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TECK REPORTS UNAUDITED SECOND QUARTER RESULTS FOR 2012



Teck Reports Unaudited Second Quarter Results for 2012
Marketwire
 
 
Teck Resources Limited
TSX:TCK.A
TSX:TCK.B
NYSE:TCK
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July 25, 2012
Teck Reports Unaudited Second Quarter Results for 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 25, 2012) -

All dollar amounts expressed in this news release are in Canadian dollars unless otherwise noted.

Teck Resources Limited (TSX: TCK.A and TCK.B, NYSE: TCK) reported second quarter adjusted profit of $312 million, or $0.53 per share, compared with $663 million or $1.12 per share in 2011.



"We are pleased with our operating results for the second quarter, with record quarterly copper production, a significant increase in coal sales compared with the last quarter and settlement of labour agreements at our Trail and Cardinal River operations.

Notwithstanding these increases, commodity prices were lower due in part to uncertainty over global economic conditions, resulting in lower profits compared with the second quarter of last year.

However, our balance sheet remains strong with $3.6 billion of cash, which positions us to continue advancing our longer term growth plans," said Don Lindsay, President and CEO.

Highlights and Significant Items


--  Gross profit before depreciation and amortization was $1.0 billion in
    the second quarter compared with $1.4 billion the second quarter of
    2011.
      
--  Cash flow from operations, before working capital changes, was $725
    million in the second quarter compared with $1.2 billion a year ago.
      
--  Profit attributable to shareholders was $268 million and EBITDA was $790
    million in the second quarter.
      
--  To date we have reached agreements with our coal customers to sell 5.0
    million tonnes of coal in the third quarter of 2012 and we expect to
    conclude additional sales over the course of the quarter.

While prices for our premium coal have been agreed at US$225 per tonne, the average price for all products is approximately US$198 per tonne. -- Our cash balance was $3.6 billion at June 30, 2012, after capital expenditures, investments and debt payments totaling $891 million in the second quarter. -- New five-year labour agreements were ratified at our Trail Operations in the second quarter and at our Cardinal River Operations in early July. -- We achieved record quarterly copper production of 90,000 tonnes in the second quarter, which reflects our share of significantly higher production from Antaminas major mill expansion. -- Subsequent to quarter end, the Social and Environmental Impact Assessment for the Quebrada Blanca Phase 2 project was voluntarily withdrawn in response to comments from Chilean regulators and requests for additional information.

We are working with the regulators to define the time frame for resubmission of the application. -- We declared a $0.40 per share dividend on our Class A common shares and Class B subordinate voting shares, which was paid on July 3, 2012.
 
This managements discussion and analysis is dated as at July 24, 2012 and should be read in conjunction with the unaudited consolidated financial statements of Teck Resources Limited (Teck) and the notes thereto for the three months ended June 30, 2012 and with the audited consolidated financial statements of Teck and the notes thereto for the year ended December 31, 2011.

In this news release, unless the context otherwise dictates, a reference to "the company" or "us," "we" or "our" refers to Teck and its subsidiaries.

Additional information, including our annual information form and managements discussion and analysis for the year ended December 31, 2011, is available on SEDAR at www.sedar.com.

This document contains forward-looking statements.

Please refer to the cautionary language under the heading "CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION" below.

Overview

We continue to make significant progress on our plan to increase copper and coal production.

Copper production of 90,000 tonnes was a new quarterly record, with further increases expected in each of the next two quarters.

Coal production was reduced by approximately 700,000 tonnes due to the nine-day Canadian Pacific Railway labour disruption which caused a complete shutdown of rail operations from our Elk Valley mines.

However, material moved was maintained at our first quarter levels and this will benefit production in future periods.



Base metal prices weakened during the second quarter.

Contract coal prices were weaker than those we experienced in the previous quarter, but coal sales volumes increased.

Unit operating costs at our coal operations rose slightly as a result of the effect of lower production levels as we were forced to temporarily curtail production due to the rail strike.

Our strong cash flow, debt capacity and cash position of $3.6 billion, together with access to capital markets, should provide the financial capacity necessary to fund our attractive portfolio of growth projects.

Profit and Adjusted Profit(i)

Adjusted profit, which excludes the effect of certain transactions as described in the table below, was $312 million, or $0.53 per share, in the second quarter of 2012 compared with $663 million, or $1.12 per share, in the same period a year ago.

The decline in adjusted profit was primarily due to significantly lower coal and metal prices.

Also contributing to the lower adjusted profit were negative after-tax pricing adjustments of $53 million as a result of declining metal prices in the quarter compared with minimal adjustments in the second quarter of 2011.

Partly offsetting these items was a 21% and 10% rise in coal and copper sales volumes, respectively.

