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) announced adjusted
earnings of $1.5 billion, or $2.62 per share for 2010, up 36% from $1.1 billion
in 2009. Fourth quarter adjusted earnings increased 76% to $548 million or $0.93
per share compared to $312 million in 2009. EBITDA was $4.3 billion for the year
and $1.0 billion in the fourth quarter.
Don Lindsay, President and CEO said, "2010 was a strong year. We are reporting
record revenues, record annual operating profits and an increase in both copper
and coal production. There is further growth ahead of us as each of Teck Coal,
Andacollo, Antamina and Highland Valley Copper increase production. Our balance
sheet was significantly strengthened as a result of a further $3.1 billion
reduction in our debt and through our refinancing we significantly reduced our
interest costs."
Highlights and Significant Items
-- We recorded record annual and record quarterly revenues of $9.3 billion
and $2.8 billion, respectively. Operating profit for the year was a
record $3.6 billion and cash flow from operating activities was $2.7
billion.
-- Operating profit, before depreciation, for the year was $4.5 billion
compared with $3.7 billion last year. Operating profit in the fourth
quarter, before depreciation, was $1.4 billion compared with $1.0
billion in 2009.
-- EBITDA was $4.3 billion for the year and $1.0 billion in the fourth
quarter.
-- Net earnings for the year were $1.9 billion compared with $1.8 billion a
year ago. Net earnings in the fourth quarter were $361 million after
refinancing charges compared with $411 million in 2009.
-- In November we declared a 50% increase in our semi-annual dividend on
our Class A common and Class B subordinate voting shares to $0.30 per
share, which was paid on January 4, 2011.
-- During the year our outstanding debt was reduced by $3.1 billion, which
will result in annual interest savings of $225 million.
-- Teck Copper:
-- our copper production in 2010 rose to 313,000 tonnes from 308,000
tonnes in 2009,
-- we achieved commercial production at Carmen de Andacollo's copper
concentrator in October, marking the completion of project
development, commissioning and operational ramp-up of the new
facility. The concentrator produced 20,700 tonnes of copper in the
ramp-up period from February to September, and contributed 14,100
tonnes to our copper production in the fourth quarter of 2010, and
-- we commenced a feasibility study by a major international
engineering company for Quebrada Blanca Phase 2, the development of
a copper concentrator at this mine, with a provisional annual
production capacity of 200,000 tonnes of copper.
-- Teck Coal:
-- our coal production in 2010 rose 22% to 23.1 million tonnes compared
to 2009,
-- we entered into a 10-year agreement with Canadian Pacific Railway
Limited ("CP") to transport coal from our five mines in southeast
British Columbia to Vancouver area ports. The commercial terms of
the agreement are confidential, but include commitments by CP to
provide capacity necessary for us to realize our coal growth
strategy and to deliver increased production on a timely basis to
our key markets,
-- we obtained agreement on prices with the majority of our coal
customers for the first quarter of 2011 with pricing at or above
US$225 per tonne for our highest quality products. We expect our
weighted average selling prices for coal in the first quarter of
2011 to be in the range of US$206 to US$211 per tonne, and
-- we announced that first quarter coal sales are expected to be in the
range of 5.0 to 5.5 million tonnes and planned sales for calendar
2011 to be in the range of 24.5 to 25.5 million tonnes assuming no
interruption in production due to labour disturbances and expected
levels of service from our rail and port service providers. On
January 31, the unionized workers at the Elkview mine went on
strike. We do not expect that the strike will affect our guidance
for the first quarter as product inventory levels at the minesites
should be sufficient to meet that target, but it is likely to affect
guidance for the full year.
-- Teck Zinc:
-- Red Dog commenced mining the Aqqaluk deposit, completed a successful
shipping season and recorded an operating profit before
depreciation, amortization and price adjustments of $548 million in
2010 (compared with $402 million in 2009).
-- Teck Energy:
-- In December, Suncor announced an updated development schedule,
subject to partner approval, for the Fort Hills oil sands projects
(Teck 20%). Based on that schedule, bitumen production from the
first phase of the project is expected to commence in 2016.
This news release is dated as at February 8, 2011. 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 management's discussion and analysis for the year ended
December 31, 2009, 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.
Earnings, Adjusted Earnings and Comparative Earnings(i)
Adjusted earnings, which exclude the effect of certain transactions described in
the table below, were $548 million, or $0.93 per share, in the fourth quarter of
2010 compared with $312 million, or $0.53 per share last year. The higher
adjusted earnings were primarily due to significantly higher coal and copper
prices and increased coal sales volumes. Earnings attributable to our
shareholders were $361 million, or $0.61 per share, in the fourth quarter
compared with $411 million or $0.70 per share in the same period last year. Our
fourth quarter earnings included a $289 million after-tax charge related to the
refinancing of a portion of our debt.
Three months ended Year ended
December 31 December 31
($ in millions) 2010 2009 2010 2009
---------------------------------------------------------------------------
Earnings attributable to shareholders as
reported (note 1) $ 361 $ 411 $ 1,860 $ 1,831
Add (deduct):
Asset and investment sale gains (2) (137) (768) (320)
Foreign exchange gains on net debt (25) (35) (65) (561)
Derivative (gains) losses (86) (4) (153) 36
Refinancing costs 289 4 658 117
Asset impairment included in equity losses - 48 - 119
Asset impairment - 20 - 20
Tax items 11 - 11 (30)
Loss (earnings) from discontinued
operations - 5 - (81)
-------------------------------
Adjusted earnings 548 312 1,543 1,131
Pricing adjustments (note 2) (38) (58) (53) (207)
-------------------------------
Comparative net earnings $ 510 $ 254 $ 1,490 $ 924
-------------------------------
(1) Earnings attributable to shareholders are earning less minority
interests in earnings.
(2) See FINANCIAL INSTRUMENTS AND DERIVATIVES section for further
information.
Our EBITDA was $1.0 billion for the quarter and $4.3 billion for the year. After
adjusting for the amounts disclosed in the table above, adjusted EBTIDA was $1.2
billion for the quarter and $4.0 billion for the year.
Business Unit Results
Our business unit results are presented in the tables below.
Three months ended December 31
Operating
profit
before
depreciation
and pricing Operating
($ in millions) Revenues adjustments profit
---------------------------------------------------------------------------
2010 2009 2010 2009 2010 2009
---------------------------------------------------------------------------
Copper $ 852 $ 664 $ 453 $ 368 $ 456 $ 363
Coal 1,215 810 679 372 544 219
Zinc 742 693 242 205 204 195
---------------------------------------------------------------------------
Total $ 2,809 $ 2,167 $ 1,374 $ 945 $ 1,204 $ 777
---------------------------------------------------------------------------
Year ended December 31
Operating
profit
before
depreciation
and pricing Operating
($ in millions) Revenues adjustments profit
---------------------------------------------------------------------------
2010 2009 2010 2009 2010 2009
---------------------------------------------------------------------------
Copper $ 2,610 $ 2,161 $ 1,470 $ 1,031 $ 1,289 $ 1,002
Coal 4,351 3,507 2,248 1,795 1,690 1,278
Zinc 2,378 2,006 691 511 576 454
---------------------------------------------------------------------------
Total $ 9,339 $ 7,674 $ 4,409 $ 3,337 $ 3,555 $ 2,734
---------------------------------------------------------------------------
Revenues
Revenues from operations were a record $2.8 billion in the fourth quarter
compared with $2.2 billion a year ago. Revenues from our copper business unit
increased by $188 million, primarily as a result of copper prices averaging 30%
higher than the same period a year ago. Coal revenues rose by $405 million to
$1.2 billion in the fourth quarter, which reflected significantly higher coal
prices and an 11% increase in sales volumes. Revenues from our zinc business
unit in the fourth quarter increased by $49 million compared with a year ago as
a result of slightly higher zinc sales volumes and additional silver by-product
revenues. The effect of the weaker US dollar partly offset the impact of higher
commodity prices in each of our business units.
Copper Business Unit
Operating profit from our copper business unit was $456 million in the fourth
quarter compared with $363 million in 2009. Copper prices rose strongly in the
quarter and closed the year at US$4.40 per pound. As a result of the rising
copper prices, pre-tax positive price adjustments were $75 million in the fourth
quarter compared with $62 million in 2009. Operating profit, before depreciation
and pricing adjustments, was $453 million in the fourth quarter compared with
$368 million a year ago primarily as a result of the significantly higher
average copper prices. Carmen de Andacollo achieved commercial production from
its new copper concentrate plant on October 1, and for the year contributed a
total of 34,800 tonnes of copper, consisting of 20,700 tonnes produced in the
pre-commercial start-up phase and 14,100 tonnes of new copper production in the
fourth quarter. This additional new production was partially offset by lower
production from Highland Valley Copper due to lower ore grades.
Coal Business Unit
Operating profit from our coal business unit was $544 million in the fourth
quarter compared with $219 million last year primarily due to significantly
higher coal prices and increased sales volumes. This was partially offset by the
effect of a weaker US dollar and higher operating expenses. Coal prices averaged
US$200 (C$204) per tonne in the quarter compared with US$139 (C$151) per tonne
in the same period a year ago. Demand from our customers was strong during the
fourth quarter and sales volumes increased by 11% compared with the fourth
quarter of 2009, reflecting our expanded production levels. However, sales in
the quarter were lower than expected due to extremely cold weather during the
month of November, which disrupted coal handling at the Vancouver ports as well
as at our Greenhills mine. Unit cost of product sold, before transportation and
depreciation charges, was $54 per tonne compared with $52 per tonne in the same
quarter a year ago due primarily to higher strip ratios, increased diesel costs,
and higher external contractor costs for initiatives undertaken to maximize
production. Transportation costs were also higher due to a customer sales mix
that included a higher proportion of sales inclusive of ocean freight. In
addition, rail surcharges increased due to higher diesel prices and rail
detention charges as a result of the coal handling problems in November.
