Teck Resources Limited (NYSE:TECK) Q1 2025 Earnings Call Transcript

Teck Resources Limited (NYSE:TECK) Q1 2025 Earnings Call Transcript April 24, 2025

Teck Resources Limited beats earnings expectations. Reported EPS is $0.42, expectations were $0.24.

Operator: Welcome to Teck Resources Limited’s first quarter 2025 results release conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. To join the question queue, this conference call is being recorded on Thursday, April 24, 2025. I would now like to turn the conference over to Emma Chapman, Vice President, Investor Relations. Please go ahead.

Emma Chapman: Thank you, operator. Good morning, everyone, and thank you for joining us for Teck Resources Limited’s first quarter 2025 conference call. Today’s call contains forward-looking statements. Actual results may vary due to various risks and uncertainties. Teck Resources Limited does not assume the obligation to update any forward-looking statements. 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&A and the latest press release on our website. Jonathan Price, our CEO, will start with an overview of our first quarter. Crystal Prystai, our CFO, will follow with a financial and operational review. Jonathan will conclude with closing remarks followed by a Q&A session. I will now turn the call over to Jonathan.

Jonathan Price: Thanks, Emma, and good morning, everyone. Before we get into the quarter, I want to take a moment to acknowledge the current macro environment on slide four. As we all know, the past few months have been marked by volatility and uncertainty. Factors like the threat of a global economic downturn, geopolitical tensions, inflation, and supply chain disruptions have created an uncertain and challenging global business landscape. Despite these headwinds, we believe that the fundamentals for our key metals, copper and zinc, are robust over the medium and long term, as several macro factors continue to drive demand. These metals are essential for global manufacturing and development, industrial policy and national security, electrification infrastructure, as well as the growth of the digital economy.

On the supply side, the industry continues to face constraints. At the same time, new demand opportunities are emerging as many economies seek to revitalize their industrial sector. For example, defense spending may be significantly broadened to include areas central to economic resilience, such as upgrades to and expansion of electricity grids, which remain central to copper demand. We see this providing a medium-term boost to metals demand as the world enters into a state-backed, more capital-intensive phase of growth. Even in the short term, we continue to see extreme tightness in the concentrate markets that make up nearly 90% of our revenue, with benchmark treatment charges for copper and zinc at historically low levels. In this environment, Teck Resources Limited is well-positioned for continued value creation.

We are growing copper production and improving margins through disciplined operational performance. In addition, we have an active share buyback program, a portfolio of value-accretive copper growth projects, an agile commercial strategy, and a strong balance sheet. Together, these underpin the resilience of our business, which is a competitive advantage for Teck Resources Limited, enabling us to navigate uncertainty while continuing to deliver value through our strategy of balancing disciplined copper growth with returns to shareholders. Turning to slide five, we are closely monitoring the potential impact of tariffs and retaliatory trade measures between the countries we trade with and the risks of wider macroeconomic uncertainty. Although the situation is fluid and evolving rapidly, we do not expect announced tariffs to materially impact our business.

That said, the global trade war could weigh on global economic growth with potential implications for metals demand. Today, we are continuing to see strong demand for our copper and zinc concentrates, and we are working closely with our customers with limited impact so far. Our copper and zinc concentrate sales are not exposed to US tariffs, as we primarily sell to Asia and Europe with no sales to the US. On the other hand, Chinese tariffs, if maintained, are expected to apply to our sales of Red Dog concentrate to China, which represent less than 20% of our zinc and lead concentrate sales. However, over the past few years, we have successfully developed a regionally diverse customer base, which gives us greater optionality while trade negotiations are ongoing.

Red Dog is a highly valued concentrate in the zinc market, and we have several long-standing customers for this product. We also have other options available, including trail feed integration, delivery outside the Red Dog shipping season, and product swaps. All options support continuity of sales. Turning to trail and our metal sales, refined zinc, lead, and specialty metals such as germanium, indium, and sulfur products are sold into the US, but they are exempt from US tariffs as they are compliant with the USMCA. Overall, Teck Resources Limited has a strong business with diversified products and operations, an agile commercial strategy, and strong logistics capabilities. This enables us to quickly adapt and respond to changing market conditions to mitigate any potential impact on our business.