Profit attributable to shareholders was $268 million, or $0.46 per share, in the second quarter compared with $756 million or $1.28 per share in the same period last year.




                                             Three months       Six months  
                                           ended June 30,    ended June 30, 
($ in millions)                             2012     2011     2012     2011 
----------------------------------------------------------------------------
                                                                            
Profit attributable to shareholders as                                      
 reported                                $   268  $   756  $   486  $ 1,217 
Add (deduct):                                                               
  Asset sale gains                           (19)    (113)     (21)    (121)
  Foreign exchange (gains) losses             13        2       19       (5)
  Derivative (gains) losses                   12       (8)     (47)      (4)
  Collective agreement charges                38       26       50       26 
  Financing items                              -        -      329        - 
                                        ------------------------------------
Adjusted profit                          $   312  $   663  $   816  $ 1,113 
                                        ------------------------------------
                                                                            
Adjusted earnings per share              $  0.53  $  1.12  $  1.39  $  1.88 
                                        ------------------------------------
 
(i) Our financial results are prepared in accordance with International Financial Reporting Standards ("IFRS").

This news release refers to adjusted profit, adjusted earnings per share, EBITDA and gross profit before depreciation and amortization, which are not measures recognized under IFRS in Canada and do not have a standardized meaning prescribed by IFRS or Generally Accepted Accounting Principles ("GAAP") in the United States.

For adjusted profit we adjust profit attributable to shareholders as reported to remove the effect of certain kinds of transactions in these measures.

EBITDA is profit attributable to shareholders before net finance expense, income taxes, depreciation and amortization.

Gross profit before depreciation and amortization is gross profit with depreciation and amortization added back.

These measures may differ from those used by, and may not be comparable to such measures as reported by, other issuers.

We disclose these measures, which have been derived from our financial statements and applied on a consistent basis, because we believe they are of assistance in understanding the results of our operations and financial position and are meant to provide further information about our financial results to investors.

Business Unit Results

Our business unit results are presented in the tables below.


Three Months ended June 30                                                  
                                      Gross profit before                   
                                       depreciation and                     
($ in millions)       Revenues           amortization         Gross profit  
----------------------------------------------------------------------------
                      2012    2011         2012         2011    2012    2011
----------------------------------------------------------------------------
                                                                            
Copper             $   731 $   749      $   342      $   427 $   255 $   355
Coal                 1,362   1,471          596          844     450     709
Zinc                   467     576           54          156      30     133
Energy                   1       -            -            -       -       -
----------------------------------------------------------------------------
Total              $ 2,561 $ 2,796      $   992      $ 1,427 $   735 $ 1,197
----------------------------------------------------------------------------
 
We achieved record copper production of 90,000 tonnes in the second quarter, an increase of 13% from the same period a year ago, reflecting our share of additional production from Antaminas mine expansion program and increased throughput at Highland Valley.

Despite the record production and resulting 10% rise in copper sales volumes, gross profit before depreciation and amortization decreased by $85 million in the second quarter compared with a year ago as a result of a 14% decline in copper prices and increased unit costs.

Operating costs rose in the quarter, reflecting higher costs for labour, energy and various consumables.

Our average total cash unit costs of product sold, after by-product credits, in the second quarter of 2012 was US$1.74 per pound compared with US$1.56 per pound in the second quarter of 2011.

Gross profit before depreciation and amortization from our coal business unit decreased by $248 million in the second quarter compared to the same period a year ago as a result of significantly lower coal prices, despite increased sales volumes.

Coal production was 5.7 million tonnes in the second quarter, similar to the same period a year ago.

Approximately 700,000 tonnes of coal production was lost due to the Canadian Pacific Railway strike, which caused a complete shutdown of rail operations from the Elk Valley mines for a nine-day period.

The reduction in production volume increased unit costs of production and costs of sales in the quarter.

Sales volumes were 6.7 million tonnes compared with 5.6 million tonnes in the second quarter of 2011.

The average coal price of US$202 per tonne in the second quarter decreased by 26% from the second quarter of last year.

Coal prices last year had reached record high levels due to the combination of strong demand for seaborne, high-quality steelmaking coal and weather-related restrictions on the supply of coal from Australia.

Total unit cost of sales in the second quarter, including depreciation and transportation charges, were similar to the same period last year.



Gross profit before depreciation and amortization from our zinc business unit decreased by $102 million in the second quarter compared with a year ago.

This was primarily due to a one-time charge of $51 million ($38 million after-tax) related to the new labour agreement at Trail, lower metal prices and reduced sales volumes from Red Dog.

Red Dog zinc production declined by 9% in the second quarter compared with the same period a year ago due to unplanned maintenance shutdowns.