Zinc Business Unit
Operating profit from our zinc business unit was $204 million in the fourth
quarter, similar to $195 million in the same period a year ago. We recorded
positive price adjustments of $12 million at Red Dog in the fourth quarter
compared with positive pricing adjustments of $28 million in the same period a
year ago. Operating profit, before depreciation and pricing adjustments, was
$242 million in the fourth quarter compared with $205 million a year ago.
Slightly higher zinc sales volumes and increased silver by-product revenues were
partially offset by a planned 32-day maintenance shutdown of Trail's Kivcet lead
smelter and a $7 million reduction in surplus power profits as a result of the
sale of a one-third interest in the Waneta Dam in the first quarter of 2010. The
Kivcet shutdown was completed on time and on budget, incurring repair and
maintenance costs of $23 million and capital expenditures of $21 million.
Average Prices and Exchange Rates(i)
Three months ended Year ended
December 31 December 31
2010 2009% Change 2010 2009% Change
---------------------------------------------------------------------------
Copper (LME Cash -
US$/pound) 3.92 3.01 +30% 3.42 2.34 +46%
Coal (realized - US$/tonne) 200 139 +44% 181 157 +15%
Zinc (LME Cash - US$/pound) 1.05 1.00 +5% 0.98 0.75 +31%
Silver (LME PM fix -
US$/ounce) 27 18 +50% 20 15 +33%
Molybdenum (published price
- US$/pound) 16 12 +33% 16 11 +45%
Lead (LME Cash - US$/pound) 1.08 1.04 +4% 0.97 0.78 +24%
Cdn/U.S. exchange rate (Bank
of Canada) 1.01 1.06 -5% 1.03 1.14 -10%
(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.
Sales of metals in concentrate are recognized in revenue on a provisional
pricing basis when title transfers and the rights and obligations of ownership
pass to the customer, which usually occurs upon shipment. However, final pricing
is typically not determined until a subsequent date, usually in the following
quarter. Accordingly, revenue in a quarter is based on actual prices for sales
settled in the quarter and ongoing pricing adjustments from sales that are still
subject to final pricing. These pricing adjustments result in additional
revenues in a rising price environment and reductions to revenue in a declining
price environment. The extent of the pricing adjustments also takes into account
the actual price participation terms as provided in certain concentrate sales
agreements. In the fourth quarter of 2010, we had positive pricing adjustments
of $64 million ($38 million after non-controlling interests and taxes) compared
with $90 million ($58 million after non-controlling interests and taxes) in the
fourth quarter last year. This amount consists of $37 million ($23 million
after-tax) on sales from the previous quarter and $27 million ($15 million
after-tax) on sales that were initially recorded at the average price for the
month of shipment and subsequently revalued at quarter end forward prices.
The table below outlines our outstanding concentrate receivable positions, which
were provisionally valued at September 30, 2010, the pounds of metal included in
the September 30 receivables and settled in the fourth quarter, and our
receivable positions provisionally valued at December 31, 2010.
Outstanding at Settled during Outstanding at
September 30, the fourth December 31,
2010 quarter 2010
-------------------------------------------------
(pounds in millions) Pounds US$/lb Pounds US$/lb Pounds US$/lb
---------------------------------------------------------------------------
Copper 93 3.65 81 3.90 98 4.39
Zinc 145 0.99 136 1.06 140 1.11
Lead 72 0.92 72 1.08 2 1.17
---------------------------------------------------------------------------
Cash Flow from Operations
Cash flow from operations, before changes in non-cash working capital items, was
$900 million in the fourth quarter compared with $673 million a year ago. The
increase in cash flow from a year ago was due to strong operating cash flow from
our copper and coal business units, as a result of significantly higher copper
and coal prices.
Changes in non-cash working capital items provided a source of cash of $59
million in the fourth quarter compared with $24 million in the same period a
year ago. During the fourth quarter of 2010, we sold a portion of our coal
receivables, which reduced our working capital by approximately $150 million at
the end of the year.
BUSINESS UNIT RESULTS
The table below shows our share of production and sales of our major commodities.
Units
(000's) Production Sales
---------------------------------------------------------------------------
Fourth Year-to- Fourth Year-to-
Quarter date Quarter date
---------------------------------------------------
2010 2009 2010 2009 2010 2009 2010 2009
---------------------------------------------------------------------------
Principal products
Copper
(notes 1 & 2)
Contained
in
concentrate tonnes 60 53 216 203 55 50 209 205
Cathode tonnes 25 26 97 105 26 27 101 100
---------------------------------------------------
85 79 313 308 81 77 310 305
---------------------------------------------------
Coal tonnes 6,028 5,354 23,109 18,930 5,950 5,368 23,167 19,767
Zinc
Contained
in
concentrate tonnes 153 189 645 711 241 242 696 681
Refined tonnes 70 66 278 240 68 64 274 243
Other
products
Lead
Contained
in
concentrate tonnes 17 36 110 132 41 46 130 119
Refined tonnes 13 16 72 73 13 17 70 73
Molybdenum
Contained
in
concentrate pounds 2,665 2,204 8,557 7,798 2,264 2,261 8,060 7,979
---------------------------------------------------------------------------
(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.
(2) Includes pre-commercial production and sales volumes from Carmen de
Andacollo prior to September 30, 2010. Production of copper contained in
concentrate during the pre-commercial start-up period was 20,700 tonnes.
Pre-commercial sales volumes of copper contained in concentrate were
16,600 tonnes. The proceeds from these sales were not recognized in
revenue, but were netted against capital costs, less related production
costs.
REVENUES AND OPERATING PROFIT QUARTER ENDED DECEMBER 31
Our revenue, operating profit before depreciation and pricing adjustments and
operating profit by business unit for the quarter ended December 31 are
summarized in the table below:
Operating
profit
before
depreciation,
amortization Operating
and pricing profit
($ in millions) Revenues adjustments (note 1)
---------------------------------------------------------------------------
2010 2009 2010 2009 2010 2009
---------------------------------------------------------------------------
Copper
Highland Valley Copper $ 249 $ 239 $ 126 $ 124 $ 144 $ 138
Antamina 198 204 130 127 149 149
Quebrada Blanca 196 166 108 97 73 66
Carmen de Andacollo 166 30 66 10 70 1
Duck Pond 43 25 23 10 20 9
---------------------------------------------------------------------------
852 664 453 368 456 363
Coal (note 2) 1,215 810 679 372 544 219
Zinc
Red Dog 450 434 215 196 212 200
Trail 356 319 31 16 19 3
Other 13 11 2 3 2 2
Inter-segment sales (77) (71) (6) (10) (29) (10)
---------------------------------------------------------------------------
742 693 242 205 204 195
---------------------------------------------------------------------------
TOTAL $ 2,809 $ 2,167 $ 1,374 $ 945 $ 1,204 $ 777
---------------------------------------------------------------------------
(1) After depreciation, amortization and pricing adjustments.
(2) 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.
REVENUES AND OPERATING PROFIT TWELVE MONTHS ENDED DECEMBER 31
Our revenue, operating profit before depreciation and pricing adjustments and
operating profit by business unit are summarized in the table below:
Operating
profit
before
depreciation,
amortization Operating
and pricing profit
($ in millions) Revenues adjustments (note 1)
---------------------------------------------------------------------------
2010 2009 2010 2009 2010 2009
---------------------------------------------------------------------------
Copper
Highland Valley Copper $ 872 $ 838 $ 480 $ 338 $ 442 $ 408
Antamina 674 634 435 353 443 427
Quebrada Blanca 697 484 406 259 285 135
Carmen de Andacollo 228 101 91 46 79 5
Duck Pond 139 104 58 35 40 27
---------------------------------------------------------------------------
2,610 2,161 1,470 1,031 1,289 1,002
Coal (note 2) 4,351 3,507 2,248 1,795 1,690 1,278
Zinc
Red Dog 1,121 986 548 402 505 399
Trail 1,447 1,190 134 122 85 70
Other 40 50 7 6 7 4
Inter-segment sales (230) (220) 2 (19) (21) (19)
---------------------------------------------------------------------------
2,378 2,006 691 511 576 454
---------------------------------------------------------------------------
TOTAL $ 9,339 $ 7,674 $ 4,409 $ 3,337 $ 3,555 $ 2,734
---------------------------------------------------------------------------
(1) After depreciation, amortization and pricing adjustments.
