RE: Some TCK news
Post says Teck faces tough choices over Chile project
2012-06-12 09:26 ET - In the News
Shares issued 576,566,147
TCK.B Close 2012-06-11 C$ 31.25
The Financial Post reports in its Tuesday edition that a technical report from Teck Resources demonstrates the challenges facing copper companies with high-cost projects amid a turbulent global economy. The Post's Peter Koven writes the Vancouver miner has disclosed an update on the massive Quebrada Blanca Phase 2 (QB2) project in Chile, which the company views as the top priority among its development projects. The $5.6-billion mine is expected to churn out 200,000 tonnes of copper a year at low operating costs (all figures U.S.). Teck already has an existing mine at the site. The problem is the economics. Due to the high construction costs and low grade of the resource, QB2 requires strong copper prices to generate an attractive net present value (NPV). The technical report shows that at a copper price of $3.50 a pound and a molybdenum price of $12.50 a pound (relatively close to current levels), QB2 has an NPV of $2.2-billion and internal rate of return of 13.7 per cent. However, should copper fall to $3, the NPV plunges to $1.1-billion. If copper drops to $2.50, the NPV is negative $239-million. Copper traded around $3.30 a pound on Monday, but it has been extremely volatile thanks to Europe.