Q1 2025 Teck Resources Ltd Earnings Call
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Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to Teck's first quarter, 2025 results release conference call.
Speaker Change: 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. Thank you very much.
Speaker Change: This conference call is being recorded on Thursday, April 24, 2025. I would now like to turn the conference over to Emma Chapman, Vice President and Investor Relations. Please go ahead.
Emma Chapman: Thank you, operator. Good morning, everyone, and thank you for joining us for Teck's first quarter 2025 conference call. Today's call contains forward-looking statements.
Emma Chapman: Actual results may vary due to various risks and uncertainties. Teck does not assume the obligation to update any forward-looking statements.
Emma Chapman: These refer to slide 2 for the assumptions underlying our forward-looking statements.
Emma Chapman: We will reference non-GAB measures throughout this presentation. Explanations and reconciliations are in our MDNA and the latest press release on our website.
Emma Chapman: Jonathan Price, our CEO , will start an overview of our first quarter. Let's go.
Emma Chapman: Crystal Prystai, our CFO will follow with a financial and operational review. Thank you.
Emma Chapman: Jonathan will conclude with closing remarks followed by a Q&A session.
I will now turn the coup over to Jonathan.
Thanks, Emma. Good morning, everyone. [inaudible]
Emma Chapman: Now, before we get into the quarter, I want to take a moment to acknowledge the current macro environment on slide 4.
Emma Chapman: As we all know, the past few months have been marked by volatility and uncertainty. Factors like the threat of a global economic downturn, geopolitical tensions, inflation, and supply changes eruptions have created an uncertain and challenging global business landscape.
Emma Chapman: Despite these headwinds, we believe that the fundamentals for our key metals, copper and zinc are robust over the medium and long term, as several macro factors continue to drive demand.
Emma Chapman: These metals are essential for global manufacturing and development in industrial policy and national security and electrification infrastructure as well as the growth of the digital economy. On the supply side, the industry continues to face constraints.
Emma Chapman: At the same time, new demand opportunities are emerging, as many economies seek to revitalize their industrial sector.
Emma Chapman: For example, defence spending may be significantly broadened to include areas central to economic resilience, such as upgrades to an expansion of electricity grids, which remains central to copper demand.
Emma Chapman: We see this providing a medium term boost to metal demand as the world enters into a state of fact more capital intensive phase of growth.
Emma Chapman: And even in the short term, we continue to see extreme tightness in the concentrate markets that make up nearly 90% of our revenue, with benchmark treatment charges for copper and zinc at historically low levels.
Emma Chapman: In this environment, Teck is well positioned for continued value creation. We are growing copper production and improving margins through disciplined operational performance.
Emma Chapman: In addition, we have an active share buyback program, a portfolio of value accretive copper growth projects, an agile commercial strategy and a strong balance sheet.
Emma Chapman: Together, these underpin the resilience of our business, which is a competitive advantage for Teck, enabling us to navigate uncertainty while continuing to deliver value through our strategy of balancing disciplined copper growth with returns to shareholders.
Emma Chapman: So turning to slide five, we are closely monitoring the potential impact of terrorists and retaliatory trade measures between the countries we trade with and the risks of wider macroeconomic uncertainty.
Emma Chapman: Although the situation is fluid and evolving rapidly, we do not expect announced tariffs to materially impact our business.
Emma Chapman: That's it, a global trade war could weigh on global economic growth with potential implications for Meffel's demand.
Emma Chapman: Today, we are continuing to see strong demand for our copper and zinc concentrate, and we are working closely with our customers with limited impact so far. Our copper and zinc concentrate sales are not exposed to US tariffs, but we primarily sell the Asia and Europe with no sales to the US.
Emma Chapman: On the other hand, Chinese tariffs, if maintained, are expected to apply to our sales of Red Door Concentrated China, which represent less than 20% of our zinc and lead concentrate sales.
Emma Chapman: However, over past few years we have successfully developed a regionally diverse customer base which gives us greater optionality while trade negotiations are ongoing.
Emma Chapman: Red Dog is a highly valued concentrating zinc market, and we have several long-standing customers for this product.
Emma Chapman: We also have other options available, including trail feed integration, delivery outside the Red Dog shipping season, and product swaps, all options that support continuity of sales.
Emma Chapman: Turning to trail and our metal sails, refined zinc, lead and specialty metals such as germanium, indium and sulfur products are sold into the US, but they are exempt from US tariffs that they are compliant with the US MCA.
Emma Chapman: Overall, Teck has a strong business with diversified products and operations and agile commercial strategy and strong logistics capabilities.
Emma Chapman: This enables us to quickly adapt and respond to changing market conditions to mitigate any potential impact on our business.
Emma Chapman: Turning now to highlights from the first quarter of 2025 on slide 6.
Emma Chapman: Our profitability improved significantly compared to last year, driven by higher commodity prices and copper sales volumes. Our adjusted EBITDA more than doubled to $927 million.
Emma Chapman: The ramp up of QB operations continues and we are seeing performance improvements in key areas such as average daily mail throughput.
Emma Chapman: Production was impacted in the quarter by additional shutdowns and I will provide more detail on this later in the presentation.
Emma Chapman: During the quarter, QB successfully achieved the completion testing requirements under the $2.5 billion US dollar project finance facility.
