Teck Resources Ltd

ladies and gentlemen thank you for standing by welcome to tech's third quarter 2023 earnings release conference call at this time all participants are in listen only mode later we will conduct a question answer session to join the question queue please press star then one on your touchtone phone anyone need assistance during the conference call, they may signal an operator by pressing star, then zero on their telephone. This conference is being recorded on Tuesday, October 24th, 2023. I would now like to turn the conference over to Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis. Please go ahead.

Thanks, Charisse. Good morning, everyone, and thank you for joining us for Tech's third quarter 2023 conference call. Please note today's call contains forward-looking statements. Various risks and uncertainties may cause actual results to vary. Tech does not assume the obligation to update any forward-looking statements. Please refer to slide two for the assumptions underlying our forward-looking statements. In addition, we will reference various non-GAAP measures throughout this call. explanations and reconciliations regarding these measures can be found in our mdna the latest press release on our website jonathan price our ceo will begin today's call with highlights from our third quarter results crystal press die our cfo will follow with additional color on the quarter jonathan will conclude today's session with a brief update on our value creation strategy before we open the lines to questions with that i'll turn the call over to jonathan

Thank you, Fraser, and good morning, everyone. I'm speaking to you today from Iquique in the Tarapaca region of northern Chile, where we're gathering this week to celebrate the opening of our flagship QB2 operation. This is a momentous event for tech, with Crabada Blanca as the cornerstone of our copper growth strategy. More on that later. So starting on slide four, our positive financial performance in the third quarter reflects continued strong pricing for copper and steelmaking coal. in addition to higher base metal sales volumes. Adjusted EBITDA of 1.2 billion reflects lower than expected steelmaking coal sales in the quarter and a localized geotechnical event at Highland Valley in August. During the quarter, we made significant progress to unlock the value of our industry-leading copper portfolio. Our QB2 project continues to ramp up and is expected to achieve design throughput and recovery rates by year end. The assets are performing well, and we are pleased with the strong operational performance we have seen to date. We have a line of sight to double our consolidated copper production when QB2 reaches full capacity, and we continue to advance our actionable portfolio of development options to position tech for our next phase of copper growth. Importantly, we ended the quarter in a strong financial position with $7 billion of liquidity, included $1.5 billion in cash. And we returned $65 million to shareholders through the payment of our quarterly base dividend. In the third quarter, we continued to make steady progress against our sustainability goals. We announced an agreement with Norden to reduce emissions in our steelmaking coal supply chain. The agreement is expected to reduce annual emissions from tech shipments handled by Norden by 25%. And our reported high potential incident frequency remained low at a rate of 0.13. Now turning to QB2 on slide five. We made solid progress on the ramp up during the quarter. And as I just mentioned, we're seeing strong asset performance with the QB2 plant performing well. At the end of the third quarter, it had been operating consistently at 70% of design capacity. Both line one and line two are operating well. Success so far with line two reflects a faster and more effective commissioning as a result of leveraging the learnings from line one. As a result, we generated our first quarterly gross operating profit at QB2. Though modest, it is a key milestone in the development of the project. While we are pleased with the performance of the assets so far, we are not pleased with what we have had to increase capital guidance to US $8.6 to $8.8 billion from $8 to $8.2 billion previously. The increase was driven by delays in construction of both the molybdenum plant and the port offshore facilities, as well as costs associated with contract claims and slower than planned demobilization. The last two outstanding pieces of construction at QB2 are the bolly plant and the port offshore facilities. The molly plant will be completed by the end of the fourth quarter, and the port will be complete in the first quarter of 2024. And significant efforts are ongoing to mitigate risks and cost pressures. Importantly, we continue to expect to be operating at design throughput and recovery rates by year end, although we expect to be near the lower end of QB2's 2023 annual copper production guidance range of 80,000 to 100,000 tons. Turning to slide six, where we outline a summary of our key 2023 operational guidance updates. In our copper business unit, we decreased our annual production guidance for Highland Valley by 10,000 tons to reflect the impact of the localized geotechnical event in August. We did not expect any impact of this event to carry beyond 2023, and our unit cost guidance remains unchanged. Copper capitalized stripping guidance was revised to $395 million, up from $295 million. The increase reflects additional stripping at QB2 while the concentrator was in ramp-up, as well as additional stripping at Antamina, and the change in the mine plan at Highland Valley due to the localized geotechnical event. And in steelmaking coal, we lowered our 2023 production guidance to 23 to 23.5 million tons, down from 24 to 26 million tons to reflect the intermittent plant challenges we've experienced this year. Our unit cost guidance remains unchanged. With major maintenance activities completed and the implementation of our plant improvement initiative, we saw an improvement in plant reliability in the third quarter relative to the first half of this year. Our steelmaking coal operations are well positioned in the fourth quarter and into 2024. Strong raw coal inventories are also expected to provide additional product flexibility and optionality going forward. Across our businesses, we remain laser focused on execution. We intently manage our key business drivers and continuously enhance our operating practices while rigorously managing our controllable costs. For external risks outside of our control, we have solid mitigation plans such as supply chain recovery and strategic sourcing to mitigate inflationary cost pressures. As ever, our focus is to drive reliable operational performance and maintain our competitive low-cost position. With that, I will now hand it over to Crystal for additional color on the quarter.