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Teck Resources Limited's CEO Discusses Q1 2012 Results - Earnings Call Transcript

We show our view of normalized or adjusted profit for the quarter on Slide 7. Profit attributable to shareholders before adjustments was $218 million. The most significant adjustment is due to our debt refinancing, which resulted in a $329 million after-tax charge. Other unusual items were derivative gains and onetime labor settlement charges related to new collective agreements in our Quebrada Blanca and Andacollo operations in Chile. Adjusting for these items, profit was $504 million for the quarter or $0.86 per share.

Turning to our operating results for the quarter on Slide 8. In our coal business, production was 6.3 million tonnes. The sales were 1 million tonnes lower as we have come through a weak point in the global steel production cycle. We certainly see the market improving now, though. The average realized price for the fourth quarter was USD $223 per tonne, about a 5% discount to the benchmark price of $235 per tonne for the premium brands of coal. Usually, the average realized price is about a 10% discount to the benchmark price due to the mix of our products, including some lower value PCI and thermal coals.

First quarter 2012 unit site costs were $70 per tonne and distribution cost came in at $34 per tonne. This gave us combined costs of CAD $104 per tonne. Year-over-year, we have seen our costs decline by approximately 8%.

On Slide 9, we continued to move towards our 28 million tonne production target from our existing 6 coal operations. As I mentioned, our 6.3 million tonnes of production equates to an annualized run rate of over 25 million tonnes. Total material moved in the quarter, combining raw coal production and waste rock, increased 15% on a year-over-year basis, and it's stabilizing at the rate necessary to achieve our production target.

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