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TECK REPORTS UNAUDITED FOURTH QUARTER RESULTS FOR 2012



Teck Reports Unaudited Fourth Quarter Results for 2012
Marketwire
 
 
Teck Resources Limited
TSX:TCK.A
TSX:TCK.B
NYSE:TCK
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February 7, 2013
Teck Reports Unaudited Fourth Quarter Results for 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb.

7, 2013) - 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, ("Teck")) reported annual adjusted profit attributable to shareholders of $1.5 billion, or $2.60 per share, compared with a record $2.5 billion or $4.18 per share in 2011.

Fourth quarter adjusted profit attributable to shareholders was $354 million, or $0.61 per share, compared with $613 million, or $1.04 per share, in the fourth quarter of 2011.

"From an operations perspective, 2012 was a good year," said Don Lindsay, President and CEO.

"Our copper production was a record, we continued to increase our steelmaking coal production and we obtained new labour agreements for a number of our operations.

However, due to uncertain global economic conditions, prices for all of our major products were down compared to last year, which resulted in lower earnings and cash flows than in 2011."

Highlights and Significant Items


--  Gross profit before depreciation and amortization in 2012 was $4.0
    billion compared with a record $5.8 billion in 2011.

Gross profit before depreciation and amortization was $961 million in the fourth quarter compared with $1.4 billion in the fourth quarter of 2011. -- Cash flow from operations, before working capital changes, was $3.2 billion in 2012 compared with a record $4.6 billion last year.

Cash flow from operations, before working capital changes, was $722 million in the fourth quarter compared with $1.2 billion a year ago. -- Profit attributable to shareholders was $811 million in 2012 compared with a record $2.7 billion in 2011.

Profit attributable to shareholders was $145 million in the fourth quarter of 2012 compared with $637 million in the same period last year. -- To date we have reached agreements with our coal customers to sell 6.0 million tonnes of coal in the first quarter of 2013 at an average price of US$159 per tonne.

We expect to conclude additional sales over the course of the quarter. -- Our cash balance was $2.9 billion as at February 6, 2013. -- In 2012, we produced a record 373,000 tonnes of copper, including 103,000 tonnes in the fourth quarter. -- We achieved significant cost reductions at our coal operations with site unit operating costs decreasing to $62 per tonne in the fourth quarter, down 17% compared with the first three quarters of 2012. -- In December, we announced a 12.5% increase in the semi-annual dividend on our Class A common and Class B subordinate voting shares to $0.45 per share. -- During the fourth quarter, we purchased for cancellation approximately 3.8 million Class B subordinate voting shares for $123 million pursuant to our normal course issuer bid announced in June 2012. -- Union employees at Antamina ratified a new three-year labour agreement in November. -- In November we redeemed the last of our high-yield notes.

Following the redemption, the average coupon rate on our outstanding notes is 4.8% with an average term to maturity of 16.5 years. -- On January 23, we were the top ranked Canadian company named to the Global 100 Most Sustainable Corporations for 2013 by media and investment research company Corporate Knights.
 
This news release is dated as at February 7, 2013.

Unless the context otherwise dictates, a reference to "Teck," "the company," "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 met our production targets for both the quarter and the year for all of our major products.

In doing so we also reduced our coal unit costs and took significant steps in our announced cost reduction program to reduce operating costs at all operations.

Unfortunately, weakness in steelmaking coal markets had a significant negative effect on prices and, to a lesser extent, volumes and our coal business was less profitable as a result.

However, our gross profit was higher than the previous quarter, helped by stronger results in copper and the seasonality of zinc and lead sales from Red Dog.



During the quarter we completed the redemption of our remaining high-yield notes and recorded a $259 million after-tax charge on the redemption.

We view the redemption as a positive step that will result in significantly lower interest charges going forward.

Debt due before the end of 2016 is now approximately US$325 million.



In project development, we continue to make good progress on the mill modernization at Highland Valley Copper, the acid plant project at Trail and the advancement of our new mine development projects.

We maintain a strong balance sheet in order to fund this internal growth.



We increased our distributions to shareholders, raising our semi-annual dividend to $0.45 per share and buying back 3.8 million Class B subordinate voting shares at a cost of $123 million.



