This is strategy day at Teck Resources (TSX: TECK.A and TECK.B; NYSE: TECK) in Vancouver. The company is presenting its strategy for generating value for stakeholders and lay out its investment pathway to grow copper production to 800,000 tonnes (176.37 billion lb.) per year before the end of the decade.
“Teck is uniquely positioned in our industry, with the ability to deliver transformative near-term copper growth while simultaneously returning significant cash to shareholders,” said Jonathan Price, president and CEO. “We are executing on a disciplined strategy to grow copper production by advancing our portfolio of lower capital intensity, high-returning projects in stable jurisdictions.”
Teck says its near-term growth will be supported by a strong balance sheet, allowing both shareholder dividends and funding for growth project. So far in 2024, the company has reduced its debt by $2.3 billion and is has a current net cash position of $1.8 billion. Since 2019, $5.3 billion has been returned to shareholders, including more than $900 million in share buybacks. A further $2.3 billion has been authorized to continue buybacks.
The company plans to invest $4.44 billion to $5.41 billion (US$3.2 billion to US$3.9 billion) over four years to develop four key project to reach its announced copper output.
Optimization and debottlenecking will take place at Quebrada Blanca (Teck 60% owner) in Chile. This is noted as a very low capital cost options to boost production by a further 15% to 25% at a capital cost of $138.6 million to $277.3 million.
At Highland Valley copper (Teck 100% owner) in British Columbia, Teck plans to extend the life of the mine to the mid-2040. The estimated capital cost will be $1.80 billion to $1.94 billion, and it will bring another 302.0 million lb. of copper to market annually beginning next year.
Teck calls the Zafranal project (80% owned) in Peru a long-life, competitive capital cost, and low-complexity copper-gold project. Permitting is underway in anticipation of a decision in the first half of next year. Estimated copper production of 277.8 million lb. annually over the first five years is planned, and there will be additional gold value. The attributable capital budget is $2.08 billion to $2.50 billion.
The San Nicolás project (Teck 50% owner) in Mexico is another low capital cost, low-complexity copper-zinc project. Teck’s partner in the project is Agnico Eagle Mines (TSX: AEM; NYSE: AEM) in this well-established mining jurisdiction. Estimated production over the first five years will be 183.9 million lb. of copper and 324.1 million lb. of zinc annually. The feasibility study is underway, and a production decision may be made in the first half of next year. Teck’s funding requirement will be $415.9 million to $ 693.2 million.
“We are focused on disciplined allocation of capital that balances value-accretive growth with continued cash returns to shareholders, all while maintaining a strong balance sheet through market cycles,” said Price.
An archive of the strategy webcast will be available on www.Teck.com.
