Q1 2024 Teck Resources Ltd Earnings Call

Yeah.

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 'twenty 'twenty four.

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 Julien 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.

Fraser Phillips: Does not assume any obligation to update any forward looking statements.

Fraser Phillips: Please refer to slide two 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, 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.

Fraser Phillips: In addition, we will reference various non-GAAP measures on this call explanations and reconciliations regarding these measures can be found in our MD&A. The latest press release on our website.

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

Crystal J. Prystai: So Brett <unk>, our CFO will follow with additional color on the quarter.

Jonathan Price: That concludes today's session with an update of our key markets and our progress on corporate growth.

Jonathan Price: Well that Q&A session.

Jonathan Price: I will 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. With our completed port facility, we mark the first shipment of construction materials. I was in QB 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: I don't think I'll slide off with highlights from our strong first quarter across our business.

Jonathan Price: <unk> completed all major construction at QB, including the ship loader a molybdenum plant.

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

Jonathan Price: Well I was going to be lost waiting to see the second change was being loaded.

Jonathan Price: It was a beautiful site.

Jonathan Price: We also continue to advance the Roundup of the Malignant 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. Regulatory approvals for the full sale of Glencore are progressing as anticipated, with closing expected no later than the third quarter of this year.

Jonathan Price: We also continue to advance.

Jonathan Price: The molybdenum plant.

Jonathan Price: In January we find that the minority stake of our steelmaking coal business.

Jonathan Price: So they won't steal cooperation on Posco and received $1 3 billion in U S dollars in cash from an estimate.

Jonathan Price: Or would you like me approvals for the full size of the Glencore are progressing as anticipated closing expected 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 right.

Jonathan Price: Our ramp up in Q V is reflected in our steadily increasing.

Jonathan Price: Quarterly production.

Jonathan Price: And all of our previously disclosed annual guidance is unchanged.

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

Jonathan Price: Our high potential incident frequency rate was lower than the same period last year a 0.06.

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 at NOLA and Green.

Jonathan Price: Green, Colorado consortium.

Jonathan Price: We have worked together to decarbonize the value chain for 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 and infrastructure required to achieve meaningful emissions reductions and they answered it.

Jonathan Price: We released our 27th annual sustainability report, which I believe is up almost in 'twenty two 'twenty three in areas such as decarbonization.

Jonathan Price: We are working towards a nature positive 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 realized steelmaking coal prices compared to the same period last year. We continue to return cash to shareholders in the quarter with $80 million in share 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 base dividend.

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

Jonathan Price: We reported adjusted EBITDA of $1 $7 billion what was that.

Jonathan Price: $2 billion, a year ago, with lower copper and zinc prices and higher unit cost steelmaking coal QB operation.

Speaker Change: All set.

Jonathan Price: Higher copper sales volumes at higher realized steelmaking coal prices compared to the same period last year.

Jonathan Price: We continue to return cash to shareholders in the quarter with $80 million share buybacks executed under the 500 million authorized by the board following receipt of the proceeds.

Jonathan Price: Also paid $65 million in quarterly 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 QV concentrate using the ship loader. Immobilization of the construction workforce is substantially advanced, and the operational ramp-up is continuing.

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

Jonathan Price: I suppose we achieved construction completion in Q1, consistent with our guidance and successfully loaded our first basketball the QB concentrate using a shade below that.

Jonathan Price: Well I think some of the construction workforce is substantially involved.

Jonathan Price: The operational ramp up is continuing.

Jonathan Price: We are on track to complete ramp-up of the molybdenum plant in the second quarter. Our QB2 project capital cost guidance of 8.6 to 8.8 US billion dollars is unchanged. 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.

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

Jonathan Price: Oh excuse me to project capital cost guidance of $8 six to eight U S $1 billion is unchanged.

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

Jonathan Price: Our full year copper in concentrate guidance for QB is unchanged at 230 to 275000 tons.

Jonathan Price: Yes.