We were also pleased to be named to the top 100 most sustainable companies at the world economic forum in Davos, placing highest among Canadian companies.

We believe our commitment to sustainability provides us with a competitive advantage in developing and operating mines throughout the world.

Profit and Adjusted Profit(i)

Adjusted profit, which excludes the effect of our debt refinancing and certain other transactions as described in the table below, was $354 million, or $0.61 per share, in the fourth quarter of 2012 compared with $613 million, or $1.04 per share, in the same period a year ago.



Our lower adjusted profit was primarily due to a 37% decline in our realized steelmaking coal prices in the fourth quarter compared with the same period a year ago.

This was despite higher sales volumes.

Partly offsetting the decline in our coal business unit were higher contributions from our copper business unit as a result of increased production levels.

Profit attributable to shareholders in the fourth quarter was affected by a $259 million after-tax charge related to the refinancing of our remaining high-yield notes, which is excluded from adjusted profit.

This transaction reduced interest costs in the fourth quarter and will result in further interest savings going forward.

Profit attributable to shareholders was $145 million, or $0.25 per share, in the fourth quarter compared with $637 million or $1.08 per share in the same period last year.




                                     Three months ended      Year ended     
                                        December 31,        December 31,    
($ in millions)                          2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Profit attributable to shareholders                                         
 as reported                         $    145  $    637  $    811  $  2,668 
Add (deduct):                                                               
  Asset sale loss (gains)                   4        (1)      (39)     (146)
  Foreign exchange (gains) losses          (1)      (14)       20        (4)
  Derivative gains                         (3)      (61)      (98)     (128)
  Collective agreement charges             11        29        70        55 
  Financing items                         259         -       784         - 
  Asset write-downs                         -        23         -        23 
  Tax items                               (61)        -       (29)        - 
                                    ----------------------------------------
Adjusted profit                      $    354  $    613  $  1,519  $  2,468 
                                    ----------------------------------------
                                                                            
Adjusted earnings per share          $   0.61  $   1.04  $   2.60  $   4.18 
                                    ----------------------------------------
 
(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 December 31                                              
                                     Gross profit before                    
                                      depreciation and                      
($ in millions)       Revenues          amortization        Gross profit    
----------------------------------------------------------------------------
                      2012      2011      2012      2011      2012      2011
----------------------------------------------------------------------------
                                                                            
Copper           $     895 $     778 $     430 $     339 $     326 $     254
Coal                 1,010     1,434       347       891       240       781
Zinc                   824       760       182       204       152       177
Energy                   1         -         2         -         1         -
----------------------------------------------------------------------------
Total            $   2,730 $   2,972 $     961 $   1,434 $     719 $   1,212
----------------------------------------------------------------------------
 
Gross profit before depreciation and amortization from our copper business unit in the fourth quarter increased by $91 million compared with a year ago as a result of production and sales volumes, which increased by approximately 15%.

Copper production in the fourth quarter was 103,000 tonnes compared with 89,000 tonnes a year ago, which was a new quarterly production record, and an increase of 4% from the third quarter of 2012.

The higher production is a result of our share of additional production from Antaminas mine expansion and the mining of higher grade sections at Highland Valley Copper.

Copper prices were also higher at US$3.59 per pound in the fourth quarter compared with US$3.40 per pound a year ago.

The higher copper prices were partly offset by a stronger Canadian dollar and lower molybdenum revenues.

Cash costs, net of by-product credits, were US$1.79 compared with US$1.51 per pound a year ago, largely due to lower by-product credits in 2012.

Gross profit before depreciation and amortization from our coal business unit decreased by $544 million in the fourth quarter compared with the same period a year ago as a result of significantly lower coal prices, despite a 16% increase in sales volumes.

The average coal price of US$159 per tonne in the fourth quarter was 37% lower than the same quarter a year ago, reflecting weaker steelmaking coal market conditions.

Coal sales of 6.4 million tonnes in the fourth quarter were 16% higher than the same period last year and exceeded prior guidance of 6.2 million tonnes.

The increase in sales volume predominantly reflects strong demand for coal delivered to China, partially offset by lower demand in our traditional markets.

