Q1 2024 Teck Resources Ltd Earnings Call

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Teck's first quarter 2024 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 conference call is being recorded on Thursday, April 25th, 2024. 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 welcome to Teck's first quarter 'twenty 'twenty four earnings release conference call. At this time all participants are in listen only mode. Later, we will conduct a question and answer session.

Operator: Join the question queue Press Star then one on your Touchtone phone.

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

Operator: This conference call is being recorded on Thursday April 25th 2024.

Operator: 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, Kaylene. Good morning, everyone.

Fraser Phillips: Thank you Lee and good morning, everyone. Thank you for joining us for tax first quarter 'twenty 'twenty four conference call.

Fraser Phillips: Thank you for joining us for Teck's first quarter 2024 conference call. Please note today's call contains forward-looking statements. Various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statements.

Fraser Phillips: Today's call contains forward looking statements various risks and uncertainties may cause actual results to vary Teck does not assume any obligation to update any forward looking statements.

Fraser Phillips: Please refer to slide 2 for the assumptions underlying these estimates. 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 first quarter results. Crystal Prystai, our CFO, will follow with additional color on the quarter. Jonathan will then conclude today's session with an update on our key base metals markets and our progress on copper growth. It will be followed by a Q&A session. With that, I'll turn the call over to Jonathan.

Fraser Phillips: Referring to slide two for the assumptions underlying our forward looking statements.

Fraser Phillips: 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: Jonathan Pryce, our CEO, who will begin today's call with highlights from our first quarter results.

Crystal J. Prystai: So Preston our CFO will follow with additional color on the quarter.

Fraser Phillips: That concludes today's session with an update of our team, but as those markets are and our progress on corporate growth in the quarter, followed by a Q&A session.

Jonathan Price: I'll turn the call over to John.

Jonathan Price: Thank you, Fraser, and good morning, everyone. Starting on slide four, with highlights from a strong first quarter across our business. We completed all major construction at QB, including the ship loader and molybdenum floor. At our completed port facility, we mark the first shipment of construction materials. I was in Cuba last week to see the second ship being loaded and departing on time. It was a beautiful sight.

Jonathan Price: Thank you Fraser and good morning, everyone.

Jonathan Price: Starting on slide four with highlights from our strong first quarter across all business.

Jonathan Price: Replacing all major construction at QB and turning the ship loader a molybdenum plant.

Jonathan Price: Thank you Paul facility, we marked the first shipment of concentrate.

Jonathan Price: Well I would like to be lost waiting to see the second being loaded.

Speaker Change: All right.

Jonathan Price: It's a beautiful site.

Jonathan Price: We also continue to advance the Roundup of the Millennium Plan. In January, we closed the minority sale of our steel-making coal business and other value resources to Nippon Steel Corporation and POSCO and received US$1.3 billion in cash from NSC. When the late re-approvals for the full sale of Glencore are progressing as anticipated, the closing is expected no later than the third quarter of this year.

Jonathan Price: We also continue to advance the Brian the molybdenum plant.

Jonathan Price: In January we find that the minority stake of our steelmaking coal business by the resources. So they won't steal corporation on Posco.

Jonathan Price: One 3 billion in U S dollars in cash from NFC.

Jonathan Price: We have approvals for the full size Blanco all progressing as anticipated.

Jonathan Price: Do you expect these no later than the third quarter of this year.

Jonathan Price: Q1 was a strong quarter from both an operational and a financial perspective. A ramp-up at QB is reflected in our steadily increasing copper quarterly production, and all our previously disclosed annual guidance is unchanged. We also continue to focus on sustainability leadership, including improved safety performance. Our high potential incident frequency rate was lower than the same period last year at 0.06.

Jonathan Price: Q1 was a strong quarter from both an operational and financial perspective.

Jonathan Price: To wrap up the Q V is reflected in our steadily increasing.

Jonathan Price: Quarterly production and all that.

Jonathan Price: As previously disclosed annual guidance is unchanged.

Jonathan Price: We also continue to focus on sustainability leadership, including improved safety performance.

Jonathan Price: High potential incident frequency rate was lower than the same period last year.

Jonathan Price: 1.06.

Jonathan Price: Together with global industry leaders, we launched the North Pacific Green Corridor Consortium, which will work together to decarbonize the value chain for commodities between North America and Asia. Activities will be focused on pathways to optimize energy efficiency with the specific goal of advancing projects and infrastructure required to achieve meaningful emissions reductions in the near term. And we released our 23rd Annual Sustainability Report, which outlines our performance in 2023 in areas such as decarbonisation, diversity, and working towards a nature-positive future.

Jonathan Price: Together with global industry leaders, we launched the.

Jonathan Price: Green car at all and so what do you.

Jonathan Price: We have worked together to decarbonize, the Bayou change commodities between North America and Asia.

Jonathan Price: I'll be focused on ways to optimize energy efficiency with the specific goal of advancing projects infrastructure required to achieve meaningful production in Nanjing.

Jonathan Price: Yeah.

Jonathan Price: We released our 27th annual sustainability report.

Jonathan Price: Your line is now almost in 2023 in areas such as decarbonization.

Jonathan Price: And working towards the nature of the future.

Jonathan Price: Looking now at the financial highlights from our first quarter on slide five, we reported adjusted EBITDA of $1.7 billion in the quarter compared to $2 billion a year ago, with lower copper and zinc prices and higher unit costs in steelmaking coal and our QB operation partly offset by higher copper sales volumes and higher realised steelmaking coal prices compared to the same period last year. We continue to return cash to shareholders in the quarter, with $80 million in shared buybacks executed under the $500 million return authorised by the board following receipt of the NSE procedure. We also paid $65 million in a quarterly dividend.

Jonathan Price: Looking now at the financial highlights from our third quarter on slide five.

Jonathan Price: We reported adjusted EBITDAR of $1 7 billion bullets in the call was that the $2 billion, a year ago with lower copper and zinc prices and higher unit costs in steelmaking coal QB operation.

Jonathan Price: We offset by higher sales volumes and higher realized steel, making coal prices.

Jonathan Price: For the same period last year.

Jonathan Price: We continued to return cash to shareholders in the quarter with $80 million.

Jonathan Price: <unk> executed under the 500 million.

Jonathan Price: I will summarize by the board following receipt of the proceeds.

Jonathan Price: We also paid $65 million importantly, nice dividends.

Jonathan Price: Turning to QB on slide 6, as I mentioned earlier, we completed all outstanding major construction in the first quarter. At the port, we achieved construction completion in Q1, consistent with our guidance, and successfully loaded our first vessel of QB concentrate using the ship loader. Immobilization of the construction workforce is substantially advanced, and the operational ramp-up is continuing.

Jonathan Price: Turning to Q B on slide six as I mentioned earlier, we completed all outstanding major construction in the first quarter.

Jonathan Price: Suppose we achieved construction completion in Q1, consistent with our guidance and successfully loaded our first basketball excuse me concentrate using a shade below that.

Jonathan Price: The mobilization of the construction workforce is substantially involved and the operational ramp up is continuing.

Jonathan Price: We are on track to complete ramp-up of the molybdenum plant in the second quarter. However, our QB2 project capital cost guidance of 8.6 to 8.8 US billion dollars is unadjusted. We produce higher QB copper and concentrate quarter over quarter at 43,300 tons, and we continue to expect progressively stronger production in each quarter throughout the rest of the year. Our full year copper and concentrate guidance for QV is unchanged at 230,000 to 275,000 samples.

Jonathan Price: We are on track to complete ramp up as the molybdenum plant in the second quarter.

Jonathan Price: You beat your project capital cost guidance of $8 $6 billion to $8 billion is unchanged.

Jonathan Price: We produced high IQ be copper in concentrate with quarter over quarter, and 43300 tons and we continue to expect progressively stronger production in each quarter throughout the rest of the year.

Jonathan Price: Copper in concentrate and guidance for Q B is unchanged.

Jonathan Price: 130 to 275000 tons.

Jonathan Price: QB unit costs are expected to remain elevated this year, particularly in the first half, consistent with our guidance. This is driven by the cost of alternative logistics, limited malignant production in the first half of the year, continued ramp-up, and inflationary pressure. Our funding and guidance for QV net cash unit costs is unchanged at £195 to £225 a year.

Jonathan Price: Unit costs are expected to remain elevated this year, particularly in the first half consistent with our guidance. This is driven by the cost of alternative logistics limited molybdenum production in the first off again continued ramp up on inflationary pressures.

Jonathan Price: Looking at guidance for Q V. Net cash unit costs is unchanged at 195 to 225 U S dollars.

Jonathan Price: With that I'll now turn it on to Crystal for some additional color on the quarter.

Crystal J. Prystai: Thanks, Jonathan. Good morning, everyone.