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 melanin production in the first half of the year, continued ramp-up, and inflationary pressure. Our full year guidance for QB net cash unit cost is unchanged at £195 to £225 a year.

Jonathan Price: Do you mean unit costs are expected to remain elevated this year, particularly in the first half consistent with our guidance.

Jonathan Price: It is driven by the cost of alternative logistics limited molybdenum production in the first off again continued ramp up and inflationary pressures.

Jonathan Price: Looking at guidance for Q V. Net cash unit cost 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, 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 India like NFC and Pascal.

Crystal J. Prystai: 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. <unk> 20.

Crystal J. Prystai: <unk> 23 per cent profit attributable to 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 interests atrophy.

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

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: Our finance expense and depreciation and amortization expense.

Crystal J. Prystai: Both increased significantly compared to the same period last year as construction is complete and ramp up continues at QB.

Crystal J. Prystai: Depreciating, most I think he'd be assets and we have stopped capitalizing interest on the kidney to 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 keeps the operations.

Crystal J. Prystai: I think all of you didn't call that Q E 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 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 74% from same period last year.

Crystal J. Prystai: This was driven by the ramp up of Cuba 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 mine plan.

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 that keep these operating assets as I previously noted with a $125 million recorded in Q1.

Crystal J. Prystai: Excluding QB are net cash unit costs of 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 Acumena received approval of the MEIA for its MindLines extension from 2028 to 2036 during the quarter.

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

Crystal J. Prystai: We're pleased that asked me have received approval of the N V. I a fourth 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 due to increased each quarter through 'twenty four.

Crystal J. Prystai: Our copper production guidance of 465 to 540000 tons at 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. Net cash unit costs are lower than last year as a result of by-product credit.

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

Crystal J. Prystai: <unk> 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 byproduct 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 coal Hill creatives, although both quarters were impacted by severe weather events.

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

Crystal J. Prystai: And Lauren contract in zinc premiums on refined zinc at 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 zinc in concentrate production guidance of 565,000 to 630,000 tonnes 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 275,000-290,000 tonnes. We have begun replacing the Kitsap 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 at Red Dog, we expect thinking concentrate sales of 50 to 60000 tons in the second quarter, reflecting normal seasonality yourself.

Crystal J. Prystai: Our full year zinc and concentrate production guidance of 565 to 630000 tons and our full year net cash unit cost guidance of USD 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 plots.

Crystal J. Prystai: They have begun replacing the kits that boiler at trail, which will impact the <unk> circuit in the second quarter.

Crystal J. Prystai: Wanted to have minimal impact on our zinc circuits.

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

Crystal J. Prystai: Despite an extreme 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: Turning now to steelmaking 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: The 8% decline from the same period last year was primarily due to higher unit operating costs at <unk>.

Crystal J. Prystai: Our sales volumes, partially offset by higher steelmaking coal prices.

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 ton of $112 was higher than last year due to higher repair parts and maintenance spend.

Crystal J. Prystai: Does the ongoing shortage of skilled trade labor. We also had increased reliance on contractors.

Crystal J. Prystai: Field volumes of 5.9 million tonnes 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 an increased reliance on contractors.

Crystal J. Prystai: In addition, weather related productivity impacts and less favorable mining drivers for 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 at the saturated rock fill out or else you operations in February.

Crystal J. Prystai: Our $75 5 million liters per day have constructed water treatment capacity continues to ramp up we are on track to achieve one of the primary objectives of the alfalfa water quality plan, which is to stabilize and reduce the selenium trend in your family.

Crystal J. Prystai: In addition, weather-related productivity impacts and less favorable mining drivers were factored in. However, transportation costs were down $2 per ton from the same period last year, largely due to reduced emergency charges. And we were pleased to achieve record throughput at the saturated rock fill at our LFU 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: Looking forward second quarter steelmaking coal sales are expected to be six to $6 4 million tonnes.

Crystal J. Prystai: Planned maintenance shutdowns at all for you and greenhouse.

