Teck Resources Q2 2025 Earnings Report

Teck Resources EPS Results

• Actual EPS: $0.27
• Consensus EPS: $0.20
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: $0.79

Teck Resources Revenue Results

• Actual Revenue: $1.49 billion
• Expected Revenue: $2.25 billion
• Beat/Miss: Missed by -$761.48 million
• YoY Revenue Growth: +12.30%

Teck Resources Announcement Details

• Quarter: Q2 2025
• Date: 7/24/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 24, 2025
• Conference Call Time: 11:00AM ET

Teck Resources (NYSE:TECK) Limited engages in exploring for, acquiring, developing, and producing natural resources in Asia, Europe, and North America. The company operates through Steelmaking Coal, Copper, Zinc, and Energy segments. Its principal products include copper, zinc, steelmaking coal, and blended bitumen. The company also produces lead, silver, and molybdenum; and various specialty and other metals, chemicals, and fertilizers. In addition, it explores for gold. The company was formerly known as Teck Cominco Limited and changed its name to Teck Resources Limited in April 2009. The company was founded in 1913 and is headquartered in Vancouver, Canada.

Teck Resources Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Adjusted EBITDA rose to $722 million in Q2 2025, reflecting improved profitability from higher byproduct revenues and cost reductions.
• Positive Sentiment: Zinc segment results were strong with Red Dog sales above guidance and net cash unit costs lowered to $0.49/lb thanks to enhanced Trail byproduct output.
• Negative Sentiment: QB ramp-up experienced tailings management constraints and a ship loader outage, leading to a revised 2025 copper production outlook of 210–230 kt.
• Positive Sentiment: The Board approved the Highland Valley Copper mine life extension project (C$2.1–2.4 billion), targeting average annual production of 132 kt for the next two decades with an attractive IRR.
• Positive Sentiment: Shareholder returns remain elevated with $487 million in Q2 buybacks and dividends (70% of the $3.25 billion buyback completed) and liquidity of $8.9 billion.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to Teck's Second Quarter twenty twenty five Earnings Release Conference Call. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session. Question This conference call is being recorded on Thursday, 07/24/2025.

[Operator]

I would now like to turn the conference over to Emma Chapman, Vice President, Investor Relations. Please go ahead.

[Emma Chapman, VP - IR at Teck Resources]

Thank you, operator. Good morning, everyone, and thank you for joining us for Teck's second quarter twenty twenty five conference call. Today's call contains forward looking statements. Actual results may vary due to various risks and uncertainties. Teck does not assume the obligation to update any forward looking statements.

[Emma Chapman, VP - IR at Teck Resources]

Please refer to Slide two for the assumptions underlying our forward looking statements. We will reference non GAAP measures throughout this presentation. Explanations and reconciliations are in our MD and A and the latest press release on our website. On today's call, Jonathan Price, our CEO, will start with highlights from our second quarter. Pristal Frenzdy, our CFO, will follow with a financial and operational review of the quarter.

[Emma Chapman, VP - IR at Teck Resources]

Jonathan will then wrap up with closing remarks and a Q and A session. With that, over to you, Jonathan.

[Jonathan Price, President & CEO at Teck Resources]

Okay. Thank you, Emma, and good morning, everyone. Now before we get into the quarter, I would like to take a moment to acknowledge the incident earlier on Tuesday at one of our peers' operations in the Northwest of our home province of British Columbia. Our thoughts are with the three workers that remain in the underground work area as well as their families, friends and colleagues and the emergency response teams, and we hope for their safe and speedy rescue. So turning to our second quarter twenty twenty five results, starting with highlights on Slide four.

[Jonathan Price, President & CEO at Teck Resources]

Overall, we are advancing our strategy of copper growth while returning cash to shareholders. Our profitability improved compared to the same period last year to $722,000,000 of adjusted EBITDA. We had strong performance in our zinc segment with Red Dog sales above our guidance range and a significant improvement in our zinc net cash unit costs as well as another quarter of profitability and cash generation at Trail. Across our established operations, production is on track to meet our annual guidance. At QB, we had previously noted that we would be at the lower end of our guidance of around 230,000 tons for the year.

[Jonathan Price, President & CEO at Teck Resources]

While the team is working hard to achieve this, we acknowledge that there could be risk from possible external factors or, of course, any delay from the TMF development work. As a result, we've revised our outlook for QB to two and ten thousand to 230,000 tonnes for the year, but continue to target design rates by year end. Earlier today, we announced that the Board has sanctioned the Highland Valley Copper mine life extension project in British Columbia for construction. This is foundational to our strategy to double copper production by the end of the decade. Given the strong demand for copper as an energy transition metal, the project will generate compelling returns with an IRR far surpassing our cost of capital and secure access to this critical mineral for the next two decades.

[Jonathan Price, President & CEO at Teck Resources]

The project extends the core assets to 2,046, with average annual copper production of 132,000 tonnes over the life of mine. We are continuing to return significant cash to shareholders with elevated daily share buying levels in the quarter, resulting in a total of $487,000,000 or 9,800,000.0 Class B shares. Year to date, we have returned a total of $1,100,000,000 to our shareholders through dividends and share buybacks, and we have completed approximately 70% of our authorized $3,250,000,000 buyback, which is the equivalent of $2,200,000,000 Finally, we are maintaining our the resilience of the business, including through our strong balance sheet, which enables us to navigate uncertainty and continue to create value. We currently have $8,900,000,000 in liquidity, including $4,800,000,000 in cash. Turning to Slide five.