Emma Chapman: This is a significant milestone that provides independent verification confirming the robustness of the business instruction and the capacity of the asset to operate at design levels, providing further confidence in the ramp up to steady state by the end of the year.
Emma Chapman: In the first quarter we had strong operational performance across our established operations. [inaudible]
particularly Highland Valley, at Karmadandra Coyote.
Emma Chapman: Trial Operations generated strong pop profit in the quarter, following the successful implementation of a range of initiatives to improve profitability and cash flow generation.
Aranual Guidance is unchanged across all operations. [inaudible]
Emma Chapman: Our balance sheet remains strong and resilient. We ended the quarter in a net cash position of $764 million, and as of yesterday, our liquidity is $10 billion.
Emma Chapman: Finally, we continue to return cash to shareholders through share buybacks and dividends, totaling $568 million a year to date.
Emma Chapman: returning to our ongoing commitment to safety and sustainability on slide seven.
Emma Chapman: Our safety performance was strong in the first quarter. Our high potential incident frequency rate across the operations we control remained low at 0.05.
Emma Chapman: I would like to take a moment to acknowledge the fatalities that occurred at Antibita in which tech holds a non-operating interest earlier this week.
Emma Chapman: We are deeply saddened by this event and we offer our condolences to the family, friends and colleagues of the deceased.
Emma Chapman: As ever, we will support the Anthemina team with the investigation and ensure that lessons are both learned and shared.
Emma Chapman: In March, we released our 24th annual Sustainability Report, which details last year's environmental and social performance, including key areas such as health and safety, support for communities, indigenous peoples, diversity and climate.
Copy the reports is available on our website.
Emma Chapman: So, coming back to QB Randolph on slide 8, I'll just mention the successful achievements of completion testing under the QB Project Finance Facility is a significant milestone.
Emma Chapman: It comprised several independently verifying operational and technical tests that validates the robustness of the design, construction and operational performance of QB. This demonstrates QB's ability to generate strong cash flows.
Emma Chapman: We've made significant progress in the ramp up of QB, as you can see on the left hand side of the slide.
Emma Chapman: We have a plan to consistently achieve design throughput and recoveries and have several data points showing that we can and have already operated at these levels.
That said, first quarter production was impacted for two reasons. [inaudible]
Emma Chapman: First, the previously disclosed 18-day extended shutdown to conduct maintenance and reliability work and progress tailings development.
Emma Chapman: and Second, External Factors that included a nationwide power outage in Chile and February leaving the site without power which affected production for several days and challenging weather.
Emma Chapman: In particular, challenging whether impacted the rate of material movement for tailings lists required for the development of the tailings management facility, which was also impacted by slower than expected sand drainage times. [inaudible]
Emma Chapman: The result of this slower than planned TMF development is that additional mechanical movement is required, prior to installation of the permanent infrastructure, and we expect to extend planned maintenance shutdowns in Q2 and Q3 to complete this work.
Emma Chapman: It's expected to impact production in the short term only, and there are no issues with damn integrity.
Emma Chapman: Once this phase of TMS development is complete, we will be on track for full production ramp up by year end and steady state operation into the future.
Emma Chapman: Moving to slide 9, QB's planned performance continues to improve. In the first quarter, the average daily throughput, excluding the extended non-flan shutdowns increased compared to the fourth quarter, demonstrating continued improvement in operational stability.
Emma Chapman: High levels of transitional were mined, leading to lower recoveries as expected, and higher grade of all mind in March, increased the average grade for the quarter.
Emma Chapman: For the remainder of the year, we will continue to drive operational performance and expect to achieve higher throughput rates and higher recoveries in line with design.
Emma Chapman: We continue to expect to achieve our production guidance for QB, albeit at the lower end of our previously disclosed range of 230 to 270,000 tons.
Emma Chapman: And we continue to expect QB Netcash unit costs to be between 180 and 250 US dollars per pound for the full year. Although commensurate with production, we expect this to be towards the higher end of guidance.
Emma Chapman: Turning to slide 10, we expect significant growth in our copper production with improved margins this year. Our copper even with our margin increased last year from 33% to 42%.
Didier, current consent estimates show further improvement to 51 percent.
Emma Chapman: We continue to expect our copper production to grow to between 490 to 565,000 tonnes for the full year, from 440,000 tonnes in 2024, reflecting the ongoing ramp up of QB and improved grades and through both the Pyle and Valley.
Emma Chapman: We also expect a significant reduction in our COP and that cash unit costs.
Emma Chapman: to 165 to 195 US dollars per pound from 220 US dollars per pound in 2024. Reflecting an increase in all of the other and the lived-in and production as well as continued cost-discipline across
Emma Chapman: Slide 11, outlines are ongoing growth trajectory, underpin by our existing portfolio of operating mines, coupled with our well-funded, value accrued near-to-em copper projects.
Emma Chapman: including the minor life extension at Highland Valley in British Columbia, and our high-returning Greenfield project at Zafran Island Peru, and Sam Nicolas in Mexico.
Emma Chapman: Compared to QB, these Greenfield projects are significantly less complex and smaller in scope with lower capital intensities.
Emma Chapman: We are also working to define the most capital efficient and valuable creative path for further growth of QB, through optimization of the mill and low capital the bottlenecking opportunities that could increase throughput by 15 to 25%.