Production in the fourth quarter decreased to 6.4 million tonnes, or by 5% compared with the same quarter in 2011 as a result of our decision to reduce production starting in mid-August through to the end of the year to align with customer demand.

Cost of product sold in the fourth quarter was $62 per tonne, before transportation and depreciation charges, or $3 per tonne lower than the same quarter a year ago, and 17% lower than in the first three quarters of 2012, reflecting our cost reduction efforts at our mines.

Transportation costs in the fourth quarter were $41 per tonne, 24% higher compared with the same quarter a year ago, as a result of higher ocean freight, port, rail costs and a higher than normal proportion of coal being sold inclusive of ocean freight.



Gross profit before depreciation and amortization from our zinc business unit decreased by $22 million to $182 million in the fourth quarter compared with a year ago primarily due to a lower contribution from our Trail Operations.

Trails refined zinc production and sales volumes declined by approximately 10% compared with the fourth quarter of last year due to electrolytic plant operating performance, which resulted in a temporary build-up of in-process inventories.

Red Dogs zinc production rose by 5% to 142,300 tonnes in the fourth quarter compared with the same period a year ago as a result of increased mill throughput.

Higher lead sales from Red Dog were the result of weather-related shipping delays that deferred sales from the third quarter.

This was offset by an increase in the NANA royalty rate from 25% to 30% in the fourth quarter of 2012.



Revenues

Revenues from operations were $2.7 billion in the fourth quarter compared with revenues of $3.0 billion a year ago.

Revenues from our copper business unit increased by $117 million from a year ago primarily due to higher sales volumes resulting from increased production levels.

Coal revenues decreased by $424 million compared with the fourth quarter of 2011 as a result of significantly lower coal prices, despite a 16% increase in sales volumes.

Revenues from our zinc business unit rose by $64 million from a year ago as a result of the timing of lead sales from Red Dog and slightly higher metal prices.

Average Prices and Exchange Rates(i)


                                    Three months            Year ended      
                                 ended December 31,        December 31,     
                                 2012   2011 % Change   2012   2011 % Change
----------------------------------------------------------------------------
                                                                            
Copper (LME Cash - US$/pound)    3.59   3.40      +6%   3.61   4.00     -10%
Coal (realized - US$/tonne)       159    253     -37%    193    257     -25%
Zinc (LME Cash - US$/pound)      0.88   0.86      +2%   0.88   0.99     -11%
Silver (LME PM fix -                                                        
 US$/ounce)                        33     32      +3%     31     35     -11%
Molybdenum (published price -                                               
 US$/pound)                        11     13     -15%     13     15     -13%
Lead (LME Cash - US$/pound)      1.00   0.90     +11%   0.94   1.09     -14%
Cdn/U.S.

exchange rate (Bank of Canada) 0.99 1.02 -3% 1.00 0.99 +1%
 
(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:


Year ended December 31                                                      
                                     Gross profit before                    
                                      depreciation and                      
($ in millions)       Revenues          amortization        Gross profit    
----------------------------------------------------------------------------
                      2012      2011      2012      2011      2012      2011
----------------------------------------------------------------------------
                                                                            
Copper           $   3,142 $   3,108 $   1,500 $   1,674 $   1,129 $   1,369
Coal                 4,647     5,641     2,033     3,306     1,563     2,800
Zinc                 2,550     2,765       480       808       373       708
Energy                   4         -         4         -         1         -
----------------------------------------------------------------------------
Total            $  10,343 $  11,514 $   4,017 $   5,788 $   3,066 $   4,877
----------------------------------------------------------------------------
 
BUSINESS UNIT RESULTS

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


                  Units                                                     
                 (000s)        Production                   Sales          
----------------------------------------------------------------------------
                           Fourth                    Fourth                 
                           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    88    69    307    251    89    72    302    256
    Cathode       tonnes    15    20     66     70    16    19     67     70
                        ----------------------------------------------------
                           103    89    373    321   105    91    369    326
                        ----------------------------------------------------
                                                                            
  Coal            tonnes 6,358 6,698 24,652 22,785 6,422 5,547 23,989 22,207
                                                                            
  Zinc                                                                      
    Contained in                                                            
     concentrate  tonnes   157   150    598    646   207   209    578    631
    Refined       tonnes    67    75    284    291    67    75    287    289
                                                                            
Other products                                                              
  Lead                                                                      
    Contained in                                                            
     concentrate  tonnes    26    22     95     84    50    32     96     78
    Refined       tonnes    24    22     88     86    23    21     88     84
                                                                            
  Molybdenum                                                                
    Contained in                                                            
     concentrate  pounds 3,040 3,937 12,692 10,983 3,620 3,978 13,016 11,122
----------------------------------------------------------------------------

1.