Jonathan Price: Thanks, Tom and good morning, everyone. I mean, let's start on slide eight with our financial performance in the first quarter.

Crystal J. Prystai: I'm going to start on slide 8 with our financial performance for the first quarter. There are a number of significant accounting and presentation items impacting our results compared to the same period last year. Following the minority sale of our steelmaking coal business in January, our financial statements now reflect the 23% minority interest in EBR held by NSC and POSCO. With our controlling shareholding, we continue to consolidate 100% of EBR's production and sales volumes, revenue, gross profit, and EBITDA.

Crystal J. Prystai: There are a number of significant accounting and presentation.

Crystal J. Prystai: Our results compared to the same period last year.

Crystal J. Prystai: Following the minority sale of our steelmaking coal business in January our financial statements now reflect the 23% minority interest in B R Y N C in Pasco.

Crystal J. Prystai: That's our controlling shareholder we continue to consolidate 100% of yarn production and sales volumes revenue gross profit and EBITDA.

Crystal J. Prystai: Our profit attributable to shareholders is now based on our reduced 77% ownership of EBR, with 23% of EBR's profit attributable to non-controlling interests. This has significantly reduced our profit attributable to shareholders and related EPS compared to the same period last year. It is important to note that despite the non-controlling interest attribution of profit from EBR, we continue to receive 100% of the cash flows generated by EBR through the closing of the transaction with Glencoe.

Crystal J. Prystai: Our profit attributable to shareholders is nowadays are would you stop me, 7% ownership of D. R.

Crystal J. Prystai: 23%.

Crystal J. Prystai: Attributable noncontrolling interests.

Crystal J. Prystai: This has significantly reduced our profit attributable to shareholders and related EPS compared to the same period last year.

Crystal J. Prystai: It is important to note that despite the noncontrolling interest atrophy.

Crystal J. Prystai: We are continuing to receive 100% of the cash flows generated by Edr through closing of the transaction with Glencore.

Crystal J. Prystai: Our finance expense and depreciation and amortization. It does have both increased significantly compared to the same period last year as construction is complete and ramp up continues at QB.

Crystal J. Prystai: Our finance expense and depreciation and amortization expense have both increased significantly compared to the same period last year as construction is complete and wrap-up continues at QBE. We are now depreciating most of the QB assets, and we have stopped capitalizing interest on the QB2 project as anticipated. Our adjusted EBITDA declined in the quarter compared to the same period last year.

Crystal J. Prystai: Now depreciating most of that can be out there.

Crystal J. Prystai: And we have stopped capitalizing interest on the QB two project as anticipated.

Crystal J. Prystai: Our adjusted EBITDA declined in the quarter compared to the same period last year.

Crystal J. Prystai: This was primarily driven by higher operating costs at EBR and at QB operations, reflecting elevated costs at QB during ramp-up. It was also driven by negative pricing adjustments, particularly for steelmaking coal. These items were partly offset by higher copper sale volumes and higher realized steelmaking coal prices compared to the same period last year. Now turning to each of our business units in greater detail, starting with Copper on slide 9. Our realized copper price was $3.86 per pound, down 5% compared to the same period last year.

Crystal J. Prystai: This was primarily driven by higher operating costs I E R and that keep the operations.

Crystal J. Prystai: I. Thank all of you had costs that you need during ramp up.

Crystal J. Prystai: It was also driven by negative pricing adjustments, particularly for steelmaking coal.

Crystal J. Prystai: Items were partly offset by higher copper sales volumes and higher realized steelmaking coal prices compared to the same period last year.

Crystal J. Prystai: Now turning to each of our business units in greater detail, starting with copper on slide nine.

Crystal J. Prystai: Our realized copper price was 386 U S per pound down 5% compared to the same period last year.

Crystal J. Prystai: We had strong quarterly copper production of 99,000 tons, an increase of 74% from the same period last year. This was driven by the ramp-up of QB operations, adding 43,300 tons of copper in concentrate production, and higher copper production from Antonina due to higher copper only ore being treated as expected in the mine plan. Our cost of sales was higher year over year, primarily due to the inclusion of QB operations. This was also the first full quarter of depreciation of QB's operating assets, as I previously noted with $125 million recorded in Q1.

Crystal J. Prystai: We had strong quarterly copper production of 99000 tonnes, an increase of 17, 4% from same period last year.

Crystal J. Prystai: This was driven by around how about QB operations, adding 43300 tonnes of copper in concentrate production.

Crystal J. Prystai: And higher copper production from <unk> due to increased copper only ore being treated as expected in the main one.

Crystal J. Prystai: Our cost of sales was higher year over year, primarily due to the inclusion of QB operation is also the first full quarter of depreciation on Tvs operating off that sounds like previously noted with a $125 million reported in Q1.

Crystal J. Prystai: Excluding QB, net cash unit costs were U.S. $1.92 per pound or U.S. $0.09 per pound higher than the same period last year due to reduced zinc by-product revenue at Antimina with significantly lower zinc pricing. We were pleased that ASMINA received approval of the MEIA for its MindLines extension from 2028 to 2036 in the quarter.

Crystal J. Prystai: Excluding QB, our net cash unit costs for a U S. Dollar 92 hotel or you up nine cents per pound higher than the same period last year due to reduced zinc by product revenue I asked me up with significantly lower zinc prices.

Crystal J. Prystai: We're pleased that asked me how received approval of the N V. I a sport my life extension from 2028 to 2036 in the quarter.

Crystal J. Prystai: Looking ahead, as Jonathan said, QB's guidance is unchanged, and we continue to expect QB production to increase each quarter through 2024. Our copper production guidance of 465 to 540,000 tons and our full year net cash unit cost guidance of US $1.85 to $2.25 per pound are also unchanged. Turning now to our think business on slide 10.

Crystal J. Prystai: Looking ahead as Jonathan said <unk> guidance is unchanged and we continue to expect QB production to increase each quarter through 2024.

Crystal J. Prystai: Our copper production guidance of 465 to 540000 patents and our full year net cash unit cost guidance of $1 85 to <unk> 25 per pound are also unchanged.

Crystal J. Prystai: Turning now to our zinc business on slide 10.

Crystal J. Prystai: In Q1, zinc in concentrate production increased by 15% and lead in concentrate production increased by 10%, both of which were driven by higher mill throughput. At Red Dog, sales of 84,600 tons were within our guidance range, and that cash unit costs were lower than last year as a result of by-product credit.

Crystal J. Prystai: In Q1, zinc and concentrate production increased by 15% and the land and concentrate production to increase by 10% both of which were driven by higher mill throughput.

Crystal J. Prystai: Sales of 84600 times four within our guidance range.

Crystal J. Prystai: Net cash unit costs are lower than last year as a result of by product credits.

Crystal J. Prystai: At trail operations, production of refined zinc and refined lead both improved, although both quarters were impacted by severe weather events. Our gross profit before depreciation and amortization decreased 27% primarily due to significantly lower zinc prices and lower contracted zinc premiums on refined zinc at trail operations as 2023 treatment charges applied through March 31st. This was partially offset by lower NANA royalties which are tied to Red Dog profitability.

Crystal J. Prystai: At trail operations production ever find zinc and refined plan O grams, although both quarters were impacted by severe weather events.

Crystal J. Prystai: Our gross profit for depreciation and amortization decreased 27%, primarily due to significantly lower zinc prices.

Crystal J. Prystai: And Lauren contracted zinc premiums on her finds a trail operations.

Crystal J. Prystai: 2023 treatment charges apply through March 31st.

Crystal J. Prystai: This was partially offset by lower amount of royalties, which are tied to Brent on profitability.

Crystal J. Prystai: Looking forward at Red Dog, we expect zinc and concentrate sales of 50,000 to 60,000 tons in the second quarter, reflecting normal seasonality of sales. Our full year in concentrate production guidance of 565,000 to 630,000 tons and our full year net cash unit cost guidance of US $0.55 to $0.65 per pound are both unchanged. At Trail Operations, our refined zinc production guidance is unchanged at 275 to 290,000 tonnes. We have begun replacing the KIFSAT boiler at Trail, which will impact the lead circuit in the second quarter but is expected to have minimal impact on our zinc supply.

Crystal J. Prystai: Looking forward Red dog, we expect thinking concentrate sales of 50 to 60000 tons in the second quarter, reflecting normal seasonality of sales.

Crystal J. Prystai: Our full year zinc and concentrate production guidance of 565 to 630000 tonnes and our full year non cash unit cost guidance of 55 to 65 cents per pound are both unchanged.

Crystal J. Prystai: At trail operations are refined zinc production guidance is unchanged.

Crystal J. Prystai: 75 to 290000 pets.