Turning now to highlights from the first quarter of 2025 on slide six. Our profitability improved significantly compared to last year, driven by higher commodity prices and copper sales volumes. Our adjusted EBITDA more than doubled to $927 million. The ramp-up of QB operations continues, and we are seeing performance improvements in key areas such as average daily mill throughput. Production was impacted in the quarter by additional shutdowns, and I will provide more detail on this later in the presentation. During the quarter, QB successfully achieved the completion testing requirements under the $2.5 billion US dollar project finance facility. This is a significant milestone that provides independent verification confirming the robustness of the construction and the capacity of the asset to operate at design levels, providing further confidence in the ramp-up to steady state by the end of the year.

In the first quarter, we had strong operational performance across our established operations, particularly Highland Valley, Carmen de Andacollo, and Trail operations, which generated strong profit in the quarter following the successful implementation of a range of initiatives to improve profitability and cash flow generation. Our annual guidance is unchanged across all operations. Our balance sheet remains strong and resilient. We ended the quarter in a net cash position of $764 million, and as of yesterday, our liquidity is $10 billion. Finally, we continue to return cash to shareholders through share buybacks and dividends totaling $568 million year to date. Turning to our ongoing commitment to safety and sustainability on slide seven. Our safety performance was strong in the first quarter.

Our high potential incident frequency rate across the operations we control remained low at 0.05. I would like to take a moment to acknowledge the fatality that occurred at Antamina, in which Teck Resources Limited holds a non-operating interest earlier this week. We are deeply saddened by this event, and we offer our condolences to the family, friends, and colleagues of the deceased. As ever, we will support the Antamina team with the investigation and ensure that lessons are both learned and shared. In March, we released our 24th annual sustainability report, which details last year’s environmental and social performance, including key areas such as health and safety, support for communities, indigenous peoples, diversity, and climate. A copy of the report is available on our website.

Coming back to QB ramp-up on slide eight, as I just mentioned, the successful achievement of completion testing under the QB project finance facility is a significant milestone. It comprised several independently verified operational and technical tests to validate the robustness of the design, construction, and operational performance of QB. This demonstrates QB’s ability to generate strong cash flows. We made significant progress in the ramp-up of QB. As you can see on the left-hand side of the slide, we have a plan to consistently achieve design throughput and recoveries and have several data points showing that we can and have already operated at these levels. That said, first-quarter production was impacted for two reasons. First, the previously disclosed 18-day extended shutdown to conduct maintenance and reliability work and progress tailings development, and second, external factors that included a nationwide power outage in Chile in February, leaving the site without power, which affected production for several days, and challenging weather.

In particular, challenging weather impacted the rate of material movement for tailings lifts required for the development of the tailings management facility, which was also impacted by slower-than-expected sand drainage times. The result of this slower-than-planned TMF development is that additional mechanical movement is required prior to the installation of the permanent infrastructure, and we expect to extend planned maintenance shutdowns in Q2 and Q3 to complete this work. This is expected to impact production in the short term only, and there are no issues with dam integrity. Once this phase of TMF development is complete, we will be on track for full production ramp-up by year-end and steady-state operation into the future. Moving to slide nine, QB’s plant performance continues to improve.

In the first quarter, the average daily throughput, excluding the extended non-planned shutdowns, increased compared to the fourth quarter, demonstrating continued improvement in operational stability. Higher levels of transition ore were mined, leading to lower recoveries as expected, and higher-grade ore mined in March increased the average grade for the quarter. For the remainder of the year, we will continue to drive operational performance and expect to achieve higher throughput rates and higher recoveries in line with design. We continue to expect to achieve our production guidance for QB, albeit at the lower end of our previously disclosed range of 230,000 to 270,000 tons. We continue to expect QB net cash unit costs to be between $1.80 and $2.50 US dollars per pound for the full year, although commensurate with production, we expect this to be towards the higher end of guidance.