(2) 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 Year ended
December 31 December 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Tonnes milled (000's) 11,112 10,243 42,488 42,888
Copper
Grade (%) 0.25 0.34 0.27 0.32
Recovery (%) 84.5 89.2 86.3 87.1
Production (000's tonnes) 23.9 30.6 98.5 118.2
Sales (000's tonnes) 23.0 28.6 97.8 118.2
Molybdenum
Production (million pounds) 2.0 2.1 6.9 6.6
Sales (million pounds) 1.8 2.1 6.7 6.6
Cost of sales ($ millions)
Operating costs $ 86 $ 79 $ 315 $ 334
Distribution costs $ 9 $ 8 $ 33 $ 31
Depreciation and amortization $ 10 $ 14 $ 82 $ 65
Operating profit summary ($ millions)
Before depreciation, amortization and price
adjustments $ 126 $ 124 $ 480 $ 338
Price adjustments - positive (negative) 28 28 44 135
Depreciation and amortization (10) (14) (82) (65)
---------------------------------------------------------------------------
After depreciation, amortization and price
adjustments $ 144 $ 138 $ 442 $ 408
---------------------------------------------------------------------------
Highland Valley Copper's fourth quarter operating profit, before depreciation
and pricing adjustments of $126 million was similar to last year. Copper sales
volumes in the fourth quarter were 20% lower than the same period a year ago, as
a result of lower production levels as further described below. The lower copper
sales were partially offset by significantly higher copper prices in the period
compared with the fourth quarter of 2009.
Copper production of 23,900 tonnes was 22% lower than the same period last year
primarily due to geotechnical constraints in the Valley pit and lower grade ore
sources available. Highland Valley Copper is continuing to execute push backs of
both the east and west walls of the Valley pit to access additional ore sources.
The east wall stabilization project will be completed in 2011 at an estimated
capital cost of $48 million. This includes amounts for remaining waste stripping
of the weak clay layers, placement of a stabilization buttress and completion of
a comprehensive dewatering system.
A new life of mine plan was developed, incorporating a major pushback and
extension of the Lornex pit and an extension of the lower grade Highmont pit.
The new plan adds approximately 200 million tonnes of ore reserves and five
years to the production plan. The expected mine life of Highland Valley now
extends into 2025, assuming additional permit amendments are approved. Lornex
has slightly lower copper grades than the remaining reserves in the Valley pit,
and is anticipated to provide 30% of the feed to the mill after pre-stripping is
complete in 2013. Overall annual production is expected to range from 90,000
tonnes to 135,000 tonnes of contained copper for an average of 115,000 tonnes a
year during the remaining mine life, driven primarily by the available grades of
copper ore. Further engineering studies have commenced to consider possible
recovery and throughput improvements in the mill through modernization,
debottlenecking and other enhancements.
Highland Valley's copper production in 2011 is anticipated to be similar to
2010. Molybdenum production is expected to increase to 9 million pounds as a
result of higher grades in the feed to the mill.
Antamina (22.5%)
Operating results at the 100% level are summarized in the following table:
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Tonnes milled (000's)
Copper-only ore 5,895 3,612 18,996 15,632
Copper-zinc ore 3,452 5,351 17,511 17,942
---------------------------------------------------------------------------
9,347 8,963 36,507 33,574
Copper (note 1)
Grade (%) 1.06 1.15 1.00 1.16
Recovery (%) 85.3 79.6 82.2 81.2
Production (000's tonnes) 83.7 81.6 301.5 316.1
Sales (000's tonnes) 66.9 81.9 289.4 323.5
Zinc (note 1)
Grade (%) 2.59 3.17 2.62 3.00
Recovery (%) 85.5 86.3 84.8 84.4
Production (000's tonnes) 77.4 145.7 386.2 456.3
Sales (000's tonnes) 87.5 141.2 409.4 436.2
Molybdenum
Production (million pounds) 3.2 0.8 7.5 5.5
Sales (million pounds) 1.9 0.7 6.1 6.0
Cost of sales (US$ millions)
Operating costs $ 119 $ 120 $ 521 $ 431
Distribution costs $ 23 $ 31 $ 98 $ 104
Royalties and other costs (note 2) $ 18 $ 30 $ 184 $ 141
Depreciation and amortization $ 31 $ 25 $ 100 $ 99
Operating profit summary (our 22.5% share)
($ millions)
Before depreciation, amortization and price
adjustments $ 130 $ 127 $ 435 $ 353
Price adjustments - positive (negative) 24 28 29 97
Depreciation and amortization (5) (6) (21) (23)
---------------------------------------------------------------------------
After depreciation, amortization and price
adjustments $ 149 $ 149 $ 443 $ 427
---------------------------------------------------------------------------
(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.
Our 22.5% share of Antamina's operating profit, before depreciation and pricing
adjustments, of $130 million in the fourth quarter was similar to a year ago.
Significantly higher copper prices and an increased contribution from molybdenum
and silver revenues offset the lower sales volumes of copper and zinc, which
declined 18% and 38% respectively, compared with the same period a year ago.
This decline is due to the complex nature of the ore body, which contains a
variety of ore types.
Tonnes milled in the fourth quarter increased by 4% compared with a year ago.
The mix of mill feed in the fourth quarter was 63% copper-only ore and 37%
copper-zinc ore compared with 40% and 60%, respectively, in the same period a
year ago. Copper production of 83,700 tonnes was similar to a year ago. Zinc
production declined by approximately 50% to 77,400 tonnes, due principally to
lower specific zinc ore grades and a reduction of copper-zinc ores processed in
the quarter.
The forecast cost of the Antamina expansion project remains at US$1.3 billion.
The project is more than 40% complete and is expected to increase ore throughput
to 130,000 tonnes per day. The expansion is expected to increase both copper and
zinc annual production by 30%, with increased mill throughput starting in the
first quarter of 2012.
Antamina's production in 2011 is anticipated to be approximately 350,000 tonnes
of copper and 200,000 tonnes of zinc, as more copper-only ores and less
copper-zinc ores are mined and processed.
Quebrada Blanca (76.5%)
Operating results at the 100% level are summarized in the following table:
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Tonnes placed (000's)
Heap leach ore 1,881 2,024 7,821 7,612
Dump leach ore 6,546 4,722 19,607 12,310
---------------------------------------------------------------------------
8,427 6,746 27,428 19,922
Grade (TCu%) (note 1)
Heap leach ore 0.81 1.14 0.87 1.15
Dump leach ore 0.39 0.57 0.44 0.54
Production (000's tonnes)
Heap leach ore 9.6 16.0 51.5 62.9
Dump leach ore 12.0 6.5 34.7 24.5
---------------------------------------------------------------------------
21.6 22.5 86.2 87.4
Sales (000's tonnes) 22.7 23.7 89.8 83.0
Cost of sales (US$ million)
Operating costs $ 85 $ 60 $ 274 $ 184
Distribution costs $ 2 $ 3 $ 9 $ 9
Depreciation and amortization $ 35 $ 31 $ 118 $ 113
Operating profit summary ($ millions)
(note 2)
Before depreciation, amortization and price
adjustments $ 108 $ 97 $ 406 $ 259
Price adjustments - positive (negative) - 3 - 6
Depreciation and amortization (35) (34) (121) (130)
---------------------------------------------------------------------------
After depreciation, amortization and price
adjustments $ 73 $ 66 $ 285 $ 135
---------------------------------------------------------------------------
(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 Blanca's fourth quarter operating profit, before depreciation and
pricing adjustments, was $108 million compared with $97 million in the fourth
quarter of 2009. Higher copper prices in the period were partially offset by
lower sales volumes and higher operating costs.
Copper production in the fourth quarter of 21,600 tonnes was slightly lower than
a year ago, and sales volumes of 22,700 tonnes in the fourth quarter were
similar to a year ago.
Operating costs in the fourth quarter were US$85 million compared with US$60
million a year ago as a result of significantly higher tonnes mined, which
resulted in additional contract service costs, additional reagent and higher
diesel costs. Quebrada Blanca set a record for mine production in 2010, which
resulted in a 38% increase in tonnage placed on leach pads. The increased tonnes
mined were offset by a decline in ore grades, as the supergene ore deposit is
being depleted.
In the fourth quarter, a slope failure occurred on the south wall of the
Quebrada Blanca pit. The effects of this failure on the mine plan are being
assessed, but minimal impact is anticipated in 2011. The effects may include
some additional waste stripping and lower grade ore feed for a period.
In late January 2011, unusual and heavy rainfall at the site temporarily
affected mine operations and washed fine sediment into the ore leaching solution
ponds. This may cause a short-term reduction in cathode production.
Quebrada Blanca's production in 2011 is expected to be approximately 85,000
tonnes of copper cathode.
Carmen de Andacollo (90%)
Operating results at the 100% level are summarized in the following table:
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Tonnes milled (000's) 3,686 - 9,685 -
Copper (note 1)
Grade (%) 0.45 - 0.45 -
Recovery (%) 81.9 - 78.6 -
Production (000's tonnes) 14.1 - 34.8 -
Sales (000's tonnes) 14.1 - 30.7 -
Gold (note 2)
Production (000's ounces) 11.3 - 27.7 -
Sales (000's ounces) 11.0 - 24.0 -
Copper cathode
Production (000's tonnes) 2.7 3.9 10.3 17.9
Sales (000's tonnes) 2.6 4.2 10.9 17.4
Cost of sales (US$ million)
Operating costs $ 72 $ 18 $ 107 $ 45
Distribution costs $ 6 $ - $ 7 $ 2
Depreciation and amortization $ 17 $ 9 $ 32 $ 37
Operating profit summary ($ millions)
(note 3)
Before depreciation, amortization and price
adjustments $ 66 $ 10 $ 91 $ 46
Price adjustments - positive (negative) 20 - 20 1
Depreciation and amortization (16) (9) (32) (42)
---------------------------------------------------------------------------
After depreciation, amortization and price
adjustments $ 70 $ 1 $ 79 $ 5
---------------------------------------------------------------------------
(1) Year-to-date figures include pre-commercial production and sales volumes
from Carmen de Andacollo prior to September 30, 2010. Production of
copper contained in concentrate during the pre-commercial start-up
period was 20,700 tonnes. Pre-commercial sales volumes of copper
contained in concentrate were 16,600 tonnes. The proceeds from these
sales were not recognized in revenue, but were netted against capital
costs, less related production costs.