Crystal J. Prystai: We have begun replacing that kept that boiler at trail, which will impact the let's start kicking in the second quarter.

Crystal J. Prystai: I'm going to have minimal impact on our zinc circuit.

Crystal J. Prystai: Turning now to Steel Making Coal on slide 11. Despite an extreme freezing event in January that affected both sales and production, we generated $1.4 billion in gross profit before depreciation and amortization. The 8% decline from the same period last year was primarily due to higher unit operating costs and lower sales volumes, partially offset by higher steelmaking tool prices.

Crystal J. Prystai: Turning now to steelmaking coal on slide 11.

Crystal J. Prystai: Despite a nice stream freezing of bad in January that affected both sales and production, we generated $1 4 billion in gross profit before depreciation and amortization.

Crystal J. Prystai: The 8% decline from the same period last year was primarily due to higher unit operating cost and lower sales volumes, partially offset by higher steelmaking coal prices.

Crystal J. Prystai: Volumes of 5.9 million tons were within our guidance range, and production recovered strongly later in the quarter. Adjusted site cash cost of sales per ton of $112 was higher than last year due to higher repair parts and needed spend. With the ongoing shortage of skilled trade labor, we also had increased reliance on contractors. In addition, weather-related productivity impacts and less favorable mining drivers were factors.

Crystal J. Prystai: Sales volumes of $5 9 million times, well within our guidance range and production recovered strongly later in the quarter.

Crystal J. Prystai: Adjusted site cost cost of sales per tonne of $105 was higher than last year due to higher repair and maintenance spend.

Crystal J. Prystai: The ongoing shortage of skilled trade labor, we also had increased reliance on contractors.

Crystal J. Prystai: In addition, weather related productivity impact unless favorable mining drivers or factors.

Crystal J. Prystai: Transportation costs were down $2 per tonne from the same period last year, largely due to reduced demurrage charges.

Crystal J. Prystai: And we were pleased to achieve record throughput on the saturated rock fill out or else you operations in February.

Crystal J. Prystai: Transportation costs were down $2 per ton from the same period last year, largely due to reduced emerge charges. And we were pleased to achieve record throughput at the saturated rock fill at our LQ operations in February. As our 77.5 million liters per day of constructed water treatment capacity continues to ramp up, we are on track to achieve one of the primary objectives of the Elk Valley Water Quality Plan, which is to stabilize and reduce the selenium trend in the Elk Valley.

Crystal J. Prystai: Of our $75 5 million liters per day I'm constructed water treatment capacity continues to ramp up we are on track to achieve one of the primary objectives of the Elk Valley water quality plan, which is to stabilize and reduce the selenium trend.

Crystal J. Prystai: Right.

Crystal J. Prystai: Looking forward second quarter steelmaking coal sales are expected to be six to $6 4 million tonnes, reflecting planned maintenance shutdowns at all for you and greenhouse.

Crystal J. Prystai: Our full year production guidance of 24 to 26 million tons is unchanged.

Crystal J. Prystai: Despite elevated adjusted same cash cost of sales in the first quarter, our full year guidance of 95 to $110 per tonne is also unchanged.

Crystal J. Prystai: Looking forward, second quarter steelmaking coal sales are expected to be 6 to 6.4 million tons, reflecting planned maintenance shutdowns at Elfview and Greenhill. Our full year production guidance of 24 to 26 million tons is unchanged. And despite an elevated adjusted site cash cost of sales in the first quarter, our full year guidance of $95 to $110 per ton is also undeniable. Turning now to slide 12.

Crystal J. Prystai: Turning now to slide 12.

Crystal J. Prystai: Capital allocation framework continues to guide our approach.

Crystal J. Prystai: And our priority is to have a disciplined approach to the deployment of capital.

Crystal J. Prystai: Overall, we aim to balance our growth with cash returns to shareholders, while maintaining a strong balance sheet through the cycle.

Crystal J. Prystai: Our capital allocation framework continues to guide our approach, and our priority is to have a disciplined approach to the deployment of capital. Overall, we aim to balance our growth with cash returns to shareholders while maintaining a strong balance sheet through the cycle. See the considerations for the use of proceeds from the sale of EBR on slide 13. In total, we are expecting to receive US$8.6 billion in cash proceeds, including the US$1.3 billion already received from NSF.

Crystal J. Prystai: Looking at the considerations for the use of proceeds from the sale of yard on slide 13.

Crystal J. Prystai: In total we are expecting to receive U S $8 6 billion in cash proceeds, including the U S. While we wait 3 billion already received from NFC.

Crystal J. Prystai: Our capital allocation framework God of the board and its decision on the use of proceeds from the minority sale of our steelmaking coal business and as we've already noted up to 500 million of the assay proceeds or 30% or should be returned to shareholders via share buyback.

Crystal J. Prystai: Our capital allocation framework will also got divorced decision on the remainder of the proceeds.

Crystal J. Prystai: Aim to maintain investment grade credit metrics through the cycle.

Crystal J. Prystai: Our capital allocation framework guided the board in its decision on the use of proceeds from a minority sale of our steelmaking cool business. And as we've already noted, up to $500 million of the NFC proceeds, or 30%, are to be returned to shareholders via a share buyback. Our capital allocation framework will also guide the board's decision on the remainder of the process. We aim to maintain investment grade credit metrics through the cycle, targeting a net debt to adjusted EBITDA ratio of one time.

Crystal J. Prystai: And that debt to adjusted EBITDA ratio of one times.

Crystal J. Prystai: Do you plan to reduce our gross debt and maintain or improve our credit metrics.

Crystal J. Prystai: We will also retain additional cash on our balance sheet to fund our near term copper growth opportunities and generate strong returns.

Crystal J. Prystai: We continue to expect to pay transaction related taxes of approximately U S $750 million in early 2025.

Crystal J. Prystai: And finally, we continue to expect a significant return to shareholders. In addition to the $500 million buyback previously authorized by the board in relation to that if he proceeds the board will determine the amount or timing of these returns.

Crystal J. Prystai: We plan to reduce our growth debt and maintain or improve our credit metrics. We will also retain additional cash on our balance sheet to fund our near-term copper growth opportunities and to generate strong returns, and continue to expect to pay transaction-related taxes of approximately US $750 million in early 2025. And finally, we continue to expect a significant return to shareholders, in addition to the $500 million buyback previously authorized by the board in relation to the NFC proceeds.

Crystal J. Prystai: Overall, the significant cash proceeds from this transaction will ensure we are well talk a lot to unlock the full potential of our business, while maintaining a strong balance sheet and delivering significant cash returns to our shareholders.

Crystal J. Prystai: Turning now to slide 14.

Crystal J. Prystai: You're in a strong financial position with $7 1 billion in liquidity, including $1 6 billion in cash.

Crystal J. Prystai: The board will determine the amount, form, and timing of these returns. Overall, the significant cash proceeds from this transaction will ensure that we are well-capitalized to unlock the full potential of our base metals business while maintaining a strong balance sheet and delivering significant cash returns to our shareholders. Turning now to slide 14.

Crystal J. Prystai: April 24th.

Crystal J. Prystai: We ended the quarter with a net debt to adjusted EBITDA ratio of one one times and we remain focused on maintaining our investment grade credit metrics are they noted.

Crystal J. Prystai: As mentioned earlier the board authorized a share buyback of up to $500 million of which 80 million has already been executed.

Crystal J. Prystai: We also paid 65 million in quarterly base dividends in March, bringing our total cash returns to shareholders to $145 million in the first quarter.

Crystal J. Prystai: We are in a strong financial position with $7.1 billion in liquidity, including $1.6 billion in cash as of April 24th. We ended the quarter with a net debt-to-adjusted EBITDA ratio of 1.1 times, and we remain focused on maintaining our investment-grade credit metrics, as I noted. As mentioned earlier, the board authorized a share buyback of up to $500 million, of which $80 million has already been exercised. We also paid $65 million in quarterly-based dividends in March, bringing our total cash returns to shareholders to $145 million in the first quarter. This extends our track record of strong cash returns to shareholders with approximately $4 billion return since 2019. With that, I'll turn it back over to Jon.

Crystal J. Prystai: This extends our track record of strong cash returns to shareholders with approximately 4 billion, which hurt since 2019.

Crystal J. Prystai: With that I'll turn it back over to Jonathan.

Jon: Thanks Crystal.

Crystal J. Prystai: Like some of your life.

Jon: ESCO in Santiago last week, and it's clear that we are at a turning point.

Crystal J. Prystai: Exciting time in the copper market, especially given the copper prices have gone up significantly since Q1 to about $4 40 per pound today.

Jon: Well, the small savings I'm debating whether demand coupled with really right. So quickly wondering where are we going to find more.

Jon: I'll provide an update on all key base metals markets.