[Jonathan Price, President & CEO at Teck Resources]

We continue to be committed to safety and sustainability. Across the operations that we control, our high potential incident frequency rate remained low in the first half of the year at 0.09, below our 2024 performance of 0.12. I would like to take a moment to acknowledge the fatality occurred on April 22 at Antamina, in which Teck holds a non controlling interest. We are deeply saddened by this event and offer our condolences to the family, friends and colleagues of the deceased. Teck fully participated in the investigation, which was led by the team at Antamina, and learnings will be shared across our company and across the sector.

[Jonathan Price, President & CEO at Teck Resources]

We were honored to be named as one of Corporate Knight's twenty twenty five Best 50 Corporate Citizens in Canada. It's the nineteenth consecutive year that we've received this recognition, which is based on an evaluation of up to 25 sustainability indicators, including Board diversity, resource efficiency, financial management, sustainable revenue and sustainable investment. So now turning to QB on Slide six. QB's second quarter performance was impacted by the ongoing TMS development work. We're advancing multiple TMS development initiatives to improve sand drainage rates and accelerate mechanical movement of sand to achieve steady state operations.

[Jonathan Price, President & CEO at Teck Resources]

This work impacted mill on line time in the quarter, as previously disclosed. The planned post QB2 construction pace of TMF development based on design assumptions for sand drainage rates that have subsequently proven unachievable. Modifications to cyclones alone, while showing an improvement in sand drainage rates, were not sufficient to allow us to fully catch up on TMF development work in the quarter. As a result, we are implementing a range of additional measures to improve sand drainage rates and accelerate the mechanical movement of sand, including enhanced sand placement techniques and optimization of the grind size of the concentrator. Importantly, the TMF development work and the transition from starter dam to regular, ongoing sand lifts is a onetime milestone related to the ramp up of the operation.

[Jonathan Price, President & CEO at Teck Resources]

When it is completed, the TMF development work will be behind us for the life of the facility. While the TMS development work will continue in Q3, we continue to target design rates by the end of the year. Throughput increased from the prior quarter, and we expect to see consistent grades of approximately 0.61% in the second half of the year. Work is ongoing to improve recoveries by year end, which will also be helped by more consistent mill run time. The outage of the ship loader at QB's port facility announced on June 2 is expected to be extended into the first half of twenty twenty six.

[Jonathan Price, President & CEO at Teck Resources]

We have been successfully shipping concentrate through our alternative port arrangements and have maximized shipments to local customers, so there has been no production impact. Alternative sales logistics have had some incremental impact on our net cash unit costs, which is expected to be approximately USD $0.01 0 per pound. We had a good step up in molybdenum production as a result of some key process improvement initiatives implemented during the quarter. We expect to continue to see molybdenum production improvements, and we continue to target design throughput and recoveries at the moly plant by year end. Once we have completed the TMS development work, QB will be able to run at steady state, showcasing it as a Tier one asset that will be a cornerstone of Teck's portfolio for generations.

[Jonathan Price, President & CEO at Teck Resources]

We continue to work on defining the most capital efficient and value accretive path for future growth of QB through optimization of the mill and low capital debottlenecking opportunities that could collectively increase throughput by a further 50% to 25%. The foundation of QB is its large long life deposit that can support multiple expansions, and it offers multiple potential paths to create value for our shareholders, including assessing adjacencies or synergies with Coyoacci. The operation also has the advantage of a very low strip ratio, which enabled competitive all in sustaining costs. We successfully achieved completion testing requirements under QB's USD 2,500,000,000.0 project finance facility earlier this year, which provides independent verification confirming the robustness of design, construction and operational capacity. And we have a taxability agreement in place through 02/1937.

[Jonathan Price, President & CEO at Teck Resources]

Taking all these factors into account, we are well positioned to generate significant future cash flows from this Tier one asset for decades to come. Turning to the mine life extension at Highland Valley on Slide 7. Highland Valley is Canada's largest copper mine and a core asset in our portfolio, and we are excited to announce the sanction of the Highland Valley Copper Mine Life Extension, or HPC, MLE project. This is a lower risk and lower complexity brownfield project that is 100% owned by Teck. The MLE is an extension of the operation to 2046 and is expected to produce 132,000 tonnes of copper per annum on average over the life of mine.

[Jonathan Price, President & CEO at Teck Resources]

Based on additional technical and engineering work, we have optimized the project. As a result, capital estimate for sanction is CAD2.1 billion to CAD2.4 billion in nominal terms. Compared with our prior estimate of CAD1.8 billion to CAD2 billion, it now includes project level contingencies, accounts for inflation, input cost escalation and the impact of potential tariffs on construction materials and reflects the accelerated procurement of mobile equipment originally planned for later project phases. It also incorporates additional scope and indirect contract requirements identified through ongoing project refinement. The MLE project consists of development of site infrastructure and facilities, grinding circuit upgrades, increased tailings storage capacity and enhancements to power and water systems, as well as the mine pushback that requires additional waste stripping to access high quality resources within the Valley Pit.

[Jonathan Price, President & CEO at Teck Resources]

The project economics are attractive, including generating a robust internal rate of return that is significantly above our cost of capital and a positive net present value using an 8% discount rate. The capital intensity of the project is expected to be low at USD 11,500 to USD 13,200 per tonne of copper on an annualized basis. Overall, we expect to generate significant EBITDA and cash flows over the life of mine. We have operated Highland Valley for decades and have successfully executed several mine life extensions there. And importantly, project readiness for construction has been confirmed through independent assurance activities, including an external construction readiness assessment and a review of the technical scope, capital cost estimate and execution strategy and planning.

[Jonathan Price, President & CEO at Teck Resources]

We are well positioned for solid project execution of the Highland Valley mine life extension with a strong and experienced team in place, all major permitting complete, engineering nearly 70% complete and all contracting and permitting well advanced. Construction mobilization is underway. We plan to start construction in a few weeks, and we look forward to delivering on this value accretive project. We have summarized the changes to our guidance on Slide eight. Production changes are driven by the revised outlook for QB based on the TMS development work.