(2) Royal Gold, Inc. holds a 75% production entitlement.
(3) Results do not include a provision for the 10% non-controlling interest
in Andacollo.
Carmen de Andacollo's operating profit, before depreciation and pricing
adjustments, was $66 million in the fourth quarter compared with $10 million in
the same period last year. The significant increase in operating profit was the
result of the additional production of 14,100 tonnes of contained copper from
the new copper concentrator, which commenced commercial production on October 1,
2010. Total copper production from the new copper concentrator since initial
start-up in February to the end of the year was 34,800 tonnes.
During the fourth quarter, mill throughput was below plan as operating and
maintenance procedures were refined and ore delivered to the concentrator was
harder than expected. To address this issue, blasting modifications have been
implemented to reduce the material size to the SAG mill. In addition, some ore
is being pre-crushed using the supergene (leaching plant) crusher. Throughput
optimization activities in the concentrator include the transfer and
distribution of ore between the SAG mill, ball mills and pebble crusher.
Metallurgical optimization activities include changes to the final grind size
and concentrate recovery from the most upstream cells in the flotation circuit.
As planned, copper cathode production of 2,700 tonnes in the fourth quarter was
31% lower than a year ago as the mine is transitioning from the supergene
deposit to the primary hypogene deposit. Cathode sales volumes of 2,600 tonnes
in the fourth quarter were 1,600 tonnes lower than the same period last year,
reflecting such decreased production levels.
Operating costs in the fourth quarter were US$72 million compared with US$18
million in the same period a year ago. US$60 million of the increase was
associated with the commencement of copper concentrate production.
Carmen de Andacollo's production in 2011 is expected to be approximately 65,000
tonnes of copper and 7,000 tonnes of copper cathode.
Duck Pond (100%)
Duck Pond's operating profit, before depreciation and pricing adjustments, was
$23 million in the fourth quarter compared with $10 million in the same period
last year. The increase in operating profit was a result of higher sales volumes
compared to the same period last year, in addition to higher metal prices.
Copper and zinc production in the fourth quarter was 3,700 tonnes and 5,800
tonnes of contained metal, respectively, compared with 4,000 tonnes and 5,000
tonnes, respectively, last year. Copper and zinc sales in the fourth quarter
were 4,000 tonnes and 4,900 tonnes of contained metal, respectively, compared
with 2,400 tonnes and 4,600 tonnes, respectively, last year. Copper and zinc
production for 2010 was 15,000 tonnes and 20,200 tonnes, respectively. This
compares with copper production of 13,900 tonnes and 21,000 tonnes of zinc
production in 2009.
Duck Pond's production in 2011 in expected to be 14,000 tonnes of copper and
20,000 tonnes of zinc.
Copper Development Projects
Work continues on the Quebrada Blanca concentrate project. Following the late
2010 completion of scoping work on the development of the hypogene resource that
underlies the supergene deposit currently being mined at Quebrada Blanca, a full
feasibility study commenced in early 2011. The feasibility study is expected to
be completed by the end of the first quarter of 2012. As contemplated by the
results of the scoping study, production from the hypogene would be expected to
be approximately 200,000 tonnes per year of copper in concentrate plus
approximately 5,100 tonnes per year of molybdenum in concentrate. Assuming a
positive feasibility study and decision to undertake project development,
production could commence in early 2016.
Work started on a pre-feasibility study for the Relincho project in the second
quarter of 2010. The pre-feasibility study is expected to be completed by the
first quarter of 2012 and will include an estimation of projected capital and
operating costs. As currently contemplated, Relincho has the potential to
produce approximately 190,000 tonnes per year of copper in concentrate and 7,000
tonnes per year of molybdenum in concentrate.
The Galore Creek project remained on care and maintenance in 2010. Further
engineering and evaluation work was completed as part of the ongoing process of
optimizing this project through consideration of an alternative plant site and
tailings location. Work commenced on a pre-feasibility study in the second
quarter of 2010 and is expected to be completed in the second quarter of 2011.
COAL
Teck Coal (100%)
Operating results at the 100% level are summarized in the following table:
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Production (000's tonnes) 6,028 5,354 23,109 18,930
Sales (000's tonnes) 5,950 5,368 23,167 19,767
Average sale price
US$/tonne $ 200 $ 139 $ 181 $ 157
C$/tonne $ 204 $ 151 $ 188 $ 177
Operating expenses (C$/tonne)
Cost of product sold $ 54 $ 52 $ 59 $ 55
Transportation $ 35 $ 30 $ 32 $ 32
Depreciation and amortization $ 23 $ 28 $ 24 $ 26
Operating profit summary ($ millions)
Before depreciation and amortization $ 679 $ 372 $ 2,248 $ 1,795
Depreciation and amortization (135) (153) (558) (517)
---------------------------------------------------------------------------
After depreciation and amortization $ 544 $ 219 $ 1,690 $ 1,278
---------------------------------------------------------------------------
The results presented are for our interests in six operating mines. Operating
profit, before depreciation and amortization, in the fourth quarter was $679
million compared with $372 million last year due primarily to significantly
higher US dollar selling prices and higher sales volume, partially offset by
foreign exchange effects and higher unit costs.
Demand from our steelmaking customers was strong during the fourth quarter and
the increase in sales volume, when compared with the fourth quarter of 2009,
reflects our expanded production levels. Sales in the fourth quarter were
impacted by extreme cold weather during the month of November, which disrupted
coal handling at the Vancouver ports as well as at our Greenhills mine.
Greenhills was producing higher moisture coal due to the coal dryer being
inoperative as a result of the explosion that occurred in June 2010, and the
high moisture coal became difficult to handle in the cold temperatures. The
rebuilt Greenhills coal dryer resumed operations in early February, 2011.
The extreme weather and higher moisture Greenhills coal also resulted in reduced
efficiency in movement of coal inventories from the mines to the ports. Port
inventories were low at December 31, while coal inventory at the mines was high.
This will place pressure on sales volumes in the first quarter of 2011, which is
typically a difficult railing period due to weather-related challenges and
avalanche risks. Furthermore, Westshore Terminals experienced a mechanical
failure of its shiploader in January, 2011 that significantly disrupted coal
loading operations for a two-week period.
We currently expect to sell between 5.0 and 5.5 million tonnes in the first
quarter of 2011. For 2011, we expect to produce and sell between 24.5 and 25.5
million tonnes, without accounting for losses due to labour-related disruptions
in production. With high coal inventories at our mine sites, we do not expect
the strike at our Elkview mine to affect our coal sales guidance for the first
quarter of 2011, but it is likely to affect our sales for the full year. The
union labour agreement at our Fording River operation expires on April 30, 2011.
Average US dollar selling prices reflect the change to quarterly pricing and
higher prevailing prices in the fourth quarter of 2010 compared with the lower
contract price settlements for the 2009 coal year that ran April 1, 2009 to
March 31, 2010, which were negotiated in the midst of the global economic
crisis. As a result of the change to quarterly contract pricing in 2010, our
sales revenue now more closely reflects prevailing market prices each quarter.
We have agreed on prices with all of our contract customers for the quarter that
commenced January 1, 2011. These prices are at or above US$225 per tonne for our
highest quality products and are consistent with prices reportedly achieved by
our competitors. We currently expect our average selling prices for the first
quarter of 2011 to be in the range of US$206 to US$211 per tonne, which reflects
a range of coal products of various qualities.
Unit cost of product sold, before transportation and depreciation charges, was
$54 per tonne compared with $52 per tonne in the same quarter of 2009 due
primarily to higher strip ratios, increased diesel prices and external
contractor costs. Strip ratios and contractor costs have increased as a result
of a number of projects initiated in 2010 to maximize our production levels and
improve our business. These cost increases were partially offset by higher
production levels, which reduce our fixed costs on a per tonne basis. We
currently expect unit mining cost of product sold to be in the range of $59 to
$63 per tonne for 2011.
The increase in unit transportation costs for the fourth quarter compared with
the same quarter in 2009 reflects increased ocean freight costs due to a higher
portion of our sales being made inclusive of ocean freight. Rail fuel surcharges
increased due to higher diesel prices and rail detention charges and carryback
costs increased as a result of the coal handling problems experienced in
November due to the extreme cold weather and the higher moisture Greenhills
coal. We also began using Ridley Terminals in Prince Rupert, British Columbia
during the quarter with shipments totalling approximately 0.4 million tonnes.
The use of Ridley Terminals increases our transportation costs due to the
greater distance of the port from our mines compared with the ports in
Vancouver. We currently expect unit transportation costs to be in the range of
$30 to $34 per tonne for 2011.
Our Quintette mine in northeast British Columbia has been closed since 2000.
During 2010, we initiated a feasibility study to restart this mine, which is
expected to be completed by mid-2011. Assuming the results of the study are
positive and development proceeds, the mine could be in production by 2013 at an
annual rate of approximately 3 million tonnes per year. The combined effects of
the capacity expansion discussed above and a restart of Quintette could result
in total steelmaking coal production capacity in excess of 30 million tonnes per
year.
