BASE METALS

RECORD COPPER, ZINC PRODUCTION

Teck comes roaring back in 2009 with second highest earnings ever

Strong base metals prices and record metals production last year gave Teck Resources a welcome infusion of profits in 2009, which enabled Canada's largest miner to report its second highest net earnings ever.

Author: Dorothy Kosich
Posted: Tuesday , 09 Feb 2010

RENO, NV -

After being written off by many mining pundits at the end of 2008 due to a fourth-quarter US$607 million loss as well as $10 billion in debt after the takeover of Fording Canadian Coal Trust, Teck Resources roared back with its second highest net earnings ever, $1.8 billion or $3.42 per share for full-year 2009.

In a statement, Teck CEO Don Lindsay said the revenues "reflected strong performance across the company, including record production of copper at Quebrada Blanca and zinc at both Red Dog and Antamina."

"Including the application of the proceeds from the sale of an interest in the Waneta Dam of $825 million, we will have reduced our total debt by approximately $6.7 billion since we acquired the Fording coal assets in October 2008," he added.

Teck expects its coal production to increase to a range between 23.5 million to 25 million tonnes this year compared to 18.93 million tonnes in 2009. The company said it is "actively planning for further production increases in 2011 and 2012."

The company also reported producing 7.8 million pounds of molybdenum last year, up from 7.2 million pounds in 2009, as well as 308,000 tonnes of copper, down from 316,000 tonnes in 2008.

During 2010 Teck plans to mine 340,000 tonnes of copper and 940,000 tonnes of zinc.

The Quebrada Blanca joint venture in Northern Chile--of which Teck owns 76.5% along with Inversiones Mineras S.A., a Chilean private company,13.5% and Empresa Nacional de Minera, a Chilean government entity, 10%--achieved a record production of 87,400 tonnes of copper cathode in 2009.

The Antamina mine in the Andes of Peru set a record for zinc production of 456,300 tonnes last year. Teck owns 22.5% interest in Antamina, along with BHP Billiton (33.75%), Xstrata (33.75%), and Mitsubishi (10%).

Meanwhile, Teck's wholly owned Red Dog mine in Alaska set a new record for contained metal production last year as a result of a number of performance initiatives. Red Dog shipped 1.02 million tonnes of zinc concentrate and 220,000 tonnes of lead concentrate during the 2009 shipping season, compared to 920,000 tonnes of zinc and 247,000 tonnes of leading concentrates for the 2008 shipping season.

Teck plans $1.05 billion in capital expenditures this year including $675 million on development projects and $375 million on sustaining capital expenditures. The company said the Galore Creek project joint venture with NovaGold "will remain on care and maintenance for 2010." However, Teck intends to begin the preparation of a pre-feasibility study in the second quarter of this year in order to determine updated capital and operating cost estimates.

FINANCIALS

Net earnings for 2009 were $1.8 billion or $3.42 per share compared with $659 million or $1.46/sh in 2008. Net earnings for the fourth-quarter 2009 were $411 million or 70-cents/sh, compared with a net loss of $607 million or negative $1.28/sh in fourth-quarter 2008.

Net earnings in the fourth quarter of 2009 included positive after-tax pricing adjustments of $58 million and an after-tax gain of $134 million from the sale of Teck's interest in the Morelos gold project in Mexico. Partly offsetting this were asset impairment charges of $68 million related to oil sands projects.

The company reduced its total debt from $10.6 billion at the end of 2009 to $6.4 billion as of February 8, 2010.

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