Vancouver, BC – Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) (“Teck”) reported profit attributable to shareholders of $94 million ($0.16 per share) compared with $68 million ($0.12 per share) a year ago. Adjusted profit attributable to shareholders was $18 million, or $0.03 per share, compared with $64 million, or $0.11 per share in 2015.
“Again our operations performed well by reducing our costs while maintaining production volumes,” said Don Lindsay, President and CEO. “Notwithstanding that the commodity cycle continues to be challenging, we are encouraged by the change in direction in steelmaking coal and zinc prices.”
Highlights and Significant Items
- Profit attributable to shareholders was $94 million and EBITDA was $517 million in the first quarter.
- Gross profit before depreciation and amortization was $464 million in the first quarter compared with $685 million in the first quarter of 2015.
- Cash flow from operations was $373 million in the first quarter of 2016 compared with $374 million a year ago.
- We have reached agreements with the majority of our steelmaking coal customers for the second quarter of 2016, based on a quarterly benchmark of US$84 per tonne for the highest quality product, and we expect total sales in the second quarter, including spot sales, to be at least 6.5 million tonnes of steelmaking coal. As current spot prices are significantly higher than the quarterly contract price, we expect our realized price for the second quarter to be within 95% of the current quarterly benchmark.
- Construction of the Fort Hills oil sands project is more than 55% complete and progressing substantially on budget and in accordance with the project schedule. As at April 25, our remaining cash funding to complete the project is $1.0 billion.
- Our liquidity remains strong at over $5.1 billion inclusive of $1.3 billion in cash at April 25, 2016 and US$3.0 billion of undrawn, committed credit facilities. Our cash balance is in line with expectations and consistent with our goal of finishing the year with more than $500 million.
- We continue to achieve significant reductions of our cash unit costs at our operations. Steelmaking coal unit costs, including transportation charges, decreased to CAD$77 (US$56) per tonne in the first quarter compared with CAD$85 (US$68) per tonne a year ago, while copper cash unit costs after by-product credits declined to US$1.29 per pound from US$1.53 per pound from a year ago.
- All of our operations were cash positive after sustaining capital and capitalized stripping in the first quarter, with the exception of Pend Oreille.
- In the first quarter of 2016, we achieved a number of production records at our operations.
- Union employees at Antamina ratified a new three-year labour agreement in January and union employees at Coal Mountain ratified a new four-year labour agreement in March.
Download/view Q1 2016 Report for the full text of this release.
Cautionary Statement On Forward-Looking Information
This news release contains certain forward-looking information and forward-looking statements as defined in applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements, principally under the headings “Outlook,” that appear in this release but also elsewhere in this document, include estimates, forecasts, and statements as to management’s expectations with respect to, among other things, anticipated cost and production forecasts at our business units and individual operations and expectation that we will meet our production guidance, sales volume and selling prices for our products (including settlement of coal contracts with customers), our target to complete 2016 with at least $500 million in cash, plans and expectations for our development projects, the impact of currency exchange rates, the expected timing of production at the Fort Hills oil sands project and our remaining capital commitment, our expectation that the SEIA for Quebrada Blanca Phase 2 initiatives will be filed in mid to late 2016, timing for the commencement of the Project Corridor feasibility study, and demand and market outlook for commodities. These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially.
These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditions, the supply and demand for, deliveries of, and the level and volatility of prices of, zinc, copper and steelmaking coal and other primary metals and minerals as well as oil, and related products, the timing of the receipt of regulatory and governmental approvals for our development projects and other operations, our costs of production and production and productivity levels, as well as those of our competitors, power prices, continuing availability of water and power resources for our operations, market competition, the accuracy of our reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, conditions in financial markets, the future financial performance of the company, our ability to attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studies on our expansion projects, our steelmaking coal and other product inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for our operations and expansions, our ongoing relations with our employees and business partners and joint venturers. Statements regarding Fort Hills are based, in part, on the assumption that the project proceeds in accordance with the 2013 project approval. Statements regarding the timing of the SEIA filing for Quebrada Blanca 2 include assumptions as to the progress of the permitting process of the existing facilities and the completion of baseline studies. Our forecast of at least $500 million in cash at the end of 2016 is based on current prices and exchange rates and assumes no unusual transactions or events occur and that we meet our full year guidance for production, costs and capital expenditures. Assumptions regarding the impact of foreign exchange are based on current commodity prices. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to vary materially.
Factors that may cause actual results to vary materially include, but are not limited to, changes in commodity and power prices, changes in market demand for our products, changes in interest and currency exchange rates, acts of foreign governments and the outcome of legal proceedings, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, adverse weather conditions and unanticipated events related to health, safety and environmental matters), union labour disputes, political risk, social unrest, failure of customers or counterparties to perform their contractual obligations, changes in our credit ratings, unanticipated increases in costs to construct our development projects, difficulty in obtaining permits, inability to address concerns regarding permits of environmental impact assessments, and changes or further deterioration in general economic conditions. Our Fort Hills project is not controlled by us and construction and production schedules and costs may be adjusted by our partners.
Statements concerning future production costs or volumes are based on numerous assumptions of management regarding operating matters and on assumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation or utilities, adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies. Statements regarding anticipated steelmaking coal sales volumes and average steelmaking coal prices for the quarter depend on timely arrival of vessels and performance of our steelmaking coal-loading facilities, as well as the level of spot pricing sales.
We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning risks and uncertainties associated with these forward-looking statements and our business can be found in our Annual Information Form for the year ended December 31, 2015, filed under our profile on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov) under cover of Form 40-F.
Webcast
Teck will host an Investor Conference Call to discuss its Q1/2016 financial results at 11:00 AM Eastern time, 8:00 AM Pacific time, on Tuesday, April 26, 2016. A live audio webcast of the conference call, together with supporting presentation slides, will be available at our website at www.teck.com. The webcast will be archived at www.teck.com.
Download/view Q1 2016 Report for the full text of this release.
Investor Contact:
Greg Waller
Vice President, Investor Relations and Strategic Analysis
604.699.4014
greg.waller@teck.com
Media Contact:
Marcia Smith
Senior Vice President, Sustainability and External Affairs
604.699.4616
marcia.smith@teck.com
16-10-TR
