Teck Resources Limited (TECK) on Q1 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Teck's First Quarter 2021 Earnings Release Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. This conference call is being recorded on Wednesday, April 28, 2021.
Fraser Phillips: Thanks very much, Kaye, and good morning everyone. Thank you for joining us for Teck's first quarter 2021 results conference call. Before we begin, I would like to draw your attention to the caution regarding forward-looking statements on Slide 2. This presentation contains forward-looking statements regarding our business. This slide describes the assumptions underlying those statements. Various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statements. I would also like to point out that we use various non-GAAP measures in the presentation. You can find explanations and reconciliations regarding these measures in the Appendix. And with that, I'll turn the call over to Don Lindsay, our President and CEO.
Don Lindsay: Thanks very much, Fraser, and good morning, everyone. I'll begin on Slide 3 with first quarter highlights; I will be followed by Jonathan Price, our CFO who will provide additional color on our financial results. And then we'll conclude with a Q&A session where Jonathan and I and several additional members of our senior management team would be happy to answer any questions. So strong operational performance and higher commodity prices contributed to a very solid start to 2021 and the first quarter. Our operations continue to be resilient despite ongoing challenges associated with COVID-19. Teck team continues to rise to meet those challenges, putting in place comprehensive measures to protect the health and safety of our people and our communities to ensure that we can continue to operate responsibly and progress our strategy to grow copper production. Across our businesses, production was in line with plan. We met our quarterly sales guidance in both steelmaking coal and zinc, and there are no changes to our annual guidance. At the same time, we achieved major milestones for priority projects. We're now past the halfway point of construction at our QB2 project, which is a long right low cost operation with major expansion potential. QB2 is expected to double our consolidated copper production by 2023 and we continue to expect first production in the second half of 2022, which is next year. Our Neptune port upgrade project has moved in the commissioning phase. We've now loaded 18 ships. We successfully commissioned the Elkview saturated rock fill expansion in the first quarter on schedule and below budget. The Elkview SRF has been achieving near complete removal for Selenium and nitrates from up to 10 million liters of water per day since 2018. It is part of our ongoing work to affect the value water quality plan to maintain the health of the watershed around our students and cooperations. The Elkview SRF expansion doubles the water treatment facilities capacity to 20 million liters of water per day.
Jonathan Price: Thanks, Don. I'll start by addressing the details of the first quarter earnings adjustments on Slide 17. Environmental costs were $33 million after-tax, primarily relating to an increase in the rates used to discounts on decommissioning and restoration provisions and increased expected remediation costs. We reversed $6 million in inventory write-downs, share-based compensation expense was $10 million and commodity derivatives were $15 million on an after-tax basis. After these and other minor adjustments, bottom line adjusted profit attributable to shareholders was $326 million in the quarter, which is $0.61 per share on both a basic and a diluted basis. The changes in our cash position during the first quarter are on Slide 18. We generated $585 million in cash flow from operations. We spent $869 million on sustaining and growth capital, including $523 million on QB2, $157 million on the Neptune port upgrade projects, and $153 million in sustaining capital. Stripping activities were $134 million primarily related to the advancement of pits for future production of our steelmaking coal operation. This was lower than a year-ago, driven by the decrease in strip ratios in our steelmaking coal business. For investments and other assets, we paid $44 million on expenditures, and received $11 million in proceeds. Net proceeds in the first quarter were from a $577 million drawdown on the US$2.5 billion limited recourse project financing facility to fund the development of the QB2 project. We repaid a net $44 million on our US$4 billion revolving credit facility. Lease payments totaled $33 million and we paid $113 million in interest and finance charges. We issued $6 million in Class B subordinate voting shares, and paid $27 million in respect of regular quarterly base dividend of $0.05 per share. After these and other minor items, we ended the quarter with cash and short-term investments of $369 million.