We include 100% of production and sales from our Highland Valley Copper, Quebrada Blanca and Carmen de Andacollo Operations 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 DECEMBER 31

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    Gross profit   
($ in millions)            Revenues        amortization         (loss)      
----------------------------------------------------------------------------
                          2012     2011     2012     2011     2012     2011 
----------------------------------------------------------------------------
                                                                            
Copper                                                                      
  Highland Valley                                                           
   Copper              $   314  $   275  $   172  $    92  $   141  $    64 
  Antamina                 257      202      173      149      155      142 
  Quebrada Blanca          119      139       (5)      46      (30)      17 
  Carmen de Andacollo      174      126       70       42       48       26 
  Duck Pond                 31       36       15       10        7        5 
  Other                      -        -        5        -        5        - 
----------------------------------------------------------------------------
                           895      778      430      339      326      254 
                                                                            
Coal (note 1)            1,010    1,434      347      891      240      781 
                                                                            
Zinc                                                                        
  Trail                    499      491       26       48       13       36 
  Red Dog                  376      339      157      159      140      144 
  Other                      1        3       (1)       -       (1)       - 
  Inter-segment sales      (52)     (73)       -       (3)       -       (3)
----------------------------------------------------------------------------
                           824      760      182      204      152      177 
                                                                            
Energy                       1        -        2        -        1        - 
----------------------------------------------------------------------------
                                                                            
TOTAL                  $ 2,730  $ 2,972  $   961  $ 1,434  $   719  $ 1,212 
----------------------------------------------------------------------------

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 Operations, and have a 95% partnership interest in the Elkview Mine and an 80% interest in the Greenhills Operations.
 
REVENUES AND GROSS PROFIT

YEAR ENDED DECEMBER 31

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          $  1,012  $    997  $    513  $    486 $    390  $    396
  Antamina              897       799       633       588      591       565
  Quebrada Blanca       499       562        82       255      (15)      160
  Carmen de                                                                 
   Andacollo            597       608       225       288      142       213
  Duck Pond             130       142        42        57       16        35
  Other                   7         -         5         -        5         -
----------------------------------------------------------------------------
                      3,142     3,108     1,500     1,674    1,129     1,369
                                                                            
Coal (note 1)         4,647     5,641     2,033     3,306    1,563     2,800
                                                                            
Zinc                                                                        
  Trail               1,865     1,989        64       256       14       207
  Red Dog               892     1,008       418       547      361       496
  Other                   7        18        (2)        2       (2)        2
  Inter-segment                                                             
   sales               (214)     (250)        -         3        -         3
----------------------------------------------------------------------------
                      2,550     2,765       480       808      373       708
                                                                            
Energy                    4         -         4         -        1         -
----------------------------------------------------------------------------
                                                                            
TOTAL              $ 10,343  $ 11,514  $  4,017  $  5,788 $  3,066  $  4,877
----------------------------------------------------------------------------

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 Operations, have a 95% partnership interest in the Elkview Mine and an 80% joint venture interest in the Greenhills Operation.
 