Work is ongoing to develop and implement selenium management plans for each of
our six operating mines following up on the recommendations of a panel of
independent experts we commissioned to review selenium management.
ZINC
Red Dog (100%)
Operating results at the 100% level are summarized in the following table:
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Tonnes milled (000's) 835 884 3,572 3,383
Zinc
Grade (%) 18.8 20.7 18.2 20.9
Recovery (%) 83.8 82.0 82.8 82.4
Production (000's tonnes) 130.2 151.3 538.0 582.5
Sales (000's tonnes) 216.2 205.9 584.6 556.1
Lead
Grade (%) 5.0 6.3 5.4 5.9
Recovery (%) 41.7 65.0 57.0 65.9
Production (000's tonnes) 17.3 36.4 109.9 131.5
Sales (000's tonnes) 40.8 45.8 129.9 117.6
Cost of sales (US$ millions)
Operating costs $ 86 $ 73 $ 230 $ 209
Distribution costs $ 45 $ 41 $ 120 $ 114
Royalties (NANA and State) $ 90 $ 86 $ 197 $ 144
Depreciation and amortization $ 15 $ 22 $ 53 $ 66
Operating profit summary ($ millions)
Before depreciation, amortization and price
adjustments $ 215 $ 196 $ 548 $ 402
Pricing adjustments - positive (negative) 12 28 12 71
Depreciation and amortization (15) (24) (55) (74)
---------------------------------------------------------------------------
After depreciation, amortization and price
adjustments $ 212 $ 200 $ 505 $ 399
---------------------------------------------------------------------------
Red Dog's operating profit in the fourth quarter, before depreciation and
pricing adjustments, was $215 million compared with $196 million a year ago as a
result of higher zinc sales volumes, lower treatment charges and increased
silver by-product revenues.
Zinc production of 130,200 tonnes in the fourth quarter was 14% lower than the
same period last year. This was a result of a planned maintenance mill shutdown
during the quarter and lower ore grades. Red Dog moved to a single annual
maintenance shutdown in 2010, which increased downtime in the quarter, but
reduced overall annual downtime. Overall mill throughput increased by 6% in
2010. Lead production of 17,300 tonnes was 52% lower this quarter due to the
impact of the mill shutdown, lower ore grades and recoveries as a result of
processing near-surface, weathered Aqqaluk ore.
Red Dog's 2010 shipping season was completed on October 22, 2010 following the
shipment of 1,035,000 tonnes of zinc concentrate and 235,000 tonnes of lead
concentrate. This compares with 1,025,000 tonnes of zinc concentrate and 220,000
tonnes of lead concentrate for the 2009 shipping season. Zinc contained in
concentrate available for sale from January 1, 2011 to the beginning of next
year's shipping season totals approximately 215,000 tonnes. Contained zinc sales
volumes in the first quarter of 2011 are estimated to be approximately 90,000
tonnes. All off-site lead inventories had been sold as at December 31, 2010.
Red Dog's production of contained metal in 2011 is expected to be approximately
555,000 tonnes of zinc and 85,000 tonnes of lead.
Certain provisions of the main water discharge permit for Red Dog have been
stayed as a result of permit appeals. As a result, the existing permit contains
an effluent limitation for TDS that the mine cannot meet. The mine will however
discharge water in accordance with limits found in the SEIS to be fully
protective of the environment and which are consistent with the court-imposed
interim discharge limits already applicable to the mine under a 2008 settlement
agreement. We continue to work with regulators to finalize a renewed water
discharge permit for Red Dog. We believe that the regulatory process has been
appropriate and robust and that a permit with appropriate effluent limitations
will ultimately be issued. However, there can be no assurance that further
appeals or permit uncertainty will not give rise to liability or impede mining
activities or that the permit conditions that are ultimately issued will not
impose significant costs on the Red Dog operation.
Trail (100%)
Operating results at the 100% level are summarized in the following table:
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Metal production
Zinc (000's tonnes) 70.5 66.4 278.3 239.9
Lead (000's tonnes) 12.6 15.5 71.5 72.6
Silver (million ounces) 3.8 3.9 19.9 16.3
Metal sales
Zinc (000's tonnes) 68.7 64.1 274.2 243.2
Lead (000's tonnes) 13.1 17.2 70.2 72.9
Silver (million ounces) 3.7 3.7 19.6 16.0
Power
Surplus power sold (GW.h) 55 197 250 1,238
Power price (US$/MW.h) $ 28 $ 49 $ 40 $ 32
Cost of sales ($ millions)
Concentrate purchases $ 194 $ 190 $ 847 $ 656
Operating costs $ 109 $ 95 $ 374 $ 325
Distribution costs $ 22 $ 18 $ 92 $ 87
Depreciation and amortization $ 12 $ 13 $ 49 $ 52
Operating profit summary ($ millions)
Before depreciation and amortization $ 31 $ 16 $ 134 $ 122
Depreciation and amortization (12) (13) (49) (52)
---------------------------------------------------------------------------
After depreciation and amortization $ 19 $ 3 $ 85 $ 70
---------------------------------------------------------------------------
Operating profit, before depreciation, at Trail was $31 million in the fourth
quarter compared with $16 million in the same period last year. Higher commodity
prices, especially for silver, and increased sales volumes of zinc were partly
offset by the KIVCET maintenance shutdown as further described below.
Planned maintenance activities in the quarter included a 32 day shutdown of the
KIVCET lead smelter, which is scheduled every three years, and a 14 day shutdown
of one of the two zinc roasters. The shutdown projects were completed on time
and on budget and included $21 million in sustaining capital expenditures and
repairs and maintenance costs of $23 million. As a result, production of lead in
the quarter was 12,600 tonnes, or 19% lower than the same period in 2009 and
silver production of 3.8 million ounces was 3% lower than a year ago. Production
of zinc of 70,500 tonnes in the fourth quarter was affected by the roaster
shutdown, but was 6% higher than the comparative period in 2009 when both
mechanical problems in the electrolytic plant and process problems in the
leaching area occurred.
Trail's production in 2011 is anticipated to be approximately 285,000 tonnes of
refined zinc, 80,000 tonnes of refined lead and 20 million ounces of silver.
Teck American continued studies under the 2006 settlement agreement with the US
Environmental Protection Agency ("EPA") to conduct a remedial investigation on
the Upper Columbia River in Washington State.
Discovery and motion proceedings continue in the Lake Roosevelt litigation in
the Federal District Court for the Eastern District of Washington. The first
phase of the case, dealing with liability under CERCLA for cost recovery and
natural resource damages, is scheduled to be tried in June 2011.
ENERGY
Fort Hills Project
During 2010, Suncor carried out a review of the Fort Hills oil sands project and
on December 17, 2010, Suncor and Total announced a strategic partnership which,
among other things, resulted in an updated development schedule for the Fort
Hills project and a proposed transfer of ownership interests in the Fort Hills
Partnership. Suncor announced, subject to partner approval, planned bitumen
production, from the first phase of the Fort Hills project, commencing in 2016.
Suncor also intends to reduce its share of the project from 60% to 41%, while
remaining the operator and Total is to increase its share of the project from
20% (originally acquired from UTS Energy Corporation) to 39%. The upgrader
portion of the Fort Hills oil sands project remains deferred. The Suncor/Total
transaction is subject to regulatory and other approvals, with closing targeted
late in the first quarter of 2011.
Also during the fourth quarter, Suncor submitted to Alberta regulators on behalf
of the Fort Hills project, a revised assessment of the Fort Hills project
cumulative effects and mine plan to facilitate the request to increase the total
recoverable resource.
Suncor has provided a forecast project spending estimate of $198 million for
2011, of which our share would be $54 million, including our earn-in
commitments, compared with our $7 million share of spend in 2010.
Frontier and Equinox Projects
Engineering contracts were awarded during the first quarter and studies are
ongoing on the Frontier Project which will include an option of developing
Equinox as a satellite operation. These studies are expected to form the basis
for a planned regulatory application scheduled to be submitted in the second
half of 2011. During 2010, 83 core holes were drilled, analytical testing was
completed and the geological model was updated.
Wintering Hills Windfarm Project
The Wintering Hills Windfarm power project is proceeding as planned.
Construction on the project began in July and is expected to be complete by the
end of 2011. At peak operation, Wintering Hills is expected to generate enough
clean electricity to power approximately 35,000 homes, displacing the equivalent
of approximately 200,000 tonnes of carbon dioxide per year.
COSTS AND EXPENSES
General and administration expenses were $103 million in the fourth quarter
compared with $51 million last year. The increase was primarily due to higher
stock-based compensation that is linked to our share price. In the fourth
quarter of 2010, general and administration expenses included a $70 million
charge for stock based compensation compared with $26 million in 2009.
Significant increases in our share price occurred in both periods.
Our interest and financing expense was $126 million in the fourth quarter
compared with $174 million a year ago. This decrease was primarily due to our
significantly lower debt levels. Our debt and interest charges are denominated
in US dollars and fluctuations in the exchange rate also affect interest
expense. In addition, our recent debt refinancing transactions described below
have reduced our interest expense, the full benefits of which are not fully
reflected in our results for the fourth quarter.