Turning to slide ten, we expect significant growth in our copper production with improving margins this year. Our copper EBITDA margin increased last year from 33% to 42%. This year, current consensus estimates show further improvement to 51%. We continue to expect our copper production to grow to between 490,000 to 565,000 tons for the full year, from 446,000 tons in 2024, reflecting the ongoing ramp-up of QB and improved grades and throughput at Highland Valley. We also expect a significant reduction in our copper net cash unit costs to $1.65 to $1.95 US dollars per pound from $2.20 US dollars per pound in 2024, reflecting an increase in copper and molybdenum production as well as continued cost discipline across our installations. Slide eleven outlines our ongoing growth trajectory, underpinned by our existing portfolio of operating mines, coupled with our well-funded value-accretive near-term copper projects, including the mine life extension at Highland Valley in British Columbia, and our high-returning greenfield projects at Zafranal in Peru, San Nicolas in Mexico.

Compared to QB, these greenfield projects are significantly less complex and smaller in scope with lower capital intensities. We are also working to define the most capital-efficient and value-accretive path for further growth of QB through optimization of the mill and low-capital debottlenecking opportunities that could increase throughput by 15% to 25%. With these projects, we have a clear path to increase our annual copper production to approximately 800,000 tons before the end of the decade. On slide twelve, we will cover the key progress updates and major future milestones as we work to bring these near-term projects to potential sanctioning this year. An independent review of the mine life extension project at Highland Valley was completed in the first quarter and confirmed construction readiness of the project.

This means we should be positioned for a potential sanction decision after we receive the necessary permits, which potentially could be in mid-2025. At Zafranal, the project is progressing as scheduled, and we received the advanced works permit on April 10. We aim to submit the construction permit in Q2, and the project could be ready for a potential sanction decision in late 2025. At San Nicolas, engagement with government authorities and other stakeholders is ongoing to support our permit application. We expect to complete the feasibility study in the second half of 2025, positioning the project for a potential sanction decision following the receipt of necessary permits. At QB, our focus is to ramp up to steady state. At the same time, optimization is progressing, and detailed planning for debottlenecking is underway.

This should enable us to submit the declaration of environmental impact or DEER permits application in the second half of the year. We look forward to progressing these well-funded near-term projects to sanction, launching the next phase of Teck Resources Limited’s copper growth. I will now hand over to Crystal to provide further details on our first-quarter results.

Crystal Prystai: Thanks, Jonathan. Good morning, everyone. I will start with our first quarter 2025 financial performance on slide fourteen. We more than doubled our adjusted EBITDA in the quarter compared to a year ago to $927 million. This was primarily driven by higher copper and zinc prices and increased copper sales volumes due to strong production performance across established operations. We generated increased revenue and profit from byproducts, including molybdenum from QB and Highland Valley, as well as silver, germanium, and other critical metals from Trail. We also benefited from a weaker Canadian dollar as we converted US dollar-denominated revenue into Canadian dollars. Our results reflect positive pricing adjustments of $106 million, primarily as a result of higher copper prices.

Our finance income increased significantly to $91 million compared with $27 million a year ago, as our investment income increased due to our balance since the sale of the steelmaking coal business last year. In February, we paid a final 2024 Canadian income tax of $130 million, primarily related to earnings and the proceeds from the sale of the steelmaking coal business. Importantly, we continue to return cash to shareholders throughout the quarter, with $568 million returned year to date. Turning to slide fifteen, which summarizes the key drivers of our financial performance in the first quarter compared to the same period in 2024. Our adjusted EBITDA increased by 127% in the first quarter as a result of strong base metals prices, higher copper and zinc concentrate sales volumes, and the positive impact of a weaker Canadian dollar.

Copper sales volumes increased by 11% from Q1 of last year, reflecting higher volumes from Highland Valley and Carmen de Andacollo. Zinc concentrate sales volumes increased by 10% due to the timing of sales from Red Dog and increased volumes from Antamina. Our strong adjusted EBITDA also reflects improved copper and zinc unit costs, reflecting cost discipline across our business. This was partially offset by an increase in royalties, primarily as a result of increased profitability at Red Dog. Now looking at each of our reporting segments in greater detail and starting with copper on slide sixteen. In Q1 2025, gross profit before depreciation and amortization from our copper segment increased 90% to $704 million compared with the same period last year, primarily due to higher copper prices and sales volumes, and increased byproduct revenues from molybdenum and zinc.

