Teck Resources Ltd

Welcome to TEC's first quarter 2025 results 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 24th, 2025. I would now like to turn the conference over to Emma Chapman, Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining us for Tech's first quarter 2025 conference call. Today's call contains forward-looking statements. Actual results may vary due to various risks and uncertainties. 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. We will reference non-GAAP measures throughout this presentation. Explanations and reconciliations are in our MD&A and the latest press release on our website. Jonathan Price, our CEO, will start with an overview of our first quarter. Crystal Prestai, our CFO, will follow with a financial and operational review. Jonathan will conclude with closing remarks followed by a Q&A session. I will now turn the call over to Jonathan.

Thanks Emma and good morning everyone. Now before we get into the quarter I want to take a moment to acknowledge the current macro environment on slide four. 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 chain disruptions have created an uncertain and challenging global business landscape. 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. These metals are essential for global manufacturing and development, industrial policy and national security, electrification infrastructure, as well as the growth of the digital economy. On the supply side, the industry continues to face constraints. At the same time, new demand opportunities are emerging as many economies seek to revitalize their industrial sector. For example, defence spending may be significantly broadened to include areas central to economic resilience, such as upgrades to and expansion of electricity grids, which remain central to copper demand. We see this providing a medium-term boost to metals demand, as the world enters into a state-backed, more capital-intensive phase of growth. 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. In this environment, tech is well positioned for continued value creation. We are growing copper production and improving margins through disciplined operational performance. In addition, we have an active share buyback program, portfolio of value accretive copper growth projects, an agile commercial strategy, and a strong balance sheet. Together, these underpin the resilience of our business, which is a competitive advantage for tech, enabling us to navigate uncertainty while continuing to deliver value through our strategy of balancing disciplined copper growth with returns to shareholders. So turning to slide five, we are closely monitoring the potential impact of tariffs and retaliatory trade measures between the countries we trade with and the risks of wider macroeconomic uncertainty. Although the situation is fluid and evolving rapidly, we do not expect announced tariffs to materially impact our business. That said, a global trade war could weigh on global economic growth with potential implications for metals demand. Today, we are continuing to see strong demand for our copper and zinc concentrates, 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, as we primarily sell to Asia and Europe with no sales to the US. On the other hand, Chinese tariffs, if maintained, are expected to apply to our sales of red dog concentrate to China, which represent less than 20% of our zinc and lead concentrate sales. However, over the past few years, we have successfully developed a regionally diverse customer base, which gives us greater optionality while trade negotiations are ongoing. Red Dog is a highly valued concentrate in the zinc market, and we have several longstanding customers for this product. 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. Turning to Trail and our metal sales, refined zinc, lead, and speciality metals such as germanium, indium, and sulfur products are sold into the U.S., but they are exempt from U.S. tariffs as they are compliant with the U.S. MCA. Overall, Tech has a strong business with diversified products and operations, an agile commercial strategy, and strong logistics capabilities. This enables us to quickly adapt and respond to changing market conditions to mitigate any potential impact on our business. Turning now to highlights from the first quarter of 2025 on slide six. 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. The ramp-up of QB operations continues and we are seeing performance improvements in key areas such as average daily mill throughput. Production was impacted in the quarter by additional shutdowns and I will provide more detail on this later in the presentation. During the quarter, QB successfully achieved the completion testing requirements under the US$2.5 billion project finance facility. This is a significant milestone that provides independent verification, confirming the robustness of the construction 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. In the first quarter, we had strong operational performance across our established operations, particularly Highland Valley at Karmadanda Koyo. Trail operations generated strong profit in the quarter following the successful implementation of a range of initiatives to improve profitability and cash flow generation. Our annual guidance is unchanged across all operations. 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. Finally, we continue to return cash to shareholders through share buybacks and dividends, totaling $568 million year-to-date. So turning to our ongoing commitment to safety and sustainability on slide 7. 