Other expenses, net of other income, were $238 million in the fourth quarter
compared with net other income of $167 million last year. Significant items in
the fourth quarter included a $341 million before-tax charge on the refinancing
of our long-term debt. We realized a non-cash foreign exchange translation gain
on our debt and working capital totalling $200 million, of which $25 million was
recorded in other income and $175 million ($153 million after-tax) in other
comprehensive income. The portion credited to other comprehensive income relates
to that portion of our US dollar debt that is designated as a hedge against our
investments in subsidiaries whose functional currency is the US dollar. Other
expenses also included a $100 million gain on our derivative positions,
primarily related to an increased value attributed to the embedded call options
on our high-yield notes.
Provision for Income and Resource Taxes
Income and resource taxes for the quarter were $309 million, or 43% of pre-tax
earnings, which is significantly higher than the Canadian statutory tax rate of
29%. Our tax rate each period depends largely on our earnings and the
jurisdictions in which they are earned. In the current quarter, our debt
refinancing charges and derivative gains are subject to low capital gains rates.
When combined with mining income, which is taxed at a higher rate, the result is
a high blended tax rate. In addition, we provided an extra $11 million in
respect of changes to Chilean mining tax rates. Our blended tax rate on earnings
before debt refinancing, derivative gains and Chilean mining tax increase was
37% in the quarter.
Income tax pools arising out of the Fording transaction currently shield us from
cash income taxes, but not resource taxes, in Canada. Canadian Development
Expenditure tax pools and tax loss carry forwards primarily generated by those
pools are $9.9 billion at December 31, 2010. We remain subject to cash taxes in
foreign jurisdictions and cash resource taxes in Canada.
FINANCIAL POSITION AND LIQUIDITY
Our financial position improved significantly in 2010 as a result of strong
commodity markets and the strengthening of our balance sheet. In the first half
of the year we repaid the remainder of our term loan of US$2.4 billion incurred
in the acquisition of Fording using funds from asset sales and cash generated
from operations. Following upgrades in our credit ratings from the major rating
agencies in the second quarter, we conducted certain liability management
transactions, beginning in August and concluding in December. The goals of this
program were to reduce our debt levels and interest expense and to spread the
maturities of our debt over a longer time period.
The transactions included the purchase and cancellation of outstanding
high-yield notes with a face value of US$2.0 billion. To fund this purchase we
issued US$1.45 billion of notes with significantly lower interest rates and
longer maturities. We also drew on cash on hand which had been generated by
operations. The total cost of the purchases was US$2.5 billion. We incurred an
after-tax loss of $629 million on these transactions in addition to an after-tax
loss of $29 million on the early retirement of our term loan. The purchase of
US$900 million (face value) of these notes, at a cost of US$1.1 billion,
resulting in an after-tax loss of $289 million, occurred in the fourth quarter.
The repayment of the term loan and the liability management transactions have
cumulatively reduced our overall debt levels by $3.1 billion. Our annual
interest charge has been reduced by $225 million. We retired debt with an
average maturity of six years and issued debt with an average maturity of 18
years. This extended the average maturity of all of our outstanding term debt
from 8 to 12 years and spread the maturities over a greater number of years so
that the most debt coming due in any one year has been reduced from US$1.9
billion to US$1.0 billion.
Our debt position and certain credit ratios are summarized in the following table.
---------------------------------------------------------------------------
December 31, 2010 December 31, 2009
---------------------------------------------------------------------------
Fixed rate term notes $ 4,694 $ 5,086
Term loan - 2,325
Other 281 205
---------------------------------------------------------------------------
Total debt (US$ in millions) $ 4,975 $ 7,616
---------------------------------------------------------------------------
Total debt (C$ in millions) $ 4,948 $ 8,004
---------------------------------------------------------------------------
Cash balances (C$ in millions) $ 832 $ 1,420
---------------------------------------------------------------------------
Net debt (C$ in millions) $ 4,116 $ 6,584
---------------------------------------------------------------------------
Debt to debt-plus-equity 24% 36%
---------------------------------------------------------------------------
Net debt to net-debt-plus-equity 20% 31%
---------------------------------------------------------------------------
Debt to EBITDA 1.2 x 1.9 x
---------------------------------------------------------------------------
We have committed bank credit facilities aggregating $1.3 billion, the majority
of which mature in 2014. The current unused availability under these facilities,
after drawn letters of credit, amounts to $1.1 billion.
Cash flow from operations, before changes in non-cash working capital items, was
$900 million in the fourth quarter compared with $673 million a year ago. The
increase in cash flow from a year ago was due to higher operating cash flow from
our copper and coal business units, which resulted from significantly higher
copper and coal prices.
Changes in non-cash working capital items resulted in a source of cash of $59
million in the fourth quarter compared with $24 million in the same period a
year ago. We sold a portion of our coal receivables in the fourth quarter, which
reduced our working capital requirements by approximately $150 million at year
end.
Expenditures on property, plant and equipment were $300 million in the fourth
quarter and included $86 million on sustaining capital and $214 million on major
development projects. The largest components of sustaining expenditures were at
our coal operations and Trail. Major development expenditures included $23
million for preparatory stripping for Highland Valley Copper's mine life
extension project, $23 million for the Wintering Hills Windfarm power project
and $80 million at Teck Coal. The expenditures at our coal operations are
largely to enable us to incrementally expand production at existing operations.
COMPREHENSIVE INCOME
We recorded comprehensive income of $412 million in the fourth quarter,
consisting of $397 million of regular earnings and $15 million of other
comprehensive income. Significant components of other comprehensive income in
the quarter were losses on currency translation adjustments on self-sustaining
foreign subsidiaries, which were more than offset by unrealized gains on
marketable securities. Currency translation gains and losses are held in
accumulated other comprehensive income, net of taxes, until they are realized at
which time they are included in earnings. Marketable securities consist
primarily of investments in publically traded companies with whom we partner in
exploration or development projects.
OUTLOOK
The information below is in addition to the disclosure concerning specific
operations included above in the operations and corporate development sections
of this document.
Our earnings are heavily dependent on base metal prices, steelmaking coal prices
and foreign exchange rates, and volatility in these markets has also been
unusually high over the past few years. Accordingly, it is difficult in these
conditions to forecast commodity prices or customer demand for our products.
Assuming no significant changes to the current global economic conditions, we
expect the second half of 2011 to be stronger for us than the first half of the
year as we are subject to a variety of seasonal factors including:
-- The Red Dog mine has a shipping window that normally starts in early
July and ends in late October. However, if ice or other weather
conditions are such that the shipping season is delayed, our quarterly
sales patterns can vary substantially. Sales and profits of the Red Dog
mine follow a seasonal pattern, with higher sales volumes of zinc and
most of the lead sales occurring in the last five months of the year
following the commencement of the shipping season in July.
-- The winter months typically present challenging production and shipping
conditions for our coal operations as either the impacts of snow in
December, January and February or rain in February and March can disrupt
production and rail haulage on a temporary basis, which can affect our
production and sales volumes. Our coal sales volumes are currently
expected to be between 24.5 to 25.5 million tonnes in 2011. However,
this production may be affected by the labour issues described on page
20 of this news release. In addition, we are currently expanding our
production capacity to 28 million tonnes per year by 2013. As a result,
production increases will occur gradually throughout 2011, with
production volumes in the last two quarters of the year expected to be
higher than in the first two quarters of the year.
Commodity Prices and 2011 Production
Commodity prices are a key driver of our earnings and current prices are well
above historic averages. On the supply side, the depleting nature of ore
reserves, difficulties in finding new ore bodies, progressing through the
permitting process, finding skilled resources to develop projects, as well as
infrastructure constraints and significant cost inflation may continue to have a
moderating impact on the growth in future production. Although we are concerned
about current global economic conditions, particularly in the United States and
Europe, we believe that, over the longer term, as China and India continue to
industrialize, those two economies will continue to be major positive factors in
the future demand for commodities. We believe that the long-term price
environment for the products that we produce and sell remains favourable.
Based on our expected 2011 production and a Canadian/US exchange rate of $1.00,
the sensitivity of our annual earnings to the indicated changes in commodity
prices, before pricing adjustments, and the US dollar exchange rate is as
follows:
---------------------------------------------------------------------------
Effect of
2011 Change on
Production After-Tax Effect On
Estimates Change Earnings EBITDA
---------------------------------------------------------------------------
Coal (000's tonnes) 25,000 US$5/tonne $80 million $125 million
Copper (tonnes) 350,000 US$0.10/lb $45 million $ 70 million
Zinc (tonnes) 905,000 US$0.05/lb $35 million $ 50 million
US$ exchange Cdn$0.01 $50 million $ 80 million
---------------------------------------------------------------------------
(1) The effect on our earnings of commodity price and exchange rate
movements will vary from quarter to quarter depending on sales volumes.
(2) Zinc includes 285,000 tonnes of refined zinc and 620,000 tonnes of zinc
contained in concentrates.
(3) All production estimates are subject to change based on market and
operating conditions.
Foreign exchange translation gains and losses on our US dollar denominated debt
arising from exchange rate fluctuations are not expected to have a significant
effect on our 2011 earnings, as our reduced debt levels are expected to be fully
hedged by our investments in US dollar denominated foreign operations and
working capital items.
Copper and zinc prices are currently trading approximately 35% and 15% higher
than 2010 average prices, respectively. Partly offsetting the higher commodity
prices is a stronger Canadian dollar, which to date in 2011 is averaging
approximately $0.99 against the US dollar compared with $1.03 against the US
dollar in 2010.