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

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

Speaker Change: Turning now to slide 12.

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.

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 Elphiu 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 unmet. Turning now to slide 12.

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: Looking at the considerations for the use of proceeds from the sale of E. P. Our on slide 13.

Crystal J. Prystai: In total we are expecting to receive U S $8 6 billion in cash proceeds, including the U F. One 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 honesty proceeds or 30% or should be returned to shareholders via share buyback.

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. Looking at the considerations for the use of proceeds from the sale of EBR on slide 13, in total, we are expecting to receive U.S. $8.6 billion in cash proceeds, including the U.S. $1.3 billion already received from NSF.

Crystal J. Prystai: Our capital allocation framework will also guide the board's decision on the remainder of the proceeds.

Crystal J. Prystai: The aim to maintain investment grade credit metrics through the cycle targeting a net 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 pass on our golf sheet to fund, our near term copper growth opportunities and to generate strong returns.

Crystal J. Prystai: Our capital allocation framework guided the board in 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 NSE 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: 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.

Crystal J. Prystai: Board will determine the amount or timing of these returns.

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 base metals business.

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: Having a strong balance sheet and delivering significant cash returns to our shareholders.

Crystal J. Prystai: Turning now to slide 14.

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.

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.

Crystal J. Prystai: Yeah.

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: 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: Also paid 65 million in quarterly dividends in March, bringing our total cash returns to shareholders to 145 million in the first quarter.

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

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

Crystal J. Prystai: Thanks, Crystal, but some of your last sentence Cisco in San Diego last week, and it's clear that we earn a turning point.

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.

Jon: It's an exciting time in the copper market, especially given the copper prices have gone up significantly since Q1 to about $4 40 per pound today.

Crystal J. Prystai: It's Paul Sidney from debating whether demand for copper would really right. So quickly wondering where are we going to find people.

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

Crystal J. Prystai: Starting with the copper market on slide 16.

Jon: Well some trade tightness that continued into the first quarter Global mine production over 2 million tons below your original guidance for 2023, and almost 1 million tonne lower year to date.

Crystal J. Prystai: Lofty projections for quite some time ago.

Crystal J. Prystai: This comes at a time of increased investment in smelting capacity in Asia, and India in preparation for stronger demand from the energy transition.

Jon: Oh, the capacity of three 7 million tons higher than three years ago.

Crystal J. Prystai: Spot TCE off piece of fallen 100% from 80 800 in less than four months, which is now enforcing costs are at a point in production.

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

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

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

Jonathan Price: Clothing recognition of new demand for 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 stabilization and a growing global middle class.

Jonathan Price: Let's start 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.

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

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

Jonathan Price: This comes at a time of increased investment in smelting capacity in Asia and India in preparation for stronger demand from the energy transition. However, the capacity is 3.7 million tons higher than three years ago. 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: These lower prices have forced the closure of around 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 someone 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: On this issue, 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 metal class. Moving on, to the zinc marking on slice 17.

Jonathan Price: Similar to copper zinc.

Jonathan Price: Zinc concentrate market is putting T six down $280 per DMT to a historic level of 30 to 50 per DMT, which is now impacting our refined metal production.

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

Jonathan Price: Well, we expect mining production to return as prices improve fundamental market tightness is expected to remain until 2027.

Jonathan Price: So turning to our progress in copper graphs on slide 18.

Jonathan Price: 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 tonnes of mine production, which will continue through 2024, with an additional 120,000 to 150,000 tonnes 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 tonnes, which is about 1 million tonnes lower than projected last year. Similar to copper, Titus and the zinc concentrate market have 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: We continue to invest in our industry, leading copper growth portfolio in the quarter, reflecting our strategy to balance growth and returns.

Jonathan Price: Of capital to shareholders.

Jonathan Price: Highland Valley, we continue to respond to information request from regulators on the permit application 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: We expect to progress engineering design project execution planning and construction planning for substantial completion in Q1 of 2025.

