Teck Resources Limited Q2 2010 Earnings Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Orest Wowkodaw - Canaccord Adams - Analyst : Hello, good morning. A couple of questions, you're guiding for a pretty hefty-discount on your coal-price realization in Q3, bigger than normal. I'm wondering, is that a function of carry-over tonnage or just higher percentage of lower quality coal in the mix, and do you expect that to carry-forward that kind of discount into Q4 and into next year?

Question: Orest Wowkodaw - Canaccord Adams - Analyst : Do you still expect carry-over tonnage to impact Q4, or have we seen the last of that? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Orest Wowkodaw - Canaccord Adams - Analyst : At Andacollo, when you expect commercial-production there, and I think, late last year you were looking for production of 60,000 tonnes of copper. Based on the ramp-up, it looks like it's going to be below that number. I'm just wondering where you see that number coming in? (audio difficulties)

Question: Haytham Hodaly - Salman Partners, Inc. - Analyst : Thank you, operator. Moving to a question just for Ron Millos. Ron your total debt levels at the end of the second quarter we about CAD 5.33 billion, what are you looking at that being roughly by the end of this year?

Question: Haytham Hodaly - Salman Partners, Inc. - Analyst : So, that is what I thought, that's a reasonable number. Secondly, just a follow-up on the coal side of the last question. Could you give us an idea, and I know you did this in the first quarter, of how much carry-over tonnage is left from the 2008 coal year and 2009 coal year? Are you still getting the same pricing? Is there any push-back on the pricing?

Question: Haytham Hodaly - Salman Partners, Inc. - Analyst : So, that pricing guidance that you give for the third quarter/full-year, that's a fairly accurate number and fairly sure will you fall into that range? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Haytham Hodaly - Salman Partners, Inc. - Analyst : Okay, fair enough. Thank you.

Question: Dave Katz - JPMorgan - Analyst : I wanted to congratulate you guys, on the tremendous amount of balance sheet improvement you have done, but I did have a question about that. Would it be possible to take the proceeds that you've received from some of the equity-issuances that you've done, and use those to do a claw-back on the bonds, and would that be something that you'd consider?

Question: Dave Katz - JPMorgan - Analyst : Okay. Thank you.

Question: Greg Barnes - TD Newcrest - Analyst : Bob Bell, I was wondering if you could give us some kind of view on where the current-coal market sits right now? There seems to be a lot of noise.

Question: Greg Barnes - TD Newcrest - Analyst : Thank you very much.

Question: John Hughes - Desjardins Securities - Analyst : Thank you, operator. Just a couple of questions that number related. Ron, I worked a tax rate of around 44% for the quarter. 43%-44%. What should we be using going forward? Has that been impacted by the revaluation on the debt side? What is happening?

Question: John Hughes - Desjardins Securities - Analyst : I hear you. That is good. I had a question, as well, just on the zinc concentrate side at Red Dog on inventory. Can you give us a sort of tonnage -- indicated inventory on tonnage of the zinc [inaudible] today?

Question: John Hughes - Desjardins Securities - Analyst : Yes, the inventory level.

Question: John Hughes - Desjardins Securities - Analyst : So, are you full now, I mean, at the port?

Question: John Hughes - Desjardins Securities - Analyst : And did you have a zinc inventory today, or is changing on a ship by ship basis?

Question: John Hughes - Desjardins Securities - Analyst : Yes, that's great. Bob, a quick one on the coal side. Is there a targeted sales number into China, for this year?

Question: John Hughes - Desjardins Securities - Analyst : Great, thank you very much. One last quick question on Aqqaluk, I note in the quarter that the mining began in May or June, formally, I'm just wondering on timing of ore-release, I would assume there is a lot of pre-strip. Is the ore released in the fourth quarter at some point?

Question: John Hughes - Desjardins Securities - Analyst : Thank you very much. That is it for me.

Question: Kerry Smith - Hayward Securities Inc. - Analyst : Thank you, operator. Greg, how long will it take to repair the plant at Greenhills - the dryer at Greenhills -- once you actually know what you have to do? Just roughly.

Question: Kerry Smith - Hayward Securities Inc. - Analyst : Okay. That is helpful. And secondly, Don, could you take me through, in general terms, how the dynamics works for the negotiation and now that you have for your quarterly coal contracts? Is it a two-week negotiation that starts in the middle of the quarter, preceding the quarter you are negotiating on? How does that dynamic work? And what sort of targeted level of contract sales are you thinking about on a go-forward basis as a percent of total sales.