Jon: So starting with the copper market on slide 16.

Crystal J. Prystai: In fact tightness that continued into the first quarter Global mine production is over 2 million tons below your original guidance for 2023, and almost 1 million tonne Huawei yesterday I saw last year.

Jonathan Price: Like some of you, I attended SESCO in Santiago last week, and it's clear that we are at a turning point. It's an exciting time in the copper market, especially given that copper prices have run up significantly since Q1 to above $4.40 per pound today. The world is fast turning from debating whether demand for copper will really rise so quickly to wondering where and how we're going to find more. Given that, I'll provide an update on our key base metals market.

Jonathan Price: Actions for quite some time before it.

Jonathan Price: So this time of increased investments smelting capacity in Asia, and India in preparation for the stronger demand from the energy transition.

Jonathan Price: The capacity is $3 7 million tonnes higher than three years ago.

Jonathan Price: Oh TCR piece has fallen 100% from 80 800 in less than four months, which is now enforcing costa refining production.

Jonathan Price: Starting with the copper market on slide 16. Concentrate tightness has continued into the first quarter, with global mine production over 2 million tonnes below the original guidance for 2023 and almost 1 million tonnes lower year to date, based on last year's projections for 2024. This comes at a time of increased investment in smelting capacity in Asia and India in preparation for stronger demand from the energy transition, with a capacity of 3.7 million tons higher than three years ago. However, spot TCRCs have fallen 100% from 88% to 0.0% in less than four months, which is now forcing cuts to refined production.

Jonathan Price: We see the lack of investment in mining over the past decade, as potentially being a constraint for the energy transition the.

Jonathan Price: The industry will need to invest around $120 billion in the next five years.

Jonathan Price: The energy transition could six five to 7 million tons to the mall in the next five years.

Jonathan Price: We're getting recognition of new demand from AI and data centers.

Jonathan Price: Importantly, an additional full 0.5 to 5 million tonnes of copper demand growth will flow from grid expansion and refurbishment internalization and a growing global middle class.

Jonathan Price: Moving on to the zinc market on slide 17.

Jonathan Price: Zinc prices have been under pressure. So most of 2023 and into Q1 'twenty to 'twenty four with prices falling a suite of 2% over Q4 2023.

Jonathan Price: In the long term, we see the lack of investment in mining over the past decade as potentially being a constraint for the energy transition. The industry will need to invest around $120 billion in the next five years. The energy transition could add 6.5 to 7 million tons to demand in the next five years, including recognition of new demand from AI and data centers. Additionally, an additional 4.5 to 5 million tons of copper demand growth will flow from grid expansion and refurbishment, urbanization, and a growing global middle class.

Jonathan Price: These lower prices have forced the closure of a variety of 500000 tons of mine production, which will continue through 2024.

Jonathan Price: Additional 120 to 150000 tons lost due to fires floods and strikes.

Jonathan Price: We expect that some long production will return in 2024 net mine production will decrease to $12 6 million tonnes, which is about 1 million tons lower than projected last year.

Jonathan Price: Similar to copper.

Jonathan Price: Moving on to the zinc market on slide 17, think prices have been under pressure for most of 2023 and into Q1 2024, with prices falling a further 2% over Q4 2023. These lower prices have forced the closure of around 500,000 tons of mine production, which will continue through 2024, with an additional 120,000 to 150,000 tons lost due to fires, floods, and strikes. We expect that some mine production will return in 2024, but that net mine production will decrease to 12.6 million tons, which is about 1 million tons lower than projected last year. Similar to copper, Titus in the zinc concentrate market has pushed TCs down from $280 per DMT to a historic low of $30 to $50 per DMT, which is now impacting refined metal production.

Jonathan Price: Concentrate market is putting T C.

Jonathan Price: $280 per DMT to a historic level of 30 to 50 per DMT, which is now impacting your refined metal production.

Jonathan Price: Instead of metal demand is improving in North America Europe from a low base in Asia due to solid automotive production and a strong energy transition infrastructure spending.

Jonathan Price: While we expect mining production to return as prices improve on the medical market tightness is expected to remain until 2020.

Jonathan Price: Now turning to our progress in copper garage on slide 18.

Jonathan Price: We continue to invest in our industry, leading copper growth portfolio in the quarter, reflecting our strategy to balance growth.

Jonathan Price: Capital to shareholders.

Jonathan Price: Oh I didn't body, we continue to respond to information request from regulators on the two I mean, that's the caution for the mine life extension.

Jonathan Price: James but you don't going with indigenous governments and organizations are key communities of interest.

Jonathan Price: With respect to progress Engineering design project execution planning and construction planning for substantial completion in Q1 2025.

Jonathan Price: Incentive metal demand is improving in North America and Europe from a low base and in Asia due to solid automotive production and strong energy transition infrastructure spending. While we expect mine production to return as prices improve, fundamental market tightness is expected to remain until 2027. We'll turn to our progress in copper growth on slide 18. We continue to invest in our industry-leading copper growth portfolio this quarter, reflecting our strategy to balance growth and return of capital to shareholders. At Highland Valley, we continue to respond to information requests from regulators on the permit application for the MyLife extension. Engagement is ongoing with indigenous governments and organizations and key communities of interest.

Jonathan Price: The team it sounds like the last submitted the permit application in January and they continue to engage government stakeholders supported payment review.

Jonathan Price: They also continue to advance feasibility study would with plans to initiate detailed engineering the first half.

Jonathan Price: 2025.

Jonathan Price: So for now we continue to update capital and operating cost estimates from 'twenty to 'twenty feasibility study.

Jonathan Price: I'll start construction.

Jonathan Price: Project is expected to enter the detailed engineering in the second half of this year.

Jonathan Price: We advanced towards defining debottlenecking opportunities and low capital expansions at QB, we expect to finalize the project scope and advanced permitting by the end of 2024.

Jonathan Price: We expect to progress engineering and design, project execution planning, and construction planning for substantial completion in Q1 of 2025. The team at San Nicolás submitted the MIAR permit application in January, and they continue to engage government and stakeholders in support of permit review. They also continue to advance feasibility study work with plans to initiate detailed engineering in the first half of 2025. And with that for now, we continue to update capital and operating cost estimates from the 2020 feasibility study, and we have advanced our construction permit. The project is expected to enter detailed engineering in the second half of this year.

Jonathan Price: Or would you not expect to sanction any projects. This year, we remain focused on advancing the atrium project potential sanctioning in 2025.

Speaker Change: All right.

Jonathan Price: All projects will be required to deliver an attractive risk adjusted return and will compete for capital in line with <unk> capital allocation framework.

Jonathan Price: Reviewing our priorities on slide 19.

Jonathan Price: We set up several key priorities for 2020 full to ensure we can continue to demonstrate our focus on value creation.

Jonathan Price: So you should have the full sale of our steelmaking coal business why Blanco will acquire a 77% controlling interest in Egypt and become the operator of the steelmaking coal mines is a key priority this year.

Jonathan Price: As I mentioned regulatory approvals continue to progress well, we think as expected no later than the third quarter.

Jonathan Price: And we are progressing towards defining de-bottlenecking opportunities and low capital expansions of QB. We expect to finalize project scope and advance permitting by the end of 2024. While we do not expect to sanction any projects this year, we remain focused on advancing near-term projects for potential sanctioning in 2025.

Jonathan Price: We are also driving site operational performance across our portfolio.

Jonathan Price: We have embedded never risks into our guidance to ensure we build confidence in our ability to deliver on our marketing commitments.

Jonathan Price: Our cube, we have now completed all major construction, including the ship loader and the molybdenum plant.

Jonathan Price: We're working hard to achieve consistent operating performance.

Jonathan Price: On capacity.

Jonathan Price: Importantly, all projects will be required to deliver an attractive risk-adjusted return and will compete for capital in line with Teck's capital allocation program. Reviewing our priorities on slide 19. We have set up several key priorities for 2024 to ensure we can continue to demonstrate our focus on value creation. Completion of the full sale of our steelmaking coal business, where Glencore will acquire a 77% controlling interest in EBR and become the operator of the Elk Valley steelmaking coal mines, is a key priority this year. As I mentioned, regulatory approvals continue to progress, and voting is expected no later than the third quarter.

Jonathan Price: At the same time, we continue to advance the development projects and our industry, leading copper growth pipeline, which are foundational to our future growth.

Jonathan Price: And we will advance our growth in a disciplined way we're following our capital allocation framework to ensure that our capital decisions are value maximizing for shareholders.

Jonathan Price: In conclusion on slide 20.

Jonathan Price: It remains on value creation.

Jonathan Price: Our priorities help us to do that and I'm excited for the opportunities ahead of us.

Jonathan Price: We are committed to responsibly, creating long term value for our shareholders and stakeholders.