This reflects strong performance across our established copper operations. Copper production increased by 7% to 106,000 tons, driven by increased grades and mill throughput at Highland Valley and Carmen de Andacollo. Production significantly improved at Highland Valley as we advanced mining in the higher-grade Lornex pit, which has softer ore leading to increased mill throughput. Carmen de Andacollo also had improved mill throughput as a result of increased water availability compared to the same period last year, which was affected by drought conditions. Antamina performed in line with expectations. Our net cash unit costs improved by 32 cents US per pound to $2.04 US per pound as a result of higher copper production, increased byproduct credits, reduced smelter processing charges, and lower transportation costs at QB.

This strong performance led to an improvement in our gross profit margin before depreciation and amortization of 13% to 47% compared to the same period last year. On April 9, QB’s third and final labor union ratified a new three-year collective bargaining agreement. This completes all labor negotiations for QB’s workforce with labor agreements now in place through 2028. Looking forward to the rest of this year, we expect QB to continue to ramp up to steady state by year-end, as well as increased quarterly copper production at Highland Valley as we process increasing proportions of higher-grade Lornex ore through 2025. For the full year, as Jonathan mentioned, we continue to expect growth in our copper production with improving margins in line with our guidance of 490,000 to 565,000 tons at a net cash unit cost of between $1.65 US and $1.95 per pound.

Turning now to our zinc segment on slide seventeen. Our profitability in zinc improved significantly in the first quarter with a 79% increase in gross profit before depreciation and amortization to $225 million. This increase was due to higher zinc prices, strong sales volumes at Red Dog, and improved profitability at our Trail operations. Our Red Dog zinc concentrate sales of 91,000 tons were higher than our guidance range for the quarter of 75,000 to 90,000 tons due to the timing of sales. Red Dog production was impacted by lower grades as expected in the mine plan. Our net cash unit cost improved to 59 cents US per pound from 67 cents US per pound in the same period last year, driven by reduced smelter processing charges, and partially offset by the impact of lower production levels.

At Trail operations, we generated strong profitability in the quarter reflecting increased production of byproducts such as silver, germanium, and other critical metals, as well as the successful implementation of initiatives to improve profitability and cash flow generation at Trail. Looking forward to the second quarter, we expect zinc concentrate sales from Red Dog of 25,000 to 35,000 tons reflecting the normal seasonality of sales. Our full-year production and unit cost guidance for our zinc segment is unchanged. Our guidance for zinc concentrate production remains at 525,000 to 575,000 tons, and we continue to expect refined zinc production of 190,000 to 230,000 tons for the year. Net cash unit costs are expected to be between 45 and 55 cents US per pound.

Turning to our balance sheet on slide eighteen. Our balance sheet remains strong and resilient. We were in a net cash position of $764 million at March 31, and as of yesterday, our liquidity was $10 billion, including $5.8 billion of cash. Our cash balance decreased in the first quarter, primarily due to continued return to shareholders through dividends and share buybacks, the final 2024 tax payment relating to the earnings and sale of the steelmaking coal business, and the seasonally larger royalty payment to NANA in respect of Red Dog’s strong Q4 2024. Our remaining outstanding term notes of $1 billion US are long-dated. We will continue to deleverage as we make semiannual repayments on the QB project finance facility through 2031. With the achievement of the QB project financing completion testing requirements, Teck Resources Limited and the other sponsor guarantees of the project finance facility have been released.

Our balance sheet strength and investment-grade credit ratings enable continued value creation in current market conditions. On slide nineteen, we remain committed to our disciplined capital allocation framework, which balances investment and value-accretive growth with returns to shareholders while maintaining a strong balance sheet through the cycle. Our capital allocation framework and project sanction requirements ensure the prudent deployment of capital. All growth projects must meet stringent criteria, delivering attractive risk-adjusted returns and competing for capital. We are continuing to execute on our $3.25 billion authorized share buyback, and we are committed to returning between 30% and 100% of available cash flows to our shareholders.