Refined zinc and lead production from Trail were similar to the same period a year ago.

Zinc sales volumes in the second quarter from Red Dog decreased by 22% as a result of the timing of shipments, as customers had advanced shipments into the first quarter of 2012.

Zinc and lead prices decreased 15% and 22%, respectively, in the second quarter of 2012 compared with the same period a year ago.

Revenues

Revenues from operations were $2.6 billion in the second quarter compared with $2.8 billion a year ago.

Revenues from our copper business unit declined slightly from a year ago as lower copper prices were partially offset by higher sales volumes.

Coal revenues decreased by $109 million compared with the second quarter of 2011 as a result of significantly lower coal prices despite a 21% increase in sales volumes.

Revenues from our zinc business unit declined by $109 million from a year ago as a result of lower metal prices and a 22% decline in sales volumes from Red Dog.

Average Prices and Exchange Rates(i)


                                       Three months          Six months     
                                      ended June 30,       ended June 30,   
                                    2012  2011 % Change  2012  2011 % Change
----------------------------------------------------------------------------
                                                                            
Copper (LME Cash - US$/pound)       3.57  4.14     -14%  3.67  4.26     -14%
Coal (realized - US$/tonne)          202   272     -26%   212   242     -12%
Zinc (LME Cash - US$/pound)         0.87  1.02     -15%  0.90  1.05     -14%
Silver (LME PM fix - US$/ounce)       29    38     -24%    31    35     -11%
Molybdenum (published price -                                               
 US$/pound)                           14    17     -18%    14    17     -18%
Lead (LME Cash - US$/pound)         0.90  1.16     -22%  0.92  1.17     -21%
Cdn/U.S.

exchange rate (Bank of Canada) 1.01 0.97 +4% 1.01 0.98 +3%
 
(i) Except for coal prices, the average commodity prices disclosed above are based on published benchmark prices and are provided for information only.

Our actual revenues are determined using commodity prices and other terms and conditions specified in our various sales contracts with our customers.

The molybdenum price is the price published in Platts Metals Week.

Our year-to-date business unit results are presented in the table below:


Six Months ended June 30                                                    
                                     Gross profit before                    
                                      depreciation and                      
($ in millions)     Revenues            amortization          Gross profit  
----------------------------------------------------------------------------
                    2012    2011          2012          2011    2012    2011
----------------------------------------------------------------------------
                                                                            
Copper           $ 1,484 $ 1,522       $   708       $   896 $   540 $   753
Coal               2,560   2,490         1,241         1,321     990   1,065
Zinc               1,062   1,150           173           323     123     276
Energy                 2       -             1             -       -       -
----------------------------------------------------------------------------
Total            $ 5,108 $ 5,162       $ 2,123       $ 2,540 $ 1,653 $ 2,094
----------------------------------------------------------------------------
 
BUSINESS UNIT RESULTS

The table below shows our production and sales of our major products.


                  Units                                                     
                 (000s)        Production                   Sales          
----------------------------------------------------------------------------
                           Second                    Second                 
                           Quarter    Year-to-date   Quarter    Year-to-date
                        ------------ ------------------------- -------------
(note 1)                  2012  2011   2012   2011  2012  2011   2012   2011
------------------------------------ ------------------------- -------------
                                                                            
Principal                                                                   
 products                                                                   
                                                                            
  Copper                                                                    
    Contained in                                                            
     concentrate  tonnes    72    62    135    119    67    60    132    116
    Cathode       tonnes    18    18     36     36    18    17     36     34
                        ----------------------------------------------------
                            90    80    171    155    85    77    168    150
                        ----------------------------------------------------
                                                                            
  Coal            tonnes 5,707 5,756 11,972 10,135 6,716 5,566 12,021 10,517
                                                                            
  Zinc                                                                      
    Contained in                                                            
     concentrate  tonnes   149   166    296    332    79    99    214    228
    Refined       tonnes    69    71    143    143    69    72    145    145
                                                                            
Other products                                                              
  Lead                                                                      
    Contained in                                                            
     concentrate  tonnes    24    22     47     43     -     -      -      -
    Refined       tonnes    22    21     43     44    21    22     43     42
                                                                            
  Molybdenum                                                                
    Contained in                                                            
     concentrate  pounds 3,234 2,342  6,204  4,221 3,280 2,223  6,390  4,578
                                                                            
----------------------------------------------------------------------------

1.

We include 100% of production and sales from our Highland Valley Copper, Quebrada Blanca and Carmen de Andacollo mines in our production and sales volumes, even though we own 97.5%, 76.5% and 90%, respectively, of these operations, because we fully consolidate their results in our financial statements.

We include 22.5% of production and sales from Antamina, representing our proportionate equity interest in Antamina.
 