COPPER

Highland Valley Copper (97.5%)

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


                                     Three months ended      Year ended     
                                        December 31,        December 31,    
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Tonnes milled (000s)                  11,660    11,653    45,383    42,284 
                                                                            
Copper                                                                      
  Grade (%)                              0.36      0.27      0.30      0.26 
  Recovery (%)                           88.4      87.7      86.7      87.6 
  Production (000s tonnes)              37.4      27.3     116.3      97.3 
  Sales (000s tonnes)                   36.8      30.4     117.0     103.9 
                                                                            
Molybdenum                                                                  
  Production (million pounds)             2.5       2.8      10.0       7.9 
  Sales (million pounds)                  3.1       3.1      10.0       8.4 
                                                                            
Cost of sales ($ millions)                                                  
  Operating                          $    130  $    171  $    462  $    474 
  Distribution                       $     12  $     12  $     37  $     37 
  Depreciation and amortization      $     31  $     28  $    123  $     90 
                                                                            
Gross profit summary ($ millions)                                           
 (note 1)                                                                   
  Before depreciation and                                                   
   amortization                      $    172  $     92  $    513  $    486 
  Depreciation and amortization           (31)      (28)     (123)      (90)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $    141  $     64  $    390  $    396 
----------------------------------------------------------------------------

1.

Results do not include a provision for the 2.5% non-controlling interest in Highland Valley Copper.
 
Highland Valley Coppers fourth quarter gross profit before depreciation and amortization increased significantly from a year ago due to substantially higher production and sales volumes.

In addition, Highland Valleys 2011 operating costs included a one-time labour settlement charge of $44 million that contributed to the lower gross profit in the fourth quarter of 2011.

Copper production in the fourth quarter of 37,400 tonnes was 37% higher than a year ago primarily as a result of significantly higher grades.

Production was focused on the higher grade ore in the Valley pit during the fourth quarter of 2012.

Molybdenum production was 10% lower than the same period a year ago primarily due to lower ore grades.

The mill optimization project progressed in the fourth quarter with commencement of structural steel erection and placement of major equipment.

Detailed engineering was substantially complete at the end of the year.

The project is on track for completion by the end of 2013, which will enable increased throughput rates and recoveries in 2014.

Ore feed grades are expected to return to the average reserve grade in 2013, with slightly lower grades expected in the first quarter due to pit sequencing.

Mill throughput is also expected to be constrained in 2013 due to various shutdowns required for tie-ins to advance the mill optimization project.

Highland Valley Coppers production in 2013 is expected to be in the range of 100,000 to 110,000 tonnes of copper.

Molybdenum production in 2013 is expected to be approximately five million pounds.

Antamina (22.5%)

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


                                     Three months ended      Year ended     
                                        December 31,        December 31,    
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Tonnes milled (000s)                                                       
  Copper-only ore                       8,619     6,930    32,160    25,335 
  Copper-zinc ore                       3,133     2,726    14,323    12,259 
  --------------------------------------------------------------------------
                                                                            
                                       11,752     9,656    46,483    37,594 
Copper (note 1)                                                             
  Grade (%)                              1.16      1.15      1.10      1.04 
  Recovery (%)                           88.7      87.4      87.9      85.9 
  Production (000s tonnes)             121.6      95.0     446.8     333.7 
  Sales (000s tonnes)                  131.3      97.6     448.3     337.0 
                                                                            
Zinc (note 1)                                                               
  Grade (%)                              1.73      2.03      1.85      2.26 
  Recovery (%)                           82.5      81.4      80.7      84.4 
  Production (000s tonnes)              44.4      47.6     219.0     235.4 
  Sales (000s tonnes)                   62.9      44.4     229.2     232.8 
                                                                            
Molybdenum                                                                  
  Production (million pounds)             2.7       5.0      12.1      13.8 
  Sales (million pounds)                  2.4       3.9      13.5      12.3 
                                                                            
Cost of sales (US$ millions)                                                
  Operating (note 2)                 $    272  $    154  $    842  $    563 
  Distribution                       $     29  $     25  $    109  $     92 
  Royalties and other (note 3)       $     54  $     34  $    206  $    204 
  Depreciation and amortization      $     81  $     30  $    184  $    110 
                                                                            
Gross profit summary (our 22.5%                                             
 share) ($ millions)                                                        
  Before depreciation and                                                   
   amortization                      $    173  $    149  $    633  $    588 
  Depreciation and amortization           (18)       (7)      (42)      (23)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $    155  $    142  $    591  $    565 
----------------------------------------------------------------------------

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.

Cost of sales in the fourth quarter includes a US$43 million one-time labour settlement charge.

3.

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 fourth quarter was primarily due to significantly higher sales volumes as the benefits from the expansion project and resulting higher production levels were realized.