Emma Chapman: With these projects, we have a clear path to increase our annual copper production to approximately 800,000 tons before the end of the decade.
Emma Chapman: Southlight 12, I will cover the key progress updates and major future milestones as we work to bring these near-to-end projects to potential sanctioning this year.
Emma Chapman: An independent review of the My Life Extension Project to Highland Value was completed in the first quarter and confirmed construction readiness of the project. This means we should be positioned for a potential sanctioned decision after we received the necessary permits, which potentially could be in May 2025.
Emma Chapman: It's therefore now the project is progressing as scheduled and we receive the advanced works permit on April 10th.
Emma Chapman: We have to submit the construction permit in Q2 and the project could be ready for a potential sanctioned decision in late 2025.
Speaker Change: Sam Nicholas, Engagement with Government Authorities and other stakeholders is ongoing to support our firm in application.
Speaker Change: We expect to complete the feasibility study in the second half of 2025, positioning the project for a potential sanctioned decision following the receipt of necessary permits.
Speaker Change: At UB, our focus is to ramp up to steady state.
Speaker Change: At the same time, Optimisation is progressive, and detailed planning for debuffel making is underway, which should enable us to submit the declaration of environmental impact or dear thermite application in the second half of the year.
Speaker Change: We look forward to progressing these well-funded near-to-and-projects to sanction and launching the next phase of text copper growth.
Speaker Change: I'll now hand over to Crystal to provide further details on our first quarter results.
Crystal Prystai: Thanks, Jonathan. Good morning, everyone. I will start with our first quarter 2025 financial performance on Slide 14.
Crystal Prystai: We more than doubled our adjustity by dying the quarter compared to a year ago to 927 million. This was primarily driven by higher copper and zinc prices and increased copper sales volumes due to strong production performance across our established operations.
Crystal Prystai: We generated increased revenue and profit from byproducts, including molybdenum from QB and Highland Valley, as well as silver, Jermadium, and other critical metals from the trail.
Crystal Prystai: We also benefited from a weaker Canadian dollar as we converted US dollar denominator revenue into Canadian dollars.
Crystal Prystai: Our results reflect positive pricing adjustments of 106 million, primarily as a result of higher copper prices.
Crystal Prystai: Our finest income increased significantly to 91 million compared with 27 million a year ago, as our investment income increased due to our elevated balance of the sale and steel making coal business last year.
In February , we paid a final 2024 Canadian income taxes. [inaudible]
Crystal Prystai: 130 million, primarily related to earnings and the proceeds from the sale of the steel making coal business. And importantly, we continue to return cash to shareholders throughout the quarter with 568 million returns year-to-date.
Crystal Prystai: Turning to Slide 15, which summarizes the key drivers of our financial performance in the first quarter compared to the same period in 2024.
Crystal Prystai: R. Jesse D. Bada, increased by 127% in the first quarter as a result of strong base metals prices, higher copper and sinking concentrate sales volumes and the positive impact of a weaker Canadian dollar.
Crystal Prystai: Copper Sales Volumes increased by 11% from Q1 of last year, reflecting higher volumes from Highland Valley and Carmen DeAndecoyo.
Crystal Prystai: Zinking Concentrate Sails Volumes Increased by 10% due to the timing of sales from Red Dogg, and increased
Crystal Prystai: Our strong-adjusted EBITDA also reflects improved caverns and unit costs, reflecting costs disciplined across our business.
Crystal Prystai: This was partially offset by an increase in royalties, primarily as a result of increased profitability at Red Dogg.
Crystal Prystai: Now looking at each of our reporting segments in greater detail as starting with cover on slide 16.
in Q1 2025, Gross Profit before.
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Let's switch to the backup line, please.
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Speaker Change: Thank you for your patience. We have reconnected with the presenters. Thank you very much.
Speaker Change: Hi everyone, sorry about the technical difficulties. I am going to start back at the beginning of slide 16.
Speaker Change: and Get Going Again. Q1 2025 growth profit before depreciation and amortization from our copper segment increased 90% to 704 million compared with the same period last year.
Speaker Change: primarily due to higher cost for prices and sales volumes, and increased by-product revenues from
This reflects strong performance across our established copper operations.
Speaker Change: Copper production increased by 7% to 106,000 tons, driven by increased grades and mill throughput at Highland Valley and Carmen de Andecoyo.
Speaker Change: Production significantly improved at Highland Valley as we advance mining in the higher grade Lornex Pit, which has softer ore leading to increased milk throughput.
Speaker Change: Carmen DeAndecoyle also had improved milk throughput as a result of increased water availability compared to the same period last year which was affected by drought conditions.
and Timina performed in line with expectations.
Speaker Change: Our net cash unit costs improved by 32 cents US per pound to $2.04 US per pound as a result of higher copper production, increased by product credits, reduced smalter processing charges, and lower transportation costs at QB.
Speaker Change: This strong performance led to an improvement in our growth profit margin before depreciation and amortization of 13% to 47% compared to the same period last year.
Speaker Change: On April 9, Cubae's third and final labor union ratified a new three year collective bargaining agreement. This completes all labor negotiations for Cubae's workforce with labor agreements now in place through 2028.
Speaker Change: Looking forward to the rest of this year, we expect to see QB continue to ramp up to steady state by year end, as well as increase quarterly copper production at Highland Valley as we process increasing proportions of higher grade law next or through 2025.