REVENUES AND GROSS PROFIT

QUARTER ENDED JUNE, 30

Our revenue, gross profit before depreciation and amortization, and gross profit by business unit are summarized in the table below:


                                        Gross profit before                 
                                          depreciation and                  
($ in millions)           Revenues          amortization       Gross profit 
----------------------------------------------------------------------------
                         2012    2011        2012        2011   2012    2011
----------------------------------------------------------------------------
                                                                            
Copper                                                                      
  Highland Valley                                                           
   Copper              $  227  $  250      $  107      $  136 $   75  $  114
  Antamina                207     184         148         134    141     129
  Quebrada Blanca         137     140          42          69     18      49
  Carmen de Andacollo     126     153          37          75     18      56
  Duck Pond                34      22          11          13      6       7
  Other                     -       -          (3)          -     (3)      -
----------------------------------------------------------------------------
                          731     749         342         427    255     355
                                                                            
Coal (note 1)           1,362   1,471         596         844    450     709
                                                                            
Zinc                                                                        
  Trail                   434     521          (7)         79    (20)     66
  Red Dog                  75     110          57          75     46      65
  Other                     2       5           4           2      4       2
  Inter-segment sales     (44)    (60)          -           -      -       -
----------------------------------------------------------------------------
                          467     576          54         156     30     133
                                                                            
Energy                      1       -           -           -      -       -
----------------------------------------------------------------------------
                                                                            
TOTAL                  $2,561  $2,796      $  992      $1,427 $  735  $1,197
----------------------------------------------------------------------------

1.

Our coal business unit represents our interest in six operating mines. We wholly own the Fording River, Coal Mountain, Line Creek and Cardinal River mines, and have a 95% partnership interest in the Elkview mine and an 80% interest in the Greenhills mine.
 
REVENUES AND GROSS PROFIT

SIX MONTHS ENDED JUNE 30

Our revenue, gross profit before depreciation and amortization, and gross profit by business unit are summarized in the table below:


                                        Gross profit before                 
                                          depreciation and                  
($ in millions)           Revenues          amortization        Gross profit
----------------------------------------------------------------------------
                         2012    2011        2012        2011   2012    2011
----------------------------------------------------------------------------
                                                                            
Copper                                                                      
  Highland Valley                                                           
   Copper              $  447  $  460      $  213      $  252 $  159  $  213
  Antamina                413     402         296         294    283     283
  Quebrada Blanca         273     283          86         151     37     108
  Carmen de Andacollo     281     310          95         168     54     129
  Duck Pond                68      67          21          31     10      20
  Other                     2       -          (3)          -     (3)      -
----------------------------------------------------------------------------
                        1,484   1,522         708         896    540     753
                                                                            
Coal (note 1)           2,560   2,490       1,241       1,321    990   1,065
                                                                            
Zinc                                                                        
  Trail                   929   1,006          33         156      8     131
  Red Dog                 228     253         134         161    110     139
  Other                     4      11           6           6      5       6
  Inter-segment sales     (99)   (120)          -           -      -       -
----------------------------------------------------------------------------
                        1,062   1,150         173         323    123     276
                                                                            
Energy                      2       -           1           -      -       -
----------------------------------------------------------------------------
                                                                            
TOTAL                  $5,108  $5,162      $2,123      $2,540 $1,653  $2,094
----------------------------------------------------------------------------

1.

Our coal business unit represents our interest in six operating mines. We wholly own the Fording River, Coal Mountain, Line Creek and Cardinal River mines, have a 95% partnership interest in the Elkview mine and an 80% joint venture interest in the Greenhills mine.
 
COPPER

Highland Valley Copper (97.5%)

Operating results at the 100% level are summarized in the following table:


                                     Three months ended    Six months ended 
                                               June 30,            June 30, 
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Tonnes milled (000s)                  11,894    10,286    22,768    19,868 
                                                                            
Copper                                                                      
  Grade (%)                              0.28      0.28      0.25      0.27 
  Recovery (%)                           82.9      88.4      83.9      87.9 
  Production (000s tonnes)              27.3      25.8      47.4      47.2 
  Sales (000s tonnes)                   25.6      26.6      48.7      46.8 
                                                                            
Molybdenum                                                                  
  Production (million pounds)             2.6       1.7       4.8       3.1 
  Sales (million pounds)                  2.4       1.7       4.7       3.5 
                                                                            
Cost of sales ($ millions)                                                  
  Operating costs                    $    112  $    106  $    218  $    192 
  Distribution costs                 $      8  $      8  $     16  $     16 
  Depreciation and amortization      $     32  $     22  $     54  $     39 
                                                                            
Gross profit summary ($ millions)                                           
 (note 1)                                                                   
  Before depreciation and                                                   
   amortization                      $    107  $    136  $    213  $    252 
  Depreciation and amortization           (32)      (22)      (54)      (39)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $     75  $    114  $    159  $    213 
----------------------------------------------------------------------------

1.

