Teck (TSX:TECK.A) reports lower YoY Q1 results, scraps proposed business split

• Teck (TECK.A) releases unaudited results for Q1 2023 as it abandons proposed business separation
• Adjusted profits attributable to shareholders came to C$930 million or US$1.81 per share in Q1 2023, down from C$1.62 billion in Q1 2022
• The company will apply shareholder feedback on the abandoned split toward a simpler, more direct separation to maximize value creation
• Teck is a global leader in mining and development focused on copper, zinc and steelmaking coal
• Teck Resources (TECK.A) is up by 4.17 per cent trading at $100.00 per share

Teck (TECK.A) releases unaudited results for Q1 2023 as it abandons proposed business separation.

“We achieved a number of significant milestones in our copper growth strategy this quarter, including first copper concentrate production at QB2, the cornerstone of our copper growth strategy, while making advances across our pipeline of near and medium-term projects,” said Jonathan Price, Teck’s CEO. “The progress in our copper growth pipeline reinforces the underlying value and optionality in our base metals business.”

Financial summary Q1 2023

Key updates

• Produced first bulk copper concentrate at QB2 in March, with ramp-up to full production by the end of 2023. Delays at QB2, combined with recent foreign exchange impacts, have resulted in pressure on project capital cost guidance, which could increase total capital costs to US$8 billion to US$8.2 billion. Over 30 per cent of the increase from previously disclosed guidance relates to non-controllable foreign exchange impacts
• Closed transactions related to joint venture partnerships for NewRange and San Nicolás projects, both key milestones in advancing Teck’s copper growth strategy, as well as sales of Quintette and Fort Hills holdings
• 2023 production guidance is unchanged
• Cash flows from operations of C$1.1 billion, ending with a cash balance of C$2.3 billion
• Liquidity as of April 25, 2023 was C$8 billion, including C$2.6 billion in cash

Guidance

Withdrawal of separation proposal

Teck will no longer seek shareholder approval at today’s annual and special meeting of the proposal to reorganize the business into two companies: Teck Metals, a pure-play base metals company, and Elk Valley Resources, a world-class steelmaking coal company.

Management intends to use shareholder feedback to offer a simpler, more direct separation to maximize value for shareholders.

Teck remains focused on advancing its pipeline of copper growth projects and optimizing production at its existing operations.

The revised separation decision follows a handful of dramatic exchanges between Teck and Glencore, which is keen on acquiring the company. These include:

• Support from a key shareholder for the shelved business split
• A letter from Teck management referring to Glencore’s recently increased bid as an “attempt to frustrate value creation for Teck shareholders”
• A report stating that Teck’s biggest shareholder, China Investment Corp., is backing Glencore’s takeover offer
• Glencore’s aforementioned sweetening of its initial bid
• Teck’s initial rejection of Glencore’s unsolicited takeover bid

Price reiterated that “Glencore’s rejected proposals remain a non-starter, with the same flawed structure and material execution risks identified by our Board.”

Teck is a global leader in mining and development focused on copper, zinc and steelmaking coal.

Teck Resources (TECK.A) is up by 4.17 per cent trading at $100.00 per share as of 11:04 am EST.

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