Teck Resources Limited (TECK) Q3 Earnings call transcript Oct 24, 2024

Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK), a leading diversified mining company, recently held its Third Quarter 2024 Earnings Call, highlighting its strategic transition and strong operational performance. The call, led by Jonathan Price, CEO, and Crystal Prystai, CFO, provided insights into the company's recent achievements, future plans, and operational updates.

Strategic Transition and Financial Performance

Teck Resources announced the successful completion of the sale of its remaining interest in the steelmaking coal business, marking a significant milestone in its strategic transition towards becoming a pure-play energy transition metals company. The proceeds from this sale, totaling USD 7.3 billion, have been utilized to return cash to shareholders, reduce debt, and fund its growth portfolio. The company achieved a net cash position of USD 1.8 billion as of September 30, 2024.

The third quarter saw Teck Resources achieve record copper production, setting a new quarterly record of 52,500 tonnes. The company has also made considerable progress in the ramp-up of its QB operations, with copper production improving quarter-over-quarter and the project nearing the final stages of completion. The company has also focused on safety, health, and sustainability, with a low incident frequency rate remaining at 0.10, a 33% reduction from the same period last year.

Operational Highlights and Challenges

Teck Resources faced operational challenges at the QB site, with production impacted by lower grade ore mines following geotechnical issues. However, the company remains optimistic about the future, expecting higher grades in the fourth quarter and improved recoveries. The company also experienced unplanned downtime at its Trail operations due to a mill feed conveyor issue, but plans to address this through equipment modifications in the first half of 2025.

Future Outlook and Growth Opportunities

Looking ahead, Teck Resources is focusing on its capital-efficient copper growth portfolio, with several projects in the pipeline for potential sanction in 2025. These projects, subject to permitting and other works, include the QB expansion, Highland Valley, and the joint venture of San Nicolas. The company is also closely monitoring the evolving political situation in Mexico, where it has several projects, and is working towards a resolution for open cut mining.

Financial Guidance and Shareholder Returns

The company updated its guidance for 2024, reflecting a revised net cash unit cost range of $0.45 to $0.55 per pound, a reduction from the previous range of $0.55 to $0.55 per pound. The company has also returned over $1.3 billion to shareholders year-to-date, including a purchase of 13.6 million Class B shares. Teck Resources remains committed to its shareholder-friendly strategy, with a record return of $3.25 billion authorized by the Board this year.

Conclusion

Teck Resources' Third Quarter 2024 Earnings Call highlighted its strategic transition towards becoming a pure-play energy transition metals company and its strong operational performance. The company's focus on safety, health, and sustainability, coupled with its capital-efficient copper growth portfolio, positions it well for future growth opportunities. Despite operational challenges, Teck Resources remains optimistic about its future prospects, with several projects in the pipeline for potential sanction in 2025. The company's commitment to shareholder returns, with over $1.3 billion returned year-to-date, underscores its focus on delivering value to its stakeholders.