Speaker Change: For the full year, as Jonathan mentioned, we continue to expect growth in our copper production with improving margins in line with our guidance of 490 to 565,000 tons at a net cash unit cost of between $1.65 U.S. and $1.95 per pound.
Speaker Change: Our profitability in zinc improves significantly in the first quarter with a 79% increase in gross profit before depreciation and amortization to 225 million.
Speaker Change: This increase with due to higher zinc prices, strong sales volumes at Red Dog and improved profitability at our trail operations.
Speaker Change: Our Red Dog Zinc can concentrate sales of 91,000 tons or higher than our guidance range for the quarter of 75 to 90,000 tons due to the timing of sales.
Speaker Change: Red Dog Production was impacted by lower grays as expected in the mine plan. [inaudible]
Speaker Change: Our net cash unit cost improved to $0.59 U.S. per pound from $0.67 U.S. per pound in the same period last year, driven by reduced snout or processing charges, and partially offset by the impact of lower production levels.
Speaker Change: At Trail Operations, we generate a strong profitability in the quarter, reflecting increased production of byproducts, such as silver, germanium, and other critical metals, as well as the successful implementation of initiatives to improve profitability and cashflow generation at trail. Thank you.
Speaker Change: Looking forward to the second quarter, we expect zinc and concentrate sales from red dog of 25 to 35,000 tons reflecting the normal seasonality of sales.
Speaker Change: Our full-year production and unit cost guidance for Zinc Segment is unchanged.
Speaker Change: Art Guidance for Zinc and Concentrate Production remains at 525 to 575,000 tons and we continue to expect for Zinc production of 190 to 230,000 tons for the year.
Speaker Change: Neck Pass Unit costs are expected to be between 45 and 55 cents US per pound. [inaudible]
Turning to our balance sheet on slide 18. [inaudible]
Speaker Change: Our balance sheet remains strong and resilient. We were in a net cash position of $764 million at March 31st, and as of yesterday our liquidity was $10 billion, including $5.8 billion of cash.
Speaker Change: R-Tashdowns decreased in the first quarter, primarily due to continued return to shareholders through dividends and share buybacks. The final 2024 tax payment relating to the earnings and sale of the steel-making coal business.
Speaker Change: and the seasonally larger royalty payment to Nana in respect of Red Dog's strong Q4 2024 performance.
All remaining outstanding terms. [inaudible]
Speaker Change: U.S. are long dated. We will continue to deliver as we make semiannual repayments on the QB Project Finance Facilities through 2031.
Speaker Change: with the achievement of the QB Project Financing Completion Testing Requirements, TAC and the other sponsor guarantees of the Project Finance Facility have been released.
R-Balantied Strength, and Investment Grade Credit. Thank you.
on
Speaker Change: We remain committed to our discipline capital allocation framework, which balances investment in value accretive growth with returns to shareholders while maintaining a strong balance sheet through the cycle.
Speaker Change: Our capital allocation framework and project sanctioned requirements ensure the prudent deployment of capital. All growth projects must meet stringent criteria delivering attractive, risk adjusted returns and competing for capital.
Speaker Change: We are continuing to execute on our $3.25 billion authorized share buyback and we are committed to returning between 30 and 100% of available cash flows to our shareholders.
Looking at our cast returns now on Sunday. That's fun.
Speaker Change: We continue to build on our strong relationship with the Supreme Court.
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$5.4 billion since 2020.
Speaker Change: We are in Martin City, absolutely falling back for shares under the 22,000,000 dollars to buy back in the last year, more than half of the fall back in the city.
Speaker Change: Pardon the interruption, pardon the interruption, this is the operator. The quality of your backup line has deteriorated to the point where we're not really able to hear you. I'd like to suggest that we pause for a moment and reconnect your main line. Thank you.
and I will...
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Let me put the hold music back on. [inaudible]
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Speaker Change: Sorry, everyone. I'm going to jump back in here, still on slide 20. As of yesterday, we've executed 1.75 billion of the 3.25 billion authorization under our normal course issue we were bid, including over 500 million year-to-date.
Speaker Change: This leaves approximately 1.5 billion of our authorized share buybacks remaining to further improve our per share value, and with the strong cashflow generation potential of our business, we could see further cash returns to shareholders in line with our capital allocation framework.
Turning to our near-term growth now on slide 21. .
Our value of credence near term copper projects are well-funded. . .
Speaker Change: While the project capital attributable to these growth projects remains unsanction and uncommitted, we can continue to expect to deploy between 3.2 and 3.9 billion US over the next four years for our near-term cover projects.
Speaker Change: and we will continue to be disciplined in our assessment and progression of these projects to ensure value of creative growth.
Speaker Change: As we continue to balance our growth and copper with cash returns to shareholders, we can continue to significantly impact the creative growth potential of our metrics on a per share basis as shown on slide 22.
Speaker Change: and by 2026, as we stabilized QV at full production and complete the remaining authorized share buybacks, our copper production per share could increase by a further 34% to 51%.
Speaker Change: and this does not consider the impact of any further share buybacks that could be authorized under a capital allocation framework as a result of the strong, cash flow generation potential of our business.
Speaker Change: Through the end of the decade, our copper production has the potential to increase rapidly on a per share basis.