Don Lindsay: Okay, thanks, Jonathan. In closing, I want to say we remain focused on Teck's prudent copper growth strategy going into green metals as they're now called. And we made solid progress on our key initiatives in the first quarter, we surpassed the halfway point of construction at QB2, we've moved in the commission phase at Neptune and we successfully commissioned the Elkview SRF on schedule and below budget. We believe Teck is one of the best positioned companies globally to capitalize on the strong demand growth that we see for green metals and in particular, for copper. We have one of the very best copper production growth profiles in the industry, and located in attractive jurisdictions. Accelerating copper growth is the cornerstone of our strategy and by growing our copper production; we rebalance our portfolio towards what's now called green metals. And in the process, we expect to continue to reduce carbon as a proportion of our total business while continuing to produce the high quality steelmaking coal that the world absolutely needs for a low-carbon future. We're also continuing to strengthen our high quality or existing high quality low-carbon assets to RACE21 technology, which is harnessing cutting-edge technologies, including artificial intelligence and automation to drive step change improvements in productivity, efficiency, safety, and sustainability. We strive to maintain the highest standards of sustainability and offer operational excellence in everything we do. And we have a leadership team with the right mix of skills and experience to deliver on our strategy. So with that, we will be happy to answer your questions. And like many of you, most of us are on phone lines from home, although I'm in the office personally today. Please bear with us if there is a delay while we sort out who will answer your question and with that operator, over to you?
Operator: Thank you. We'll now take questions from the telephone lines. . Our first question, Orest Wowkodaw from Scotiabank. Your line is open. Please go ahead.
Orest Wowkodaw: Hi, good morning, and thanks for taking the question. So I was wondering if I could get some more color on the QB2 development here, just in the context of what's happening with the COVID outbreak in Chile. You did say that the COVID is having an impact on the pace of development. Just wondering where you are with respect to headcount, have you been able to get to the full rate? And also where is the project with respect to consuming the contingency that was embedded in the original $5.2 billion CapEx number?
Don Lindsay: Okay, I'll make an opening comment. And then I'm going to turn it over to Red Conger and Alex Christopher whichever one wants to follow me. So we have been affected by COVID. No question about that. And so that has slowed us down relative to the ramp-up schedule that we had. But having said that, we just had our best four weeks. In fact, we just had our best two weeks. So it continues to improve. And we're quite encouraged by the progress the last month, there's no doubt that February, March were very tough. But things are coming along well. But COVID is still with us, it is still an ongoing challenge. In terms of the contingency, we still have most of the contingency that we published, available going forward. So with that, I'll turn it over to Red or Alex whoever wants to go.
Red Conger: Yes, Don, Red here. Orest, thanks for the question. Again, we're really proud as a team and all the accomplishments that they continue to make their in place to be circumstances; headcount right now is about 9,400. We've been able to hold that level here the last couple of months and continue to make the progress that we would expect just that level of effort on the site. And the beauty of how the team is managing that numbers but we faced with COVID continue to get better, we were in a great position to springboard off of that and increase additional personnel on the site. All in all, very, very proud of where we're at.
Orest Wowkodaw: Thanks, Red. I didn't quite catch the number you gave us. Sorry, the headcount can give you the headcount one more time, and what percent is that where you're supposed to be in terms of maximum?
Red Conger: Yes, it's 9,400. And I don't have the percentage of total, but it's I'm guessing 10% less Alex, if you want to add more precision to that.
Alex Christopher: Yes, I think Orest, our peak numbers here has been at around, I plan coming over definitive estimate that we were going to hit just shy of I think 12,000 workers on site. So it's sort of 9,400 well, sort of 20% there or so below that in that order. And this is really moved from I would say two people for instance, two people were actually come through with some current wave of COVID things. And I think there's lots of positives here with respect to Chile on that some of the levels now, given I think vaccine 42% of their total population and nearly 32% of the population or 7 million people actually have two vaccines doses. So this is a really positive there, I think one of the leading countries in the world in terms of vaccination. So this gives us lots of a view towards what's going to happen over the next few months and our ability to start to ramp back up to that .
Don Lindsay: No, the peak workforce wasn't intended to be there today, that was the target for mid-year.
Operator: Thank you. Our next question is from Greg Barnes. Your line is open. Please go ahead.
Greg Barnes: Yes, thank you. Lot of delay with this point, but what completion rate per month are you achieving. Thank you.