[Jonathan Price, President & CEO at Teck Resources]

We had previously noted that we would be at the lower end of our guidance of around 230,000 tonnes for the year. Whilst this is still possible, we acknowledge that there could be risk from possible external factors or from any delay to the TMF development work. As a result, we have revised our outlook for QB to two and ten thousand to 230,000 tonnes for the year, but continue to target design rates by year end. Production guidance for all other operations is maintained. As such, the impact of the revised QB outlook is the only driver of flow through changes to total copper production, moly production and therefore, net unit cash costs.

[Jonathan Price, President & CEO at Teck Resources]

We have also incorporated the increase in copper production in 2028 and the start of the growth capital investment associated with the sanction of the Highland Valley copper mine life extension project. Please refer to the MD and A for further detail. Turning to the near term growth on Slide 9. Our ongoing growth trajectory is underpinned by our established portfolio of operating mines. The sanction of the HBC MLE project is foundational to our copper growth strategy and a significant milestone in the growth of Teck's copper production into the future.

[Jonathan Price, President & CEO at Teck Resources]

Our high returning greenfield projects at Zafranal in Peru and San Nicolas in Mexico are progressing as planned, and we are targeting sanction readiness by year end. Sanford Now we initiated advanced early works in May following receipt of the advanced works permit in April. This will enable construction to start immediately following project sanction. We are targeting receipt of the construction permit of Stage eight approval versus two approvals required in Q3, and the earliest date for a potential sanction decision is late in 2025. San Nicolas, engagement with government authorities and other stakeholders is ongoing to support our permit applications.

[Jonathan Price, President & CEO at Teck Resources]

We plan to complete the feasibility study in the fourth quarter, which is the earliest date of the project to be positioned for a potential sanction decision following the receipt of necessary permits. These projects are significantly less complex and smaller in scope than QB with lower capital intensities, attractive project economics and well balanced risk return profiles. In addition, we are working to define the most capital efficient and value accretive path for further growth in QB through optimization of the mill and low capital debottlenecking opportunities that could increase throughput by 15% to 25. Our priority at QB remains completing the ramp up, Optimization plans are also progressing, detailed planning for debottlenecking is underway. This should enable us to submit the declaration of environmental impact or DIA permit application in the second half of the year.

[Jonathan Price, President & CEO at Teck Resources]

All of our growth projects must meet stringent criteria, delivering attractive risk adjusted returns and competing for capital in alignment with our capital allocation framework. Overall, we expect to be able to double copper production by the end of the decade with a path to annual copper production of up to 800,000 tonnes through these near term projects. With that, I will now hand the call over to Crystal.

[Crystal Prystai, EVP & CFO at Teck Resources]

Thanks, Jonathan. Good morning, everyone. I will start with our second quarter twenty twenty five financial performance on Slide 11. Our adjusted EBITDA increased by 3% in the quarter compared to a year ago to $722,000,000 primarily due to another profitable quarter from Trail operations, lower smelter processing charges and reductions in corporate overhead costs, partially offset by lower copper and zinc prices and higher operating costs at Highland Valley due to increased production and at QB. The improved performance from Trail operations reflects the implementation of initiatives to improve profitability and cash flows, including increasing byproduct revenue.

[Crystal Prystai, EVP & CFO at Teck Resources]

While the current load smelter processing charges are a headwind for Trail, Teck overall has a net benefit from them. We successfully reduced our corporate overhead costs by 21%, reflecting our ongoing efforts to reduce costs across our business. We continue to expect lower annual corporate overhead costs compared with 2024. Importantly, we continue to return cash to shareholders with $548,000,000 returned in the second quarter. This includes $61,000,000 of base dividends and $487,000,000 of share buybacks, which equates to 9,800,000.0 shares and reflects elevated daily share buying levels through the quarter.

[Crystal Prystai, EVP & CFO at Teck Resources]

Year to date, we have returned over $1,100,000,000 to our shareholders. Turning to Slide 12, which summarizes the key drivers of our financial performance in the second quarter compared to the same period in 2024. Our adjusted EBITDA increased by $19,000,000 to $722,000,000 driven by another profitable quarter from Trail operations, lower smelter processing charges, reductions in corporate overhead costs and lower royalty. It also reflects higher sales volume and an increase in commodity prices for our byproducts and positive foreign exchange impact. Trail's improved results reflect higher byproduct production volumes such as silver, germanium and indium and higher refined lead production as compared with a year ago.

[Crystal Prystai, EVP & CFO at Teck Resources]

These factors were partially offset by a $91,000,000 reduction in settlement pricing adjustments and higher operating costs at Highland Valley due to increased production and at. Now looking at each of our reporting segments in greater detail, starting with copper on Slide 13. In the second quarter, gross profit before depreciation and amortization from our copper segment declined by 3% to $673,000,000 compared to the same period last year, primarily due to lower copper prices and higher operating costs, partially offset by increased co products and byproduct revenues from zinc and molybdenum and lower smelter processing charges. Copper production remains similar to the same period last year at 109,000 tonnes. At QB, the online time was impacted by the TMS development work required to complete the ramp up of the operation as expected.

[Crystal Prystai, EVP & CFO at Teck Resources]

Our established operations are performing in line with guidance and our outlook remains on track for the balance of the year. Production improved significantly at Highland Valley, driven by higher grades and mill throughput as we advanced mining in the Lornecks Pit. Production at Antamina was lower, reflecting a shutdown of approximately one week due to the fatality, as well as the processing of a lower proportion of copper only ore as expected in the mine front. The site returned to full production in June. Carmen De Andacollo had higher production in the quarter, driven by higher grades and recoveries as water availability improved compared to the same period last year, which was impacted by drought conditions.