Jonathan Price: In a unique position to deliver significant value through our strategy centered on copper garage to capitalize on strong demand and the transition to a low carbon economy.

Jonathan Price: We have current production from our premium portfolio with long life high quality assets in stable well understood jurisdictions.

Jonathan Price: We are also driving safe operational performance across our portfolio. We have embedded known risks into our guidance to ensure we build confidence in our ability to deliver on our market commitment. At QB, we have now completed all major construction, including the ship loader and the molybdenum plant.

Jonathan Price: Nathan we are adding to that production through the ramp up of QB.

Jonathan Price: Longer term, we seek to unlock significant value from our core portfolio.

Jonathan Price: And we are assuming that baidu driven by employing a rigorous investment framework and continuing to balance growth with cash returns to our shareholders.

Jonathan Price: We are working hard to achieve consistent operating performance at design capacity. At the same time, we continue to advance the development projects in our industry-leading copper growth pipeline, which are foundational to our future growth. We will advance that growth in a disciplined way by following our capital allocation framework to ensure that our capital decisions are value-maximizing for shareholders. In conclusion, on slide 20, our focus remains on value creation. Our priorities help us to do that, and I'm excited about the opportunities ahead of us.

Speaker Change: Thank you operator, please open the line for questions.

Jonathan Price: Certainly.

Jonathan Price: She joined the question queue. Please press Star then one on your Touchtone phone, you'll hear a tone acknowledging your request if you're using a speaker phone. Please ensure you lift your handset before pressing any keys.

Jonathan Price: We ask that you limit yourself to one question and one follow up.

Jonathan Price: If you wish to remove yourself from the question queue. You May Press Star then two.

Jonathan Price: Our first question is from Aurist walk at all with Scotiabank. Please go ahead.

Speaker Change: Hi, good morning, with the BHP bid for reported bid for Anglo American I'm curious whether.

Jonathan Price: We are committed to responsibly creating long-term value for our shareholders and stakeholders. We are in a unique position to deliver significant value through our strategy centering on copper growth to capitalise on strong demand in the transition to a low carbon economy. We have current production from a premium portfolio of long-life, high-quality assets in stable, well-understood jurisdictions. In the near term, we are running for that production through the ramp-up of QB.

Jonathan Price: Taxi do the opportunities out there to add producing copper assets to the portfolio just given your balance sheet transformation post a coal.

Jonathan Price: Sale, that's going to close in Q3, I certainly thank God.

Jonathan Price: Producing assets are a lot easier to add that.

Jonathan Price: And then building as we saw with <unk>, but I'm curious how you see the landscape.

Speaker Change: Yeah, Hi, Austin, Thanks for that question.

Jonathan Price: Longer term, we seek to unlock significant value from our copper growth portfolio. We are pursuing that value-driven growth by employing a rigorous investment framework and continuing to balance growth with cash returns to our shareholders. Operator, please open the line for questions.

Speaker Change: So I think firstly I would say that the other.

Jonathan Price: Proponents to all potential take over here.

Jonathan Price: Volume P. H P. Just reinforces the attractiveness of the long term fundamentals for copper market.

Jonathan Price: And our long term fundamentals around which we have stated our strategy for the years ahead for us.

Operator: To join the question queue, please press star and then one on your touchtone phone. You'll hear a tone acknowledging your request. If you're using a speakerphone, please ensure you lift your handset before pressing any keys. We ask that you limit yourself to one question and one follow-up. If you wish to remove yourself from the question queue, you may press star then 2. Our first question is from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: I just meant this news doesn't change I think we remain very focused on.

Orest Wowkodaw: Completing the transaction Oh about E B R with Glencore deploying those proceeds to strengthen the balance sheet to ensure long term resilience to the company coupled with investing into high quality projects that we have in our portfolio.

Orest Wowkodaw: I'm, making a significant return of capital to shareholders.

Orest Wowkodaw: No change <unk>, where we're very focused on delivering that type of growth the market fundamentals.

Orest Wowkodaw: Hi, good morning. With the BHP bid for reported bid for Anglo American, I'm curious whether Teck sees any opportunities out there to add producing copper assets to the portfolio, just given your balance sheet transformation post the coal sale that's going to close in Q3. I certainly think producing assets are a lot easier to add than building, as we saw with QB2. But I'm curious how you see the landscape.

Orest Wowkodaw: We will continue to focus on those things, we can control to deliver value for our shareholders.

Speaker Change: Thank you.

Orest Wowkodaw: Quick follow up can you give us an update on QB two it from the Churchill co data it looked like the monthly production was pretty flat in January February March.

Jonathan Price: Hi Orest, and thanks for that question. Look, I think, firstly, I'd say that the proposed or potential takeover here of Anglo by BHP just reinforces the attractiveness of the long-term fundamentals for the copper market and, you know, the long-term fundamentals around which we have centered our strategy for the years ahead. For us, you know, this announcement, this news doesn't change anything. We remain very focused on completing the transaction over EVR with Glencore, deploying those proceeds to strengthen the balance sheet to ensure the long-term resilience of the company, coupled with investing in the high-quality projects that we have in our portfolio and making a significant return of capital to shareholders.

Orest Wowkodaw: Can you maybe just speak to what the current challenges or bottlenecks in terms of breaking through from a production standpoint.

Jonathan Price: Yeah.

Jonathan Price: Make some high level comments, and then Uh huh.

Speaker Change: Well no.

Jonathan Price: Look we are where we expect it to be at this point in time our guidance for this year is unchanged, we expect to increase copper production quarter over quarter.

Jonathan Price: Year unfolds.

Jonathan Price: That's all about to.

Speaker Change: Blackstone should that give you some sort of color on where we're at.

Jonathan Price: Jonathan.

Jonathan Price: Or is it you know we are addressing the challenges that we have encountered in the first three months.

Jonathan Price: In April we had a planned shutdown.

Jonathan Price: For line of changes.

Jonathan Price: Several modifications.

Jonathan Price: <unk> identified to improve reliability and stability that shutdown was executed.

Jonathan Price: So, no change, Orest, we're very focused on delivering that copper growth. I think the market fundamentals are compelling, and we will continue to focus on those things that we can control to deliver value for our shareholders.

Jonathan Price: On time very safely and essentially has started up and made those changes.

Jonathan Price: Some very encouraging results so far.

Jonathan Price: We fully expect to be within guidance.

Jonathan Price: Yeah.

Jonathan Price: And next question is from Liam Fitzpatrick with Deutsche Bank. Please go ahead.

Orest Wowkodaw: Thank you. As a quick follow-up, can you give us an update on QB2? From the Chichilco data, it looked like the monthly production was pretty flat in January, February, and March. Can you maybe just speak to what the current challenges are, bottlenecks, in terms of breaking through from a production standpoint?

Speaker Change: Hi, Jonathan I just wanted to ask a question about a few areas that you mentioned I think late last year and earlier this year, which was about conducting.

Orest Wowkodaw: Conducting a full review of the of the QB two projects just to get learnings from that before you embark on your next phase of growth potentially from next year and also about bringing.

Jonathan Price: I'll just make some high-level comments and then hand over to Sherhzad Bharmal. Look, we are where we expected to be at this point in time. Our guidance for this year is unchanged. We expect to increase copper production quarter over quarter as the year unfolds. And with that, I'll let Sherhzad give you some further color on where we are. Thanks, Jonathan.

Sherhzad Bharmal: The right expertise and people on board to ensure you've got the right sort of.

Jonathan Price: Capabilities.

Sherhzad Bharmal: That's the first question can you just give us an update on where those things stand.

Sherhzad Bharmal: Thanks Jonathan. Orest, you know, we are addressing the challenges that we have encountered in the first three months. In April, we had a planned shutdown. For minor changes and several modifications that we had identified to improve reliability and stability, that shutdown was executed on time, very safely, and since we have started up and made those changes, we have seen some very encouraging results. So we fully expect to be within guidance at the end of the year.

Sherhzad Bharmal: Yeah. Thanks, Thanks for the question.

Sherhzad Bharmal: We do want to extract as many learnings as we can from the construction of the QB two.

Orest Wowkodaw: It's going to be critical as we set ourselves up for future growth, Yes that review is ongoing.

Sherhzad Bharmal: We've referenced before we'd all using external experts to support us with that.

Sherhzad Bharmal: We expect to complete that review in the months ahead. Meanwhile.

Sherhzad Bharmal: The project team on the call. The mill continues to build capacity and capability, including working on systems and processes that will be required to help us deliver those projects reliably in the future in terms of maintaining the schedule and the capital budgets that we set.