Jonathan Price: April will be our best month and I don't have that number yet. It was not quite finished. I think we're going to have to leave that Greg because it varies quite a bit week-to-week, but we're very pleased with April hasn't had a tough February month.
Greg Barnes: Okay. So just a question for you, Don, given you have QB2 in slide, you've got a couple of projects in the pipeline potential if you want to build in, there's a lot of talk about what the long-term incentive copper price is. Do you have a view on that? And could you give us your ideas on that?
Don Lindsay: Yes, so that could be a very long answer, but I'll just fill in. So in our planning, I'll give like what we do as a company, then personal view, if you like. In our planning, we generally use $3 copper. And in some cases we've used $3.10, or $3.15, but it has been down in those ranges. I see quite a few research reports now coming up saying kind of price has to be at least $3.50. So you always have to look at these things, whether they're inflation adjusted or not, relative to sort of real prices. My own view is that COVID has accelerated copper demand from what would have been a long-term rate of about 2%. And it's probably gone up a four percentage point to three would max 3.2 or 3.5. And that's probably right. If you see the activity in the world, if you see what's happened in the last week between President Biden hosting the Climate Summit, President Xi making his announcements and Mark Carney getting the banks and insurers to mobilize trillions of dollars to net zero, all of that is going to accelerate decarburization and accelerate demand for copper. So I think the prices are going to be there. We're seeing that in the market. Now, I just don't think the resources are there to develop. We're in a very fortunate position. We have a long list of projects at different stages, some of which could be built quite shortly, or built by partners quite shortly. And then QB -- QB itself is massive with over 8 billion tonnes now headed to 10 billion tonnes. So we could do nothing, but just add the next 10 years, and that would be a real value adding for the company. So I think given the nature of the resources that are out there, you're probably going to need 3.50 copper, to get companies to mobilize to go after to actually develop and there's got to be a real reward for going through the 10 to 15 years of pain to get something built.
Greg Barnes: Thanks Don, that's realty helpful. And if I can, one final question maybe to Jonathan, the 42% tax rate in the quarter. What drove that, significantly above what the normalized rate would be?
Jonathan Price: Yes, Greg, there were a couple of items, which were unique to the quarter that were essentially non-deductible for tax purposes. In the absence of that it will probably have been at 37% so consistent with our usual range. But nothing significant and nothing that's structural.
Operator: Thank you. Our next question is from Jackie Przybylowski from BMO Capital Markets. Your line is open. Please go ahead.
Jackie Przybylowski: Hi, thanks very much. I want to just ask you a question on the coal, the coal division first, your performance for Q1, are they seem quite strong 2 million tonnes and the guidance you have given previously was for the year 2021 at 7.5 million tonnes. I thought Q1 was supposed to be sort of lower run rate versus the rest of the year. So are you thinking that there's any way that the coal sales in China could go above that 7.5 million tonne number that you've previously guided?
Don Lindsay: I'll turn it over to Réal. But I'll just say that we thought the same as you because normally with Chinese New Year in the first quarter, you'd have a little lower number.
Jackie Przybylowski: Fair enough.
Don Lindsay: But the answer to the big picture question is no, 7.5 million is our target. So Réal, more detail on that.
Réal Foley: Yes, not much more to add, Jackie. I guess in reality, we're continuing to try to maximize sales to China. But as Don is saying, we have contractual commitments with long-term customers in other markets. So we're still looking very similar target 2.5 million tonnes throughout 2021.
Jackie Przybylowski: Okay, thank you. Can you maybe while we're on the topic, can you talk a little bit about what you're seeing today? I know things change so quickly. The Chinese coal market seems pretty strong right now, but maybe that's not the case in other markets like India is -- can you give us a little bit of commentary on what you're seeing in terms of the CFR premium versus the FOB benchmarks today?
Réal Foley: Yes, sure Jackie. So the current premium is getting very close to US$100, FOB price this morning is down to around 109, and CFR, China is at 227. So if we develop ocean freight, which currently for us is in the low 20s, you end up with very close to US$100 tonne crew.
