Teck (TECK) Q3 2026 Earnings Call Transcript

DATE

Thursday, Oct. 29, 2026

CALL PARTICIPANTS

• Vice President, Investor Relations and Treasurer - Edwin Shadeo
• President and Chief Executive Officer - Jonathan Price
• Executive Vice President and Chief Financial Officer - Crystal Prystai
• Senior Vice President and Chief Commercial Officer - Ian Anderson

TAKEAWAYS

• Adjusted EBITDA -- CAD 2.3 billion, representing a 97% increase from the prior year driven by record copper prices and lower smelter processing charges.
• Revenue -- CAD 4.5 billion, reflecting higher production volumes and significantly higher realized commodity prices.
• Copper Production -- 115,700 tonnes, representing 11% growth due to higher grades at Highland Valley and Antamina.
• Copper Net Cash Unit Costs -- $1.77 per pound, which improved 15% compared with the same period last year due to strong byproduct pricing and cost discipline.
• Annual Copper Cost Guidance -- $1.80 per pound to $2.00 per pound, representing a reduction from the previous guidance of $1.85 per pound to $2.20 per pound.
• Zinc Net Cash Unit Costs -- $0.27 per pound, which increased 59% year over year as a result of lower volumes at the Red Dog operation.
• Annual Zinc Cost Guidance -- $0.30 per pound to $0.40 per pound, lowered from the previous guidance of $0.65 per pound to $0.75 per pound.
• Quebrada Blanca Production -- 47,200 tonnes of copper, which was affected by severe weather events including power outages and flooding in August and September.
• Antamina Zinc Production -- 38,500 tonnes, a 70% decrease on a 100% basis due to a lower ratio of copper-zinc ore processed.
• Refined Zinc Production -- 62,000 tonnes, representing an 18% increase at the Trail operations.
• Liquidity -- CAD 10.9 billion as of Sept. 30, 2026, including CAD 6.7 billion in cash and an undrawn $3 billion sustainability-linked revolving credit facility.
• Net Cash Position -- CAD 1.9 billion, an increase of CAD 655 million during the quarter and CAD 1.7 billion over the first nine months of the year.
• Impairment Reversal -- CAD 888 million pre-tax reversal related to the Trail operations, driven by improved expectations for long-term commodity prices.
• Highland Valley Copper Project Capital -- CAD 230 million invested in the third quarter, with the mine life extension project now more than 25% complete.
• HVC MLE Total Capital Guidance -- CAD 2.1 billion to CAD 2.4 billion, which remains unchanged for the extension project expected to sustain operations through 2046.
• Red Dog Sales Guidance -- 65,000 tonnes to 75,000 tonnes of zinc in concentrate for the fourth quarter, reflecting normal seasonal sales patterns.
• Molybdenum Production -- 600 tonnes at Quebrada Blanca, an increase from 480 tonnes produced in the same period last year.
• Adjusted Profit -- CAD 923 million, or CAD 1.88 per share, compared with CAD 372 million, or CAD 0.76 per share, in the third quarter of 2025.
• Capitalized Stripping -- CAD 157 million, impacted by higher waste movement at Antamina and Quebrada Blanca and increased diesel prices.
• Average Realized Copper Price -- $6.41 per pound, representing a significant increase from $4.45 per pound in the prior year quarter.

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RISKS

• Price stated, "The weather we experienced in the third quarter is a reminder of the very real impacts of climate change," noting that severe events impacted mining conditions at multiple copper sites.
• Price noted that a strike at Highland Valley commenced on Oct. 24, 2026, and stated, "The impact on production depends on the duration of the labor action," while the site operates at reduced capacity.
• Prystai noted that higher diesel costs have negatively impacted operating costs, particularly in the copper segment, and that full-year supplies at Red Dog were purchased at higher prices than the prior year.

SUMMARY

Teck Resources Limited (NYSE:TECK) reported significant earnings growth for the third quarter of 2026, supported by record quarterly average copper prices and increased production across most copper operations. Management reported that the company's merger with Anglo American to form a copper-focused minerals champion is progressing as planned, with integration planning advancing and a target close within 12 to 18 months of the Sept. 2025 announcement. Financial results included a doubling of adjusted EBITDA and a substantial increase in cash flow from operations, allowing the company to strengthen its net cash position to CAD 1.9 billion. While severe weather events in Chile and a labor strike at the Highland Valley operation presented operational challenges, the company maintained its annual copper and zinc production guidance and lowered its net cash unit cost projections for both segments due to strong byproduct pricing and operating discipline.

