Highland Valley Copper - Positioning for the Future

Transcription

1 Highland Valley Copper - Positioning for the Future September 4, 2013

2 Forward Looking Information These slides 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 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. These forward-looking statements relate to the Highland Valley Copper Mine and include estimates, forecasts, and statements as to expectations with respect to the various planned and undertaken initiatives, expectations for production and growth of the mine and expected mine life. 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, inventories of, and the level and volatility of prices of copper, the timing of receipt of regulatory and governmental approvals, Teck s costs of production and production and productivity levels, the accuracy of Teck s reserve and resources estimates and the geological, operational and price assumptions on which these are based, tax benefits, the resolution of environmental and other proceedings, our ongoing relations with our employees, 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 the supply, demand, and prices for our copper products, 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), delays in receiving permits or complying with the terms of permits and changes in general economic conditions or conditions in the financial markets Certain of these risks are described in more detail in the annual information form of the company available at and in public filings with the Securities and Exchange Commission. The company does not assume the 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

3 TECK RESOURCES Building a Leading Diversified Mining Company Steelmaking Coal Growing high quality production Crucial raw material for steelmaking Copper Zinc Energy Expanding production Strong assets geared toward future growth World class operations 1st quartile cash costs Emerging oil producer Creating value in oil sands assets 3

4 Teck Copper Snapshot Operating in the Americas Duck Pond 4% Galore Creek Highland Valley 2012 Revenues C$3,142 million Antamina 29% HVC 32% Mesaba Duck Pond Carmen 19% QB 16% San Nicolas Antamina Duck Pond 3% Quebrada Blanca Relincho Andacollo 2012 Gross Profit C$1,500 million Antamina 42% HVC 34% Mine Advanced Project Carmen 15% QB 5% 4 Note: Gross profit is before depreciation and amortization.

5 Teck Copper A Closer Look Solid Performance Record quarterly and annual copper production in 2012 Focus now on cost reduction and productivity improvement at all sites 380 Copper Production Rolling 4-Quarters 4-Qtr Production: ~370kt Highland Valley Mill Optimization Project on track Antamina Overcame production challenges in Q1 Quebrada Blanca Return to profitability Permit update and cost focus Carmen de Andacollo Cost and productivity focus kt Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 Q

6 Agenda - Highland Valley Copper Positioning for the Future The Highland Valley Story Discovery, Development and Consolidation Operational Overview The Value and Contribution of 50+ Years of Mining Extending the Operation What the Future Holds for Highland Valley Copper Mill Optimization Project Summary 6

7 The Highland Valley Story The Really Early Years Highland Valley was destined to become one of the great ore producing sections of the province. 7

8 The Highland Valley Story Discovery & Development Bethlehem Discovery < 1950s Production 1962 Shut down 1982 Bethlehem Valley (Cominco) Discovery 1967 Production 1982 Extension 2005; 2009 Highmont (Teck) Discovery 1962 Production 1980 Shut down 1984 Valley JA JA (Bethlehem) Discovery 1971 Reactivated 2005 Lornex Lornex (Rio Algom) Discovery Production 1972 Extension 2011 Highmont courtesy AMEBC 8

9 The Highland Valley Story Consolidation Cominco purchases Bethlehem Billiton purchases Rio Algom Merger of Valley Copper Mines and Lornex Mining Corp into Highland Valley Copper Valley Bethlehem JA Highland Valley Copper (Teck Cominco 63.9%; BHP Billiton 33.6%; Highmont 2.5%) (Cominco 55%; Lornex 45%) Highmont joins Highland Valley Copper Lornex Highland Valley Copper (Teck 97.5%; Highmont (Cominco 50%; Rio Algom 33.6%; Teck 13.9%; Highmont 2.5%) Highmont 2.5%) 9

10 10 The Highland Valley Story Location

11 Agenda - Highland Valley Copper Positioning for the Future The Highland Valley Story Discovery, Development and Consolidation Operational Overview The Value and Contribution of 50+ Years of Mining Extending the Operation What the Future Holds for Highland Valley Copper Mill Optimization Project Summary 11