[Crystal Prystai, EVP & CFO at Teck Resources]

The improved performance in Q2 twenty twenty five was despite maintenance at the SAG mill for approximately one month for repairs. The operation has been running at full rates since it successfully restarted at the June. Our net cash unit cost improved by $0.14 per pound to $2.02 per pound. While cost of sales increased, particularly at QB and Highland Valley, this was more than offset by increased byproduct credits, including significantly higher zinc revenue from Antamina and additional molybdenum revenue from Highland Valley and as well as much lower self. In order, agreements at QB and Carmen de Andacollo.

[Crystal Prystai, EVP & CFO at Teck Resources]

QB's third labor union by the new three year collective bargaining agreement in early April, completing all labor negotiations for QB's workforce and ensuring that labor agreements are now in place through 2028 across our QB operations. At CDA, both unit contracts were ratified in June and July with each covering a three year period. Looking forward, we continue to target design rates at QB by the end of this year. We also continue to expect higher quarterly copper production at Highland Valley through the balance of this year as we process increasing proportions of higher grade Flournex ore. As mentioned earlier, we've updated our annual production and unit cost guidance based on our revised QB operational outlook.

[Crystal Prystai, EVP & CFO at Teck Resources]

Copper production has been revised to four and seventy thousand to five and twenty five thousand tonnes and copper net cash unit costs have been revised to $1.9 to $2.05 per pound. Turning now to our zinc segment on Slide 14.

[Crystal Prystai, EVP & CFO at Teck Resources]

Performance in our zinc segment was very strong in the second quarter. Our profitability in zinc improved substantially with 137% increase in gross profit before depreciation and amortization compared with the same period last year to $159,000,000 This improvement was driven by higher byproduct revenues as a result of our updated operating strategy at Trail and lower operating costs. Red Dog performed well despite lower grades that we expected in the mine plan. Red Dog sales of 35,100 tons were higher than our guidance range of 25,000 to 35,000 tons due to the timing of sales. Our net cash unit cost for zinc improved significantly, decreasing by $0.02 0 per pound to $0.49 per pound, primarily due to lower smelter processing charges and higher byproduct credit.

[Crystal Prystai, EVP & CFO at Teck Resources]

At Trail operations, profitability was strong in the quarter, reflecting our updated operating plans with profitability and capital generation and challenging smelter market conditions. We have curtailed our refined zinc production and increased production of byproducts such as silver, germanium and other critical metals compared with the same period last year. We also implemented cost reductions in Q4 of twenty twenty four, the benefit of which continued into Q2. Overall, this strong performance led to a 13% improvement in our gross profit margin before depreciation and amortization for our zinc segment, 28% compared to the same period last year. Looking forward to the third quarter, we expect zinc and concentrate sales from Red Dog of 200,000 to 250,000 tons.

[Crystal Prystai, EVP & CFO at Teck Resources]

And with Red Dog shipping season commencing on July 11, we expect reductions in Red Dog inventory in the third quarter, reflecting the normal seasonality of sales. Our annual production and unit cost guidance for zinc segment is unchanged. The zinc concentrates production of five and twenty five thousand to 575,000 tonnes, refined zinc production of 190,000 to two and thirty thousand tonnes and net cash unit costs of US0.45 dollars to US0.55 dollars per pound. Looking at our cash returns to shareholders on Slide 15. We continue to build on our strong history of cash returns to shareholders.

[Crystal Prystai, EVP & CFO at Teck Resources]

We have returned a total of approximately $6,000,000,000 since 2020. This includes over $1,100,000,000 year to date, reflecting elevated daily share buyback levels in the second quarter. We have now completed $2,200,000,000 or approximately 70% of our $3,250,000,000 authorized buyback, leaving approximately $1,000,000,000 remaining. And with the strong cash flow generation potential of our business, can see further cash returns to shareholders in line with our capital allocation framework. We remain committed to returning between 30100% of future available cash flows to our shareholders.

[Crystal Prystai, EVP & CFO at Teck Resources]

Looking now at our balance sheet on slide 16. We remain focused on maintaining the resilience of our business, including the strength of our balance sheet. As of yesterday, our cash balance remains significant at $4,800,000,000 and our liquidity is strong at $8,900,000,000 We also continue to maintain investment grade credit ratings. We have moved into a small net debt position in the quarter as we've continued to deploy the proceeds from the sale of steelmaking coal business to shareholder return. But we do expect a release of working capital build of Red Dog inventory to unwind in the third quarter, reflecting the normal shipping season.

[Crystal Prystai, EVP & CFO at Teck Resources]

Since 2024, we have reduced our debt by US2 billion dollars and our US1 billion dollars outstanding term notes are long dated. We made a semiannual repayment of US147 million on the QB project finance facility in the quarter. And through these payments, we are further deleveraging our balance sheet on an ongoing basis. Our near term growth projects, including the HPC MoE projects remain well funded, and we are strongly positioned for continued value creation as we execute on our strategy. With that, I'll turn it back to Jonathan.

[Jonathan Price, President & CEO at Teck Resources]

Thanks, Crystal. On Slide 18, we remain focused on our priorities to create value for our shareholders. Completing the TMS development work at QB and ramping up the operation, targeting design rates by year end driving operational excellence, including growing our copper production, reducing our unit costs and improving our margins continuing to return cash to our shareholders through execution of our authorized share buyback program and through our base dividend and progressing our value accretive near term copper projects to create options for our next phase of copper growth and maintaining the resilience of our business, including our strong balance sheet. We are committed to continuing to balance investment and growth in copper with cash returns to shareholders. Turning to Slide 19.