Results do not include a provision for the 2.5% non-controlling interest in Highland Valley Copper.
 
The decline in Highland Valley Coppers second quarter gross profit before depreciation and amortization was primarily due to lower copper prices.

Copper sales volumes in the second quarter were slightly lower than the same period a year ago due to timing of shipments.

Copper production of 27,300 tonnes was 6% higher primarily as a result of higher throughput in the mill, partially offset by lower recovery.

Throughput improvement projects are continuing to demonstrate strong results as the mill processed 16% more material than the same quarter last year.

Molybdenum production was also strong in the quarter as a result of the additional throughput and higher feed grades.

Cost of sales in the second quarter were similar to the same quarter a year ago, with the benefits realized from improvement projects largely offsetting higher costs associated with the increased throughput.

The mill modernization project is progressing, with detailed engineering now over 50% complete.

Concrete work has started and steel erection will commence in the third quarter.



Antamina (22.5%)

Operating results at the 100% level are summarized in the following table:


                                     Three months ended    Six months ended 
                                               June 30,            June 30, 
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Tonnes milled (000s)                                                       
  Copper-only ore                       7,796     5,811    14,182    10,783 
  Copper-zinc ore                       4,499     3,442     8,275     7,759 
  --------------------------------------------------------------------------
                                                                            
                                       12,295     9,253    22,457    18,542 
Copper (note 1)                                                             
  Grade (%)                              1.01      0.90      1.03      0.95 
  Recovery (%)                           86.4      84.8      86.5      84.1 
  Production (000s tonnes)             106.9      69.1     201.7     145.5 
  Sales (000s tonnes)                  100.6      72.4     194.9     152.7 
                                                                            
Zinc (note 1)                                                               
  Grade (%)                              1.84      2.38      1.85      2.27 
  Recovery (%)                           79.9      85.9      79.7      85.3 
  Production (000s tonnes)              64.2      71.6     123.5     156.4 
  Sales (000s tonnes)                   64.1      64.8     111.6     154.8 
                                                                            
Molybdenum                                                                  
  Production (million pounds)             3.0       2.7       6.4       4.9 
  Sales (million pounds)                  3.2       2.3       7.6       4.9 
                                                                            
Cost of sales (US$ millions)                                                
  Operating costs                    $    191  $    133  $    366  $    273 
  Distribution costs                 $     27  $     19  $     51  $     44 
  Royalties and other costs (note 2) $     47  $     49  $    103  $    115 
  Depreciation and amortization      $     35  $     27  $     64  $     53 
                                                                            
Gross profit summary (our 22.5%                                             
 share) ($ millions)                                                        
  Before depreciation and                                                   
   amortization                      $    148  $    134  $    296  $    294 
  Depreciation and amortization            (7)       (5)      (13)      (11)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $    141  $    129  $    283  $    283 
----------------------------------------------------------------------------

1.

Copper ore grades and recoveries apply to all of the processed ores. Zinc ore grades and recoveries apply to copper-zinc ores only.

2.

In addition to royalties paid by Antamina, we also pay a royalty in connection with the acquisition of our interest in Antamina equivalent to 7.4% of our share of cash flow distributed by the mine.
 
The increase in our 22.5% share of Antaminas gross profit before depreciation and amortization in the second quarter was primarily due to higher copper production and sales volumes as the benefits from the expansion project began to be realized.

Higher sales volumes were partially offset by the significantly lower copper and zinc prices.



Tonnes milled in the second quarter were 33% higher than a year ago and averaged approximately 135,100 tonnes per day, which reflects Antaminas expanded mill capacity.



The mix of mill feed in the second quarter was 63% copper-only ore and 37% copper-zinc ore, similar to the same period a year ago.

Copper production increased by 55% to 106,900 tonnes compared with 69,100 tonnes in the second quarter of 2011.

The higher production was the result of the mill expansion, as well as higher head grades and improved recovery.

Zinc production decreased to 64,200 tonnes from 71,600 tonnes in the same period a year ago due to lower zinc grades and recoveries.

Molybdenum production rose slightly in the second quarter compared with a year ago as a result of higher throughput of copper-only ores with higher molybdenum grades.



Negotiations for a new collective labour agreement have commenced as the current agreement expired on July 23, 2012.