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%. I would like to take a moment to acknowledge the fatality that occurred at Antamina, in which tech holds a non-operating interest, earlier this week. We are deeply saddened by this event and we offer our condolences to the family, friends and colleagues of the deceased. As ever, we will support the Antamina team with the investigation and ensure that lessons are both learned and shared. 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 of the report is available on our website. So coming back to QB ramp up on slide 8. As I just mentioned, the successful achievement of completion testing under the QB project finance facility is a significant milestone. It comprised several independently verified operational and technical tests that validate the robustness of the design, construction and operational performance of QB. This demonstrates QB's ability to generate strong cash flows. We've made significant progress in the ramp-up of QB, as you can see on the left-hand side of the slide. 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. first the previously disclosed 18-day extended shutdown to conduct maintenance and reliability work and progress tailings development and second external factors that included a nationwide power outage in chile in february leaving the site without power which affected production for several days and challenging weather in particular challenging weather impacted the rate of material movement for tailings lifts required for the development of the tailings management facility which was also impacted by slower than expected sand drainage times. 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. This is expected to impact production in the short term only and there are no issues with dam integrity. Once this phase of TMF development is complete, we will be on track for full production ramp up by year end and steady state operation into the future. Moving to slide 9. QB's plant performance continues to improve. In the first quarter, the average daily throughput, excluding the extended and unplanned shutdowns, increased compared to the fourth quarter, demonstrating continued improvement in operational stability. Higher levels of transition ore were mined, leading to lower recoveries, as expected, and higher grade ore mined in March increased the average grade for the quarter. 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. 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. And we continue to expect QB net cash unit costs to be between 180 and 215 US dollars per pound for the full year. Although commensurate with production, we expect this to be towards the higher end of guidance. So turning to slide 10. We expect significant growth in our copper production with improving margins this year. Our copper EBITDA margin increased last year from 33% to 42%. This year, current consensus estimates show further improvement to 51%. We continue to expect our copper production to grow to between 490,000 to 565,000 tons for the full year, from 446,000 tons in 2024. reflecting the ongoing ramp up of QB and improved grades and throughput at Highland Valley. We also expect a significant reduction in our copper net cash unit costs to 165 to 195 US dollars per pound from 220 US dollars per pound in 2024, reflecting an increase in copper and molybdenum production as well as continued cost discipline across our reservations. Slide 11 outlines our ongoing growth trajectory, underpinned by our existing portfolio of operating mines, coupled with our well-funded, value-accretive, near-term copper projects, including the mine life extension at Highland Valley in British Columbia, and our high-returning greenfield projects at Zafranal in Peru and San Nicolas in Mexico. Compared to QB, these greenfield projects are significantly less complex and smaller in scope, with lower capital intensities. We are also working to define the most capital efficient and value accretive path for further growth of QB through optimisation of the mill and low capital debottlenecking opportunities that could increase throughput by 15 to 25%. With these projects, we have a clear path to increase our annual copper production to approximately 800,000 tonnes before the end of the decade. Now on slide 12, I will cover the key progress updates and major future milestones as we work to bring these near-term projects to potential sanctioning this year. An independent review of the mine life extension project at Highland Valley was completed in the first quarter and confirmed construction readiness of the project. This means we should be positioned for a potential sanction decision after we receive the necessary permits, which potentially could be in mid 2025. At Zafranal, the project is progressing as scheduled and we received the advanced works permit on April 10th. We aim to submit the construction permit in Q2 and the project could be ready for a potential sanctioned decision in late 2025. At San Nicolas, engagement with government authorities and other stakeholders is ongoing to support our permit application. We expect to complete the feasibility study in the second half of 2025, positioning the project for a potential sanction decision following the receipt of necessary permits. At QB, our focus is to ramp up to steady state. At the same time, optimization is progressing and detailed planning for de-bottlenecking is underway, which should enable us to submit the Declaration of Environmental Impact or DEA Permit application in the second half of the year. We look forward to progressing these well-funded near-term projects to sanction and launching the next phase of tech's copper growth. I'll now hand over to Crystal to provide further details on our first quarter results.