Jackie Przybylowski: Thank you very much. That's amazing. Maybe just shifting gears, I just have been reminiscing on some old places as, we haven't left the house in a while. And thinking back to the site visit we did to Highland Valley, I think it was around September 2019. And we saw the technology working there or sorting the autonomous haulage; would you give us, would you mind giving me an update maybe on how those trials are going? I think it's been a while since you've been doing those trials? Are you seeing success there? And is there regroup for how that might be kind of rolled through other mines or other areas of your business?
Don Lindsay: Yes, it's pretty good. Shehzad, why don't you start?
Shehzad Bharmal: Sure, thanks Don. Jackie on VHS at Highland Valley, we have now converted 21 trucks and not all on service in autonomous but will be as 2021 progresses. And our plan is to be able to have 35 trucks fully autonomous in both the pits by the -- by Q1 of 2022. And that was our plan. In terms of the performance of VHS is performing as designed, as expected. And we are doing cash flow to see longer-term benefits associated with higher life maintenance and fuel savings, which were on top of our expected benefits for VHS of utilization and labor issues. And of course, safety being one of the best things we have had really no issues on the safety front. It has performed really well. With respect to mine your other question. And we have them on three shovels. And depending on where we are, we usually use two of them. And we continue to utilize them; the utilization is a little bit lower than expected. But we're working through the technology issues of making them more robust and so as per expectations. I should also add that on RACE21 aspect, Highland Valley has been one of -- one side of the gate. And with respect to our location models and combination and grinding circuits, the models that we have created are very fluid and performing really well. Highland Valley has delivered significant improvements in expected throughput compared to our geological models and the recoveries as well. So we’re very happy with that.
Jackie Przybylowski: Is there any plan to expand these trials to other operations?
Shehzad Bharmal: I can, perhaps Andrew or Robin can talk. We do have AHS at LQ as well right now. Andrew or Robin if you want to add to that?
Don Lindsay: Robin why don't you do your version of what Shehzad just said.
Robin Sheremeta: That you got it. Pretty much a repeat. We're pursuing the same technology as the LQ mine, we've got about half the truck fleet converted there now, so about the same 21 trucks. And we'll have that fully converted by the end of the year. And we're seeing very similar safety improvements, maintenance type improvement, shale life, that kind of thing. So very, very strong technology and it's still quite successful in coal as well.
Operator: Thank you. Our next question is from Emily Chieng, Goldman Sachs. Your line is open. Please go ahead.
Emily Chieng: Good morning, everyone. I wanted to pivot back to met coal and just maybe your return views on the commodity there, certainly doesn't seem to be a lot of new Greenfield groups for met coal certainly supportive on the supply side. But how do you square that off against what's happening in global steel markets longer-term where different regions of the world, China in particular perhaps looking at curtailing production or more globally, you're seeing a transition to more AS capacity?
Don Lindsay: Okay. Réal Foley why don't you turn that.
Réal Foley: Yes, I can do that. Thanks for the question, Emily. And so what we're seeing actually in the short-term is record high steel prices and that in large part due to recovering demand in all parts of the world, including China, India, and also outside of those regions. And there was an announcement this morning actually that China is removing the tax rebate on the majority of its steel product exports that will also support steel production in other countries, and will help China to reduce their exports. But the exports from China just put this in perspective, there are 54 million tonnes last week, estimates of that announcement again, it's just as of this morning, so it's pretty early, but it looks like it could reduce those export by 70% to 75%. So that's 40 million tonnes or so. And that compares to record high exports from China that were around 115 million tonnes a few years ago. So there is a in shift in terms of scrap utilization that we're starting to see in China. China's currently using around this is a low 20% range in terms of scrap utilization. But overall, production in China is still very low. And given the stage that China is at in terms of scrap generation, a lot of this in China is going into construction and infrastructure, which is a longer cycle to January, submit a significant scrap to support faster increase of VAS. In other countries like India, where the majority of the growth is going forward, story is quite similar scrap availability is lower. And when we look at more developed markets, scrap utilization is probably somewhere around low-30s to mid-30% utilization. So we could see eventually shifting to that kind of level. But that will probably take some time to get there just in terms of scrap availability.