Quebrada Blanca (76.5%)

Operating results at the 100% level are summarized in the following table:


                                     Three months ended    Six months ended 
                                               June 30,            June 30, 
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Tonnes placed (000s)                                                       
  Heap leach ore                        1,773     1,841     3,226     3,279 
  Dump leach ore                        6,806     5,917    12,244    12,256 
  --------------------------------------------------------------------------
                                                                            
                                        8,579     7,758    15,470    15,535 
Grade (TCu%) (note 1)                                                       
  Heap leach ore                         0.91      1.04      0.89      0.93 
  Dump leach ore                         0.43      0.50      0.44      0.45 
                                                                            
Production (000s tonnes)                                                   
  Heap leach ore                          9.8       8.7      20.3      16.3 
  Dump leach ore                          6.4       7.6      12.8      15.8 
  --------------------------------------------------------------------------
                                         16.2      16.3      33.1      32.1 
                                                                            
Sales (000s tonnes)                     16.9      15.6      33.3      30.5 
                                                                            
Cost of sales (US$ million)                                                 
  Operating costs                    $     93  $     72  $    183  $    131 
  Distribution costs                 $      2  $      1  $      4  $      3 
  Depreciation and amortization      $     23  $     21  $     48  $     44 
                                                                            
Gross profit summary ($ millions)                                           
 (note 2)                                                                   
  Before depreciation and                                                   
   amortization                      $     42  $     69  $     86  $    151 
  Depreciation and amortization           (24)      (20)      (49)      (43)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $     18  $     49  $     37  $    108 
----------------------------------------------------------------------------

1.

TCu% is the percent assayed total copper grade.

2.

Results do not include a provision for the 23.5% non-controlling interest in Quebrada Blanca.
 
Quebrada Blancas gross profit before depreciation and amortization declined in the second quarter due to lower copper prices and higher operating costs, partly offset by higher sales volumes.



Cathode copper production in the second quarter of 16,200 tonnes was similar to the same period a year ago.

Operating costs increased by US$21 million in the second quarter compared with the same period a year ago partly due to higher costs for sulphuric acid and energy, the effect of higher sales volumes that rose 8%, and an increased use of mine consumables.

In addition, labour costs rose, reflecting the new terms of the collective agreement ratified earlier in 2012.

Carmen de Andacollo (90%)

Operating results at the 100% level are summarized in the following table:


                                     Three months ended    Six months ended 
                                               June 30,            June 30, 
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Tonnes milled (000s)                   4,063     3,562     7,961     7,285 
Copper                                                                      
  Grade (%)                              0.51      0.52      0.51      0.51 
  Recovery (%)                           85.1      89.5      86.2      88.1 
  Production (000s tonnes)              17.7      16.7      35.3      33.0 
  Sales (000s tonnes)                   15.2      14.9      32.0      28.9 
                                                                            
Gold (note 1)                                                               
  Production (000s ounces)              11.8      13.1      24.7      26.7 
  Sales (000s ounces)                   11.1      10.0      24.2      21.8 
                                                                            
Copper cathode                                                              
  Production (000s tonnes)               0.8       1.4       2.4       3.4 
  Sales (000s tonnes)                    0.7       1.6       2.7       3.6 
                                                                            
Cost of sales (US$ million)                                                 
  Operating costs                    $     82  $     76  $    173  $    136 
  Distribution costs                 $      6  $      4  $     12  $     10 
  Depreciation and amortization      $     19  $     20  $     41  $     40 
                                                                            
Gross profit summary ($ millions)                                           
 (note 2)                                                                   
  Before depreciation and                                                   
   amortization                      $     37  $     75  $     95  $    168 
  Depreciation and amortization           (19)      (19)      (41)      (39)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $     18  $     56  $     54  $    129 
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1.

Carmen de Andacollo processes 100% of gold mined, but 75% of the gold produced is for the account of Royal Gold Inc.

2.

Results do not include a provision for the 10% non-controlling interest in Andacollo.
 
The decrease in Carmen de Andacollos second quarter gross profit before depreciation and amortization was primarily due to lower copper prices and higher operating costs.

Production in the second quarter rose by 6% to 17,700, which reflects additional mill throughput as a result of mill modification enhancements completed earlier this year.

The 20,000 tonnes per day pre-crushing plant will be ramped-up during the third quarter, and is expected to further increase plant throughput.

Operating costs in the second quarter rose 8% from a year ago partly as result of higher labour costs, additional manpower levels and higher costs for energy.

The expansion study at Carmen de Andacollo has evaluated both additional grinding (SAG mill 2) and additional pre-crushing as ways to increase concentrator throughput.

Further circuit configuration and economic evaluation for the expansion will be undertaken based on the performance of the new 20,000-tonnes-per-day pre-crushing plant during the second and third quarters of 2012.

During this period we will continue infill drilling to evaluate the resource potential and continue our investigation of sources available for additional water required for the expansion.