Our 22.5% share of gross profit was affected by a one-time $10 million (US$43 million - 100% basis) labour settlement charge for the new three-year labour agreement ratified in the quarter.

Tonnes milled in the fourth quarter were 22% higher than a year ago and averaged approximately 128,000 tonnes per day, which reflects Antaminas expanded mill capacity.

The mix of mill feed in the fourth quarter of 73% copper-only ore and 27% copper-zinc ore was the same as a year ago.

Copper production increased by 28% to 121,600 tonnes compared with 95,000 tonnes in the fourth quarter of 2011, reflecting the additional mill throughput and slightly improved recoveries.

Zinc production in the fourth quarter of 44,400 tonnes was 7% lower than the same period last year as lower ore grades offset the increased mill throughput.

Molybdenum production decreased in the fourth quarter compared with a year ago as a result of lower molybdenum grades and recoveries.



The increased cost of sales in the fourth quarter compared with a year ago was due to substantially increased sales volumes in both copper and zinc and the one-time US$43 million charge for the new three-year labour agreement ratified in the quarter.

Excluding the one-time labour settlement charge, total cash costs, before by-product credits, was similar to the same quarter last year.

Our 22.5% share of Antaminas copper production in 2013 is expected to be in the range of 90,000 to 100,000 tonnes and our 22.5% share of zinc production is expected to be in the range of 45,000 to 50,000 tonnes.



Quebrada Blanca (76.5%)

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


                                     Three months ended      Year ended     
                                        December 31,        December 31,    
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Tonnes placed (000s)                                                       
  Heap leach ore                        1,495     1,796     6,625     6,621 
  Dump leach ore                        5,668     6,030    25,361    23,288 
  --------------------------------------------------------------------------
                                                                            
                                        7,163     7,826    31,986    29,909 
Grade (TCu%) (note 1)                                                       
  Heap leach ore                         0.96      0.84      0.89      0.90 
  Dump leach ore                         0.54      0.43      0.50      0.46 
                                                                            
Production (000s tonnes)                                                   
  Heap leach ore                          9.3      10.6      39.5      33.6 
  Dump leach ore                          5.0       7.1      22.9      29.8 
  --------------------------------------------------------------------------
                                                                            
                                         14.3      17.7      62.4      63.4 
                                                                            
Sales (000s tonnes)                     15.1      17.5      62.2      63.5 
                                                                            
Cost of sales (US$ million)                                                 
  Operating                          $    122  $     88  $    410  $    301 
  Distribution                       $      2  $      2  $      7  $      7 
  Depreciation and amortization      $     26  $     29  $     97  $     96 
                                                                            
Gross profit (loss) summary ($                                              
 millions) (note 2)                                                         
  Before depreciation and                                                   
   amortization                      $     (5) $     46  $     82  $    255 
  Depreciation and amortization           (25)      (29)      (97)      (95)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $    (30) $     17  $    (15) $    160 
----------------------------------------------------------------------------

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 in the fourth quarter declined substantially due to significantly higher unit costs, and a 14% decrease in sales volumes as a result of lower production.

Copper production in the fourth quarter declined by 19% to 14,300 tonnes compared with the same period a year ago.

Production decreased as a result of processing lower amounts of heap and dump-leach ore placed in this and previous quarters.

In addition, dump leach mining activities were stopped in the fourth quarter as a result of a flow of dump leach solution into the open pit through a gravel lens in the pit wall.

Dump leach mining is expected to resume in the first quarter of 2013.

Operating costs increased by US$34 million in the fourth quarter compared with the same period a year ago.

The increase was due to significant increases for labour costs, reflecting the new terms of the collective agreement ratified earlier in 2012, higher contractor and consumables costs.

Steps were taken in the fourth quarter to address lower production and higher costs at Quebrada Blanca, as the leaching operation reduces in scale ahead of the Phase 2 concentrator project due to lower ore grades.

Manpower of both company employees and contractor employees was reduced and a review of supply and maintenance contracts was undertaken.

These and other actions are expected to improve results in 2013, although challenges will remain as the Quebrada Blanca Operation nears the end of its life.