Emily Chieng: That's really helpful color. And then maybe just one follow-up if I may, on the copper price environment and positive demand trends that you're seeing for the green metal and definitely your QB2 delivering into that should be a very exciting time. But as you think about your longer-term organic portfolio, is there a need to accelerate any of the other growth projects that you have, or from a tech perspective, would you rather see how the copper price environment plays out for a little while longer enjoy the free cash flow harvest, and then make those decisions?
Don Lindsay: Let me speak to that, Emily. We don't need to see the copper price play out any longer, we have confidence in the long-term copper price that the market is going to need those projects. So that wouldn't be the limiting factor. The limiting factor is the stage at which each of the projects are at. So for example, QB2 is obviously going to be finished next year even if we wanted to go ahead with QB3, the earliest we could sanction that is probably beginning of 2026, because we have to finish the pre-feasibility study in now and feasibilities and file for the FCRA and so on. If everything went perfectly, you might be able to do in three to six months faster, but nothing if it does go perfectly. So there's going to be a gap between when QB2 starts up next year, probably three, four years of very, very strong free cash flows. And even when QB3 is sanctioned the first equity capital comes from our partners and in project finance so Teck wouldn't have to come up with any funding till 2027 to 2028. So there's a long stretch there where there's should be very, very strong cash flows available to return to shareholders. The other project Zafranal the feasibility is finished but there's a lot of optimization going on. Peru is still locked down, and I saw earlier that that's likely to stay until September. So the earliest anybody who wanted to partner with us there could go visit it. It's not for several months, yet. San Nicolas, we've just finished the pre-feasibility study, which we'll be publishing in due course. We're just working on some final questions. And, that's one that maybe could be built during the period between QB2 and QB3. We probably have a partner build that for us. So again, we wouldn't have to come up with any capital. The market will need the projects. But the projects themselves have to go through the stage gate process, until they're ready to built. So, that's really the state of affairs. And that's the same worldwide, by the way, you look at all the list of projects, there's about four or five -- that are already under construction coming on in the next two years. And after that, there's a long period when there's quite a gap to still open up.
Emily Chieng: Great. That's perfect. Thank you.
Don Lindsay: There was a consultant, done a research report out a couple of days ago, calling for a 4.5 million tonnes gap between supply and demand by 2030, that's 15QB -- they're just not around.
Operator: Thank you. Our next question, Adam Bryce, CIBC Capital Markets. Your line is open. Please go ahead.
Adam Bryce: Good morning. Thanks for the update and taking my questions. Actually, I just have one. It's a follow-up to Orest and related to QB2, with today's update the project past 50% completion. And going back to 2020 update, I recall you were targeting 40% completion by year-end, which ultimately you achieved. So my question is, and I know that COVID is a variable, but on your updated project schedule, what percentage of completion are you targeting by 2021 year-end?
Don Lindsay: I don't think we're going to give you a number on that because it's so dependent on COVID and we're not through that situation yet. Well, once we are through it and we can finish the ramp-up to peak workforce, then the predictability and the percent per week to go back to Greg’s question, all that becomes much clearer and we can give you a better, better number. What we can say is that we just had our four best weeks in April. So it's going in the right direction. We expect, the percent completion per week to continue to increase week-by-week, going forward, as long as COVID doesn't get in the way. But until, we have COVID well and truly behind us, it wouldn't be right for us to be too definitive on those things. But we do have a lot of confidence, a very high-level of confidence that this is going to be finished, as we've always said in the second half of 2020s.
Adam Bryce: Okay. So excluding COVID, if we try to stack it publicly and at a very high-level, first production is expected, second half of next year. We're at or past 50% now, would it be fair to split the differences and say that to be on track for first production on schedule that the project needs to be at, or about 75% for the year-end, is that fair reference or is that --
Don Lindsay: I think you're trying to get too specific and we're going to leave the disclosure as it is. Thanks.
Operator: Thank you. Next question from Timna Tanners, Bank of America. Your line is open. Please go ahead.
Timna Tanners: Hey, good morning guys. I have two follow-up, to the topics we had earlier on met coal and on the satellite projects. So, net coal, it's really missing the party in terms of global prices and the gap you pointed out. It is really wide. And I know you said you have long-term contracts, but are there any potential for revisiting these contracts that they can do at any point, if this is a long-term situation, is there anything that can happen down the road? And then I'll ask a follow-up on the copper projects. Thanks.