We will also continue metallurgical test work to finalize the molybdenum recovery circuit.

Duck Pond (100%)

Duck Ponds gross profit before depreciation and amortization was $11 million in the second quarter compared with $13 million in the same period a year ago.

Copper and zinc production in the second quarter were 3,800 tonnes and 5,500 tonnes, respectively, compared with 3,700 tonnes and 5,900 tonnes, respectively, last year.

Copper and zinc sales in the second quarter were 3,700 tonnes and 4,700 tonnes, respectively, compared with 1,900 tonnes and 3,200 tonnes, respectively, last year.

Copper Development Projects

Quebrada Blanca Phase 2

During the quarter we completed a feasibility study on our Quebrada Blanca hypogene project.

The study estimates a capital cost for the development of the project of US$5.6 billion on a 100% basis (in January 2012 dollars, not including working capital or interest during construction), of which our funding share would be US$4.8 billion.

The study contemplates the construction of a 135,000 tonne per day concentrator and related facilities connected to a new port facility by 165 kilometre concentrate and desalinated water pipelines.

As part of the ongoing project work plan for 2012, the Social Environmental Impact Assessment for the project was submitted to the Chilean regulatory authorities during the second quarter.

This was subsequently voluntarily withdrawn in order to allow us to respond to comments and to provide additional information requested by the Chilean authorities in the most effective manner.

We are currently reviewing the requests and comments of the regulators and after discussions with them to clarify their requirements, the application will be resubmitted.

Discussions are ongoing with various potential suppliers for power to the project.

We are also in discussions with the other shareholders of Quebrada Blanca concerning financing options for the hypogene project, which may include limited recourse project financing and, possibly, bringing in a new funding partner.

A decision to proceed with development will depend on the outcome of these discussions and progress on permitting issues.

Relincho

The feasibility study is progressing on schedule and is expected to be complete by the end of the first quarter of 2013.

Exploration and geotechnical drilling are ongoing and a new resource and reserve estimate is expected at the completion of the feasibility study.

Based on the prefeasibility design, production would average 180,000 tonnes per year of copper and 6,000 tonnes per year of molybdenum over a 22-year mine life, with higher production in the first five years.

Galore Creek (50%)

The Galore Creek project team is currently executing a $25 million work program for 2012 which was previously approved by the partners.

The 2012 work program includes approximately 25,000 meters of infill and geotechnical drilling, which commenced in the second quarter to support the advanced engineering work completed in the fourth quarter of 2011.



COAL

Teck Coal Partnership (100%)

Operating results at the 100% level are summarized in the following table:


                                     Three months ended    Six months ended 
                                               June 30,            June 30, 
                                         2012      2011      2012      2011 
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Production (000s tonnes)               5,707     5,756    11,972    10,135 
                                                                            
Sales (000s tonnes)                    6,716     5,566    12,021    10,517 
                                                                            
Average sale price                                                          
  US$/tonne                          $    202  $    272  $    212  $    242 
  C$/tonne                           $    203  $    264  $    213  $    237 
                                                                            
Operating expenses (C$/tonne)                                               
  Cost of product sold               $     77  $     80  $     74  $     78 
  Transportation                     $     37  $     33  $     36  $     33 
  Depreciation and amortization      $     22  $     24  $     21  $     24 
                                                                            
Gross profit summary ($ millions)                                           
  Before depreciation and                                                   
   amortization                      $    596  $    844  $  1,241  $  1,321 
  Depreciation and amortization          (146)     (135)     (251)     (256)
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  After depreciation and                                                    
   amortization                      $    450  $    709  $    990  $  1,065 
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Gross profit before depreciation and amortization in the second quarter declined primarily due to significantly lower selling prices, partially offset by higher sales volumes than in the second quarter of 2011.

Coal production of 5.7 million tonnes in the second quarter was similar to the same quarter a year ago.

Although our production capacity has increased in the past year, the Canadian Pacific Railway strike caused a complete shutdown of rail operations from the Elk Valley mines for a nine-day period.

Due to limited storage capacity at most mines, the inability to ship coal immediately resulted in approximately 700,000 tonnes of lost production.

A one-week delay in completing a two-week planned maintenance outage at our primary west coast port facility and start-up issues on the Elkview plant upgrade subsequent to commissioning also contributed to lower production this quarter.

The volume of material moved in the second quarter of 76.5 million banked cubic metres ("BCM") was 10% higher than the same quarter in 2011, and raw coal production has also significantly increased over last years levels.

Subject to market conditions for the remainder of the year, production is expected to remain within the current guidance of 24.5 to 25.5 million tonnes in 2012, in spite of the loss of 700,000 tonnes of production during the rail strike.