12 Safety Performance 1.4 LTI Frequency* Safety is a core value at Teck Numerous initiatives at Highland Valley Copper driving performance Courageous Safety Leadership Visible Felt Leadership Field Level Risk Assessments Incident Cause Analysis Method (ICAM) Change Management Leading Indicators Medical Aid Frequency * Frequency based on 200,000 hours worked

13 Current Production 2012 Pit Comparison Ore Milled Total Moved All Pits 45 Mt 100 Mt Valley 88% 63% Lornex 5% 23% Highmont 7% 14% 2012 Production Grades Production 0.30 Cu% Mo% 116,300 t Cu 4,500 t Moly 13

14 Ore Development and Release Drilling and Blasting 6 drills 311mm holes 15m bench Material Extraction 8 electric shovels 50 haulage trucks Optimization Tools Dispatch GPS 14

15 Crushing 3 gyratory crushers Ore conveyance - 6,000 tph Coarse ore stockpiling 15

16 Grinding Five operating lines Primary and secondary grinding 3 x SAG mills 2 x AG mills Processing: 5,500 tph Current capacity is ~120,000 tpd Grind 45% passing 100 mesh 16

17 Flotation Differential flotation process Conventional mechanical flotation cells and columns Production of copper/molybdenum bulk concentrate Separation circuit produces final copper concentrate Molybdenum flotation product leached to remove residual copper content 17

18 Products to Market Quality Focus High quality, clean copper concentrates 30-43% Cu High quality molybdenum concentrates 51-52% Mo Concentrate transport Trucked from the mine site to Ashcroft Rail from Ashcroft to Vancouver for shipping 18

19 Operating Costs Breakdown of 2013 YTD Costs Other 17% Labour 32% Supplies 34% Energy 17% 19

20 A Year In Focus Cost Reduction and Business Improvement Achieve $30M ongoing cost reductions Improved truck and shovel productivities Key project - increase throughput from Mine-2-Mill initiative Grinding lines are bottleneck, focus on high energy (HE) blasting Target is 7% increase in throughput, in addition to mill optimization 20

21 Key to Success Our People Transitioning workforce 1320 employees staff - 45 technical production Highly experienced; many 30+ years CBA with USW Expires Sept 2016 Strong relationships with local communities and First Nations 21

22 Community Benefits Jobs & Economic Impact Wages & Benefits Purchase of Local Goods & Services Municipal & Provincial Resource Taxes (Excluding Federal and Provincial Income Taxes) > $150 million annually $90 million annually from 450 vendors > $50 million annually 22

23 Environment Responsible Management Comprehensive Environmental Management System Tailings - 2.6Bt storage Water - 272,000 m3/d - Water reclaimed from tailings - Minimize fresh water ISO Certified TSM Compliant 23

24 Reclamation Progressive Restoration 7,000 Ha of land disturbed; 2,100 Ha re-vegetated (30%) Active reclamation programs ongoing - Biodiversity focus Trojan Pond Tailings pond to fish habitat 24

25 Agenda - Highland Valley Copper Positioning for the Future The Highland Valley Story Discovery, Development and Consolidation Operational Overview The Value and Contribution of 50+ Years of Mining Extending the Operation What the Future Holds for Highland Valley Copper Mill Optimization Project Summary 25

26 History of Extending the Life Operation originally slated to close in 2009 Declining grades and low metal price environment Valley East Wall pushback Approved in 2007 Extends life to 2013 Valley West Wall pushback Approved in 2009 Extends life to 2019 Lornex extension Added +200 Mt of ore in 2010 Increased stripping requirements Extends life to

27 Strong Operating Base Major Investments Completed Stripping and buttress on east wall of Valley pit - Addresses geotechnical stability concerns - Additional ~80Mt of overburden and clay removal - 6 Mt buttress placed - Improved grade and ore availability Dust covers installed on coarse ore stockpiles New explosives preparation plant 27

28 Going Forward A Belief in the Future Major Investments In Progress Mill optimization program Capital $550 million Complete in 2013 Tailings system upgrade Capital $58 million New tailings lines and cyclone plant; complete in 2013 Resource exploration programs Capital $25 million in 2013 Crusher re-location project Planning in PFS stage Planned for 2014/15 28

29 Growing Reserves and Resources Mineral Reserves (Dec 31, 2012) Tonnes (000s) Copper (%Cu) Molybdenum (%Mo) Proven 359, Probable 337, Total 697, Mineral Resources (Dec 31, 2012) Tonnes (000s) Copper (%Cu) Molybdenum (%Mo) Measured 292, Indicated 614, Inferred 518, Current mine life into 2027 Significant mineral resource base at similar grades to current reserves 29 Note: Mineral reserve and mineral resource estimate assume US$2.70/lb of copper, US$13.60/lb molybdenum and a CDN$1.10 per US$1.00 exchange rate.