Speaker Change: With that, I'll now turn it back over to Jonathan. Thanks, Crystal. So turning to slide 24, we remain focused on our priorities to create value for our shareholders.
Completing the QB ramp up to steady state operations.
Speaker Change: Continuing to drive operational excellence across our portfolio of high quality copper and zinc operations and projects, growing our copper production and improving our margins.
Speaker Change: Remaining Committed to returning cash to our shareholders by continuing to execute our authorized share by-back program and paying our base dividends.
progressing of value-acreative near-to-em copper projects.
Speaker Change: to Possible Sanction Decisions in 2025, positioning us for our next phase of copper growth and maintaining the resilience of our business to navigate uncertainty and create value leveraging our agile commercial strategy and strong balance sheet.
Speaker Change: So to wrap up on Flight 25, our strategy remains delivering growth and creating value in a responsible and disciplined way. We will continue to balance investment in growth with returns to shareholders.
Speaker Change: We have the resilience to successfully navigate the current environment as well as potentially exploring evolving opportunities.
Speaker Change: as a pure play energy transition metals company. Teck is uniquely positioned to deliver significant value to shareholders through the execution of our copper growth strategy.
Speaker Change: Apologies again for the disruption on the line during that portion of the call. Hopefully you can hear us clearly now. So with that operator, please open the line for questions.
Speaker Change: Thank you. To join the question, please press star then one on your touchtone phone.
Speaker Change: You will hear a tone acknowledging your request. If you wish to remove your question, please press star then two. We ask that you limit yourself to one question and one follow-up.
Operator: The first question is from Orest Wowkodaw with Scotiabank. Please go ahead.
Oris Wachadel: Good morning. Questions on QB2? It sounds like you're pushing back the target for sustainable full production at the operation from mid-year to end of year, yet the guidance has unchanged.
Oris Wachadel: What, can you give us a sense of how long these extended maintenance outages related to the tailings facility are supposed to impact Q2 and Q3? And I'm curious what gives you confidence at this point?
Speaker Change: Given the pretty week to one, you can still make even the low end of the range for the year.
Oris Wachadel: Hi, Orest. Thank you for the questions. We'd always expected 2025 to be a build of production throughout the year and achieving steady state operations towards the end of the year rather than in the first
Oris Wachadel: Part of the Year, and I think that's no different with what we've guided today. We still expect to deliver the guidance of 230 to 270,000 tonnes of this year, albeit now towards the bottom end of that range.
Oris Wachadel: And yes, there's some additional work we have to do here around the tailings facility. We're making good progress, we're implementing measures to complete that work quickly, and that includes initiatives which will allow us to speed up sand drainage and deposition of material at the dam. Thank you.
Oris Wachadel: Look, as we've said, you know, completing this will require some additional downtime in 22 and 23, which is why we anticipate being at that lower end. But once we get
Oris Wachadel: Through this phase of the transition from the starter dam to regular ongoing sand lifts.
which is essentially a one-time event. [inaudible]
Oris Wachadel: We can then operate at steady state for the life of the facility. So that's the phase of work we're going through, this quarter and next quarter. That's why we have confidence that we can end the year running at steady state and that's why we believe that we will continue to deliver within the guidance range that we've set out for 2025.
Speaker Change: You know, knowing that this was a ramp up year for the operation, you know, we reflected in that guidance range, you know, the uncertainty with operations in this phase of the life of a project, and that's what you're seeing in our disclosures today, but I think, you know, critical that we remain confident of delivering production within that range.
Speaker Change: And sorry, can you give us detail how long are the expected outages in total for QQ to be now?
Oris Wachadel: Look, that will be a function of the work that needs to be done, Orest, which will be determined by the operations team and will be a function of the improvements that we make in sand drainage and the improvements that we make in the pace of material deposition at the dam. So it's, you know, it's not possible to be precise on what those the number of days that we will need to achieve that this year at this point in time, but I can tell you that the range of outcomes that we expect will be done in the future, and that will be done in the future, and that will be done in the future.
Oris Wachadel: to be lightly in terms of the number of days that we will take are reflected in the guidance and are reflected in the fact that we continue to hold that guidance, yet we are pointing towards the lower end of that range.
Oris Wachadel: Okay, and finally, do you see anything at this point that could impact the guidance range for 26, the 280 to 3, I think it's 3, 10 based on what you're seeing or all these issues expected to be solved by your end?
Oris Wachadel: Yes, so the short answer is no. Orest, we don't expect to see any changes to the guidance for 2026 or beyond. The works that's required here on the tailings to transition into steady state. We expect to be finishing the third quarter of this year. So therefore as we move into 2026 and beyond, we don't see any ongoing impact of the works that we're undertaking today.
Okay, thank you.
I'm Sourced.
Oris Wachadel: The next question is from Liam Fitzpatrick with Deutsche Bank. Please go ahead.
Pardon me.
if I can take control of the...
Speaker Change: The next question is from Liam Fitzpatrick with Deutsche Bank. Please go ahead.
Can you hear me okay?
Liam Fitzpatrick: My question is just around the next crop of projects that you're highlighting now.
Liam Fitzpatrick: First of all, would you realistically approve something like Zafernell in the current macro environment, or would you wait for greater clarity around US trade policies in the general macro and so on?
Liam Fitzpatrick: and then it also seems that three or four of your projects are all converging towards a decision within the next.
