Mr. Don Lindsay reports
TECK REPORTS UNAUDITED THIRD QUARTER RESULTS FOR 2016
Teck Resources Ltd. had profit attributable to shareholders of $234-million (41 cents per share) and adjusted profit of $152-million (26 cents per share) compared with $29-million (five cents per share) a year ago.
"Our operations have performed very well throughout the year, setting a number of quarterly and year-to-date production records while continuing to reduce costs," said Don Lindsay, president and chief executive officer. "As a result of the recent increase in steelmaking coal prices, we are generating a significant amount of additional cash which we have used to reduce our debt by repurchasing $1.0-billion of our outstanding notes."
Highlights and significant items
- Adjusted earnings before interest, taxes, depreciation and amortization were $830-million in the third quarter, more than double
the $389-million recorded a year ago.
- Gross profit before depreciation and amortization was $817-million in
the third quarter compared with $670-million in the third quarter of
2015.
- Cash flow from operations was $854-million in the third quarter of 2016
compared with $560-million a year ago.
- In September and early October, the company repurchased $759-million (U.S.) ($1.0-billion) face value debt in market transactions, recording a gain of
approximately $75-million. At Oct. 26, the company's outstanding notes
totalled $6.1-billion (U.S.), down from $7.2-billion (U.S.) at Sept. 30, 2015.
- The company's liquidity remains strong at $4.7-billion inclusive of
approximately $690-million in cash at Oct. 26, 2016, and $3.0-billion (U.S.) of undrawn, committed credit facilities. The company now expects that it will exceed its original target and end the year with a cash balance of
approximately $1.0-billion after having retired $1.0-billion of
debt, which was not contemplated in original guidance.
- The company set a number of quarterly and year-to-date sales and production
records while reducing total costs in each of its business units.
- The company expects total steelmaking coal sales, including spot sales, to be at
or above 6.5 million tonnes in the fourth quarter of 2016.
- The company's average realized fourth quarter price for steelmaking coal is
expected to be in its typical range, in percentage terms, relative to
the $200-(U.S.)-per-tonne benchmark price which has been reported for the
highest-quality steelmaking coal.
- Construction of the Fort Hills oil sands project has surpassed 70-per-cent
completion. Project execution is now effectively site based, as the
module program has been completed and substantially all the remaining
construction components are now on-site.
- The Red Dog concentrate shipping season is expected to be completed in
the first week of November after a two-week extension due to favourable
ice conditions. The company expects to ship approximately 1,075,000 tonnes of zinc
concentrate and 220,000 tonnes of lead concentrate.
- For the seventh straight year, the company has been named to the Dow Jones
Sustainability World Index (DJSI), indicating that its sustainability
practices are in the top 10 per cent of the 2,500 largest companies in the S&P
Global Broad Market Index.
Production and sales statistics
Production statistics for each of the company's operations are presented in the table. Operating results are on a 100-per-cent basis.
PRODUCTION AND SALES STATISTICS
Three months Nine months
ended Sept. 30, ended Sept. 30,
2016 2015 2016 2015
Steelmaking coal
Waste production (million BCM) 61.0 52.8 192.0 187.4
Clean coal production (million tonnes) 7.0 5.5 20.3 18.9
Clean coal strip ratio (waste BCM/coal
tonnes) 8.7:1 9.6:1 9.4:1 10.0:1
Sales (million tonnes) 7.3 6.2 20.1 19.5
Highland Valley copper
Tonnes mined (000) 29,105 29,243 85,258 86,106
Tonnes milled (000) 12,415 11,791 36,323 34,559
Copper
Grade (%) 0.27 0.39 0.31 0.36
Recovery (%) 81.9 88.0 85.2 87.9
Production (000 tonnes) 27.3 40.2 96.8 110.2
Sales (000 tonnes) 26.9 39.5 98.6 106.5
Molybdenum
Production (million pounds) 1.4 0.7 3.2 2.5
Sales (million pounds) 1.4 0.8 3.2 3.0
Antamina
Tonnes mined (000) 65,111 56,792 183,088 163,523
Tonnes milled (000)
Copper-only ore 9,886 8,117 31,751 27,398
Copper-zinc ore 3,635 6,184 8,895 14,614
13,521 14,301 40,646 42,012
Copper(1)
Grade (%) 0.84 0.88 0.92 0.80
Recovery (%) 89.7 82.1 89.7 81.6
Production (000 tonnes) 104.9 107.9 332.6 276.3
Sales (000 tonnes) 100.9 94.6 321.5 256.1
Zinc(1)
Grade (%) 1.83 1.55 1.64 1.56
Recovery (%) 86.8 82.9 84.6 81.2
Production (000 tonnes) 54.2 72.6 118.8 177.0
Sales (000 tonnes) 56.5 66.2 109.6 169.8