Looking at our cash returns now on slide twenty. We continue to build on our strong history of cash returns to shareholders, which currently total approximately $5.4 billion since 2020. We are in the market daily, actively buying back our shares under this $3.25 billion share buyback announced last year, with more than half of the buyback now complete. We have increased the daily number of shares. As of yesterday, we’ve executed $1.75 billion of the $3.25 billion authorization under our normal course issuer bid, including over $500 million year to date. This leaves approximately $1.5 billion of our authorized share buybacks remaining to further improve our per-share value. With the strong cash flow generation potential of our business, we could see further cash returns to shareholders in line with our capital allocation framework.

Turning to our near-term growth now on slide twenty-one. Our value-accretive near-term copper projects are well-funded. While the project capital attributable to these growth projects remains unsanctioned and uncommitted, we continue to expect to deploy between $3.2 and $3.9 billion US over the next four years for our near-term copper projects. We will continue to be disciplined in our assessment and progression of these projects to ensure value-accretive growth. As we continue to balance our growth in copper with cash return to shareholders, we can continue to significantly impact the accretive growth potential of our metrics on a per-share basis as shown on slide twenty-two. Last year, with the ramp-up of QB and with a significant portion of our $3.25 billion share buyback completed, we increased our copper production per share by 54% compared to the prior year.

By 2026, as we stabilize QB at full production and complete the remaining authorized share buyback, our copper production per share could increase by a further 34% to 51%. Beyond that, our copper production per share could increase substantially as we bring our near-term value-accretive growth projects online. This does not consider the impact of any further share buyback that could be authorized under our capital allocation framework as a result of the strong cash generation potential of our business. Through the end of the decade, our copper production has the potential to increase rapidly on a per-share basis. With that, I’ll now turn it back over to Jonathan.

Jonathan Price: Thanks, Crystal. Turning to slide twenty-four, we remain focused on our priorities to create value for our shareholders. Completing the QB ramp-up to steady state operations, continuing to drive operational excellence across our portfolio of high-quality copper and zinc operations and projects, growing our copper production and improving our margins, remaining committed to returning cash to our shareholders by continuing to execute our authorized share buyback program and paying our base dividend, progressing our value-accretive near-term copper projects to possible sanction decisions in 2025, positioning us for our next phase of copper growth, and maintaining the resilience of our business to navigate uncertainty and create value leveraging our agile commercial strategy and strong balance sheet.

To wrap up on slide twenty-five, our strategy remains delivering growth and creating value in a responsible and disciplined way. We will continue to balance investment in growth with returns to shareholders. We have the resilience to successfully navigate the current environment as well as potentially exploring evolving opportunities. As a pure-play entity transition metals company, Teck Resources Limited is uniquely positioned to deliver significant value to shareholders through the execution of our copper growth strategy. Apologies again for the disruption on the line during that portion of the call. Hopefully, you can hear us clearly now. With that, operator, please open the line for questions.

Q&A Session

Operator: Thank you. One under your touch-tone phone. You will hear a tone acknowledging your request. If you wish to remove your question, please press star then two. We ask that you limit yourself to one question and one follow-up. The first question is from Mark Wachadeau with St. Go ahead.

Mark Wachadeau: Hi. Good morning. Questions on QB. It sounds like you’re pushing back the target for sustainable full production at the operation from midyear to end of year, yet the guidance is unchanged. Can you give us a sense of how long these extended maintenance outages related to the tailings facility are supposed to impact Q2 and Q3? I’m curious, what gives you confidence at this point, given the pretty weak Q1, that you could still make even the low end of the range for the year?

Jonathan Price: Hi, Mark. Thank you for the questions. Look, we’d always expected 2025 to be a build of production throughout the year and achieving steady state operations towards the end of the year rather than in the first part of the year. I think that’s no different from what we’ve guided to today. We still expect to deliver the guidance of 230,000 to 270,000 tons this year, albeit now towards the bottom end of that range. Yes, there’s some additional work we have to do here around the tailings facility. We’re making good progress. We’re implementing measures to complete that work quickly, and that includes initiatives which will allow us to speed up sand drainage and deposition of material at the dam. As we’ve said, completing this work will require some additional downtime in Q2 and Q3, which is why we anticipate being at that lower end.