Our copper production for 2011 is expected to increase by 12% from 2010 levels
to 350,000 tonnes. Copper concentrate production is expected to increase by
approximately 40,000 tonnes from 2010, due mainly to a full year's production
from Andacollo's concentrator project, which achieved commercial production
levels effective October 1, 2010.
Our zinc in concentrate production in 2011 is expected to be approximately
620,000 tonnes compared with 645,000 tonnes in 2010. Red Dog's production is
expected to increase by approximately 15,000 tonnes and our share of zinc
production from Antamina will decrease by 40,000 tonnes due to ore body
sequencing. Refined zinc production from our Trail metallurgical complex is
expected to increase slightly to approximately 285,000 tonnes.
Capital Expenditures
Our estimated capital expenditures for 2011 are initially set at approximately
$1.4 billion and are summarized in the following table:
---------------------------------------------------------------------------
($ in millions) Development Sustaining Total
---------------------------------------------------------------------------
Copper $ 285 $ 375 $ 660
Coal 260 275 535
Zinc - 125 125
Energy 70 - 70
Corporate - 5 5
---------------------------------------------------------------------------
$ 615 $ 780 $ 1,395
---------------------------------------------------------------------------
We may authorize further capital expenditures during the year depending on
commodity markets, our financial position, results of feasibility studies, and
other factors. We also expect to invest approximately $54 million as our share
of costs for the Fort Hills oil sands project. The amount and timing of actual
capital expenditures is dependent upon being able to secure equipment, supplies,
materials and labour on a timely basis and at expected costs to enable the
projects to be completed as currently anticipated.
Exchange Rates
Our US dollar denominated debt will be subject to revaluation based on changes
in the Canadian/US dollar exchange rate. Exchange rate fluctuations will also
affect our debt to equity ratio and our interest expense.
Foreign Exchange, Debt Revaluation and Interest Expense
The sales of our products are denominated in US dollars, while a significant
portion of our expenses are incurred in local currencies, particularly the
Canadian dollar. Foreign exchange fluctuations can have a significant effect on
our operating margins, unless such fluctuations are offset by related changes to
commodity prices.
Our US dollar denominated debt is subject to revaluation based on changes in the
Canadian/US dollar exchange rate. As at December 31, 2010, our entire US dollar
denominated debt is designated as a hedge against our US dollar denominated
foreign operations. As a result, any foreign exchange gains or losses arising on
our debt are recorded in other comprehensive income.
FINANCIAL INSTRUMENTS AND DERIVATIVES
We hold a number of financial instruments and derivatives, the most significant
of which are marketable securities, forward sales contracts, prepayment rights
on senior debt notes, and settlements receivable and payable. From time to time
we may engage in simple derivative transactions such as forward swaps and
options to manage our exposure to changes in market prices. These transactions
may result in gains or losses depending on changes in market prices. The
financial instruments and derivatives are all recorded at fair values on our
balance sheet with gains and losses in each period included in other
comprehensive income, earnings from continuing operations and earnings from
discontinued operations as appropriate. Some of our gains and losses on
metal-related financial instruments are affected by smelter price participation
and are taken into account in determining royalties and other expenses. All are
subject to varying rates of taxation depending on their nature and jurisdiction.
The after-tax effect of financial instruments on our net earnings for the
following periods is set out in the table below:
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Price adjustments
On prior quarter sales $ 23 $ 17 $ 9 $ 14
On current quarter sales 15 41 44 193
---------------------------------------------------------------------------
38 58 53 207
Derivatives gains (losses) 86 4 153 (36)
---------------------------------------------------------------------------
124 62 206 171
Amounts included in discontinued operations
Cajamarquilla sale price participation - 1 - 7
Derivative losses - (4) - (13)
---------------------------------------------------------------------------
- (3) - (6)
---------------------------------------------------------------------------
Total $ 124 $ 59 $ 206 $ 165
---------------------------------------------------------------------------
QUARTERLY EARNINGS AND CASH FLOW
(in millions,
except for
share data) 2010 2009
---------------------------------------------------------------------------
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Revenues $ 2,809 $ 2,520 $ 2,110 $ 1,900 $ 2,167 $ 2,131 $ 1,707 $ 1,669
Operating
profit 1,204 1,005 741 605 777 694 636 627
EBITDA 1,030 912 844 1,511 1,042 1,236 1,122 709
Net earnings
(note 1) 361 331 260 908 411 609 570 241
Earnings
per share $ 0.61 $ 0.56 $ 0.44 $ 1.54 $ 0.70 $ 1.07 $ 1.17 $ 0.50
Cash flow
from
operations 959 730 574 480 697 772 386 1,128
---------------------------------------------------------------------------
(1) Attributable to common shareholders of the company.
OUTSTANDING SHARE DATA
As at February 7, 2011 there were 581,293,244 Class B subordinate voting shares
and 9,353,470 Class A common shares outstanding. In addition, there were
5,180,600 director and employee stock options outstanding with exercise prices
ranging between $4.15 and $49.17 per share. More information on these
instruments and the terms of their conversion is set out in Note 14 of our 2009
year end financial statements.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
This news release contains certain forward-looking information and
forward-looking statements as defined in applicable securities laws. All
statements other than statements of historical fact are forward looking
statements. These forward-looking statements, principally under the heading
"Outlook," but also elsewhere in this document, include estimates, forecasts,
and statements as to management's expectations with respect to, among other
things, our future production, earnings and cash flow, our plans for our oil
sands investments and other development projects, forecast production and
operating costs, expected progress and costs of our various expansion projects,
the sensitivity of our earnings to changes in commodity prices and exchange
rates, the potential impact of transportation and other potential production
disruptions, the impact of currency exchange rates, future trends for the
company, progress in development of mineral properties, the benefits of our
transportation agreement with Canadian Pacific Railway, transportation costs,
the timing of commissioning of the Greenhills coal dryer, future production and
sales volumes, future zinc ore grades at the Red Dog mine, capital expenditures
and mine production costs, demand and market outlook for commodities, future
commodity prices and treatment and refining charges, the settlement of coal
contracts with customers, access to and treatment and disposal of process water
at our operations, the outcome of mine permitting currently underway, the impact
of measures required to manage selenium discharges, the impact of adoption of
International Financial Reporting Standards and the outcome of legal proceedings
involving the company. These forward-looking statements involve numerous
assumptions, risks and uncertainties and actual results may vary materially.
These statements are based on a number of assumptions, including, but not
limited to, assumptions regarding general business and economic conditions,
interest rates, the supply and demand for, deliveries of, and the level and
volatility of prices of, copper, coal and zinc, and other primary metals and
minerals as well as oil, and related products, the timing of the receipt of
regulatory and governmental approvals for our development projects and other
operations, our costs of production and production and productivity levels, as
well as those of our competitors, power prices, market competition, the accuracy
of our reserve and resource estimates (including with respect to size, grade and
recoverability) and the geological, operational and price assumptions on which
these are based, conditions in financial markets and the future financial
performance of the company. The foregoing list of assumptions is not exhaustive.
Events or circumstances could cause actual results to vary materially.
Factors that may cause actual results to vary materially include, but are not
limited to, changes in commodity and power prices, changes in interest and
currency exchange rates, acts of foreign governments and the outcome of legal
proceedings, inaccurate geological and metallurgical assumptions (including with
respect to the size, grade and recoverability of reserves and resources),
unanticipated operational difficulties (including failure of plant, equipment or
processes to operate in accordance with specifications or expectations, cost
escalation, unavailability of materials and equipment, government action or
delays in the receipt of government approvals, industrial disturbances or other
job action, adverse weather conditions and unanticipated events related to
health, safety and environmental matters), political risk, social unrest,
failure of customers or counterparties to perform their contractual obligations,
changes in our credit ratings, and changes or a deterioration in general
economic conditions. Statements concerning future production costs or volumes,
and the sensitivity of the company's earnings to changes in commodity prices and
exchange rates are based on numerous assumptions of management regarding
operating matters and on assumptions that demand for products develops as
anticipated, that customers and other counterparties perform their contractual
obligations, that operating and capital plans will not be disrupted by issues
such as mechanical failure, unavailability of parts and supplies, labour
disturbances, interruption in transportation or utilities, adverse weather
conditions, and that there are no material unanticipated variations in the cost
of energy or supplies.
We assume no obligation to update forward-looking statements except as required
under securities laws. Further information concerning risks and uncertainties
associated with these forward looking statements and our business can be found
in our Annual Information Form for the year ended December 31, 2009, filed on
SEDAR and on EDGAR under cover of Form 40-F.
WEBCAST
Teck will host an Investor Conference Call to discuss its Q4/2010 financial
results at 11:00 AM Eastern time, 8:00 AM Pacific time, on Wednesday, February
9, 2011. A live audio webcast of the conference call, together with supporting
presentation slides, will be available at our website at www.teck.com. The
webcast is also available at www.earnings.com. The webcast will be archived at
www.teck.com.