Jonathan Price: The team it sounds like the last submitted the M. I L. Three with application in January and they continue to engage government stakeholders and supported David reviewed we also continue to advance feasibility study would with plans to initiate detailed engineering the first half of 2025.

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

Speaker Change: Well start construction goodness.

Jonathan Price: Projects as expected you went through a detailed engineering in the second half of this year.

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

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

Jonathan Price: Importantly, 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 'twenty 'twenty four to ensure we can continue to demonstrate our focus on value creation.

Jonathan Price: Completion of the full sale of our steelmaking coal business, where glencore will acquire a 77% controlling interest in a b R. That'd become the operator of the alcoholic steelmaking coal mines is a key priority this year.

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: Well I mentioned regulatory approvals continue to progress well everything as expected no later than the third quarter.

Jonathan Price: We're 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 market commitments.

Jonathan Price: Ah QB, 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: 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 of value maximizing for shareholders.

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: In conclusion on slide 20, our focus 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 all shareholders and stakeholders.

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

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

Jonathan Price: Nathan we are asking for that production through the ramp up of QB.

Jonathan Price: So long as we seek to unlock significant value from our public REIT portfolio.

Jonathan Price: And we are hearing that value driven growth by employing a rigorous investment framework I'm continuing to balance growth with cash returns to our shareholders.

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.

Jonathan Price: We're using a speaker phone. Please ensure you lift your handset before pressing any keys.

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 shiploader and the molybdenum plant.

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 P. H P bid for reported bid for Anglo American I'm curious whether taxis.

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 maximization for shareholders. In concluding 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.

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

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

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

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

Jonathan Price: Yeah, Hi, Austin and thanks for that question.

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

Jonathan Price: To install a whole potential take over here, although ongoing volume P. H P. Just just reinforces the attractiveness is the long term fundamentals for copper market.

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 adding to that production through the ramp-up of QV. 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. Thank you. Operator, please open the line for questions.

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

Speaker Change: As you know there's this announcement this news doesn't change I think we remain very focused on.

Jonathan Price: Placing the the transaction Oh about E B R with Glencore deploying those proceeds to strengthen the balance sheet to ensure long term resilience of the company coupled with investing into high quality projects that we have in our portfolio and are making a significant return of capital to shareholders.

Speaker Change: No change or a square, we're very focused on delivering that type of growth do you think the market fundamentals.

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

Orest Wowkodaw: Thank you.

Orest Wowkodaw: A 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.

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

Orest Wowkodaw: Hi, good morning. With the BHP bid for, and 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 is 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.

Speaker Change: Yeah, I'll just make some some high level comments that had over two two shutdowns all now.

Orest Wowkodaw: Luckily, 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.

Orest Wowkodaw: The year unfolds.

Orest Wowkodaw: That's all I'll do Blackstone should ought to be some sort of color or wherever else you actually.

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 EBR 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: Thanks, Jonathan.

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

Jonathan Price: In April we had a planned shutdown.

Jonathan Price: Four lineup changes.

Jonathan Price: Several modifications that'd be identified.

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

Jonathan Price: On time, very safely and and since we have started up and made those changes you are seeing some million encouraging results. So we fully expect to be within guidance up at the end of it.

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

Speaker Change: Hi, Jonathan.

Speaker Change: Wanted to ask a question about a few areas that you mentioned I think late last year and earlier this year, which was about <unk>.

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: 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 them the right expertise and had people on board to ensure you've got the right sort of.

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?

Orest Wowkodaw: Capabilities.

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

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, Johnson.

Speaker Change: Yeah. Thanks. Thanks for the question listen you know, we we do want to extract as many learnings as we can from the construction of the QB two.

Sherhzad Bharmal: I gotta 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 this with us and we expect to complete that review in the months ahead.

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. (inaudible)

Sherhzad Bharmal: Meanwhile, the project's team on the call a bell with continues to build capacity and capability, including working on systems and processes.

