Third Quarter 2018 Results October 25, 2018
Caution Regarding Forward-Looking Statements Both these slides and the accompanying oral presentation contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward- looking information within the meaning of the Securities Act (Ontario). Forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variation of such words and phrases or state that certain actions, events or results “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Teck to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The forward-looking statements in these slides and the oral presentation include estimates, forecasts, and statements as to management’s expectations and guidance with respect to, among other matters, business unit and commodity production guidance, cost guidance, expectations for production at each of our operations, sales guidance, timing of announcement of a QB2 partnership transaction, timing of potential QB2 sanction, timing of full production at Fort Hills, the expectations underlying our guidance, our expectations regarding the projects and transactions described on the slide titled “Looking Forward Multiple catalyst/valuation milestones”, our expectation that our credit lines will be available to be drawn and our expectations regarding our business and markets. 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, interest rates, the supply and demand for, inventories of, and the level and volatility of prices of coal, copper, zinc and other primary metals and minerals produced by Teck as well as oil, natural gas and petroleum products, the timing of receipt of regulatory and governmental approvals for Teck’s development projects and other operations, Teck’s costs of production and production and productivity levels, as well as those of its competitors, power prices, market competition, the accuracy of Teck’s reserve estimates (including, with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, tax benefits, the resolution of environmental and other proceedings, assumptions regarding the impact of our cost reduction program on our operations, our ongoing relations with our employees and partners and joint venturers, performance by customers and counterparties of their contractual obligations, and the future operational and financial performance of the company generally. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but are not limited to: adverse developments in business and economic conditions in the principal markets for Teck’s products, in credit markets, or in the supply, demand, and prices for metals and other commodities to be produced, changes in interest and currency exchange rates, failure of customers or counterparties to perform their contractual obligations, inaccurate geological or metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), changes in taxation regimes, legal disputes or unanticipated outcomes of legal proceedings, 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 permits or government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), political risk, social unrest, lack of available financing for Teck or its partners or co-venturers, and changes in general economic conditions or conditions in the financial markets. Our Fort Hills project is not controlled by us and construction and production schedules may be adjusted by our partners. Closing of the Waneta Dam sale is subject to certain conditions. Announcement of any partnering transaction regarding QB2 will depend on several factors, including, but not limited to, status of negotiations and reaching an acceptable outcome in those negotiations. Sanctioning decisions regarding QB2 may be impacted by a number of factors, including status of partnering discussions. 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 coal sales volumes and average coal prices for the quarter depend on timely arrival of vessels and performance of our coal-loading facilities, as well as the level of spot pricing sales. Certain of these risks are described in more detail in our news release dated October 25, 2018, and our most recently filed annual information form and annual report and other documents the company files with securities regulators made available at www.sedar.com and in public filings with the SEC available under the company’s profile at www.sec.gov, including but not limited to quarterly reports. Teck does not assume any obligation to revise or update these forward-looking statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws. 2
Highlights From Q3 2018 Received regulatory approval for QB2 Completed the Waneta Dam sale for $1.2B cash Purchased US$1.0B of our near-term debt maturities Received regulatory approval to renew our NCIB (up to 40M shares) Named to the 2018 Dow Jones Sustainability World Index 3
Quarterly Earnings Q3 2018 Q3 2017 Revenue $ 3.2 billion $ 3.1 billion Gross profit before depreciation & amortization 1 $ 1.4 billion $ 1.5 billion Gross profit $ 1.0 billion $ 1.1 billion Adjusted EBITDA 1 $ 1.2 billion $ 1.4 billion Profit attributable to shareholders $ 1.3 billion $ 584 million Adjusted profit attributable to shareholders 1 $ 466 million $ 605 million Adjusted basic earnings per share 1 $ 0.81/share $ 1.05/share Adjusted diluted earnings per share 1 $ 0.80/share $ 1.03/share 4 1. Non-GAAP measure. See appendix for reconciliation.
Earnings Adjustments in Q3 2018 $/share $M (diluted) Profit attributable to shareholders $ 1,281 Add (deduct): Debt purchase (gains) losses 19 Debt prepayment option (gains) losses (17) Asset sales & provisions (812) Foreign exchange (gains) losses (6) Collective agreement charges 1 Adjusted profit attributable to shareholders 1 $466 $0.80 Additional Items and Events Not Adjusted For (After Tax) • Shortfall in zinc sales vs. guidance at Red Dog due to timing of sales: ($10) million, or ($0.02)/share • Shutdown at Trail Operations due to smoke from forest fires: ($2) million • Inventory write-downs at Red Dog and Trail Operations: ($18) million, or ($0.03)/share • Environmental provisions: ($19) million, or ($0.03)/share • Commodity derivatives: ($9) million, or ($0.02)/share 5 1. Non-GAAP measure. See appendix for reconciliation.
Steelmaking Coal Business Unit Q3 2018: Steelmaking Coal Prices 2 300 • Generated significant cash flow based on continued 250 solid operating performance 200 US$/tonne 150 • Strong sales; deliveries negatively impacted by 100 50 operating problems at Westshore Terminals • Higher site costs reflect decisions to capture margin and inflationary pressures Argus FOB Australia 12-Month Moving Average • Outperforming market expectations • Promising initial results for Saturated Rock Fill project • Ten-year average price: US$180/t Looking Forward: • Ten year inflation-adjusted average price: US$197/t • Expect sales of ~6.7 Mt in Q4 2018 • Forward curve: >US$170/t through 2021 Updated Guidance 2018 2019-2022 Production (Mt) 26-27 26.5-27.5 Site Costs 1 ($/t) $60-63 from $56-60 Transport Costs ($/t) $35-37 6
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