[Jonathan Price, President & CEO at Teck Resources]

We can continue to significantly impact the accretive growth potential of our metrics on a per share basis. Last year, with the ramp up of QB and with a significant portion of our $3,250,000,000 share buyback completed, we increased our copper production per share by 54% compared to the prior year. By 2026, our copper production per share could increase by a further 33% to 50% as we stabilize QB at full production while completing the remaining authorized share buyback. And our copper production per share could increase substantially beyond that as we bring on near term value accretive growth projects, And this does not consider the impact of any further share buybacks that could be authorized under our capital allocation framework, given the strong cash flow generation potential of our business. Our copper production has the potential to increase rapidly long term on a per share basis.

[Jonathan Price, President & CEO at Teck Resources]

So thank you. And with that, operator, please open the line for questions.

[Operator]

You.

[Operator]

The first question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

[Orest Wowkodaw, Managing Director & Senior Research Analyst at Scotiobank]

Hi, good morning. Some questions on QB2, please. Firstly, the tailings issue that's limiting throughput and then the new investment required here. Is there any knock on impact to 2026? I mean, will tailings still be a constraint next year?

[Jonathan Price, President & CEO at Teck Resources]

Orest, thank you for that question. Yes, as you point out, in the current quarter and to some extent, as well expected in Q3, the TMS development work has been limiting online time for QB. Actually, throughput at the plant and recoveries of the plant have been good considering these constraints, but online time is an issue. Our expectation here, Orest, is that we can work through the TMS development issue and put that behind us so that it won't deconstrain operations on an ongoing basis. On that basis and based on what we see in terms of throughput and recoveries and grade, of course, the operation we have maintained our guidance for 2026.

[Jonathan Price, President & CEO at Teck Resources]

But of course, as we noted, we'll continue to monitor the progress of the TMS development work through the balance of this year.

[Orest Wowkodaw, Managing Director & Senior Research Analyst at Scotiobank]

Is there potentially more investment required in the tailings next year?

[Jonathan Price, President & CEO at Teck Resources]

At this point, we've guided to the incremental capital spend for this year. We don't expect additional investment next year. We expect normal operating conditions around the TMS and its ongoing development, but we don't expect to signal additional capital essentially as we have done in the current quarter.

[Orest Wowkodaw, Managing Director & Senior Research Analyst at Scotiobank]

Okay. And just, I mean, given the state of the ramp up, I mean, at this point, I'm having trouble understanding how realistic it is for QB to even reach the low end of its guidance for '26. I mean, that would imply monthly production required of 23,000 tons a month. The operation hasn't done that in a single month to date. At this point, what gives you confidence that you can exit the year anywhere close to that kind of run rate?

[Jonathan Price, President & CEO at Teck Resources]

Yes. So our view, Orest, is that when we can put the TMS issue behind us and we can therefore improve the online plant that we see from a throughputs, recoveries and grade perspective, the potential around the guidance for 2026. So these are assumptions that we are able to underpin by operating parameters that we have experienced and delivered at the plant. Of course, it requires us to run the operation consistently through the year to achieve those numbers. They're consistent with design, of course.

[Jonathan Price, President & CEO at Teck Resources]

And at the low end of the range, we have seen operating results already that give us confidence that those numbers are achievable. As you can imagine, we continue to interrogate both the operational parameters at QB, and we continue to interrogate the forward guidance for QB. But at this point in time, we don't see any changes to 2026 and believe with a period of consistent operation without the constraints of TMS development that we can move forward and deliver.

[Orest Wowkodaw, Managing Director & Senior Research Analyst at Scotiobank]

Okay. Thank you.

[Operator]

The next question comes from Matthew Murphy with BMO Capital Markets. Please go ahead.

[Matthew Murphy, MD - Equity Research at BMO Capital Markets]

Hi. I have a question just on the pace of CapEx this year. So first half of the year, you've done almost $700,000,000 CapEx that's growth in sustaining, not including capitalized stripping. And then your guidance is around $2,400,000,000 if I'm not mistaken. So you have to spend 1,600,000,000.0 to 1,800,000,000.0 call it, half of the year. Am I thinking about that right?

[Jonathan Price, President & CEO at Teck Resources]

Yes. I'll let Crystal speak to the details behind that. Of course, we have increased our capital guidance for the second half of the year in large part based on the sanctioning of HPC, MLE, which goes to both capitalized stripping, but it also, of course, goes directly to the growth capital as well as some of the additional capital that we've just discussed for TMS development at QB. But Crystal, over to you.

[Crystal Prystai, EVP & CFO at Teck Resources]

Yes. Thanks, Matt, for the question. You're right. So year to date, we spent $700,000,000 on capital expenditures, excluding capitalized stripping. And our total for the year is at the low end, 2,300,000,000.0.

[Crystal Prystai, EVP & CFO at Teck Resources]

So that's a reasonable run rate in terms of what you're thinking that would put us around $1,600,000,000 over the second half of the year. Again, a large portion of that is in relation to growth. And that number, again, has increased because it previously didn't increase the sanction capital associated with HBCMLE over the balance of the year. So we have now embedded that spending for the second half of the year. And that's why I think we're seeing that in the run rate.

[Crystal Prystai, EVP & CFO at Teck Resources]

Of course, we also have embedded the TMF expected costs associated with that work in the plan and you'll see some of that coming through in the third quarter itself.

[Matthew Murphy, MD - Equity Research at BMO Capital Markets]

Okay. Yes, it's just the magnitude of the step up. Mean, do you worry about being able to get that done this year? Or are there some big ticket items in there that you're confident you'll see that spend? And is a lot of the tailing spend therefore yet to come in the back half of the year?

[Crystal Prystai, EVP & CFO at Teck Resources]

Yes. I think the run rate is reasonable. We've done a detailed scrub through the projects to understand exactly what is remaining ongoing. We do have a few larger projects in the sustaining side that we expect to kick off, including the Antamina tailings lift associated with the mine life extension. We have the QB truck shop that we're continuing construction on.