Quebrada Blancas production in 2013 is expected to be in the range of 50,000 to 60,000 tonnes of copper cathode.

Carmen de Andacollo (90%)

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


                                     Three months ended      Year ended     
                                        December 31,        December 31,    
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Tonnes milled (000s)                   4,233     3,763    16,723    14,751 
Copper                                                                      
  Grade (%)                              0.54      0.51      0.52      0.51 
  Recovery (%)                           87.1      89.5      86.8      88.2 
  Production (000s tonnes)              19.7      17.3      75.8      66.1 
  Sales (000s tonnes)                   19.2      16.2      69.7      63.0 
                                                                            
Gold (note 1)                                                               
  Production (000s ounces)              16.7      15.8      57.6      54.3 
  Sales (000s ounces)                   17.4      12.2      56.3      47.5 
                                                                            
Copper cathode                                                              
  Production (000s tonnes)               0.8       1.8       4.0       6.3 
  Sales (000s tonnes)                    1.1       1.3       4.4       6.0 
                                                                            
Cost of sales (US$ million)                                                 
  Operating                          $     96  $     78  $    344  $    304 
  Distribution                       $      9  $      6  $     28  $     22 
  Depreciation and amortization      $     23  $     15  $     84  $     76 
                                                                            
Gross profit summary ($ millions)                                           
 (note 2)                                                                   
  Before depreciation and                                                   
   amortization                      $     70  $     42  $    225  $    288 
  Depreciation and amortization           (22)      (16)      (83)      (75)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $     48  $     26  $    142  $    213 
----------------------------------------------------------------------------

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 increase in Carmen de Andacollos fourth quarter gross profit before depreciation and amortization was primarily due to increased copper production and sales, as well as higher copper prices.

Total copper production rose by 7% to 20,500 tonnes compared with the same period a year ago.

The concentrator processed a record 55,500 tonnes per day in October, slightly over design capacity.



Operating costs in the fourth quarter increased by 23% to US$96 million compared with a year ago, due primarily to the 16% rise in sales volumes and partly to higher labour and energy costs.



Carmen de Andacollos production in 2013 is expected to be in the range of 70,000 and 80,000 tonnes of copper in concentrate and approximately 5,000 tonnes of copper cathode.

Duck Pond (100%)

Duck Ponds gross profit before depreciation and amortization increased to $15 million in the fourth quarter compared with $10 million in the same period a year ago, primarily as a result of higher metal prices and lower operating costs.

Copper and zinc production in the fourth quarter were 3,500 tonnes and 4,200 tonnes, respectively, compared with 3,300 tonnes and 5,000 tonnes, respectively, last year.

Copper and zinc sales in the fourth quarter were 3,600 tonnes and 4,200 tonnes, respectively, compared with 3,800 tonnes and 7,700 tonnes, respectively, last year.

Development of the Boundary open pit will occur over the first six months of 2013 and is expected to supplement underground ore production in the second half of the year.

Duck Ponds production in 2013 is expected to be approximately 15,000 tonnes of copper and 15,000 tonnes of zinc.

Copper Development Projects

Quebrada Blanca Phase 2

During the fourth quarter detailed design of the Quebrada Blanca Phase 2 Project continued.

During the quarter purchase orders for some of the long-lead equipment were issued.

The estimated capital cost for the development of the project is 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 project 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.

Work continues on the updated Social Environmental Impact Assessment ("SEIA") for the project.

We currently expect to re-file the SEIA by the end of the second quarter of 2013.

Discussions are ongoing 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.



Relincho

The feasibility study for Relincho is progressing and it is expected to be complete at the end of the fourth quarter of 2013.

Permitting delays have affected the progress of third-party port and power supply facilities that we expected to use for Relincho, which delayed the completion of the feasibility study.

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 2012 work program, which included approximately 25,000 meters of infill and geotechnical drilling, was completed in the third quarter.

Drill results are being assessed.