Don Lindsay: Yes. We surely understand why you're asking the question and it's something that we would, kind of conceptually look at here. I think it's too soon to conclude that it's a long-term situation between China and Australia. And then, even if it was, the fact is like, you have to look at the market globally. You can't be totally dependent on one country. And we have some really good, strong, important customers that we've had long-term relationships with. What, I think, you'd more likely see is the current pricing mechanism, evolve over time. So that -- those -- and so right now we have a bifurcated market with two distinct prices, one's risky, good. We're very happy with it. And yes, we wish we could sell more tonnes at a higher price obviously. But, I think if the market concludes that geopolitical situation is long-term, that's the pricing mechanism will change and that, and that will be favorable to us, as some competitors it won't be as favorable to.
Timna Tanners: All right, that makes a lot of sense. Thank you for that. And then on the project, the satellite project, you just went through and explained that the earliest sanctioning for QB2 would 2026, and Zafranal needs to go -- has done the feasibility and San Nicolas is potentially for this, but can you just go through and give us, earliest productions and what are the gaps in that, the projects that you could give, because you've also said that, Teck is in a favorable position to start earlier than other, other companies, I'd just like to understand that timing a little better. Thank you.
Don Lindsay: That's a fairly detailed question. What I'm going to suggest is that, what's the best way. I know, because there's eight projects really and all different timetables because they are at different levels of development, from pre-feasibility, feasibility, it's on the permitting in different countries takes that different length of time. I think, what we'll probably do is put a packaged answer to that and get it out to the market generally in some form between now and the next quarterly, and certainly at Investor Day, we'll be going through that, those plans in details, but it would be a very long answer. And it would only, generate a whole bunch of more questions if we tried to go through the whole list today. So, certainly appreciate the question and, we in due course, we'll get to you a more reasonable answer.
Operator: Thank you. Our next question from Lucas Pipes, B. Riley Securities. Your line is open. Please go ahead.
Lucas Pipes: Hey, good morning, everybody. I have questions along the same lines as well. And first to turn to -- to China and the met coal market, you noted that the decline of 80% of imports in the release, and obviously, the steel market is globally very strong. And I wondered what your perspective is on how China is meeting its demand today, if not with seaborne imports and then how sustainable you think that situation is longer term. Thank you.
Don Lindsay: Réal, over to you?
Réal Foley: All right. Thanks Lucas. So what China is doing in the short- term is increasing their domestic production in Q1 2021. Their domestic production was up 15 million tonnes year-over-year. That is the on the backdrop of some challenges that the domestic industry has faced in terms of -- at coal mine accidents, and following increased safety and environmental inspections. So it remains to be seen where it could increase to currently and China consultants are expecting that steel production will be above, not steel, sorry domestic coal production will be about 500 million tonnes, a bit above 500 million tonnes in 2021. That is up somewhere around 15 million tonnes compared to 2020. And as a result of that tight availability, of course, the domestic price in China, has increased, it is now sitting around 231 CFR equivalent. The other place where China is getting more coking coal is from Mongolia. So during Q1, the imports were up also, and, but they are still down on an annualized basis compared to the record high in 2019. That record high was 24 -- was 34 million tonnes and then Q1 the number is annualized at 24 million tonnes. And a lot of it is result of increasing COVID cases in Mongolia that is putting that curve on exports that started from about mid-March and is still ongoing today. Imports from the seaborne market, as you said, are lower, given that there is none from Australia now, since December of 2020. But overall seaborne imports for Q1 on an annualized basis are up to above 21 million tonnes. And that compares to about 13 million tonnes excluding Australia in 2020. So that's -- that's kind of where the coal is coming from, during the Australian there .