[Crystal Prystai, EVP & CFO at Teck Resources]

We also have some demobilization of the QB facilities as we spin to the next phase mining there. So that in addition to HPC, which, of course, we have a rigorous schedule associated with the project and the CapEx that we've articulated is in line with that schedule. And then in the context of TMS, we have spent half to date. We haven't disclosed what that figure is, but we can get that out to folks as required. But do expect that spending to continue through the second half of this year.

[Crystal Prystai, EVP & CFO at Teck Resources]

And really, maybe to articulate a bit more about why that number is the number that it is. We did have spend associated with CMS embedded in our sustaining capital guidance this year. But the amount and distance of mechanical movement of sand related to the TMS and the related costs that work has increased that expected cost and hence our guidance in relation to that.

[Matthew Murphy, MD - Equity Research at BMO Capital Markets]

Okay. Thank you.

[Jonathan Price, President & CEO at Teck Resources]

Thanks, Matt.

[Operator]

The next question comes from Carlos De Alba with Morgan Stanley. Please go ahead.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Yes. Thank you. Good morning, everyone. Just on QB, could you please provide a little bit more comments around the ship loader repairs? How long would it take if you have already started? And also, if there is any maybe you mentioned this, but I might have missed it. If there is any impact on CapEx that are material because of the repairs?

[Jonathan Price, President & CEO at Teck Resources]

Yes, Carlos, thank you for that question. As you know, we disclosed challenge with the ship loader back in June. Essentially, cause for that was a brake failure on the shuttle, which caused an overextension of the ship loader and, of course, some damage associated with that. It took some time to be able to access the ship loader to even assess the repair work, that was because we were required to apply for and obtain some marine permits. The assessment of that damage is ongoing, and the repair plans are being finalized associated with that work as well.

[Jonathan Price, President & CEO at Teck Resources]

As we've said, we do think that's going to be an extended shutdown now that will extend the first half of twenty twenty six. We haven't got a finalized capital number for that repair at this point in time because that assessment is ongoing. Importantly, as we've said, the work on the ship loader and the downtime of the ship loader is not impacting our production here. As you'll recall, previously, we had in place trucking arrangements while we were awaiting the completion of the ship loader originally. This was allowing us to move material to either smelters in Chile or to other ports in Chile.

[Jonathan Price, President & CEO at Teck Resources]

We've just reactivated that, and we have that trucking fleet operating daily. So no production constraints, and that's allowed us to minimize any buildup in inventory at the port.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Fair enough. And then just, if I may, a second question, just on sequence of the projects for Safranal and San Nicolas, While both are likely to be sanctioned or maybe sanctioned by the end of this year at the earliest, is it fair to think that Zafaranal probably is ahead and maybe will be developed earlier?

[Jonathan Price, President & CEO at Teck Resources]

I mean, I think it's fair to say that Zafranal is more advanced in terms its in terms of the permitting status, in terms of the construction readiness of that team, for example. However, we consider both of those to be options, While we're saying we would like to get them ready for sanction by the end of the year, of course, those are decisions that are yet to be taken, and there's a range of factors that will play into those decisions. I wouldn't give any particular guidance now on the sequencing of those projects. Think of them as options that we have in the portfolio as we look to derisk and progress those options to the point that we could take sanction decisions when ready.

[Carlos de Alba, Equity Research Analyst at Morgan Stanley]

Thank you very much. Thanks, Garth.

[Operator]

The next question comes from Craig Hutchinson with TD Cowen. Please go ahead.

[Craig Hutchison, Mining Equity Research Analyst at TD Cowen]

Hi, good morning, guys.

[Craig Hutchison, Mining Equity Research Analyst at TD Cowen]

Just on the Highland Valley extension, now that you guys have made a final investment decision, is there a plan to file a technical report? And just maybe as an interim, can you give me a sense of what throughput you're looking at to achieve that annual production rate of 132,000 tons year, sorry?

[Jonathan Price, President & CEO at Teck Resources]

Yes. So we will publish a technical report. We expect that to happen in August. And of course, you'll get all the detail associated with that. The throughput throughout the life of the future mine will be variable.

[Jonathan Price, President & CEO at Teck Resources]

Of course, it's going to be a product of the ore we're mining. You'll see in our disclosure that we go through various phases here where we're mining different pits, of course, there's different ore harvests associated with the ore coming from those pits. So there'll be variable throughput is the answer and variable grade, of course, that goes with that.

[Crystal Prystai, EVP & CFO at Teck Resources]

And Craig, we did disclose in our Investor Day in November of what a production profile would look like for HPC Emily. So I just encourage you to go back and look at that as think about it, it shows the variability.

[Craig Hutchison, Mining Equity Research Analyst at TD Cowen]

Which is I guess to get to the 132,000 tons per year, I would assume the throughput has to be materially higher just based on your reserve grade, unless I'm missing something.

[Jonathan Price, President & CEO at Teck Resources]

I mean, think we are adding capacity to the circuit. We're adding mills there to increase the throughput of material and also to improve recoveries of material, I should say. I mean, last year, you saw our production at HPC come in just below 100,000 tons. This year, of course, that production guidance is materially higher in the sort of 140, 150 range. You see variability year on year currently through the operations at HPC and that's been driven this year with the processing of additional Lawnex ore.

[Jonathan Price, President & CEO at Teck Resources]

And I think that's what you should expect going forward is variability depending on the ore type that's dominating mill feed at any point in time.

[Craig Hutchison, Mining Equity Research Analyst at TD Cowen]

Okay.

[Craig Hutchison, Mining Equity Research Analyst at TD Cowen]

And then just on QB, how are the recoveries progressing? Are you guys do you feel like you'll be through the transitional ore this quarter or is that still kind of I guess in Q4?