Liam Fitzpatrick: Six to 12 months or so. Can you talk about management bandwidth to manage multiple projects, particularly while QB is still ramping up and how you're thinking about project phasing with all of these options ahead of you. Thank you.
Speaker Change: Yes, thanks for the question, Liam. Now of course, you know, as we look at the projects that we have in the portfolio here, what we're focused on is the long-term perspective for the fundamentals of the commodities associated with those projects.
Speaker Change: and we see nothing at this point in time that changes our view or our conviction on the long-term fundamentals for both Copper and Zinc being the key components of growth with Copper being the primary target. So there's nothing in that respect that causes us to sort of take a pause in that regard.
The
Speaker Change: Growth projects that we have in the portfolio are critical to the long-term strategy, as I mentioned in the call, these are...
there soon.
Speaker Change: Strong Returns. So from that perspective, you know, no change, of course we always continue to evaluate those things and when we take our projects forward for sanction, we always look at a range of forward pricing scenarios to ensure that those economics and returns will be robust. Thank you very much.
Just in terms of your comments on organizational bandwidth.
just to put these projects into context. Next.
Speaker Change: So Highland Valley, you know, my life extension, you know, is a Brownfield project at a site where we've been operating since the 60s and we've undertaken numerous previous Brownfield expansions of that site. You know, the team is all in place is ready to go. And as I mentioned, you know, we had a very positive, independent review of our construction readiness for that project. So we've got a good level of confidence moving forward with that. Thank you.
Speaker Change: The other Greenfield project that we would deliver, and Teck would take the lead on is Zafernau, because of course we are 80% of that project, so that's where we would be delivering, and again, we've been building a very strong team over an extended period of time now coupled with our EPC partners, so we well set up subject to sanction and permits of course for construction and delivery of that project.
Speaker Change: Sam Nicholas is somewhat different because of course that is an incorporated joint venture with
Speaker Change: Agnico, which doesn't mean Teck is taking the lead on delivering that project, it's actually the joint venture.
that does not work.
Speaker Change: So of course we'll be very closely involved in a range of ways in support of that project and in particular really taking a lead on the commercial aspects.
Speaker Change: of that project when it comes to the marketing and sales of copper and zinc. But that's necessarily by virtue of the way that that's been set up is a lower list on the organization here. So we do believe that this is manageable, Liam. We've been preparing for this for a number of years in terms of systems, processes, procedures, et cetera, but most importantly, bringing in the talent, developing the teams and getting ourselves set up for success in execution.
All right, thank you.
Thank you Liam.
Speaker Change: The next question is from Carlos Dalba with Morgan Stanley . Please go ahead.
Carlos Dalba: Thank you very much. Good morning. I would like to see if you receive any feedback or suggestions for potential improvement.
Carlos Dalba: on the completed QB independent testing that you successfully did recently, which again, congratulations on that, but I'm interested to know if there was any any suggestions, any potential improvements and that they provided?
Carlos Dalba: Look, I think in short answer is no, you know, that's not really the way that process works. There's a series of tests that have to be achieved, you know, based on performance and those tests were achieved and independently validated and certified, but it's not really an improvement, you know, an improvement focused process Carlos.
Carlos Dalba: All right, thanks, John Tan, and Joseph, maybe a follow-up. Can you mention how many days was QB shut down as a result of the power averages? I think it's a little bit with several days but it will help us for the analysis if we had a little bit of a more precise number of days.
Carlos Dalba: Yes, so Carlos, we were sort of directly shut down for a couple of days and then it took us a couple of days to get back up and running to full rates again. So broadly speaking, four days, half of which was down time and half of which was recovery. Of course, it's the first time at QB that we've had to deal with one of these events and then get the sights.
Carlos Dalba: Backup and running to full capacity, so that's a learning experience. Perhaps in future we'll be able to come back online more quickly but we have to be prudent first time out dealing with an event like this at that site.
Thank you very much, Jonathan.
Thanks, Carlos
The next question is from Craig.
Speaker Change: The next question is from Craig Hutchinson with TV Collin. Please go ahead.
Craig Hutchinson: Good morning. I'm just going to ask about the zinc business. I think in your opening remarks, you said that about 20%
Speaker Change: The sales from Red Dog is going to China and could be subject to tariffs that they've remained in place. Just any indications whether there's concerns about those sales right now, whether you have to redirect the material. No, no, no, no.
Speaker Change: and then I guess just on the flip side, are you purchasing materials for Red Dog from China that are subject to tariffs and that could that be a potential risk on costs? Thanks.
Speaker Change: Thanks for those questions. Look on the outbound, as I mentioned, given the levels of tariffs being placed.
Speaker Change: on imports from the US into China. That creates challenges with supply at the moment. Fortunately, at this time of the year, given the shipping seasons at Red Dog, we're not moving material from the site in any event. So, we're pretty well covered at present. The commercial team is working very hard as I mentioned on the call as a range of options and alternatives. Thank you very much.
Speaker Change: here, which could see us, you know, placing material elsewhere through this period of time. The bottom line is Craig that we don't expect to face a material impact here as the result of tariffs between China and the US. And as I said, we've got, you know, a number of months up our sleeve here to resolve any issues that might arise. There is no risk the other way around, you know. We're not exposed on the inbound here in terms of imports of goods.