Once we get through this phase of the transition from the start of dam to ongoing sand lifts, it’s essentially a one-time event. We can then operate at steady state for the life of the facility. That’s the phase of work we’re going through this quarter and next quarter. That’s why we have confidence that we can end the year running at steady state, and that’s why we believe that we will continue to deliver within the guidance range that we’ve set out for 2025. Knowing that this was a ramp-up year for the operation, we reflected in that guidance range the uncertainty with operations in this phase of the life of a project. That’s what you’re seeing in our disclosures today. But I think, critically, we remain confident of delivering production within that range.

Mark Wachadeau: Sorry, can you give us detail on how long the expected outages will be for Q2 and Q3?

Jonathan Price: Look, that will be a function of the work to be done, which will be determined by the operations team and will be a function of the improvements that we make in sand drainage and the pace of material deposition at the dam. It’s not possible to be precise on the number of days that we will need to achieve that this year at this point in time. But I can tell you that the range of outcomes that we expect to be likely in terms of outages is reflected in the guidance. It’s reflected in the fact that we continue to hold that guidance, yet we are pointing towards the lower end of that range.

Mark Wachadeau: Is there anything at this point that impacts the guidance range for 2026 to 280,000 to 310,000 tons based on what you’re saying? Or are all these issues expected to be solved by year-end?

Jonathan Price: The short answer is no, Mark. We don’t expect to see any change to the guidance for 2026 or beyond. The work that’s required here on the tailings to transition into steady state, we expect to be finished in the third quarter of this year. As we move into 2026 and beyond, we don’t see any ongoing impact of the work that we’re undertaking today.

Mark Wachadeau: Thank you.

Jonathan Price: Thanks, Mark.

Operator: The next question is from Patrick with Deutsche Bank. Please go ahead.

Patrick: Can you hear me okay?

Jonathan Price: Yes, all good. I got you, Patrick.

Patrick: Okay. Alright. My question is just around the next copper project that you’re highlighting now. First of all, can you realistically approve something like Zafranal in the current macro environment, or would you wait for greater clarity around the macro environment generally? It also seems that three or four of your projects are converging on a decision within the next six to twelve months or so. Can you talk about management bandwidth to manage these projects, picking off the ramping up, and how you’re thinking about project phasing with all of these options potentially?

Jonathan Price: Thanks for the question, Patrick. Of course, as we look at the projects that we have in the portfolio here, what we’re focused on is the long-term perspective for the fundamentals of the commodities associated with those projects. We see nothing at this point in time that changes our view or our conviction on the long-term fundamentals for both copper and zinc being the key components of growth, with copper being the primary target. There’s nothing in that respect that causes us to take a pause in that regard. The growth projects that we have in the portfolio are critical to the long-term strategy. As I mentioned in the call, these are projects that are smaller in scope, lower in complexity than QB, for example, with low capital intensities, which should be very competitive projects and should deliver strong returns.

From that perspective, no change. Of course, we always continue to evaluate those things when we take our projects forward for sanction. We always look at a range of forward pricing scenarios to ensure that those economics and returns will be robust. Just in terms of your comment on organizational bandwidth, just to put these projects into context, Highland Valley mine life extension is a brownfield project at a site where we’ve been operating since the sixties, and we’ve undertaken numerous previous brownfield expansions of that site. The team is all in place, is ready to go, and as I mentioned, we had a very positive independent review of our construction readiness for that project. We’ve got a good level of confidence moving forward with that.

The other greenfield project that we would deliver and Teck Resources Limited would take the lead on is Zafranal because, of course, we’re 80% of that project. That’s where we would be delivering. Again, we’ve been building a very strong team over an extended period of time now, coupled with our EPC partners, so we’re well set up, subject to sanction and permits, of course, for construction and delivery of that project. San Nicolas is somewhat different because, of course, that is an incorporated joint venture with Agnico, which doesn’t mean Teck Resources Limited is taking the lead on delivering that project. It’s actually the joint venture that does that work. Of course, we’ll be very closely involved in a range of ways in support of that project, and in particular, really taking a lead on the commercial aspects of that project when it comes to the marketing and sales of copper and zinc.

