Mining News: News Nuggets: Teck looks forward to a brighter spring
Teck Resources Ltd. Oct. 22 reported a third-quarter loss attributable to shareholders of C$2.1 billion (C$3.73 per share) due to non-cash after-tax impairment charges of C$2.2 billion. The impairment charges are non-cash revaluations of assets to reflect lower market expectations of commodity prices. The prices of all of Teck’s major commodities – steelmaking coal, copper and zinc – continued to fall during the third quarter. To meet the challenge of low prices, the company has taken significant steps that include lowering costs and reducing capital expenditures. “We are taking significant steps to meet the challenge of low commodity prices,” said Teck President and CEO Don Lindsay, president and CEO. “We have reduced costs throughout the company, and we’ve raised nearly C$1 billion in two streaming transactions. We used a portion of those proceeds to reduce debt by C$400 million, and our current cash balance of C$1.8 billion exceeds our remaining C$1.5 billion share of capital required for Fort Hills.” Teck said its cost-reduction program combined with a falling Canadian dollar, lower oil prices, and higher copper grades have helped lower its copper costs by US20 cents per pound and steelmaking costs by US$20 per metric ton, compared to last year. In response to steelmaking coal market conditions, Teck shut down its steelmaking coal mines for three weeks during the third quarter to reduce production and product inventory. Third-quarter earnings, excluding one-time items, totaled C$29 million (5 cents per share), compared to C$159 million (29 cents per share) a year earlier. This year’s third-quarter earnings were higher than expected, resulting in an 8 percent increase in its share price, from C$10.42 to C$11.25 on the Toronto Exchange on Oct. 22. Teck’s per share price has since settled at about C$11.00. Lindsay reminded shareholders and analysts that “the best and most effective cure for low commodity prices is, and always has been, low commodity prices. And remember that the darker the winter is, the brighter the spring will be.”
Teck’s zinc unit was the company’s best performer during the third quarter, producing C$805 million in revenue and C$231 million in gross profit. The Red Dog Mine in Northwest Alaska produced 132,000 metric tons of zinc during the third quarter, a 12 percent drop compared with last year. Zinc grade and recovery was similar to 2014; however, mill throughput was lower than the third quarter of 2014. Red Dog shipped 1.048 million metric tons of zinc concentrate during the 2015 shipping season that ended Oct. 22.
- Shane Lasley
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