• CEO Price stated, "We will be entering our next chapter from a position of strength, built on the foundation of a high-quality critical minerals portfolio with safe and productive operations."
• Management reported that the company continues to engage constructively with China's antitrust regulator (SAMR) for the final outstanding regulatory approval required for the Anglo American merger.
• The Highland Valley Copper mine life extension project reached over 25% completion, with infrastructure work and a process plant upgrade aimed at sustaining annual copper production of approximately 132,000 tonnes through 2046.
• Management expects the Quebrada Blanca mine to open multiple additional mining phases by 2027, which is intended to enhance operational flexibility and resilience to future weather disruptions.
• Ian Anderson noted that the zinc market is exhibiting supply constraints similar to copper, with negative treatment charges reflecting a shortage of concentrate relative to smelter needs.
• The company signed a strategic investment agreement with the Canada Growth Fund for up to CAD 400 million to potentially double production capacity for germanium and antimony at Trail operations.
• Management confirmed that Quebrada Blanca has achieved four consecutive quarters with no tailings management facility-related downtime in the concentrator.

INDUSTRY GLOSSARY

• EBITDA: Earnings before interest, taxes, depreciation, and amortization.
• HPI: High potential incident, a safety metric tracking incidents with the potential for serious injury or fatality.
• HVC MLE: Highland Valley Copper Mine Life Extension, a project to extend the operating life of the Highland Valley mine.
• LME: London Metal Exchange, the global center for industrial metals trading and price discovery.
• Net Cash Unit Cost: The cost to produce a unit of metal after deducting the value of co-product and byproduct sales.
• QB: Quebrada Blanca, a major copper mining operation in Chile.
• SAMR: State Administration for Market Regulation, the Chinese regulatory body responsible for antitrust approvals.
• TC/RC: Treatment and refining charges, the fees paid to smelters to process concentrate into refined metal.
• TMF: Tailings management facility, the infrastructure used to store the waste materials from mining operations.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Teck's Third Quarter 2026 Earnings Release Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. To join the question queue, please press star then one on your touchtone phone. Should anyone need assistance during the conference call, they may signal an operator by pressing star then zero on their telephone. This conference call is being recorded on Thursday, October 29, 2026. I would now like to turn the conference over to Edwin Shadeo, Vice President, Investor Relations and Treasurer. Please go ahead.

Edwin Shadeo: Thank you, operator. Good morning, everyone, and thank you for joining us for Teck's Third Quarter 2026 Conference Call. Today's call contains forward-looking statements. Actual results may vary due to various risks and uncertainties. Teck does not assume the obligation to update any forward-looking statements. Please refer to slide two for the assumptions underlying our forward-looking statements. We will reference non-GAAP measures throughout this presentation. Explanations and reconciliations are in our MD&A and the latest press release on our website. On today's call, Jonathan Price, our CEO, will provide highlights for the third quarter of 2026. Crystal Prystai, our CFO, will follow with further details on our operational performance and financials for the quarter.

Jonathan will then wrap up with closing remarks and an opportunity for Q&A. Over to you, Jonathan.

Jonathan Price: Thanks, Edwin, and good morning, everyone. We've delivered another quarter of significant earnings growth and robust cash generation, underlying the strength of our business. In the third quarter of 2026, we increased production, demonstrated resilience in execution, and benefited from another record quarterly average copper price. We significantly increased our cash flow from operations to CAD 1.6 billion, and doubled our adjusted EBITDA to CAD 2.3 billion compared to the same period last year. We continue to strengthen our balance sheet quarter by quarter, driven by significant cash flows from operations. We've increased our net cash position by CAD 655 million in the quarter, and by CAD 1.7 billion over the first nine months of the year.

Our liquidity is almost CAD 11 billion as of September 30, including CAD 6.7 billion of cash. Our focus remains on our key near-term priorities to drive shareholder value, and we are making continued progress against them. Our merger of equals with Anglo American to form a copper-focused global metals and minerals champion continues to progress as planned, and integration planning is advancing. We continue to engage constructively with China's antitrust regulator to obtain the final outstanding regulatory approval. Expected completion within 12-18 months of our September 2025 announcement remains unchanged. In parallel, we remain focused on disciplined execution, particularly on safe and reliable operational performance and delivery against our commitments.