Lucas Pipes: Réal, I really appreciate all this detail. My second question is, along the lines of copper project satellite et cetera. And when I -- when I think back to few years back, it seems like those -- some of those projects were potential monetization targets, sounds very different today, obviously, but what I wondered in terms of strategy going forward, would you be going so far as to be inquisitive on the M&A side when it comes to two copper projects specifically? And if so, where would you be? Where would you be looking, and then I've given some of the things you mentioned earlier, in regards to the outlook for copper, what would be the implications for exploration spending, et cetera? Would really appreciate your perspective on this. Thank you.
Don Lindsay: Okay. There were several questions within that. I'll start with some. First in terms of, you mentioned the inquiries are looking at buying. We're not interested in buying anything because we were very rich in resources and technically we have eight projects to work through. So, that's not to say that our eyes are closed. We're obviously going to keep an open mind, if something comes along that is that much better than everything we've already got then we'll take a look at it. But now we don't expect that to occur. In terms of exploration budget, as we get further along knocking off all these initiatives, such as Neptune, Elkview water treatment, Fording River water treatment, and with pricing with copper, zinc where they are, I think more capital becomes available. And, I would expect the exploration, we'll share in that. And we've been very pleased with the work our exploration team has done over the years. So, yes, is the answer to that question. In terms of, monetization of the assets, I guess I'd make two observations. One is clearly assets are worth more today than they were a year ago, pre-COVID. And that's just a function of two things. One is the long-term view of copper price or copper demand, which drives price has shifted from about 2% copper demand growth to 3% to 3.5% that opens up a big gap, which means that these projects are more valuable based on the long-term price people are using. But then also the mid-caps that really need their next project, they have a much better access to capital markets. Then they can do a block deal for 500 million of equity and put that to work getting themselves a new project. So the number of buyers and the ability of the buyers to pay has increased significantly over the last year. So in that context, we will look at the market as one of our board members said, why would you ever sell a copper project, given the outlook for the board over the next 10 years? I think the answer is somewhere in between, getting the right balance and we've looked at some of our situations and listened to the inbound calls that we've been receiving. And there -- there's some interesting opportunities whereby we could bring on a partner and they build it with their capital and their people, and we're left with half of mine or more for free. And if that sneaks in between QB2 and QB3, then that's a pretty good situation. So we're looking at those kinds of options. And what we'll do is, we'll put together a whole package of information on the portfolio. And just back to Timna's question earlier, I mean, one of the reasons we can't really answer today is because we just don't know when COVID is going to end. And COVID is the single determining factor as to whether people can even visit a site to decide whether they want to buy something or partner with us or whatever. That's still up in the air, it is still not possible, in some circumstances. So that's why it's hard to be too dependent on the dates.
Lucas Pipes: Don, I really appreciate this perspective. Thank you very much and best of luck.
Don Lindsay: Thank you.
Operator: Thank you. Our next question from Matthew Murphy, Barclays. Your line is open. Please go ahead.
Matthew Murphy: Hello. I was wondering if you could share any thoughts you might have on Peru. We've got the leading presidential candidate positioned fairly aggressively against foreign miners. I'm just wondering if, you or Anthony in the management or the Chamber of Mines have had any briefing insights into his administration and just anything you can suggest we should think about as this election plays out.
Don Lindsay: Yes. Clearly we're all watching it, and there's different professional geopolitical commentators that publish reports every day. I read some of them and I'm sure most of the team does. But I don't think that there's much, additional insight that we can add to that to help you with your question. No one knows the answer and the results. I see that it shows the modifying his position somewhat in the end he comes from a advantage point. That's fairly far left and it looks like in the polls, he has as a lead. In our case for our company, it's an important thing to watch. We have two key assets, Antamina of course a very, very important asset; Zafranal a development asset. It's not that material to our company as it would be to some other companies, but, in the end I’m sure, we're all just going to have to watch and see what happens.
Matthew Murphy: Sure. And maybe just as a follow-on, on that, it's my understanding that we want to have a tax stabilization agreement in place right now. And can you just remind if we look just for Antamina, how much CapEx you'd be paying or putting into the asset over the next few years.
Don Lindsay: I'll turn that to Jonathan, but just saying, because you prompted the issue. We do have one at QB2, which is very important. So Jonathan, over to you.