Molybdenum
Production (million pounds) 3.6 0.6 8.8 2.9
Sales (million pounds) 4.3 1.0 7.6 3.1
Quebrada Blanca
Tonnes mined (000) 2,428 4,085 8,207 17,335
Tonnes placed (000)
Heap leach ore 1,229 1,074 3,672 4,426
Dump leach ore 259 586 866 2,472
1,488 1,660 4,538 6,898
Grade (SCu%)(2)
Heap leach ore 0.45 0.53 0.51 0.64
Dump leach ore 0.33 0.22 0.19 0.28
Production (000 tonnes)
Heap leach ore 6.2 3.6 16.8 17.5
Dump leach ore 2.4 2.5 9.0 12.3
8.6 6.1 25.8 29.8
Sales (000 tonnes) 8.4 8.0 25.9 30.3
Carmen de Andacollo
Tonnes mined (000) 7,163 6,716 22,043 20,718
Tonnes milled (000) 4,827 4,134 13,339 12,789
Copper
Grade (%) 0.43 0.44 0.43 0.44
Recovery (%) 89.1 88.4 89.3 88.1
Production (000 tonnes) 18.5 16.2 51.3 50.1
Sales (000 tonnes) 17.3 12.9 50.1 46.5
Gold(3)
Production (000 ounces) 14.8 11.5 40.1 33.6
Sales (000 ounces) 11.8 7.5 35.6 27.2
Copper cathode
Production (000 tonnes) 0.9 1.2 2.8 3.4
Sales (000 tonnes) 0.8 1.3 2.6 3.3
Trail
Concentrate treated (000 tonnes)
Zinc 153 139 418 412
Lead 41 38 130 102
Metal production
Zinc (000 tonnes) 83.7 77.8 231.4 228.2
Lead (000 tonnes) 23.6 21.8 76.9 59.7
Silver (million ounces) 6.3 6.1 18.7 16.7
Gold (000 ounces) 10.8 13.0 38.7 41.4
Metal sales
Zinc (000 tonnes) 78.8 77.2 228.4 228.5
Lead (000 tonnes) 23.5 20.6 74.1 58.5
Silver (million ounces) 6.2 6.0 18.5 16.5
Gold (000 ounces) 12.4 13.2 39.9 42.5
Red Dog
Tonnes mined (000) 3,620 2,752 10,774 9,062
Tonnes milled (000) 1,057 937 3,196 3,093
Zinc
Grade (%) 17.1 16.8 17.3 16.6
Recovery (%) 81.9 82.8 82.8 84.1
Production (000 tonnes) 148.3 130.2 458.3 430.8
Sales (000 tonnes) 190.5 186.3 386.5 400.3
Lead
Grade (%) 5.2 5.1 5.0 4.8
Recovery (%) 50.4 56.1 54.5 59.1
Production (000 tonnes) 27.6 26.7 87.0 88.4
Sales (000 tonnes) 64.4 52.3 64.4 57.9
Pend Oreille(4)
Tonnes mined (000) 187 159 580 433
Tonnes milled (000) 156 150 492 432
Zinc
Grade (%) 6.6 5.9 5.9 6.0
Recovery (%) 88.0 86.0 86.6 84.9
Production (000 tonnes) 9.0 7.7 25.2 22.1
Sales (000 tonnes) 9.2 7.7 25.4 22.1
Lead
Grade (%) 1.5 1.3 1.2 1.4
Recovery (%) 71.5 71.3 67.8 72.3
Production (000 tonnes) 1.6 1.5 4.1 4.5
Sales (000 tonnes) 1.7 1.5 4.2 4.5
(1) Copper ore grades and recoveries apply to all of the processed ores. Zinc
ore grades and recoveries apply to copper-zinc ores only.
(2) For heap-leach and dump-leach operations, copper grade is reported as
soluble copper percentage (SCu) rather than total copper percentage.
(3) Carmen de Andacollo processes 100 per cent of gold mined, but 75 per cent
of the gold produced is for the account of Royal Gold Inc. up to June, 2015.
From, July, 2015, and onward, 100 per cent of the gold produced is for the
account of Royal Gold until 900,000 ounces have been delivered and 50 per
cent thereafter.
(4) Includes precommercial production and sales in the first quarter of 2015.
Webcast
Teck will host an investor conference call to discuss its Q3 2016 financial results at 11 a.m. ET/8 a.m. PT on Thursday, Oct. 27, 2016. A live audio webcast of the conference call, together with supporting presentation slides, will be available on the company's website. The webcast will be archived at the company's website.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In millions, except per share)
Three months Nine months
ended Sept. 30, ended Sept. 30,
2016 2015 2016 2015
Revenues $2,305 $2,101 $5,743 $6,124
Cost of sales (1,853) (1,762) (4,924) (5,126)
------ ------ ------ ------
Gross profit 452 339 819 998
Other operating expenses
General and administration (21) (29) (67) (78)
Exploration (15) (27) (37) (55)
Research and development (6) (16) (23) (36)
Asset impairments (26) (2,895) (26) (2,895)
Other operating income (expense) (81) (174) (99) (262)
------ ------ ------ ------
Profit (loss) from operations 303 (2,802) 567 (2,328)
Finance income 3 3 13 4
Finance expense (89) (79) (269) (236)
Non-operating income (expense) 131 (44) 214 (68)
Share of income (losses) of
associates and joint ventures - - 3 (1)
------ ------ ------ ------
Profit (loss) before taxes 348 (2,922) 528 (2,629)
Recovery of (provision for) income
taxes (119) 767 (192) 614
------ ------ ------ ------
Profit (loss) for the period 229 (2,155) 336 (2,015)
====== ====== ====== ======
Profit (loss) attributable to
Shareholders of the company 234 (2,146) 343 (2,015)
Non-controlling interests (5) (9) (7) -
------ ------ ------ ------
Profit (loss) for the period 229 (2,155) 336 (2,015)
====== ====== ====== ======
Earnings (loss) per share
Basic 0.41 (3.73) 0.60 (3.50)
Diluted 0.40 (3.72) 0.59 (3.49)
We seek Safe Harbor.
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