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

Sherhzad Bharmal: 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.

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 the QB review of course will be channeled into that team and will be reflected in the in the continue building capacity and capability within that area of our business. So.

Liam Fitzpatrick: You know 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 also two to favorable economics and returns but.

Liam Fitzpatrick: But we are working hard in order to ensure that we set ourselves up for success and to use that.

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.

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

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 about establishing stability and consistency of operations day in that.

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

Jonathan Price: Okay.

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

Jonathan Price: To ask about the remaining net proceeds its E V or are there there's the U S. Six 6.9 billion from Glencore seven.

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.

Speaker Change: 750 million tax payable in 2025 first wanted to confirm that that includes the glencore proceeds in 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.

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

Jonathan Price: 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.

Liam Fitzpatrick: And as my one follow-up, 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? And I think, as I said, we expect...

Liam Fitzpatrick: That debt to adjusted EBITDA of Africa, one times through the cycle and all these people will have a it will be out of that cash.

Liam Fitzpatrick: 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 being H B C mine life extension, South Nicholas and stopped for now.

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: And then certainly returning a significant amount to shareholders, obviously, the Florida authorized the 500 million returned to shareholders, let's be honest. The proceeds received in January and 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 <unk>.

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 NSC and, lastly, overall closing costs? Thank you very much.

Nick Giles: $400 million are remaining proceeds from N S C.

Nick Giles: He's come in through the receipt of a 100% of the steelmaking coal hospitals through clothing I was glad fourth transaction. So you won't see 400 million come in in one in one payment Wow on closing of that transaction, but rather youre seeing it come in now as we go through as she received a 100%.

Nick Giles: It is possible.

Nick Giles: That's really cool thing.

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 framework. So, secondly, having cash on the balance sheet earmarked for those near-term growth projects, being HBC Mine Life Extension, St. Nicholas, and Sacramento, and then, thirdly, returning a significant amount to shareholders. Obviously, the board authorized the $500 million return to shareholders with the NSE proceeds received in January.

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 of around US 1 billion has has that changed at all especially you know in the faces kind of weaker we met coal prices.

Speaker Change: Yeah, I think that's a fair point I think there is you always have to consider the a the timing of our sales and AR and the operating costs as well as the as follows the coal prices. So that number will key dynamic that's been as we make our way through but you've seen obviously the gross profit generated from the call.

Crystal J. Prystai: But as I said, the first quarter was very strong at 1415 4 billion.

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

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

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.

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

Crystal: Yeah. Thank you good morning, everyone.

Nick Giles: On QB, two I think I read in the release the ratio and if you had a negative gross gross profit, but I want to see in terms of EBITDA. If the company is.

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 as high as we would like it to be.

Crystal J. Prystai: Already broke even and if not you can provide any color as to how do you see that obviously sports say, assuming the spot copper prices, how do you see the path for a for a positive EBITDA in the operation.

Speaker Change: And Carlos I think that in answer to your question, we don't disclose a separate number for QB 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 through this.

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

Carlos de Alba: 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, say, assuming the spot's co-proprietors, how do you see the path for positive EBITDA in the operation?

Carlos de Alba: Here, we can expect that that should she didn't frame. If we look at the run rate projections. We provided when we did the investor day at QB using inkjet was 350 to 450 for copper price, we got huge Canadian one seven to $2 6 billion of EBITDA generation from from Q V. One side.

Carlos de Alba: Production rates were up to a full a full steady state.

Crystal J. Prystai: Thanks, Carlos. I think that in answer to your question, we don't disclose a separate number for QBE EBITDA, but I think just in relation to where production levels were and costs were in the quarter, we were in a lost 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 QBE, using a range of $350 to $450 for copper prices, we got to Canadian $1.7 to $2.6 billion of EBITDA generation from QBE once production rates were up to full steady state.

Speaker Change: Alright, great. Thank you and then for the follow up is on the cost on the collaborations do face some difficulties in the quarter and your adjusted cash cost.