But that necessarily, by virtue of the way that that’s been set up, is a lower lift on the organization here. We do believe that this is manageable, Patrick. We’ve been preparing for this for a number of years in terms of systems, processes, procedures, etc. But most importantly, bringing in the talent, developing the teams, and getting ourselves set up for success in execution.

Patrick: Thanks, Jonathan.

Operator: The next question is from Carlos De Alba with Morgan Stanley. Please go ahead.

Carlos De Alba: Yeah, thank you very much. Good morning. I would like to check if you received any feedback or substantial or potential improvement on the completed QB independent testing that you successfully did recently. Congratulations on that. But, you know, I am interested to know if there was any suggestion for any potential improvement that they provided.

Jonathan Price: Look, I think the short answer is no. That’s not really the way that process works. There’s a series of tests that have to be achieved based on performance, and those tests were achieved and individually validated and certified. But it’s not really an improvement-focused process, Carlos.

Carlos De Alba: Alright. Thanks. How long was the QB shutdown after the power outage? It was several days, but could you provide a more precise number of days?

Jonathan Price: Yeah, so Carlos, we were directly shut down for a couple of days, and then it took us a couple of days to get back up and running to full rates again. Broadly speaking, four days, half of which was downtime and then half of which was recovery. Of course, it’s the first time at QB that we’ve had to deal with one of these events and get the site back up and running to full capacity. So that’s a learning experience. Perhaps in the future, we’ll be able to come back online more quickly, but we have to be prudent the first time out dealing with an event like this at that site. Thanks, Carlos.

Operator: The next question is from Craig Hutchinson with TD Securities. Please go ahead.

Craig Hutchinson: Hi there. Good morning. Just want to ask about the zinc case. In your remarks, you said that about 20% of sales of Red Dog is going to China. If tariffs remain in place, any indications or concerns about the sales right now, and have you redirected material? On the flip side, are you purchasing materials for Red Dog from China that are subject to tariffs, and could that be an issue for Red Dog or Teck Resources Limited?

Jonathan Price: Thanks, Craig, for those questions. Look, on the outbound, as I mentioned, given the levels of tariffs being placed on imports from the US into China, that creates challenges with supply at the moment. Fortunately, at this time of the year, given the shipping seasons at Red Dog, we’re not moving material from the site in any event. So we’re pretty well covered at present. The commercial team is working very hard, as I mentioned on the call, with a range of options and alternatives here, which could see us placing material elsewhere through this period of time. The bottom line is, Craig, that we don’t expect to face a material impact here as a result of tariffs between China and the US. As I said, we’ve got a number of months up our sleeve here to resolve any issues that might arise. There is no risk the other way around. We’re not exposed on the inbound here in terms of imports of goods from China into the US or into Red Dog. So no risk there.

Craig Hutchinson: Okay. Thank you.

Jonathan Price: Yeah, look, as I said, tragic events, we will work very closely as we always do with the Antamina team here to understand what’s happened and to look at learnings for the future and learnings not just for Antamina, of course, but for the industry more generally. Our understanding is that the site will be returning to operations today, so back up and running.

Operator: The next question is from Myles Allsop with UBS. Please go ahead.

Myles Allsop: Okay, thanks. Maybe just on QB, should you get the licenses to be able to distribute those about 242,000 tons a day? Is this the kind of optimization debottlenecking?

Jonathan Price: Yeah, I mean, I think that there’s a level of optimization that’s allowed under the current permits, Myles, as we have it today, which is essentially a 10% allowance from nameplate. So that’s something we already have in hand. In terms of the submission of the DEER, let’s say that goes in in July of this year, we would expect to have an approval on that twelve months subsequent. So that would be July of the following year, which fits very well with the time frame we have for the debottlenecking. So the existing permit really allows for the optimization that we’ve been talking about, and this DEER or amendments to the permit allows for the debottlenecking. So we can get the optimization with what we have now, and with the DEER, we can unlock the debottlenecking.