Teck Resources Limited
Consolidated Statements of Earnings
(Unaudited)
---------------------------------------------------------------------------
Three months ended Year ended
December 31 December 31
(Cdn$ in millions, except for share data) 2010 2009 2010 2009
---------------------------------------------------------------------------
Revenues $ 2,809 $ 2,167 $ 9,339 $ 7,674
Operating expenses (1,371) (1,132) (4,844) (4,012)
---------------------------------------------------------------------------
1,438 1,035 4,495 3,662
Depreciation and amortization (234) (258) (940) (928)
---------------------------------------------------------------------------
Operating profit 1,204 777 3,555 2,734
Other expenses
General and administration (103) (51) (263) (188)
Interest and financing (126) (174) (565) (655)
Exploration (19) (2) (56) (33)
Research and development (8) (1) (21) (15)
Asset impairment - (27) - (27)
Other income (expense) (Note 1) (238) 167 265 824
---------------------------------------------------------------------------
Earnings before the undernoted items 710 689 2,915 2,640
Provision for income and resource taxes (309) (199) (932) (695)
Equity loss (4) (48) (8) (126)
---------------------------------------------------------------------------
Earnings from continuing operations 397 442 1,975 1,819
Earnings (loss) from discontinued operations - (5) - 81
---------------------------------------------------------------------------
Earnings $ 397 $ 437 $ 1,975 $ 1,900
---------------------------------------------------------------------------
Attributable to:
Non-controlling interests $ 36 $ 26 $ 115 $ 69
Shareholders of the company 361 411 1,860 1,831
---------------------------------------------------------------------------
Earnings per share
Basic $ 0.61 $ 0.70 $ 3.15 $ 3.43
Basic from continuing operations $ 0.61 $ 0.71 $ 3.15 $ 3.28
Diluted $ 0.61 $ 0.70 $ 3.14 $ 3.42
Diluted from continuing operations $ 0.61 $ 0.70 $ 3.14 $ 3.27
Weighted average shares outstanding
(millions) 589.9 588.8 589.5 534.1
Shares outstanding at end of period
(millions) 590.6 589.1 590.6 589.1
---------------------------------------------------------------------------
Teck Resources Limited
Consolidated Statements of Cash Flows
(Unaudited)
---------------------------------------------------------------------------
Three months ended Year ended
December 31 December 31
(Cdn$ in millions) 2010 2009 2010 2009
---------------------------------------------------------------------------
Operating activities
Earnings from continuing operations $ 397 $ 442 $ 1,975 $ 1,819
Items not affecting cash
Depreciation and amortization 234 258 940 928
Provision for future income and resource
taxes 95 71 208 185
Equity loss 4 48 8 126
Asset impairment - 27 - 27
Gain on sale of investments and assets (2) (159) (859) (383)
Unrealized gain on derivatives (103) (11) (182) 7
Foreign exchange gains (37) (42) (93) (686)
Loss on debt repurchase 341 13 796 241
Other (29) 26 12 10
---------------------------------------------------------------------------
900 673 2,805 2,274
Net change in non-cash working capital
items 59 24 (62) 709
---------------------------------------------------------------------------
959 697 2,743 2,983
Investing activities
Property, plant and equipment (300) (214) (810) (590)
Investments and other assets (9) (16) (46) (372)
Decrease (increase) in restricted cash - 71 91 (94)
Proceeds from the sale of investments and
assets 147 162 1,239 392
---------------------------------------------------------------------------
(162) 3 474 (664)
Financing activities
Issuance of debt 57 - 1,560 4,462
Repayment of debt (1,171) (352) (5,054) (8,141)
Issuance of Class B subordinate voting
shares 26 8 33 1,670
Dividends paid - - (118) -
Distributions to non-controlling interests (33) (44) (89) (69)
---------------------------------------------------------------------------
(1,121) (388) (3,668) (2,078)
Effect of exchange rate changes on cash and
cash equivalents (21) (12) (46) (71)
---------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents from continuing operations (345) 300 (497) 170
Cash received (paid) from discontinued
operations - (53) - 309
---------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents (345) 247 (497) 479
Cash and cash equivalents at beginning of
period 1,177 1,082 1,329 850
---------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 832 $ 1,329 $ 832 $ 1,329
---------------------------------------------------------------------------
Teck Resources Limited
Consolidated Balance Sheets
(Unaudited)
---------------------------------------------------------------------------
(Cdn$ in millions) December 31, 2010 December 31, 2009
---------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 832 $ 1,329
Restricted cash - 91
Accounts and settlements receivable
and other 1,094 881
Inventories 1,380 1,375
---------------------------------------------------------------------------
3,306 3,676
Investments 1,371 1,252
Property, plant and equipment 21,886 22,426
Other assets 1,009 857
Goodwill 1,637 1,662
---------------------------------------------------------------------------
$ 29,209 $ 29,873
---------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 1,498 $ 1,242
Dividends payable 177 -
Current portion of long-term debt 65 1,121
---------------------------------------------------------------------------
1,740 2,363
Long-term debt 4,883 6,883
Other liabilities 1,187 1,029
Future income and resource taxes 5,223 5,007
Equity
Attributable to shareholders of the
company 16,052 14,487
Attributable to non-controlling
interests 124 104
---------------------------------------------------------------------------
16,176 14,591
---------------------------------------------------------------------------
$ 29,209 $ 29,873
---------------------------------------------------------------------------
Teck Resources Limited
Consolidated Statements of Equity
(Unaudited)
---------------------------------------------------------------------------
(Cdn$ in millions) December 31, 2010 December 31, 2009
---------------------------------------------------------------------------
Share capital
Class A common shares $ 7 $ 7
Class B subordinate voting shares 6,795 6,750
---------------------------------------------------------------------------
6,802 6,757
Contributed surplus 84 85
Non-controlling interests 124 104
Accumulated comprehensive income
attributable to the shareholders of
the company
Retained earnings at beginning of
year 7,307 5,476
Earnings 1,860 1,831
Dividends declared (295) -
---------------------------------------------------------------------------
Retained earnings at end of year 8,872 7,307
Accumulated other comprehensive
income 294 338
---------------------------------------------------------------------------
9,166 7,645
---------------------------------------------------------------------------
$ 16,176 $ 14,591
---------------------------------------------------------------------------
Teck Resources Limited
Consolidated Statements of Comprehensive Income
(Unaudited)
---------------------------------------------------------------------------
Three months ended Year ended
December 31 December 31
(Cdn$ in millions) 2010 2009 2010 2009
---------------------------------------------------------------------------
Earnings $ 397 $ 437 $ 1,975 $ 1,900
Other comprehensive income (loss) in
the period
Currency translation adjustments:
Unrealized losses on translation of
self-sustaining
foreign subsidiaries (180) (96) (299) (833)
Foreign exchange differences on debt
designated as hedge of
self-sustaining foreign
subsidiaries (net of tax of $(22),
$(13), $(36) and $(105)
respectively) 153 90 256 724
Losses reclassified to net earnings on
realization - - - 26
---------------------------------------------------------------------------
(27) (6) (43) (83)
Available-for-sale instruments:
Unrealized gains (net of taxes of $(6),
$(4), $(18) and $(14) respectively) 41 37 128 118
Gains reclassified to earnings on
realization (net of taxes of nil, nil,
$17 and $2 respectively) (1) (1) (120) (11)
---------------------------------------------------------------------------
40 36 8 107
Derivatives designated as cash flow hedges:
Unrealized gains (net of taxes of $(3),
$(3), $(3) and $(13) respectively) 8 6 8 19
Losses (gains) reclassified to earnings on
realization (net of taxes of $2, $5, $7
and $(21) respectively) (6) (12) (20) 35
---------------------------------------------------------------------------
2 (6) (12) 54
---------------------------------------------------------------------------
Total other comprehensive income (loss) 15 24 (47) 78
---------------------------------------------------------------------------
Total comprehensive income $ 412 $ 461 $ 1,928 $ 1,978
---------------------------------------------------------------------------
Other comprehensive income (loss)
attributable to:
Non-controlling interests $ (1) $ (1) $ (3) $ (13)
Shareholders of the company 16 25 (44) 91
---------------------------------------------------------------------------
$ 15 $ 24 $ (47) $ 78
---------------------------------------------------------------------------
Comprehensive income attributable to:
Non-controlling interests $ 35 $ 25 $ 112 $ 56
Shareholders of the company 377 436 1,816 1,922
---------------------------------------------------------------------------
$ 412 $ 461 $ 1,928 $ 1,978
---------------------------------------------------------------------------
1. OTHER INCOME (EXPENSE)
Three months ended Year ended
December 31 December 31
($ in millions) 2010 2009 2010 2009
---------------------------------------------------------------------------
Interest income $ 1 $ 1 $ 6 $ 8
Derivative gains (loss) 100 6 180 (50)
Debt repurchase and refinancing fees (341) (6) (782) (168)
Foreign exchange gains 25 39 66 640
Gain on sale of investments and assets 2 159 859 383
Reclamation for closed properties (11) (7) (23) (13)
Other (14) (25) (41) 24
---------------------------------------------------------------------------
$ (238) $ 167 $ 265 $ 824
---------------------------------------------------------------------------
(i) Our financial results are prepared in accordance with Canadian GAAP
("GAAP"). This news release refers to adjusted net earnings, comparative net
earnings, EBITDA, operating profit and operating profit before depreciation and
pricing adjustments, which are not measures recognized under GAAP in Canada or
the United States and do not have a standardized meaning prescribed by GAAP. For
adjusted net earnings and comparative net earnings, we adjust earnings
attributable to shareholders as reported to remove the effect of certain kinds
of transactions in these measures. EBITDA is earnings attributable to
shareholders before interest and financing expenses, income taxes, depreciation
and amortization. Operating profit is revenues less operating expenses and
depreciation and amortization. Operating profit before depreciation and pricing
adjustments is operating profit with depreciation, amortization and pricing
adjustments added or deducted as appropriate. Pricing adjustments are described
under the heading "Average Prices and Exchange Rates" below. 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.
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