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

Liam Fitzpatrick: Hi Jonathan. I just wanted to ask a question about a few areas that you mentioned late last year and earlier this year, which were about conducting a full review of the QB2 project, just to get learnings from that before you embark on your next phase of growth, potentially from next year, and also about bringing, you know, the right expertise and people on board to ensure you've got the right sort of capabilities. As the first question, can you just give us an update on where those things stand?

Liam Fitzpatrick: The findings from the <unk> review of course will be channeled into that team.

Liam Fitzpatrick: It will be reflected in the continued building.

Liam Fitzpatrick: Steve capability within that area of our business so.

Liam Fitzpatrick: No. We were very focused on that as I said, we won't be sanctioning any projects until 2025 and of course, the lucky sanction those projects subject to permits, but then also to some favorable economics and returns.

Jonathan Price: Yeah, thanks. Thanks for the question, Liam. You know, we do want to extract as many learnings as we can from the construction of QB2. That's going to be critical as we set ourselves up for future growth. That review is ongoing. You know, as we've referenced before, we are using external experts to support us with that. And we expect to complete that review in the months ahead. Meanwhile, the project team under Carla Mills continues to build capacity and capability, including working on, you know, systems and processes that will be required to help us deliver those projects reliably in the future, in terms of meeting the schedule and the capital budgets that we set out.

Jonathan Price: But we are working hard to ensure that we set ourselves up for success in the use of it.

Speaker Change: Okay. Thank you and as my my one follow up I think it was partly addressed in the previous question, but just to be.

Speaker Change: Be clear on QB, two could you maybe outline where the current kind of bottleneck or constraints is and is there a point in the year you know perhaps towards around the middle where there should be more of a step up in subs at the production rates.

Jonathan Price: And I think as I said, we expect to see a step up quarter over quarter as we work our way through the year. There's no. One particular bottleneck here that we would point to it's just establish.

Jonathan Price: The findings from the QB review, of course, will be channeled into that team and will be reflected in the continued building of capacity and capability within that area of our business. So, you know, we're very focused on that. As I said, we won't be sanctioning any projects until 2025. And, of course, we'll only sanction those projects subject both to permits but also to favorable economics and returns. But we are working hard now to ensure that we set ourselves up for success in the years ahead.

Jonathan Price: Establishing stability and consistency of operations studying that.

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

Jonathan Price: Yeah. Thank you operator, good morning, everyone. This is Nick childs on for Lucas.

Jonathan Price: I wanted to ask about the remaining net proceeds its E V or are there there's the U S. Six $6 9 billion from Glencore.

Jonathan Price: 750 million tax payable in 2025 first wanted to confirm that that includes the glencore proceeding and can you remind us the timing of the 400 million from E. T. Our cash flows related to and if he and lastly, overall closing costs. So thank you very much.

Liam Fitzpatrick: Thank you. And as my one follow-up question, I think it was partly addressed in the previous question, but just to be clear on QB2, could you maybe outline where the current kind of bottleneck or constraint is? And is there a point in the year, you know, perhaps towards around the middle, where there should be more of a step up in terms of production rates? But I think, as I said, we expect.

Speaker Change: Sure I'll have you up with a crystal for an overview of our intended use of those proceeds and then to answer some of those are more detailed questions.

Speaker Change: Hi, guys. Thanks for the question I think we've been pretty consistent with our messaging around our intended use of the proceeds that will come in from from Glencore being very consistent with our capital allocation framework, we intend to reduce our debt levels and gets you achieving that.

Jonathan Price: I think, as I said, we expect to see a step up quarter over quarter as we work our way through the year. There's not one particular bottleneck here that we would point to. It's just about establishing stability and consistency of operations day in, day out.

Jonathan Price: That debt to adjusted EBITDA.

Jonathan Price: That's about one times through the cycle and all these people will have a net cash position.

Jonathan Price: On clothing, and see that trending down as we are deploying cash towards our growth projects. So secondly, having cash on the balance sheet are earmarked for those near term growth projects.

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

Nick Giles: Yeah, thank you, Operator. Good morning, everyone. This is Nick Giles on behalf of Lucas.

Nick Giles: I wanted to ask about the remaining net proceeds of EVR. There's the U.S. $6.9 billion from Glencore, and $750 million tax payable in 2025. First, I wanted to confirm that that includes the Glencore proceeds. And can you remind us the timing of the $400 million from EVR cash flows related to NSV and, lastly, overall closing costs? Thank you very much.

Nick Giles: That's H B C mine life extensions and Nicholas and soccer in L. A and then certainly returning a significant amount to shareholders. Obviously the board authorized a 500 million a.

Nick Giles: We're trying to shareholders, let's be honest. He proceeds received in January and I think that's a reasonable proxy to think about as we go forward and then I think just lastly in response to your question about the 400 million remaining proteins from N. S. E. Those proceeds come in through the receipt of a 100%.

Crystal J. Prystai: Sure, I'll hand you over to Crystal for an overview of our intended use of those proceeds and then to answer some of those more detailed questions.

Crystal: The steelmaking coal hospitals are closing up the Glencore transaction. So you won't see 400 million come in in one.

Crystal J. Prystai: Hi Nick, thanks for the question. I think we've been pretty consistent with our messaging around our intended use of the proceeds that will come in from Glencore, being very consistent with our capital allocation, and we intend to reduce our debt levels and get to achieving that debt to adjust it even to a factor of one times through the cycle.

Crystal J. Prystai: In one payment Wow on closing of that transaction, but rather youre seeing it come in now.

Crystal J. Prystai: As he goes through his team, that's probably ever see about 100% of hospitals.

Crystal J. Prystai: That's very cool thing.

Nick Giles: Got it, got it. Crystal, I really appreciate all that color.

Speaker Change: Got it got it Crystal really appreciate all that color and maybe just one follow up on that I believe the prior estimate was cash flows around US 1 billion has has that changed at all especially you know in the faces kind of weaker we met coal prices.

Nick Giles: Maybe just one follow-up on that. I believe the prior estimate was cash flows of around US $1 billion. Has that changed at all? Especially, you know, in the face of kind of weaker, weaker Metcalfe? Yeah, I think so.

Crystal: Yeah, I think that's a fair point I think there is you always have to consider the timing of our sales.

Crystal J. Prystai: Yeah, I think that's a fair point. I think there is, you always have to consider the timing of sales and the operating costs as well as coal prices. So that number will be dynamic as we make our way through. But you've seen, obviously, the gross profit generated from the coal business in the first quarter was very strong at 1.4 billion Canadian dollars. So I think we're making very good progress, but that number won't be a fixed number, and it depends on those factors.

Crystal J. Prystai: Sales and AR and the operating costs as well as be as follows the coal prices. So that number will key dynamic that's being as we make our way through but you've seen obviously the gross profit generated from the coal business in the first quarter was very strong at 14154.

Crystal J. Prystai: 4 billion.

Crystal J. Prystai: Canadian dollar so so I think we're making very good progress, but that number is won't be effects number and it depends on those factors.

Operator: The next question is from Carlos de Alba with Morgan Stanley. Please go ahead. Yeah, thank you.

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

Carlos de Alba: Thank you. Good morning, everyone. On QB2, I think I read in the release that the operation still had a negative gross profit, but I want to see, in terms of EBITDA, if the operation has already broken even, and if not, if you can provide any color as to how you see that obviously, at a spot price, say, assuming the spot copper prices, how do you see the path for positive EBITDA in the operation?

Speaker Change: Yeah. Thank you and good morning, everyone.

Carlos de Alba: On QB, two I think I read in the release that the operation had a negative gross gross profit, but I want to see in terms of EBITDA. If the company is operationally broke even and if not you can provide any color as to how do you see that obviously spot say, assuming the spot copper prices.

Carlos de Alba: How do you see the path for a for a positive EBITDA in the operation.

Jonathan Price: Thanks, Carlos. I think that in answer to your question, we don't disclose a separate number for QB EBITDA, but I think just in relation to where production levels were and costs were in the quarter, we were in a loss position from an EBITDA perspective. As we ramp up production through this year, we can expect that that should improve. If we look at the run rate projections we provided when we did the investor day at QB, using a range of $350 to $450 per copper price, we got to Canadian $1.7 to $2.6 billion of EBITDA generation from QB once production rates were up to full steady state.

Jonathan Price: And Carlos I think that in answer to your question, we don't disclose a separate number for TVE EBITA, but but I think just in relation to where production levels were in costs were in the quarter. We were in a loss position from an EBITDA perspective, as we ramp up production.

Jonathan Price: This year, we can expect that that should she didn't frame. If we look at the run rate projections. We provided let me go to the Investor day at QB.

Jonathan Price: I have 350 to 450 for copper price, we got huge Canadian one seven to $2 6 billion of EBITDA generation from from Q V was a production rates were up to a steady.

Jonathan Price: Steady state.