Crystal J. Prystai: Sales were elevated basically on some equipment failures.

Speaker Change: Do you retain your guidance for the year with Josie assumes or suggests 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 of that improvement.

Speaker Change: Yeah. Thanks, Carl I thought you said Robin surveys of the presidents of the coal business.

Carlos: This is Carlos.

Crystal J. Prystai: There's a few issues through Q1, oh be exasperated by the cold Snap. We had we did have a number of equipment failures that occurred nothing major.

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 retain your guidance for the year, which always 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.

Carlos de Alba: Pretty much time temporary are resolved through then.

Carlos de Alba: Through that period so.

Speaker Change: 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.

Carlos de Alba: We had to get through that period of cold and then recovery from that so things are well on track in its review of forecast. This morning, and we were well within guidance here through the rest of the year or so.

Carlos de Alba: Is it looking much better.

Carlos de Alba: The next question is from Bill Peterson with Jpmorgan. Please go ahead.

Crystal J. Prystai: Yeah, thanks, Carlos. I'll hand you to Robin Sheremata, the president of the COVID... Thanks, Carlos. Yeah, I was.

Crystal J. Prystai: Yeah.

Robin Sheremata: Yeah, Hi, good morning, and thanks for taking the questions a little bit of 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 Sheremata: 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, the equipment's 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 just reviewed your forecast this morning, and we are well within guidance through the rest of the day.

Speaker Change: Is that for now the T V expansion GBS expansion.

Robin Sheremata: In addition for the even longer term assets, given where we see positive trends in copper any opportunity to Polish court 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.

Carlos: Yeah. Thanks. Thanks for that 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 brownfield.

Operator: The next question is from Bill Peterson with J.P. Morgan. Please go ahead.

William Chapman Peterson: Yeah, hi, good morning, and thanks for taking the questions. A little bit of follow-on to an 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, Zafranol, 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, would there already be interest to sell some of these assets that you may have?

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

William Chapman Peterson: Nicholas in Mexico, a 50, 50, JV with Agnico Eagle a relatively simple a greenfield project in terms of the the scope with respect to us needing to add very little ancillary infrastructure to that so we can tap into.

William Chapman Peterson: All roads power pole facilities.

William Chapman Peterson: <unk> et cetera, and then San Fernando and in Peru, you know a little more complex than.

William Chapman Peterson: Our son, Nicholas 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: 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.

Jonathan Price: One of those executed under a joint venture with <unk> Nikko.

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 all the sanctions always with a primary view on optimizing shareholder value and that's really the decisions that we take that into your <unk>.

Speaker Change: Question on the the rest of the portfolio of course, we you know we always evaluate our you know the long term value of these options to us you.

Bill: And how do we maximize value to shareholders.

Jonathan Price: The lost 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, a portfolio approach to won't be house, yes.

Jonathan Price: But, you know, again, nothing like what we've undertaken at QB2. So, you know, a portfolio we think of both brownfield and greenfield projects, very manageable, one of those executed under a joint venture with Agnico.

Jonathan Price: The you know the advantage we have of course, there's a fairly significant suite of options.

Jonathan Price: And we will, you know, progress all of those to complete studies, complete engineering, and 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 strengths in the common market.

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

Speaker Change: Thanks for that Jonathan I wanted to ask about lesser discuss segment.

Jonathan Price: Ink market you discussed your views a little bit on the supply and demand and those things.

Jonathan Price: Recently, we just hit a 52 week high on the spot, albeit well off 2022 levels you discuss some of the supply issues, but I guess you know.

Jonathan Price: Against the context of what 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 and expectations around the direction of travel in terms of pricing.

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

Jonathan Price: Jonathan had said it in terms of supply we have seen mine production down over the course of this year that of course is faced with the period of low pricing that we've seen and as a result wouldn't expect that all of those mines come on during the course of 2020 for 2025. So we are expecting the market to be in deficit Chinese.

