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Q & A Highlights

Q: Can you provide more details on the QB2 ramp-up and its performance since the January shutdown? A: Jonathan Price, CEO: The ramp-up is progressing well and aligns with our benchmark ramp-up timelines. The 18-day shutdown in January for maintenance and reliability work is reflected in our 2025 guidance of 230,000 to 270,000 tonnes. Post-shutdown, operations have been running according to our plans, and we are confident in achieving our guidance range.

Q: What is the planned schedule for future maintenance shutdowns at QB2? A: Jonathan Price, CEO: We expect the plant's online time to be around 92%, implying a shutdown of about seven days each quarter. We plan to maintain this cadence throughout 2025.

Q: How does Teck plan to balance its strong balance sheet with capital allocation, shareholder returns, and potential M&A? A: Jonathan Price, CEO: Our capital allocation focuses on value creation for shareholders. We have a significant share buyback authorization and a base dividend. Excess cash will be returned to shareholders or invested in low-capital, high-return projects like Highland Valley, Zafranal, and San Nicolas. Our focus remains on organic growth rather than M&A.

Q: Can you provide an update on the potential tie-up or JV with Collahuasi? A: Jonathan Price, CEO: We recognize the potential value of a tie-up with Collahuasi and have engaged in discussions with partners. However, our primary focus is on optimizing QB's ramp-up and debottlenecking. Discussions are confidential, but we aim to maximize value for Teck shareholders.

Q: What are the key factors influencing the decision to sanction the Zafranal project? A: Jonathan Price, CEO: Sanctioning Zafranal depends on completing studies, engineering work, and securing permits. The project's economics, including strong IRRs and cash flow potential, are compelling. We are progressing towards a potential sanction decision, focusing on ensuring all financial metrics align with our expectations.

Q: How does Teck view its zinc segment in terms of capital allocation and future growth? A: Jonathan Price, CEO: We view capital allocation holistically, with zinc competing for capital based on returns. Zinc fundamentals are attractive, and Red Dog is a world-class operation. We aim to extend Red Dog's life and maintain a strong position in the zinc market, supported by potential future sources like San Nicolas.

Q: What is the status of the Highland Valley life extension project, and how are you addressing indigenous concerns? A: Jonathan Price, CEO: We are in the final phases of the EA process, with a formal dispute process in place to resolve issues. We have agreements with other indigenous groups and continue to engage with SSN. We are confident in moving forward successfully and expect to sanction the project later this year.

Q: How does Teck plan to address the cash flow challenges at Trail operations? A: Jonathan Price, CEO: We are focused on profitability and cash generation at Trail, implementing cost reductions and optimizing operations. Trail is strategically important, producing critical metals like germanium. We aim to maintain its place in the portfolio by ensuring profitability and leveraging its strategic benefits.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.