Carlos de Alba: All right, great. Thank you. And then the follow-up is on the cost of the call operation; you faced some difficulties in the quarter, and your adjusted side cash costs of sales were elevated, basically due to some equipment failures. You retained your guidance for the year, which obviously assumes or suggests that things are going to improve, but I want to see if there is any color as to how things came out in March and April, just to get a sense of the cadence on that improvement.

Speaker Change: Alright, great. Thank you and then the follow up is on the cost on the <unk>.

Carlos de Alba: Collaborations.

Carlos de Alba: Your face some difficulties in the quarter and your adjusted cash cost were upsells.

Carlos de Alba: Sales were elevated and basically on some equipment failures.

Carlos de Alba: Do you retain your guidance for the year with Josie assumes or suggest that things are going to prove that I want to see if there's any color as to how things came out in March and April just to get a sense of the cadence on that improvement.

Jonathan Price: Yeah, thanks, Carlos. I'll hand you to Robin Sheremeta, the president of COVID-19. Thanks, Carlos. Yeah, I was.

Robin Sheremeta: Yes, Thanks Colin.

Robin Sheremeta: Robin sharpening the president that the coal business.

Robin Sheremeta: Thanks Carlos.

Robin Sheremeta: Thanks Carlos. Yeah, there were a few issues through Q1, probably exasperated by the cold stop we had. We did have a number of equipment failures that occurred, not major, all pretty much temporary or resolved through that period. So, with regard to March and April, as we go into those months, we've actually been performing quite strong, so our availabilities are back up, and improvements are back up. We had to get through that period of cold and then recover from that. So I think things are well on track and I will just review your forecast this morning. And we are well within guidance through the rest.

Robin Sheremeta: A few issues through Q1.

Robin Sheremeta: I'll be exasperated by the cold snap we had we did have a number of equipment failures that occurred nothing major.

Robin Sheremeta: Pretty much type of a temporary are resolved through then.

Robin Sheremeta: Through that period so.

Robin Sheremeta: With regards to March and April as we go into those months, we've actually been performing quite strong. So our availabilities are backups equivalents backup.

Robin Sheremeta: Well, we have to get through that period of cold and then recovery fall not sold it.

Robin Sheremeta: Teams are well on track.

Robin Sheremeta: To review our forecast this morning, and we are well within guidance here through the rest of the year or so.

Speaker Change: Much better.

Robin Sheremeta: The next question is from Bill Peterson with Jpmorgan. Please go ahead.

Robin Sheremeta: Okay.

Speaker Change: Yeah, Hi, good morning, and thanks for taking the questions a little bit of a follow on to the earlier question about use of proceeds for some of your growth projects I guess, if you look at it today, how would you stack rank between San Nicola.

Robin Sheremeta: It's lucky.

Operator: The next question is from Bill Peterson with JPMorgan. Please go ahead.

William Chapman Peterson: Yeah, hi, good morning, and thanks for taking the questions. A little bit of follow-on to the earlier question about the use of proceeds for some of your growth projects. I guess if you look at it today, how would you stack rank between Sanmicula, Zafranal, the QB expansion, and the QBS expansion? And additionally, for the even longer-term assets, given where we see, you know, positive trends in copper, any opportunity to pull these forward, or even maybe conversely, with the interest in M&A broadly, especially as we see today, it would already be interesting to sell some of these assets that you may have.

William Chapman Peterson: Is that for now the QB expansion GDS expansion.

William Chapman Peterson: In addition for the even longer term assets, given where we see positive trends in copper any opportunity to Polish corridor, or even maybe conversely, with the interest in M&A broadly, especially as we see today it would even be interest to sell some of these are assets that you may have.

William Chapman Peterson: Yeah.

Speaker Change: Thanks, a lot question Bill just just picking up with some of the near term projects here you know, we very much manage them as a portfolio of course, they all have different risk and return characteristics H B C being a brown field.

Jonathan Price: Yeah, thanks for that question, Bill. Just picking up, you know, with some of the near-term projects here, we very much manage them as a portfolio. Of course, they all have different risk and return characteristics. You know, HBC being a brownfield and a relatively simple project here in British Columbia. Canada is certainly at the lower risk end of that portfolio. San Nicolas in Mexico, a 50-50 JV with Agnico Eagle, a relatively simple greenfield project in terms of the scope with respect to us needing to add very little ancillary infrastructure to that as we can tap into available roads, power, port facilities, etc. And then Zafranal in Peru, you know, a little more complex than San Nicolas, but, you know, again, nothing like what we've undertaken at QB2.

Jonathan Price: Relatively simple project here in British Columbia, Canada or is it certainly would be the lower risk and as a portfolio.

Jonathan Price: Nicholas in Mexico, 50, 50, JV with Agnico Eagle a relatively simple a greenfield project in terms of the scope with respect to with needing to add very little ancillary infrastructure through the answers we can tap into.

Jonathan Price: All roads power port facilities.

Jonathan Price: Etc.

Jonathan Price: And then sorry for awhile in Peru, you know a little more complex than.

Jonathan Price: And San Nicolas, but you know again nothing like what we've undertaken at QB. Two so you know our portfolio, we think both brownfield and Greenfield projects are very manageable.

Jonathan Price: What everybody was executed under a joint venture with Veeco.

Jonathan Price: So, you know, a portfolio of both brownfield and greenfield projects, very manageable. One of those executed under a joint venture with Agnico, and we will, you know, progress all of those to complete studies, complete engineering, obtain permits, so it will enable us to make decisions on sanctions always with a primary view to optimizing shareholder value through the decisions that we take there. You know, to your question on the rest of the portfolio, of course, we always evaluate the long-term value of these options to us and how we maximize value to shareholders, whether that's through the progression and de-risking of those projects, whether ultimately through the development of those projects, or whether there are other alternatives for those resources and projects, as you alluded to with respect to capitalizing on strength in the copper market.

Jonathan Price: And we will you know progress all of those two to complete studies complete engineering obtaining permits so will enable us to make decisions on sanction was always with a primary view on optimizing shareholder value and that's really the decisions that we take that to your question on the the rest of the portfolio of course, we.

Jonathan Price: We always evaluate.

Jonathan Price: The long term value of these options to us.

Jonathan Price: And how do we maximize value to shareholders, whether that's through the progression of Derisking those projects, whether ultimately through the development of those projects or whether there are other alternatives for those resources and projects as you alluded to with respect to capitalizing on the strengths in the copper market. So again.

Jonathan Price: You know a portfolio approach to won't be house, yes. The you know the advantage. We have of course is a fairly significant suite of options.

Jonathan Price: Across different jurisdictions, which does give us choices and we'll make those choices very thoughtfully with a focus on creating value.

Jonathan Price: So, again, you know, a portfolio approach to what we have here, the advantage we have, of course, is a fairly significant suite of options across different jurisdictions, which does give us choices and will make those choices very thoughtfully with a focus on creating value.

Speaker Change: Thanks for that Jonathan when I ask about it like it has a lesser discuss segment of <unk>.

Jonathan Price: Ink market you discussed your views a little bit on the supply and demand and I think some recently just hit a 52 week high on a nail on the spot, albeit well off 2022 levels you discussed some of the supply issues, but I guess.

William Chapman Peterson: Thanks for that, Jonathan. I want to ask about a lesser-discussed segment of your zinc market. You discussed your views a little bit on supply and demand. Zinc has recently hit a 52-week high on the LME spot, albeit well off 2022 levels. You discussed some of the supply issues, but I guess, against the context of what you put in your slides where you see a slight surplus over the next few years, how should we think about the supply-demand trends within zinc and expectations around the direction of travel in terms of pricing?

William Chapman Peterson: Against the context of what did you put in your slides, where you certainly see a slight surplus over the next few years, how should we think about the supply demand trends within zinc in and expectations around the direction of travel in terms of pricing.

Speaker Change: Yeah always are always happy to answer questions on zinc. It is one of our favorite commodity. So let me hand, you over to we announced our chief commercial officer. Thank you very much for the question.

William Chapman Peterson: As Jonathan had said it in terms of supply we have seen mine production down over the course of this year.

William Chapman Peterson: Of course, there is.

William Chapman Peterson: Faced with the period of low pricing that we've seen and as a result, we can expect that all of those mines come on during the course of 2020 for 2025. So we are expecting the market to be a deficit Chinese concentrate imports last year were up about 14%.

Ian Anderson: Yeah, always happy to answer questions on zinc. It is one of our favorite commodities. So, let me hand you over to Ian Anderson, our Chief Commercial Officer.

Ian Anderson: As Jonathan said, in terms of supply, we have seen mine production down over the course of this year. That, of course, is faced with a period of low prices that we've seen, and as a result, you wouldn't expect that all of those mines would come on stream during the course of 2024 or 2025. So we are expecting the market to be in deficit.

