OREANDA-NEWS. October 24, 2012. Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) reported third quarter adjusted profit of USD 349 million, or USD 0.60 per share, compared with USD 742 million or USD 1.26 per share in 2011.

"The uncertainty in global economic conditions resulted in lower commodity prices and sales volumes of steelmaking coal compared with the third quarter of 2011. This resulted in profits and cash flow from operations being less than the third quarter of last year. However, our quarterly operating results continued to be strong with another quarterly record for copper production at 99,000 tonnes, up 29% from the third quarter of last year. Our balance sheet remains strong, with a current cash balance of USD 4.2 billion and we are well positioned to continue with our growth plans. Notwithstanding our strong financial position, some of our planned capital spending has been deferred for a variety of reasons and we have also implemented a cost reduction program," said Don Lindsay, President and CEO.
Highlights and Significant Items
Gross profit before depreciation and amortization was USD 933 million in the third quarter compared with a record USD 1.8 billion in the third quarter of 2011.
Cash flow from operations, before working capital changes, was USD 741 million in the third quarter compared with a record USD 1.3 billion a year ago.
Our cash balance was USD 4.2 billion as at October 23, 2012.
Profit attributable to shareholders was USD 180 million and EBITDA was USD 721 million in the third quarter.
To date we have reached agreements with our coal customers to sell 6.2 million tonnes of coal in the fourth quarter of 2012 at an average price of USUSD 163 per tonne. We expect to conclude additional sales over the course of the quarter.
Copper production increased 29% from the third quarter of 2011 to a record 99,000 tonnes in the third quarter, which reflects investments we have made at the Antamina, Carmen de Andacollo and Highland Valley Copper Operations. With the increase in copper production in the third quarter our total cash costs, before by-product credits declined by 6%, and cash costs net of by-product credits, declined by 5% from the second quarter of 2012 to USUSD 1.69 per pound.
In August, we issued USUSD 1.75 billion of long-term notes with an effective average interest rate of 4.0%. A portion of the notes refinanced USUSD 660 million of our high-yield notes, which resulted in an after-tax charge of USD 196 million in the quarter.
On October 19, we issued a notice of redemption to redeem all USUSD 521 million principal amount of our outstanding 10.75% senior notes due in 2019, with the redemption taking place on November 19, 2012. We expect to record an after-tax charge of approximately USUSD 259 million in the fourth quarter in connection with the redemption.
Approximately USD 1.5 billion of expected capital spending is being deferred from our original 2012 and 2013 capital budgets, which includes:
reduced capital spending for Quebrada Blanca Phase 2 and Quintette due to permitting delays for each project,
a delay in the Relincho project as a result of external factors related to power and port facilities,
a delay in the development of Fort Hills as our partner updates the design basis for the project, and
a deferral of the construction of the Number 4 slag fuming furnace at our Trail Operations.
We are currently implementing cost reduction programs across our operations designed to reduce a minimum of USD 200 million from our annual operating costs.
The Red Dog 2012 shipping season was successfully completed on October 19, 2012 with all available concentrates being shipped. Zinc concentrate shipments totalled 950,000 tonnes and lead concentrate totalled 175,000 tonnes.
During the quarter we reduced our coal production to align with declining market demand. However, we expect that our annual production will meet the lower end of our guidance of 24.5 million tonnes for 2012.
In September, we were named to the Dow Jones Sustainability World Index (“DJSI”) for the third straight year. Our DJSI score placed our sustainability performance in the top two percent of companies in the mining industry worldwide, with our environmental performance being ranked the highest in the sector.

Download/view Q3 2012 Report (PDF) for the full text of this release.
Cautionary Statement on Forward-Looking Information

This news release contains certain forward-looking information and forward-looking statements as defined in applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements, principally under the heading “Outlook,” but also elsewhere in this document, include estimates, forecasts, and statements as to management’s expectations with respect to, among other things, anticipated production at our business units and individual operations and expectation that we will meet our production guidance, sales volume and selling prices for our products (including settlement of coal contracts with customers), plans and expectations for our development projects, forecast operating costs and costs of product sold, expected progress, costs and outcomes of our various projects and investments, including but not limited to those described in the discussions of our operations, the sensitivity of our profit to changes in commodity prices and exchange rates, the impact of potential production disruptions, the impact of currency exchange rates, future trends for the company, progress in development of mineral properties, increased coal and copper production as a result of our expansion plans, timing of completion, costs and results of our mill modernization program at Highland Valley Copper, 2012 production guidance for Quebrada Blanca, statements under the heading “Copper Development Projects,” including the expected resubmittal of the environment impact assessment for Quebrada Blanca Phase 2, the timing of the feasibility study and drilling for Relincho, our expectation that coal sales will not be impacted by greater use of shipping terminals other than Westshore terminals, our expectation that average trail lengths will increase in 2013, the timing of permit approval, production and anticipated production levels from the Quintette coal mine, timing and results of the Neptune Bulk Terminals capacity expansions, the impact of measures to manage selenium discharges and costs and impacts related thereto, timing of construction at our new acid plant in Trail, the statements under the heading “Energy” regarding timing of sanction, production permitting decisions, timing of final SIRs on our Frontier project and our responses thereto, anticipated capital expenditures and demand and market outlook for commodities, These forward-looking statements involve numerous assumptions, risks and uncertainties and actual results may vary materially.

These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditions, the supply and demand for, deliveries of, and the level and volatility of prices of, zinc, copper and coal and other primary metals and minerals as well as oil, and related products, the timing of the receipt of regulatory and governmental approvals for our development projects and other operations, our costs of production and production and productivity levels, as well as those of our competitors, power prices, continuing availability of water and power resources for our operations, market competition, the accuracy of our reserve estimates (including with respect to size, grade and recoverability) and the geological, operational and price assumptions on which these are based, conditions in financial markets, the future financial performance of the company, our ability to attract and retain skilled staff, our ability to procure equipment and operating supplies, positive results from the studies on our expansion projects, our coal and other product inventories, our ability to secure adequate transportation for our products, our ability to obtain permits for our operations and expansions, our ongoing relations with our employees and business partners and joint venturers. With respect to the Quebrada Blanca Phase 2, assumptions are based on receiving comments from all interested parties and our ability to address the comments in a satisfactory manner. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to vary materially.

Factors that may cause actual results to vary materially include, but are not limited to, changes in commodity and power prices, changes in market demand for our products, changes in interest and currency exchange rates, acts of foreign governments and the outcome of legal proceedings, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, adverse weather conditions and unanticipated events related to health, safety and environmental matters), union labour disputes, political risk, social unrest, failure of customers or counterparties to perform their contractual obligations, changes in our credit ratings, unanticipated increases in costs to construct our development projects, difficulty in obtaining permits, inability to address concerns regarding permits of environmental impact assessments, and changes or further deterioration in general economic conditions. Our Fort Hills project is not controlled by us and construction, sanction and production schedules may be adjusted by our partner.

Statements concerning future production costs or volumes, and the sensitivity of the company’s profit to changes in commodity prices and exchange rates are based on numerous assumptions of management regarding operating matters and on assumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation or utilities, adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies.

We assume no obligation to update forward-looking statements except as required under securities laws. Further information concerning risks and uncertainties associated with these forward-looking statements and our business can be found in our Annual Information Form for the year ended December 31, 2011, filed on SEDAR and on EDGAR under cover of Form 40-F.