Speaker Change: from China into US or into Red Dog, so no risk that.
Speaker Change: Okay, and just sit on to me now, I'll be so sorry to hear about the fatality. Is there any updates on that operation? Is it still halted or is it back online? Thanks.
Thanks for tuning in.
Speaker Change: Yeah, look, as I said, you know, tragic event, we will work very closely if we always do with the the Ansemina team here to understand what happened and to look at learnings for the future and learnings not just for Ansemina, of course, but for the industry more generally our understanding is that the site will be returning to to operations today. So getting back up and running.
Thank you guys.
Thank you, Craig.
The next question is from Myles Allsop with UBS, please go ahead. The next question is from Myles Allsop with UBS,
That's all I'm going to show you.
Great thanks
Speaker Change: If all goes to plan, when should you get the licenses to be able to lift throughput above the 143,000 tons a day? Just how do we model that kind of optimisation in the bottle like you?
Speaker Change: Yeah, I mean, I think there's a level of optimization that's allowed under the current permits, Myles, as we have it today, which is essentially a 10% allowance from name plates. So that's something we already have in hand. In terms of the submission of the DLF say that goes in in July of this year, we would expect to have an approval on that 12 month subsequent. So that would be July over the following year, which fits very well with the timeframe we hear. We have for the debacle making.
Speaker Change: So the existing permit really allows for the for the optimization that we've been talking about and this deer or amendment to the permit allows for the debottle necking so we can get the optimization with what we have now and with the deer we can unlock the debottle necking.
Speaker Change: Thank you. And then with the Highland Valley, I think it was still a dispute that had to be resolved before you could kind of push your head with the Life Extension project. Where are you with that? I mean, is that potentially going to push back approval from mid-year?
Speaker Change: Yeah, look so, so we are going through engagements with various of the Indigenous Government organisations surrounding Highland Valley and those, a number of those parties, two of those parties of fact have initiated dispute resolution processes under the Environmental Assessment Act. That's not unusual for these sorts of processes. It's the way in which they engage with the province, essentially around the terms of the permit. Ultimately, you know, we stay very close to this, of course. Thank you very much.
Speaker Change: Unfold, and while we can't guarantee time for permitting, you never can with any project, we are optimistic that we will have a resolution in the middle of this year. So we'll continue to progress the project, as I said, the work we've done on construction readiness looks very good, that's been independently verified and we'll continue to move the project forward this year. So yes, we've got to get through those engagements and ultimately get the permits issued, but we're hopeful that the middle of this year is still [inaudible]
the time frame that we're working to.
Speaker Change: Okay, so maybe just on QB, are you confident now we're not going to see any more downgrades to production guidance for 25?
No.
Yeah, look, you know, [inaudible]
Speaker Change: What we know about the site, what we see in the operation of the of the mine of the concentrator of the port and our view now on the work that is required to progress the tailings facility from today into steady state operations. All of those factors are considered in the guidance range. All of those factors are considered in the guidance range. All of those factors are considered in the guidance range.
and so of course.
Speaker Change: We are looking at guidance all the time to ensure it's appropriate and representative of what we expect to do at the affit and we've communicated 230 to 270 again today because we have confidence in delivering within that range, albeit at the lower end.
Good luck. Thank you.
Thanks, Myles.
Speaker Change: The next question is from Matthew Murphy with BMO Capital Markets. Please go ahead.
Matthew Murphy: Hi, Jonathan. Just would like to dig a little deeper on the understanding the tailings issue. Is sand drainage is that referring to like how wet the sand is? [inaudible]
Jonathan Price: Well, it's essentially referring to how long it's taking that sand to dry. It might be a better way of thinking about it. But yes, it is to do with the moisture and the sand and the time that it's taking for those moisture levels to reduce.
Jonathan Price: Okay, and is that connected to challenging weather or is a separate issue? [inaudible]
Jonathan Price: No, it's really a separate issue there. I mean, you know, ultimately, what you need to be able to do is to compact the sand and to compact the sand, you need it to drain. You know, we think the source of some of these the slower drainage times has been a function of clay and fines in the sand, which have to be separated. That separation happened through the cyclones and we've recently made some modifications to those cyclones and the initial results from those modifications are positive. [inaudible]
Jonathan Price: Again, which is part of what gives us confidence that we move through this issue by the third quarter of the year.
Speaker Change: Okay, and then the last little follow on, the need to take maintenance shutdowns, is it because you're currently constrained on tailings capacity? So you're like waiting for the use lifts to be ready to let the mill go do what it can do or is part of the shutdown also on the mill? [inaudible]
Speaker Change: So we have our regular shutdowns, you know, on the mill for mill re-lining and other works so there's nothing different at the mill over and above what we would consider to be our sort of routine quarterly work. You know, the reason that we point towards the low end of the guidance range is that the work we have to do on the tailing facility does create a constraint to production.
Speaker Change: But again, factoring in the range of outcomes there that we can foresee for this year, we maintain the range at 230 to 270.
Okay, thanks, Jonathan. [inaudible]
Thank you very much, [inaudible]
Speaker Change: The next question is from Lawson Winder with Bank of America Securities. Please go ahead.
Speaker Change: Operator, thank you very much. Good morning, Jonathan, and Tim, and thank you for the update today. Thank you.