Question: Kerry Smith - Hayward Securities Inc. - Analyst : So, you are suggesting a 80% committed on these quarterly contracts, and then call it 10% to 20% for spot? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Kerry Smith - Hayward Securities Inc. - Analyst : Right. Okay. And then as Don sort of commented, the negotiations on a quarterly basis tend to happen pretty quickly, because it's really on price. You don't have to worry about volume or anything else?

Question: Kerry Smith - Hayward Securities Inc. - Analyst : Okay. That is helpful. Thanks a lot.

Question: Oscar Cabrera - BofA Merrill Lynch - Analyst : Hi, good morning everyone. Questions with regards to the coal business. In terms of your guidance, can you give us an idea what the percentage of hard-coking coal you have in that? And then, I believe you alluded to the fact that you expect that mix to improve to hard-coking coal in the future?

Question: Oscar Cabrera - BofA Merrill Lynch - Analyst : If you were to just exclude those higher volatility would that number be pushed down to 80% or 85%?

Question: Oscar Cabrera - BofA Merrill Lynch - Analyst : 80 %. Okay, that helps. Thanks, and my second question on the selenium management, in your press release, you say that the cause of the selenium management could be material. I was wondering if you could give us an idea what that would do to your cost of operations? I believe, Don, you mentioned that there won't be any affect on the 28 million tonnes, but I was also wondering if the expansion in Quintette, would the CapEx be affected? In past you guys have been talking about expansion capital in Quintette CAD150 a tonne, and I was wondering if you could give us an idea what that selenium management would could to CapEx?

Question: Oscar Cabrera - BofA Merrill Lynch - Analyst : In terms of the current operations, would you define "materiality" as 5% of revenue in the operations? Like accountants do? Bill Flemming - Teck Resources Limited It really roughly, but we expect this issue to be something we have to deal with on an ongoing basis over decades, and if we talked -- And I'm just throwing out a number -- CAD0.50 a tonne, then CAD10 million a year would add up to perhaps CAD300 million over 30 years. So, I don't expect it to be 5% of revenue.

Question: Oscar Cabrera - BofA Merrill Lynch - Analyst : Okay. That is helpful. Thank you very much.

Question: Meredith Bandy - BMO Capital Markets - Analyst : Sorry, gentleman. So, my first question is on the zinc market. It appears, in some respects, to be in surplus. I was wondering if you could comment on your near-term outlook for zinc? Bill Flemming - Teck Resources Limited Andrew?

Question: Meredith Bandy - BMO Capital Markets - Analyst : Okay. Thanks. And then a second point, you mentioned about the pre-feasibility and when you are expecting some of those projects to come up. The Relincho and Galore Creek, the pre-feasibility studies seem to come at a similar time. Would you rank one over the other or would you go for both, or how would you think about that?

Question: Meredith Bandy - BMO Capital Markets - Analyst : Okay, thank you. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Orest Wowkodaw - Canaccord Adams - Analyst : Hello, thanks for taking my call. Just a couple of financial questions, for Ron. So, just at Andacollo, when do we expect that to flow-through the statements? Is that a Q3, or is that a 2011 event?

Question: Orest Wowkodaw - Canaccord Adams - Analyst : Okay. On the administrative costs, they were way down this quarter at CAD15 million, and you have been averaging something close though CAD50 million, for the last year or two. Is this a sustainable run rate, or is there something that is a credit in this current quarter?

Question: Orest Wowkodaw - Canaccord Adams - Analyst : What do you see as a good run rate per quarter, without any movement in your share price?

Question: Orest Wowkodaw - Canaccord Adams - Analyst : So, still considerably below where it has been the last year?

Question: Orest Wowkodaw - Canaccord Adams - Analyst : Then, finally, on your tax shield from the Fording acquisition. I would have expect a sort of higher feature income tax asset to show up on the cash-flow statement each quarter, just based on the amount of money you are making from the coal assets. Can you just walk us through how you are recognizing that shield?

Question: Orest Wowkodaw - Canaccord Adams - Analyst : Right.

Question: Orest Wowkodaw - Canaccord Adams - Analyst : For instance, in the current quarter, you know, you are booking CAD200 million on the income statement, but you're only shielding CAD40 million on the cash-flow.

Question: Orest Wowkodaw - Canaccord Adams - Analyst : Okay. Still seems like a pretty big difference to me. Thank you very much.

Question: Haytham Hodaly - Salman Partners, Inc. - Analyst : Thank you operator. Just a follow-up question. Again for Ron on the depth, is there any plans to re-pay any of the Antamina facilities than is currently allocated.

Question: Haytham Hodaly - Salman Partners, Inc. - Analyst : So, there is effectively no additional debt repayments you could make throughout the remainder of this year?

Question: Haytham Hodaly - Salman Partners, Inc. - Analyst : Perfect. Thank you.