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 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: Concentrate imports last year were up about 14%.

William Chapman Peterson: While at the same time as we said mine production down so Chinese smelters bought quite aggressively at the end of last year that then contributed to the low TCR season that we're seeing and I would describe the market as being tightened right now and that is reflected.

Jonathan Price: So optimistic about that though again very tight supply demand balance and it depends both on smelters in their condition. Similarly mine production.

William Chapman Peterson: The next question is from Brian Macarthur with Raymond James. Please go ahead.

Jonathan Price: 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. Thank you very much for the question. As Jonathan had said...

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

Jonathan Price:

Ian K. 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 K. 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 K. Anderson: You, obviously won't get annual numbers, but in the first quarter. Your capitalized stripping was like at a run rate well above the high end of your guidance.

Ian K. Anderson: Guidance for the year and Conversely, your capital spend.

Ian K. Anderson: Is that the low end so as we're trying to figure out the cash flows available.

Ian K. Anderson: Chinese concentrate imports last year were up about 14% while at the same time as we set mine production 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 that depends both on smelters and their condition, and similarly mine.

Ian K. Anderson: 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, and therefore, it's been a depressed attack relative to an annual number or can you just talk a little bit about how that goes throughout the year.

Ian K. Anderson: But at the highest level, Brian I was I would say that don't assume any major differences quarter over quarter here for us otherwise at the the business is operating in a we expect it to be fairly consistent.

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 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: Now I suggest you should get hold of Friday post call and he can walk you through that in a bit more detail.

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 as good a number as anything else other than maybe our prices were higher is that a fair comment.

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, well, it should close before year end. Is it all more weighted towards capital and 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?

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

Speaker Change: This is a will be a big variable in that as we've seen pressure in the in the unit operating cost at least in the first quarter and.

Brian Macarthur: Obvious here and of course ultimately the timing of closing the transaction will be a big determinant as to what comes a quantum of cash flows flipped attack ultimately that so there are a few moving pieces there, but from an underlying operational perspective, and including the you know the key mining drivers yeah nothing significantly different.

Jonathan Price: At the highest level, Brian, I would say that, you know, 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 over to Fraser, post a call, and he can run you through that in a bit more detail.

Jonathan Price: From what we've assumed in our plans.

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

Fraser Phillips: Thanks, Brian.

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

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?

Fraser Phillips: 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.

Brian Macarthur: Just wanted to get your thoughts on it I mean, you've allocated in most of your.

Brian Macarthur: Part of the proceeds from a glencore fail to your growth pipeline, but I wanted to get your thoughts on the buy versus build the argument just given valuations in the market today. Thank you.

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 flows to tech ultimately there. So there are a few moving pieces there. From an underlying operational perspective, including the key mining drivers here, nothing significantly different from what we've assumed in our plan. Thanks, Jonathan. That's what I was after.

Speaker Change: I mean, just just to sort of clarify on the allocation of the proceeds are adults and in a way we're allocating a fair bit of thought to debt reduction and we'll allocate a significant portion of the box who are returning cash to shareholders and you are right in the bag.

Jonathan Price: 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.

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

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

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

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 assets through M&A and again, when you've got a SaaS only.

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.

Dalton Baretto: And throw off a ton of production basis. So.

Dalton Baretto: That's the reason that we're pursuing this 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 for value creation.

Dalton Baretto: I mean, just to sort of clarify on the allocation of those proceeds, Dalton. We're 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.

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 with.

Dalton Baretto: We're very happy to have cubie construction behind us and the ramp up that world class operation and proceeding to plan.

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,

Dalton Baretto: We are focused on the completion of the E V off 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 have any further questions. Please reach out to phrase that.

Dalton Baretto: The IR team and have a great day.

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

Jonathan Price: 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: Yeah, thank you. And thanks, everyone, for joining us today. You know, 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 as planned. 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: [music].

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. However, if you have any further questions, please reach out to Fraser or the IR team, and have a great day.

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

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