[Jonathan Price, President & CEO at Teck Resources]

Yes, I'll just ask Chazad to talk about that in terms the transitional ore, where we are on recoveries and the work we're doing there to drive those higher.

[Orest Wowkodaw, Managing Director & Senior Research Analyst at Scotiobank]

Thanks, Greg. Greg, as we have noted last year that we did expect lower recoveries in the first half as we were dealing with more transition ores. And our recovery performance was just slightly below what we had expected due to the inconsistency in the first half of the down days. We do expect to have better quality ore in the second half with a high grade and higher recoveries. And the transition ores will be variable.

[Orest Wowkodaw, Managing Director & Senior Research Analyst at Scotiobank]

But yes, we expect lot less transition ore in the second half and in 2026.

[Craig Hutchison, Mining Equity Research Analyst at TD Cowen]

All right. Thanks, guys.

[Jonathan Price, President & CEO at Teck Resources]

Thanks, Greg.

[Operator]

The next question comes from Myles Allsop with UBS. Just

[Myles Allsop, Mining Research Analyst at UBS Group]

a couple of questions. Maybe first on QB and Colossae. As you mentioned in your presentation, It sounds like discussions are not happening at the moment. Is that right? Or is there any progress in terms of looking at that option seriously?

[Jonathan Price, President & CEO at Teck Resources]

Look, there are discussions regarding QB Kauwase. I'm not going to go into those because, of course, they're confidential in nature. But as we've said before, we recognize the potential of the opportunity there for synergies. We will always do what's in the best interest of our shareholders in that regard. As you can see right now, we have our hands full with ramping QB up to steady state, which has to be our priority here.

[Jonathan Price, President & CEO at Teck Resources]

So, to make sure we get stable production there and the cash generation that this asset is capable of delivering. But as I mentioned, in parallel, continue to think about, continue to discuss the potential synergies there, I won't unpack those discussions given their confidential.

[Myles Allsop, Mining Research Analyst at UBS Group]

Fair enough. And then just going back to the two issues at QB, why is it taking a year to fix the ship loader if it's overextended, it's a new ship loader? It seems an awful long time. And obviously, there is a meaningful OpEx impact. And with the tailings, when when are you hoping to get that complete?

[Myles Allsop, Mining Research Analyst at UBS Group]

Is it right to assume that, that will be sorted largely by the end of this year? Or is that going to drag?

[Jonathan Price, President & CEO at Teck Resources]

So I'll hand the question over to Ian Anderson in a moment. I'm just going to talk about tailings. I mean, of course, given the fact that we have maintained our guidance for 2026, our expectation is that we put the TMS issues behind us this year and that's what we're providing for in our guidance. So as I mentioned, it's sort of a onetime event associated with ramp up. And when we get through that phase of work, we move into a steady state operation.

[Jonathan Price, President & CEO at Teck Resources]

So it's not something we expect to be plaguing this operation indefinitely at all. It's something we expect is a it's a discrete piece of work. We'll get that resolved and move past it, and then we'll be able to secure the online time essentially that we need for this operation unimpeded. Ian, would you like to make some comments just on the ship loader outlook, please?

[Ian Anderson, EVP & Chief Commercial Officer at Teck Resources]

Sure. Thank you very much, Myles, for the question. So despite the fact that we said it would conclude in the first half of twenty twenty six, that's not saying that it will, in fact, take a year. At this point, we're really carefully defining the nature of that work.

[Ian Anderson, EVP & Chief Commercial Officer at Teck Resources]

So as a result of the brake failure, of course, we have to assess all of the structural elements, make sure that that ship loader is returned safely. And similarly, that we complete all the work to get it back into the right condition. And so we'll progress that project as we go. Of course, you are dealing with maritime authority, that can cause permit delays. We certainly want to be cautious about how we deal with that in constant facility.

[Ian Anderson, EVP & Chief Commercial Officer at Teck Resources]

We want to make sure that, that continues at pace, but at the same time, the nature of the incident demand.

[Operator]

The next question comes from Bill Peterson with JP Morgan. Please go ahead.

[Bill Peterson, Equity Research at JP Morgan]

Yes. Hi, good morning, everyone, and thanks for taking the questions. On higher CapEx guide for Highland Valley, the mine life extension relative to last year's strategy day, it looks around 15% to 20% higher. Can you provide additional color or breakdown between materials inflation, contingencies you mentioned or any other factors? And then is there anything to read through for projects sanctioning for Zafranal or San Nicolas, for example, should we expect some more sort of double digit increase at this stage just to be prudent or any read through at all? Thanks.

[Jonathan Price, President & CEO at Teck Resources]

Yes. So on the HPC piece, mean, I won't specifically give that breakdown, but as I mentioned, there's a range of things in there. I mean, product level contingency, it's inflation, it's cost escalation, it's a potential for tariffs on construction materials, which we think is a real driver, of course, particularly between The U. S. And Canada.

[Jonathan Price, President & CEO at Teck Resources]

So that is something that we've reflected here. Importantly, as I mentioned, it's also the acceleration of the procurement of mobile equipment that we brought forward from later project phases and that materially derisks the project and the rate at which we'll be able to essentially access the Vale pit for the long term. So those are important derisking elements in our view. I'll also ask Crystal just to comment on some of the process by which we looked at this capital spend through the investments approach here that we've taken and our determination to ensure that we give robust capital numbers that can be delivered.

[Crystal Prystai, EVP & CFO at Teck Resources]

Sure. No problem. Thanks, Bill. Look, we've advanced this project through the final stages of our project delivery framework as well as through our governance processes, including through our investment committee. Those processes embed the final project requirements, the construction readiness, probabilistic modeling around various facets of the estimates involved.