The average coal price of US$202 per tonne in the second quarter was 26% lower than the same period last year.

Prices in the prior year period had reached record levels due to the combination of strong demand and reduced supply of high-quality steelmaking coal on the seaborne market.

Prices have been agreed with the majority of the quarterly contract customers for the third quarter of 2012 based on pricing of approximately US$225 per tonne for our highest quality product.

As of the date of this release, negotiated sales are approximately 5.0 million tonnes of coal for delivery in the third quarter at an average price of US$198 per tonne for all our products.

We are still in pricing discussions with some of our quarterly contract customers and our third quarter sales will depend on market conditions over the balance of the quarter.

Vessel nominations for quarterly contract tonnage are determined by customers and final sales for the quarter will depend on vessels arriving at port as scheduled, as well as on the level of additional sales.



Unit cost of product sold in the second quarter before transportation and depreciation charges was $77 per tonne compared with $73 per tonne in the same period a year ago before a $7 per tonne one-time labour charge and $70 per tonne in the first quarter of this year.

The higher unit costs were primarily due to increased waste stripping activities, as strip ratios increased to 11.7 in the second quarter compared with 10.6 in the second quarter of 2011.

Additional waste stripping took place while the rail strike prevented any rail shipments.

The 2012 annual cost of product sold is expected to fall within our current guidance range of $72 to $78 per tonne for current production plans.

Unit transportation costs increased by $4 per tonne compared with the same quarter a year ago partly due to higher port costs and increased ocean freight costs as a higher portion of our sales being made is inclusive of ocean freight.

The rate under a new port services agreement for westbound coal into our primary west coast port facility increased starting in April 2012.

A number of opportunities have been undertaken to utilize different coal terminals in North America as a means of supplementing capacity during the planned outages, which are required to complete expansion programs at the Vancouver terminals, and as a risk reduction measure.

These include Pacific Coast Terminals in Port Moody and the Port of Quebec.

The additional costs incurred to ship to these alternative locations also contributed to the higher transportation costs in the second quarter.

Annual unit transportation costs are expected to remain within the range of $34 to $38 per tonne.

Depreciation and amortization decreased by $2 per tonne due to the significant increase in coal reserves recorded in 2011 as a result of our drilling program.



Execution of our coal growth strategy continued during the quarter and $57 million was invested in expansion capital, mainly related to the Quintette re-opening project, a shovel purchase at Cardinal River, pre-stripping spending that will maximize Line Creek capacity, and the Neptune Bulk Terminals expansion project.

The feasibility study for the reopening of the Quintette mine in British Columbia is progressing with completion expected in the third quarter of this year.

The Mines Act Permit Amendment ("MAPA") application was submitted in April and is being reviewed with the Provincial regulators in order to comply with the newly issued draft guidelines pertaining to caribou management plans.

Permit approval is not expected before the first half of 2013.

First coal production could occur approximately 12 months after receipt of this permit.

Work is ongoing to develop and implement selenium management plans for each of the six operating coal mines and the Quintette project.

Permitting for current and future projects will depend on acceptable selenium management plans being developed and implemented.

Water treatment is being planned at three mine sites in the Elk Valley, entailing expenditures of approximately $175 million over the next three years.

Construction will commence later this year at the Line Creek Operation.

In addition, an extensive applied research and development program focused on the development of long-term lower-cost methods of designing mines to reduce selenium generation has been initiated.

Selenium management plans are not yet complete and additional costs could be incurred which may be significant.



Neptune Bulk Terminals, of which we have a 46% ownership interest, will further expand its annual coal throughput capacity by an additional six million metric tonnes within the existing footprint.

Neptunes annual coal handling capacity is currently nine million tonnes.

This will be increased to 12.5 million tonnes with the addition of a second stacker reclaimer, already in the fabrication phase, in the spring of 2013.

This next expansion phase is expected to take terminal capacity to 18.5 million tonnes per year.

The proposed upgrades will include a second railcar dumper and associated conveying system, a new rail track within the existing rail loop, and the replacement of a ship loader and foundation reinforcement of the loading berth.

The feasibility study for this expansion is expected to be completed in the third quarter.

ZINC

Trail (100%)

Operating results at the 100% level are summarized in the following table:


                                     Three months ended    Six months ended 
                                               June 30,            June 30, 
                                         2012      2011      2012      2011 
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Metal production                                                            
  Zinc (000s tonnes)                    69.5      71.6     143.5     143.5 
  Lead (000s tonnes)                    21.7      21.2      42.7      43.7 
  Silver (million ounces)                 5.2       5.6      10.6      11.0 
                                                                            
Metal sales                                                                 
  Zinc (000s tonnes)                    68.5      71.6     144.7     144.7 	



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