30 Going Forward Growing the Resource Exploration has been minimal for the last 30 years, until recently Previously focused on the active open pits Limited to in-pit drilling programs - Ore/waste contact delineation - Internal reserve/resource delineation - Metallurgical testing 30

31 Going Forward Growing the Resource Bethlehem During 2012 the HVC team studied a wide range of development options Bethsaida Valley JA Study included all the known deposits and considered various mining options Lornex Highmont Based on this work, a $25m drill campaign for 2013 was approved Bethlehem Valley Deeps 31

32 Going Forward Bethlehem Exploration Chargeability Anomaly % Cu was mined from Bethlehem in the 1960s and 70s Huestis 500m Jersey Iona Potential feed source to the mill within next 5 years Low strip ratio 75,000 m of drilling planned in diamond drill rigs currently active Multi-year program 32

33 Going Forward Valley Pit Exploration High grade heart of Valley is still open at depth 15,000 m of deep drilling planned in 2013 Future studies may consider both OP and UG mining methods 33

34 Agenda - Highland Valley Copper Positioning for the Future The Highland Valley Story Discovery, Development and Consolidation Operational Overview The Value and Contribution of 50+ Years of Mining Extending the Operation What the Future Holds for Highland Valley Copper Mill Optimization Project Summary 34

35 Creating Value - Optimization Sustain and Modernize Mill Facility Existing plant is old and high maintenance $550 million mill optimization project to create value as opposed to alternative of $210 million repair and replace New flotation and pebble crushing plants Construction to be complete in late 2013 Seizing Opportunity Apply current process technology Lower risk profile, minimize downtime Reduced sustaining capital going forward Expect +2% Cu recovery and +10% throughput Expect ~5% reduction in unit operating costs 35

36 Mill Optimization Project (MOP) Project Fast-Tracked From PFS Into Full EPCM Execution Approved in September 2011 Q to end 2013 construction period (27 months) Pebble crusher facility completed in August commissioning Key Components New flotation plant with 300 m 3 tank cells New pebble crushing facility with 2 x 900 hp crushers Pumped tailings system Variable frequency drives for existing mills 36

37 MOP Safety Performance Total Project to Date (end July 2013): 2,170,900 hours No lost time incidents 1,741,000 field hours 429,900 office hours 10 recordable incidents (medical aids) TRIF

38 MOP Project Current Status (end of August 2013) Engineering and procurement completed Work Force Currently at peak of ~1,200 84% from BC; 19% local hires; 6% First Nations % Completion Concrete 97% Steel Erection 87% Piping Installation 51% Cladding Installation 62% Electrical Installation 45% OVERALL CONSTRUCTION 68% 38

39 New Flotation Building Jan 2012 Jan

40 New Flotation Cells Feb 2013 Feb

41 New Flotation Building Aug

42 New Pebble Crushing Plant June 2012 Jan

43 New Pebble Crushers Jan 2013 Jan

44 New Pebble Crushing Plant Aug

45 Mill Optimization Project On Track for 2013 Completion New Pebble Crushers New Flotation Plant 45

46 Agenda - Highland Valley Copper Positioning for the Future The Highland Valley Story Discovery, Development and Consolidation Operational Overview The Value and Contribution of 50+ Years of Mining Extending the Operation What the Future Holds for Highland Valley Copper Mill Optimization Project Summary 46

47 Highland Valley Copper Well Positioned Sound operation with long life Strong pipeline of improvement and growth projects Major plant and infrastructure renewal program nearly complete Growing reserves and resources Tremendous upside potential 47

48 48 Thank You