Speaker Change: Maybe I have to get in about QB2 and just going back to one of the challenges that was experienced last year, that with the stabilization.
Speaker Change: of the mix of clay in the feed, is the asset now on track to be able to deliver that consistency in the second half, and then also on that geotechnical issue, the faulting that led to the slip on the ramp. Is that?
Speaker Change: as the work to date in the mine now confirmed that that was in fact localized. Thank you very much.
Speaker Change: Yeah, so there's no ongoing manifestation of that geotechnical issue. That's very much behind us, Lawson. In terms of the clays, as we go through this year, we've started the year processing a lot of transition laws, which is why you've seen some lower recoveries in the first quarter. As the year progresses, we expect to have less transition law and therefore less play and therefore better recoveries. So all of those things are connected. That's been in the plan for this year.
dot com.
Speaker Change: And then just a question on grade with QB2. So when we started the year, the guidance suggested that grade would improve in the second half. But actually, I mean, you guys had really solid grades at QB2.
Speaker Change: I think it was about 0.61%, but you're guiding to a 0.6% average grade. I mean, is there some room in there for grade to potentially do better? Is that part of what's driving your confidence in staying within the guidance range? Thank you.
Speaker Change: No, we still expect a grade for the full year to be approximately 0.6. You know, with the mind plan, we ended up processing a little bit of higher grade in March that was previously expected to come through in April . So there's always a few, you know, sort of puts and takes in this, but as we look at this for the year of the whole, the average of 0.6 is still the right number.
Speaker Change: So we're not relying on grade to deliver the guidance if that's the question, Lawson.
Speaker Change: Yeah, no, that was it. Perfect. Thanks very much, Jonathan. Thank you, Lawson.
Speaker Change: The next question is from Bill Peterson with JP Morgan. Please go ahead.
Bill Peterson: Yeah, hi, good morning and thanks for taking the question. I'm thinking, I guess, on trail specifically, you know, nice job in a profitability. I guess, how should we think about profitability in the second quarter of the back half of the year? You know, specifically to expect, you know, the bike products to repeat in the subsequent quarters? [inaudible]
Bill Peterson: and then maybe beyond that, like what are the issues you have to maybe continue to drive and improve profitability, are there rooms for further improvements there?
Speaker Change: Yeah, thanks for that Bill. I'll ask Crystal to just respond when they look for trial for the bounds of the year.
Speaker Change: Thanks, Bell, nice to hear from you. Looking Q1, as you mentioned, we had very strong performance at Trill. We generated 80 million of gross profit before depreciation and amortization.
Speaker Change: That was really the result of that implementation of initiatives to improve cash flows. Those have been fully embedded in now and we expect those to continue.
Speaker Change: through the rest of the year and we'll continue to realize the benefit of those. And then in terms of the contribution from five products such as silver, germanium, and indium and then obviously the FX rate has an impact. We built up a stockpile of materials during the period when we had the kids that boiler under repair in 2023. We are progressing treating those materials which is where you're seeing the benefit of some of those specialty metals coming through and supporting the improvement of the profitability. So
Speaker Change: So, we expect that to continue through this year, but of course that's not a long-term solution. The TC environment for trails continues to be challenging, but the cost structure changes that we've made there have led to some improvement that we're seeing come through, and we expect that to continue. [inaudible]
and Chris Chappell. Thank you. Thank you.
Speaker Change: Good Great, thanks for that. And then, I guess, for the panelists out of the border, I guess any thoughts on the upcoming presidential election, any potential impacts to the industry, industry in Canada, retreats for HVC or maybe, you know, practically FDI? Bye.
Speaker Change: Nothing in particular. I mean, there's obviously an election early next week. We will know who the Prime Minister will be at that point in time. I think what we can say is that both sides of politics here are very, very supportive of the resources industry. That's been a key part of their
Speaker Change: Whether that's about deregulation and simplification, whether that's about actually putting in place investment vehicles to help with the development of the...
Speaker Change: Industry here, I think there's a lot of support for resources, Canada's recognising that as a real potential competitive advantage and the great lever through which to engage with the US on something that's clearly very important.
Speaker Change: to them. So we hope to see that progress bill in the weeks and months ahead, but I think, however, the election works out, Canada will remain very focused on its mining industry, on its critical minerals, and we do expect to see supportive legislation to help ease the...
Speaker Change: of doing business essentially in the country. So I think the outlook is positive from that perspective. Thank you.
Thanks, Jeff, and Crystal. Thanks for sharing the answers.
Thanks a lot.
Speaker Change: Thank you. We are out of time for further questions. I'd now like to hand the call back over to Jonathan Price for closing remarks.
Speaker Change: Thank you, operator. Apologies once again for the issues with the call today. I hope you were able to hear everything you needed to hear. If not, as ever, please follow up with Emma and the investor relations team. I would just close off by saying the business is in really good shape. We are very resilient. We're managing very well through these turbulent times, both through our commercial strategy and through the strong balance sheet we have. We will continue returning capital to our shareholders. Thank you very much.
Speaker Change: and we've discussed QV extensively on this call. We will get past this tailings situation by the third quarter of this year, move on to steady state operations. And as I said, we see no changes to guidance this year or in the coming years. So thank you very much for joining us all today and enjoy the rest of your day.
Speaker Change: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
[music]
Speaker Change: Thank you for all you do is make it possible for me to keep creating.