Myles Allsop: That helps. Thank you.

Operator: The next question is from Lawson Winder with Bank of America. Please go ahead.

Lawson Winder: Hi, good morning, Jonathan and team, and thank you for the update today. Just maybe ask again about Q2 and just going back to one of the challenges that you experienced last year, that would be stabilization of the mix of clay and the seed. Is the asset now on track to be able to deliver that consistency in the second half? And then also on that geotechnical issue of the pole and the slip on the ramp, is that work now complete, and was that in fact localized?

Jonathan Price: Yeah, so there’s no ongoing manifestation of that geotechnical issue. That’s very much behind us, Lawson. In terms of the clays, as we go through this year, we start the year processing a lot of transition ores, which is why you’ve seen some lower recoveries in the first quarter. As the year progresses, we expect to have less transition ore and therefore less clay and therefore better recovery. So all of those things are connected. That’s been in the plan for this year. It’s why we’ve expected to see quarter-over-quarter improvements through the year. But nothing different from what we’ve communicated previously there, Lawson.

Lawson Winder: Thanks, Jonathan.

Operator: The next question is from Bill Peterson with JPMorgan. Please go ahead.

Bill Peterson: Yeah, hi. Good morning, and thanks for taking the question. On zinc and I guess on Trail specifically, I’ve got a question on profitability. How should we think about the profitability in Trail for the back half of the year? Will the byproduct contribution repeat in the coming quarters? And maybe beyond that, what initiatives do you have that might be driving further improvement in profitability?

Jonathan Price: Thanks for that, Bill. I’ll ask Crystal to respond on the outlook for Trail for the balance of the year.

Crystal Prystai: Thanks, Bill. Nice to hear from you. In Q1, as you mentioned, we had very strong performance at Trail. We generated $80 million of gross profit before depreciation and amortization. That was really the result of the implementation of initiatives to improve cash flows. Those have been fully embedded now, and we expect those to continue through the rest of the year. We’ll continue to realize the benefit of those. In terms of the contribution from byproducts such as silver, germanium, and indium, and then obviously, the FX rate has an impact. We built up a stockpile of materials during the period when we had the Kivcet Boiler under repair in 2023. We are progressing treating those materials, which is where you’re seeing the benefit of some of those metals coming through and supporting the profitability.

We expect that to continue through this year, but of course, that’s not a long-term solution. The TC environment for Trail continues to be challenging, but the cost structure changes that we’ve made there have led to some improvements that we’re seeing come through, and we expect that to continue.

Bill Peterson: Thanks for that. And then I guess for the West, any thoughts on the upcoming presidential election and the type of impact it might have on the industry?

Jonathan Price: Look, nothing in particular. There’s obviously an election early next week. We will know who the prime minister will be at that point in time. What we can say is that both sides of politics here are very supportive of the resource industry. That’s been a key part of their platforms. Whether that’s about deregulation and simplification, whether that’s about actually putting in place investment vehicles to help with the development of the industry here. I think there’s a lot of support for resources. Canada has a real potential competitive advantage and a great lever through which to engage with the US on something that’s clearly very important to them. We hope to see that progress in the weeks and months ahead, but I think however the election works out, Canada will remain very focused on its mining industry, on its critical minerals, and we do expect to see supportive legislation to help ease the doing business essentially in the country.

I think the outlook is positive from that perspective.

Bill Peterson: Thanks, Jonathan.

Operator: We are wrapping up time for further questions. I’d now like to hand the call back over to Jonathan Price for closing remarks.

Jonathan Price: Thank you, operator. Apologies once again for the issues on the call today. I hope you were able to hear everything you needed to hear. If not, as ever, please follow up with Emma and the investor relations team. I would just close off by saying the business is in really good shape. We are very resilient. We’re managing very well through these turbulent times, both through our commercial strategy and through the strong balance sheet we have. We will continue returning capital to our shareholders per our commitment of balancing that with growth, and we’ve discussed QB extensively on this call. We will get past this tailings situation by the third quarter of this year, move on to steady state operations, and as I said, we see no changes to guidance this year in the coming years. Thank you very much for joining us all today, and enjoy the rest of your day.