Jonathan Price: I was just getting off mute there. I don’t have the outlook for Antamina CapEx to hand, but if you can get with Fraser after this call, we can -- we can just give you whatever relevant disclosures you have on that point.
Operator: Thank you. Our next question, Brian MacArthur from Raymond James. Your line is open. Please go ahead.
Brian MacArthur: Hi, good morning Don. Yes, mine had to do with project satellite, and I know you've given lots of answers, but just so I, and obviously you've got lots of strategic options. Are we now seeking a originally project satellite with all monetization, you've talked about a partner building one of your projects. Can I assume that you don't really want to build any of these eight projects and I could argue maybe you should have another production center or what's your philosophical thinking on that? Given originally, you thought you could monetize probably big satellite for $3 billion or at least that number was originally put out. I don't know if you'd be willing to put out a new potential number, you might be able to get out of this.
Don Lindsay: Okay. And a couple of clarification, that we took these projects that were all very early stage. And what we said is we've moved them through the scoping, resource, reserve, scoping study, pre-feasibility, feasibility, and then decide what best to do with it, whether it was to actually build it, if it made sense as part of Teck’s portfolio or to partner or to contribute into another company, take back shares, run the cycle or to sell out right for cash. So that it was never contemplated that we would monetize all of them, but some were less likely to become part of the Teck portfolio going forward. And so it was always thought that some of them would be monetized. We set a target of $3 billion of value in terms of NAV. We have significantly exceeded that for those five projects. But we haven't necessarily realized any of that in cash. We do know from just -- just inbound calls and letter proposals and things that we get unasked, that we could clear significantly over a billion on a couple of them if we chose to do that. We would just say we know we've received offers that say those numbers, we think it's long way from exit, getting letters it's actually closing the deal. But so a significant value has been created by the satellite team. Market has shifted structurally, I think for some time. COVID has a big impact, well no question about it. And part of the de-carbonization and the associated electrification and long-term demand for copper looks very strong. So that causes us to rethink it carefully. So, we don't leave value on the table. We've done studies of all our competitors to see what they are becoming. And like a lot of people don't have much in the cupboard in terms of copper resources to develop. And if you look at the exploration track record as an industry, the copper industry hasn't done that well over all. I mean, there have been some, some successes. But it's limited. So we're looking at very carefully. And as I said earlier, we’ll commit to putting out a full update on our copper pro division if you like, or maybe they're calling that. And so people can see just what kind of a pipeline we've got. But it's pretty exciting and we've got a tremendous resources, we're rich in resources.
Brian MacArthur: Great, thanks. That's very helpful. Just a second question, just for a detailed question, for the settlement with the Fisheries I think there were two $30 million payments, have they been made yet or they out of cash flow yet?
Don Lindsay: Just a final thought on your last question.
Brian MacArthur: Thanks.
Don Lindsay: We almost know for sure we will be building QB3, right. We don't know, whether it's a direct 50% quick expansion of doubling or tripling, right, consider the resources are there to sustain. So you can assume that Teck and our partners in the mining we've got will be building and expanding QB overtime. On the Fisheries, I’ll turn that to Peter Rozee. I don't hear Peter. So I'll just say that the two 30s have not been paid yet. I think we have a year to do.
Peter Rozee: I’m sorry; I’m getting myself off mute. The answer is we have not paid the Fisheries at times. Yet, they're recorded as a short-term liability at quarter-end.
Operator: Thank you. There are no further questions registered. At this time, I'd like to turn the meeting back over to Don Lindsay.
Don Lindsay: Okay, well, with that, thank you very much for joining us today. We look forward to having the next quarterly call in July and we'll give you another update on QB2, then we're very excited to have passed the halfway point, very excited with our progress. In the last four weeks, we do see some improvements in the COVID situation in Chile. We certainly hope that continues. And that allows us to ramp back up to peak forward -- peak forced them towards the middle of the year. We're delighted to have Neptune in the full commissioning stage, 18 ships having already been loaded. As I said I was there on Monday looking terrific and is going to be tremendous long-term asset for our coal business and structurally lower the costs for decades to come and allow us to deliver high quality metallurgical coal to our customers when they wanted, when prices are high. Once again, thank you all. Have a good day.