COAL (100%)

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


                                     Three months ended      Year ended     
                                        December 31,        December 31,    
                                         2012      2011      2012      2011 
----------------------------------------------------------------------------
                                                                            
Production (000s tonnes)               6,358     6,698    24,652    22,785 
                                                                            
Sales (000s tonnes)                    6,422     5,547    23,989    22,207 
                                                                            
Average sale price                                                          
  US$/tonne                          $    159  $    253  $    193  $    257 
  C$/tonne                           $    157  $    259  $    194  $    254 
                                                                            
Cost of sales (C$/tonne)                                                    
  Operating                          $     62  $     65  $     72  $     73 
  Transportation                     $     41  $     33  $     37  $     32 
  Depreciation and amortization      $     17  $     20  $     20  $     23 
                                                                            
Gross profit summary ($ millions)                                           
  Before depreciation and                                                   
   amortization                      $    347  $    891  $  2,033  $  3,306 
  Depreciation and amortization          (107)     (110)     (470)     (506)
----------------------------------------------------------------------------
  After depreciation and                                                    
   amortization                      $    240  $    781  $  1,563  $  2,800 
----------------------------------------------------------------------------
 
Gross profit before depreciation and amortization in the fourth quarter declined compared with last year due primarily to significantly lower coal prices and higher transportation unit costs, partially offset by higher sales volumes and lower mine operating unit costs.



Production in the fourth quarter decreased by 5% compared with the same quarter in 2011 primarily as a result of our decision to reduce production starting in mid-August through to the end of the year to align with customer demand.

In 2012 our production capacity increased, reflecting our growth objectives with the completion of the Elkview plant expansion and additions to the mining fleet.

Our current production capacity is approximately 27 million tonnes and is expected to grow to 28 million tonnes by the end of 2013.

However, to align production rates with anticipated demand and to effectively manage inventories, we plan to produce 24.0 to 25.0 million tonnes of coal in 2013.

Production for the first quarter of 2013 is not expected to be materially impacted by the damage incurred in December to Berth 1 at Westshore Terminals.

We will use alternative shipping options for the duration of the repairs at Westshore, including securing additional capacity through Neptune Terminals, Pacific Coast Terminals and Ridley Terminals.

On the basis of Westshores estimated repair schedule for Berth 1 and expected loading capacity for Berth 2, we expect to have total shipping capacity of approximately six million tonnes in the first quarter of 2013, although shipping capacity in the first quarter can also be affected by adverse weather conditions.

Coal sales of 6.4 million tonnes in the fourth quarter were 16% higher than the same period last year and exceeded prior guidance of 6.2 million tonnes.

The average coal price of US$159 per tonne in the fourth quarter was 37% lower than the same quarter a year ago and reflects the weaker steelmaking coal market conditions.

The increase in sales volume predominantly reflects strong demand for coal delivered to China, partially offset by lower demand in our traditional markets.

Sales to China in the fourth quarter reached a record high level.

However, the ratio of Chinese sales to total sales in 2013 is expected to decline to be similar to what was experienced in the first three quarters of 2012.

Coal sales in 2012 reached 24.0 million tonnes, an increase of 1.8 million tonnes over last year and the third highest year on record.

Increased sales were achieved through continuing progress in growth markets and occurred despite weaker demand in some of our traditional markets.

Coal prices have been agreed with the majority of the quarterly contract customers for the first quarter of 2013 based on pricing of US$165 per tonne for the highest quality products, which is consistent with prices reportedly achieved by our competitors.

As of the date of this release, contracted sales are approximately 6.0 million tonnes of coal for delivery in the first quarter at an average price of US$159 per tonne.

We remain in quarterly contract discussions with a small number of customers and are anticipating selling additional tonnage on the spot market.

Vessel nominations for quarterly contract tonnage are determined by customers and final sales and average prices for the quarter will depend on timely arrival of vessels and the performance of our coal-loading facilities.

The cost of product sold in the fourth quarter, before transportation and depreciation charges, was $62 per tonne, or $3 per tonne lower than in the same quarter in 2011, and $13 per tonne lower than the first three quarters of 2012.

Cost reduction efforts at the mines, which accompanied the reduction in production levels beginning in mid-August, have been successful.

Lower unit cash production costs in the fourth quarter when compared to the same period a year ago resulted from reductions in overtime, a hiring freeze, shutdowns of higher cost equipment, shutdowns on statutory holidays and reductions in the consumption of repa



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