[Crystal Prystai, EVP & CFO at Teck Resources]

As well, we had detailed independent assurance provided on many areas of the business plan as well as in the context of construction readiness. So all of those are learnings that we set from the key projects that we've committed to embedding as we go forward into future projects, including an HPC, MOE. And the conclusion of that work ahead of sanction has led to the capital range that we're disclosing, of course, in addition to the factors that John noted in the context of what's embedded into that range.

[Jonathan Price, President & CEO at Teck Resources]

So I think Bill,

[Bill Peterson, Equity Research at JP Morgan]

you have any read through for future?

[Jonathan Price, President & CEO at Teck Resources]

Yes, I was just going to pick up on that. Look, project has its own characteristics. We will take the same approach with future projects that Crystal just outlined in terms of using independent insurance, taking probabilistic modeling to ensure the full range of, obviously, economic outcomes associated with the project, but also the full range of potential input assumptions here, which go to capital because we need to ensure that we're reflecting uncertainties or known unknowns in the project as we're setting forth the assumptions here. But again, as I mentioned, these projects have its own unique characteristics. So I don't think you should take a direct read through from that.

[Jonathan Price, President & CEO at Teck Resources]

But what I can say is we will apply the same rigorous approach to Dapronau and Sandvik that we've applied to HPC.

[Bill Peterson, Equity Research at JP Morgan]

Well understood. Thanks for that. My next question is, not something the teams talked about recently, as NewRange, the potential project in The U. S. Just any update on where that project stands in terms of permitting, community engagement and I guess an opportunity to potentially move faster than what appears to be pretty strong support within The U. S. In terms of permitting and promoting domestic production?

[Jonathan Price, President & CEO at Teck Resources]

Yes, look, I mean, remains an interesting option for us. It's clearly further out than Zafranau or San Nicolas here in the schedule. I think the key for us there is to define what is the right project, what is the configuration that will deliver the greatest value in the event that project develops, and that's the work that we're doing now. And of course, you have to define that before you can start to approach the permitting process in any detail. So I think that's the conversation for later.

[Jonathan Price, President & CEO at Teck Resources]

Bill, we have our hands full with other things right now, but we do continue to work that in parallel.

[Bill Peterson, Equity Research at JP Morgan]

Well, understood. Thanks for your insights.

[Jonathan Price, President & CEO at Teck Resources]

Thank you.

[Operator]

The next question comes from Chris Lapamino with Jefferies. Please go ahead.

[Chris LaFemina, Equity Research Analyst at Jefferies Financial Group]

Hi, thanks for taking my question. I just wanted to ask about first on the incremental CapEx for QB for the TMF. How do you decide whether you're going to include CapEx in the project CapEx or in sustaining? Because I would think if you're spending money to ramp the project to full capacity for whatever reason that would have been part of the project CapEx. I understand it's really just a question of semantics.

[Chris LaFemina, Equity Research Analyst at Jefferies Financial Group]

When we think about the capital intensity of the project, why wouldn't that be project CapEx rather than sustaining?

[Jonathan Price, President & CEO at Teck Resources]

I will hand the Symantec's question over to Crystal.

[Crystal Prystai, EVP & CFO at Teck Resources]

Hi, Chris. Thanks for the question. In the context of PMF, when we thought about the growth capital for the project, of course, there was construction costs associated with that built in to to the project capital that we've reported against in our results over over years. I think the pieces that I add to why outstanding. I mean, firstly, we're running the operation and we're producing copper.

[Crystal Prystai, EVP & CFO at Teck Resources]

So I think these things are no longer growth capital. We did expect to spend on the TMF, but that amount, as I mentioned, is more significant than we expected as we are now moving significantly more sand further distances than we expected for mechanical movements and a related cost of that as expected cost. And I think at this point, it doesn't make sense to starting growth capital and it becomes part of the sustaining capital as well.

[Chris LaFemina, Equity Research Analyst at Jefferies Financial Group]

Okay. That's fair enough. And then secondly, just on the ship loader, do you have any insurance related to the issues there? Is it all on you? You.

[Jonathan Price, President & CEO at Teck Resources]

Do want to comment on that as well?

[Ian Anderson, EVP & Chief Commercial Officer at Teck Resources]

Yes.

[Ian Anderson, EVP & Chief Commercial Officer at Teck Resources]

Certainly, we are investigating the root cause and we'll understand based on that what the next steps will be in terms of insurance. So yes, we do have insurance coverage and that includes interruption.

[Chris LaFemina, Equity Research Analyst at Jefferies Financial Group]

Okay, great. Thanks.

[Jonathan Price, President & CEO at Teck Resources]

Thank you, Chris.

[Operator]

Thank you. We are out of time for further questions. I will now hand the call back over to Jonathan Price for closing remarks. Please go ahead.

[Jonathan Price, President & CEO at Teck Resources]

Thank you, operator, and thanks again to everyone for joining us today. We look forward to welcoming many of you to our QB site visit on November. Please reach out to Emma Chapman and our IR team for further information on the site visit or, of course, if you have any follow-up questions on the quarter. So thank you, and enjoy the rest of your day.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Participants

Executives

• Emma Chapman, VP - IR
• Jonathan Price, President & CEO
• Crystal Prystai, EVP & CFO
• Ian Anderson, EVP & Chief Commercial Officer

Analysts

• Orest Wowkodaw, Managing Director & Senior Research Analyst at Scotiobank
• Matthew Murphy, MD - Equity Research at BMO Capital Markets
• Carlos de Alba, Equity Research Analyst at Morgan Stanley
• Craig Hutchison, Mining Equity Research Analyst at TD Cowen
• Myles Allsop, Mining Research Analyst at UBS Group
• Bill Peterson, Equity Research at JP Morgan
• Chris LaFemina, Equity Research Analyst at Jefferies Financial Group