things are in the mix in what we would call the near term here from a project development capability and delivery.

Yes.

Read into it necessarily in that first phase, where you see those five projects or some niche <unk> mill expansion Zephyr, and all et cetera, because of course offer now is the one where we have a permit but theres offer now we're redoing feasibility and we've got some engineering to be done.

Nicholas we havent yet.

Put in the application for the fitness and <unk> mill expansion of course with somewhere between the two so I wouldn't read into that too definitively in terms of the sequence in which these things happen.

Point, we're trying to communicate here is all of these things are in the mix and what we would call. The near term here from a project development capability and delivery and we will look at that on a portfolio basis across some of the range of.

Jonathan Price: We will look at that on a portfolio basis across some of the range of factors I referenced in my remarks earlier. It's a great position to be in because of the risk of things like permitting, having multiple projects here that we can, you know, accept one moving back in time 'cause there'll be others that still exist in that close timeframe, gives us the option to continue to invest in growth. Whereas if we were a, you know, a single project operator or even a two project operator, that might be a very difficult thing to achieve.

Brian just factors I referenced in my remarks earlier, but it's a it's a great position to be in because of the risk off things like permitting having multiple projects here that we can accept one moving back in time, because there'll be others that still exist in that and that plus timeframe gives us the option to continue to invest in growth.

Whereas if we were a single project operator, or even a two project operators that might be a very difficult thing to achieve.

Speaker 15: That's great. I appreciate the discussion. Thanks so much.

Bryce Adams: That's great. I appreciate the discussion. Thanks so much.

That's great I appreciate the discussion thanks, so much.

Jonathan Price: Thanks, Bryce.

Thanks, Brian .

Operator: The next question is from Timna Tanners with Wolfe Research. Please go ahead.

The next question is from Timna Tanners with Wolfe Research. Please go ahead.

Speaker 16: Great. Thank you. I wanted to follow up on the last question just to understand slide sixteen on those cash costs, if you could just remind us when they were last updated and, if it wasn't that recently, like what you think they might look like roughly, if you were to update them, just high level?

Timna Tanners: Great. Thank you. I wanted to follow up on the last question just to understand slide sixteen on those cash costs, if you could just remind us when they were last updated and, if it wasn't that recently, like what you think they might look like roughly, if you were to update them, just high level?

Alright. Thank you I wanted to follow up on that last question just to understand slide.

<unk> 16 on those cash costs, if you could just remind us when they were last updated and.

If if it wasn't that recently what do you think they might look like roughly if you were to update them just high level.

Jonathan Price: Yeah. Thanks, Timna. Tyler, do you wanna comment on those?

Yeah. Thanks, Timna Tyler do you want to comment on those.

Speaker 14: Yeah, those cash costs there, they are from the most recent studies that we have done, though some of those are dated. As Jonathan's saying, we're moving through feasibility updates and for the majority of these projects, and we'll update those as we complete the final feasibility numbers. As he noted, we are seeing inflationary impacts across the board, so we anticipate those will go up, but I can't tell you what they are at this point in time. We'll have much better information as we work through the feasibility and the study process and update.

Tyler Mitchelson: Yeah, those cash costs there, they are from the most recent studies that we have done, though some of those are dated. As Jonathan's saying, we're moving through feasibility updates and for the majority of these projects, and we'll update those as we complete the final feasibility numbers. As he noted, we are seeing inflationary impacts across the board, so we anticipate those will go up, but I can't tell you what they are at this point in time. We'll have much better information as we work through the feasibility and the study process and update.

Yes, those cash cost there they are from the most recent studies that we have done some of those are dated and as we're moving through as Jonathan saying, we're moving through feasibility updates then.

For the majority of these projects and we will update those as we complete the final feasibility numbers.

Is it.

I noted you are.

Being inflationary impacts across the board. So we anticipate those will go up but I can't tell you what they are at this point in time, but we'll have much better information as we work through the feasibility and the steady process and update.

Speaker 16: Okay. Fair enough. Thanks for that. My other question is just for Crystal. Wanted to touch base on the working capital just 'cause it continues to see pretty high inventories. Just I'm assuming of course, it has to do with the QB2 ramp up, but how do we think about the cadence of that normalizing? Because the working capital use hasn't reversed as much as we might have expected. Any timing guidance there would be great. Thanks.

Timna Tanners: Okay. Fair enough. Thanks for that. My other question is just for Crystal. Wanted to touch base on the working capital just 'cause it continues to see pretty high inventories. Just I'm assuming of course, it has to do with the QB2 ramp up, but how do we think about the cadence of that normalizing? Because the working capital use hasn't reversed as much as we might have expected. Any timing guidance there would be great. Thanks.

Okay Fair enough. Thanks for that my other question is just for Crystal I wanted to touch base on the working capital just because it continues to see pretty high inventories and just I'm assuming of course that has to do with the <unk> ramp up but how do we think about the cadence of that normalizing and because the working capital.

Haven't reversed as much as we might have expected so any timing guidance that would be great. Thanks.

Crystal Prystai: Thanks, Timna, for your question. You're correct. There is a build in working capital in relation to QB. I think you can expect that, you know, to come down over time through the rest of the year.

Thanks for your question you are correct there is a.

Build in working capital in relation to QE. So I think you can expect that to come down.

Overtime.

The recipe here.

Speaker 16: Okay, great. Thanks again.

Timna Tanners: Okay, great. Thanks again.

Okay, great. Thanks again.

Operator: I will now hand the call back over to Mr. Price for closing remarks.

I will now hand, the call back over to Mr price for closing remarks.

Jonathan Price: Thank you. Thanks to everyone for joining us today. As ever, if you need further details or context here, please reach out to the IR team. They will be very happy to help. We look forward to seeing you all soon. Thank you very much and have a good day.

Thank you and thanks to everyone for joining us today as ever if you need further details or context here. Please please reach out to the IR team they will be very happy to help.

And we look forward to seeing you all soon so thank you very much and have a good day.

Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

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Q2 2023 Teck Resources Limited Earnings Call

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