Ian Anderson: At the same time as we said mine production down so Chinese smelters bought quite aggressively at the end of last year that didn't contributed low TCR sees that we're seeing and I would describe the market as being tightness right now and that's reflected.

Ian Anderson: So I'm optimistic about that though again very tight supply demand balance and depends both on smelters in their condition and similarly mine production.

Ian Anderson: The next question is from Brian Macarthur with Raymond James. Please go ahead.

Ian Anderson: Chinese concentrate imports last year were up about 14%, while at the same time, as we said, mine production was down. So Chinese smelters bought quite aggressively at the end of last year. That then contributed to the low TCRCs that we're seeing, and I would describe the market as in tightness right now, and that's reflected. So, optimistic about that, though again, a very tight supply and demand balance, and depends both on smelters and their condition, and similarly mine.

Speaker Change: Good morning, and thank you for taking my question. It again goes back to the coal cash flows.

Ian Anderson:

Ian Anderson: Can you maybe just talk a little bit about your stripping over the next few quarters, because again, you give annual guidance, but if this closes in Q3.

Ian Anderson: You all be smoked get annual numbers, but in the first quarter of your capitalized stripping was like at a run rate well above the high end of your guidance for the year and Conversely, your capital spend.

Operator: The next question is from Brian MacArthur with Raymond James. Please go ahead.

Brian Macarthur: Good morning, and thank you for taking my question. It again goes back to the coal cash flows. Can you maybe just talk a little bit about your stripping over the next few quarters? Because again, you give annual guidance, but if this closes in Q3, you obviously won't get annual numbers. But in the first quarter, your capitalized stripping was like on a runway well above the high end of your guidance for the year.

Brian Macarthur: Is that the low end so as we're trying to figure out the cash flows available to.

Brian Macarthur: To use it will it should close before year end is it is it all more weighted on the capital and the capitalized stripping is it heavily weighted to Q1 Q2.

Brian Macarthur: And therefore, it's been a depressed cash relative to an annual number or can you just talk a little bit about how that goes throughout the year.

Brian Macarthur: And conversely, your capital spend is at the low end. So as we're trying to figure out the cash flows available to you, since this should close before year end, is it all more weighted to the capital and the capitalized stripping? Is it heavily weighted to Q1, Q2, and therefore it's going to depress the cash relative to an annual number? Or can you just talk a little bit about how that goes throughout the year?

Speaker Change: Okay. That's the highest level, Brian I was I would say that you know I've done. This you are any major differences quarter over quarter here for us in the way that the business is operating in a we expect it to be fairly consistent but I know what I suggest you should get home afraid that post call and he can walk you through that in a bit more.

Brian Macarthur: Yep.

Brian Macarthur: Okay, well, maybe just to ask a bigger higher question, though is there's nothing you see then that really changes that original estimate of 1 billion U S cash flow over the time period from when you originally announced the deal in November for the 12 months, that's still a good number or anything else other than maybe our prices were higher is that a fair comment.

Jonathan Price: At the highest level, Brian, I would say that don't assume any major differences quarter on quarter here for the way that the business is operating. We expect this to be fairly consistent, but I suggest you get on with Fraser, post a call, and he can run you through that in a bit more detail.

Brian Macarthur: Okay, well, maybe just ask a bigger, higher question, though. Is there anything you see then that really changes that original estimate of a billion US cash flow over the time period from when you originally announced the deal in November for the 12 months? That's still as good a number as anything else, other than maybe prices were higher. Is that a fair comment?

Brian Macarthur: Well I mean, I know it was critical to that.

Brian Macarthur: This is a will be a big variable in that we've seen.

Brian Macarthur: And then the unit operating cost at least in the first quarter of this.

Brian Macarthur: As you are of course also looking at the timing of closing the transaction will be a big determinant as to what quantum of caseloads flipped attack ultimately that so there are a few moving pieces bad bets from an underlying operational perspective, including the you know the key mining drivers yeah, nothing significantly different.

Jonathan Price: Well, as Crystal said, prices will be a big variable in that. We've seen pressure on unit operating costs, at least in the first quarter of this year. And of course, ultimately, the timing of the close of the transaction will be a big determinant as to what quantum of cash flows flow to tech ultimately there. So there are a few moving pieces there, but from an underlying operational perspective, including the key mining drivers here, nothing significantly different from what we've assumed in our plan. Great. Thanks, Jonathan. That's what I was asking.

Jonathan Price: What we've assumed in our plans.

Speaker Change: Great. Thanks, Jonathan that's what I was after thank you.

Speaker Change: Thanks, Brian.

Jonathan Price: The next question is from Dalton Barreto with Canaccord Genuity. Please go ahead.

Speaker Change: Thanks, Good morning, everybody most of my questions have been answered, but Jonathan I just want to circle back to M&A again, just for a quick second I just wanted to get your thoughts on it.

Jonathan Price: You've allocated most of your.

Jonathan Price: Part of the proceeds from a glencore sale to your growth pipeline.

Brian Macarthur: Great. Thanks, Jonathan. That's what I was after.

Operator: Thank you. Thanks, Brian. The next question is from Dalton Baretto with Canaccord Genuity. Please go ahead. Thanks. Good morning, everybody.

Brian Macarthur: Wanted to get your thoughts on the buy versus build the argument just given valuations in the market today. Thank you.

Operator: I mean, just to sort of clarify on the allocation of the proceeds the adult or the way, we're allocating a fair bit of boxes that production will allocate a significant portion of the block to returning cash to shareholders.

Operator: The next question is from Dalton Baretto with Canaccord Genuity. Please go ahead. Thanks. Good morning, everybody. Most of my questions haven't been answered, but Jonathan, I just wanted to ask you something.

Operator: Right.

Dalton Baretto: Then as those proceeds we will be using to invest in inorganic growth. You know of course, we look at the you know like everybody you have to look at the buy versus build dynamics.

Dalton Baretto: I mean, just to sort of clarify on the allocation of those proceeds, Dalton. We were allocating a fair bit of that to debt reduction, and we'll allocate a significant portion of that to returning cash to shareholders. You're right in that the balance of those proceeds we will be using to invest in organic growth. You know, of course, we look at the, you know, like everybody, you have to look at the buy versus build dynamics in the market.

Dalton Baretto: And the market, we think in particular with the projects. We have ahead of us here.

Dalton Baretto: If you are smaller in scope and complexity that that capital intensity will be competitive and are likely to be more competitive in the acquisition of I'll say, it's true M&A and again, what you're gonna SaaS only.

Dalton Baretto: It's all offense on a production basis so.

Dalton Baretto: That's the reason that we're pursuing the strategy we are because of the quality of the projects. We have in the portfolio the capital intensity that they can offer and therefore the returns are there won't be available with the value creation.

Dalton Baretto: We think, in particular, with the projects we have ahead of us here, which are smaller in scope and complexity, that their capital intensities will be competitive and are likely to be more competitive than the acquisition of assets through M&A, again, which you can assess on a, you know, a dollar per ton of production basis. So that's the reason that we're pursuing the strategy we are because of the quality of the projects we have in the portfolio, the capital intensity that they can offer,

Speaker Change: Great. Thank you.

Dalton Baretto: I will now hand, the call back over to Jonathan price for closing remarks.

Speaker Change: Yeah. Thank you and thanks, everyone for joining us today, just to reiterate we are operating well right now and we've maintained guidance across all areas of business.

Dalton Baretto: Very happy to have Cubie construction behind us and the ramp up that will box operation and proceeding to plan.

Jonathan Price: I will now hand the call back over to Jonathan Price for his closing remarks.

Dalton Baretto: We are focused on the completion of the email sale and be thoughtful allocation of proceeds with a focus on creating value for our shareholders and we believe we have the right portfolio the right people and the right opportunities to create significant long term sustainable value for shareholders I never any further questions. Please reach out to phrase that.

Jonathan Price: Yeah, thank you. And thanks, everyone, for joining us today. Just to reiterate, we are operating well right now, and we've maintained guidance across all areas of the business. We're very happy to have QB Construction behind us, and the ramp-up of that world-class operation is proceeding to plan. We are focused on the completion of the EVR sale and the thoughtful allocation of proceeds with a focus on creating value for our shareholders.

Jonathan Price: Or the IR team and have a great day.

Speaker Change: This brings to a close today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.

Jonathan Price: And we believe we have the right portfolio, the right people, and the right opportunities to create significant long-term sustainable value for shareholders. And if there are any further questions, please reach out to Fraser or the IR team. And have a great day!

Jonathan Price: [music].

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

Operator: Okay.

Operator: [music].

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unknown: Yes.

unknown: [music].