In the third quarter of 2026, our financial performance was strong despite a challenging operating environment at several of our sites. Our teams dealt with a wide range of severe weather events across our copper business. Extreme weather conditions at Carmen de Andacollo and [Quebrada Blanca], with torrential rain and flooding and more than three times the area's historical annual average rainfall in a short period of time. Heavy rain, snow, and sustained high winds at QB operations in one of the driest regions in the world, and severe drought conditions and an extended wildfire season at Highland Valley. Throughout these events, the safety of our people remained the priority.

While simultaneously dealing with multiple severe weather events and the resulting impacts on mining conditions, we safely recovered our operations in the quarter. Across our copper business, we increased production, lowered unit costs, and delivered strong margin growth, and our zinc business continued to contribute meaningful cash flow. We've lowered our 2026 annual cash unit cost guidance in both our copper and zinc segments, primarily as a result of strong by-product pricing year-to-date. We lowered the midpoint of our net cash unit cost guidance by $0.13 per pound for copper and by $.035 per pound for zinc, which also reflects our strong operating discipline. Our 2026 annual production and capital expenditure guidance is unchanged.

We continue to advance the work necessary to realize the full value of QB, which will ultimately come from stable and efficient operations and continuous improvement. QB's strong operating performance in the first half of the year continued in July, but heavy snowfall and high winds in August caused intermittent power outages, resulting in shutdowns of the concentrator, dewatering systems, and other critical equipment. Flooding of active mining areas reduced access to high-grade ore and impacted mine productivity into September. QB successfully completed its final planned shutdown for 2026 in September, supporting continued operational performance for the remainder of the year. Despite the weather disruptions in the third quarter, QB's annual copper production guidance is unchanged.

QB's resilience to severe weather events will continue to be enhanced through the remainder of 2026 and into 2027 as the mine matures and more mining phases are opened. QB's Tailings Management Facility, or TMF, development work continues to progress, and we commenced construction of Rock Bench 6 in the quarter, which I will cover in more detail in a later slide. The third quarter of 2026 was our fourth consecutive quarter with no TMF-related downtime in the concentrator, supporting improved asset utilization and operational consistency. We're advancing construction of the mine life extension at Highland Valley Copper, which will sustain operations at this important asset through to 2046. And supports average annual copper production of approximately 132,000 tons.

Construction is now more than 25% complete. At the same time, we're continuing to progress the copper growth project in our portfolio towards sanction readiness to generate shareholder value and strengthen optionality for future development opportunities. And we are pleased that San Nicolás received its main environmental impact assessment permits in July. Overall, our third quarter 2026 results showcase the underlying strength of our business and demonstrate our strong foundation as we advance towards completion of our merger with Anglo American. I'll now provide an update on each of our key near-term priorities, starting with the merger with Anglo American on slide five. The merger is progressing as planned towards completion.

The parties are working collaboratively towards securing the remaining required regulatory approval, and we are continuing to engage constructively with SAMR in China and are responding to their information requests. Integration planning continues to advance with teams focused on day one readiness, maintaining safe and reliable operations, and ensuring business continuity while preparing the combined company to realize the strategic and operational benefits of the transaction. Significant progress has been made, including establishing the future executive leadership team for Anglo Teck, defining the fundamentals of its operating model and advancing integration plans. On July 30, we announced Anglo Teck's future executive leadership team, which brings together a highly experienced and complementary set of leaders from both companies.

The leadership who will be responsible for Anglo Teck's mining and production businesses across Brazil, Chile, Peru, North America, and South Africa was also confirmed. These appointments will take effect immediately upon completion of the merger. During the quarter, S&P and the TSX announced that certain foreign issuers with a strong Canadian presence will be eligible for full inclusion in Canadian indices. We expect Anglo Teck will be an important part of the Canadian investment landscape and, if confirmed, the ability to achieve full inclusion in Canadian indices is a significant milestone, enabled by having headquarters in Vancouver and expected listing on the Toronto Stock Exchange and significant operations and ongoing investment in Canada.

The transaction continued to progress as planned and steady execution against the merger roadmap supports the expected close within 12-18 months of our September 2025 announcement, which remains unchanged. We expect completion of the merger to be approximately 11 trading days from fulfillment or waiver of the remaining applicable precedent conditions. Turning to our safe and reliable operational performance and starting with safety and sustainability on slide six. In the third quarter of 2026, our quarterly high potential incident frequency rate improved to 0.06, equivalent to our 2025 annual rate, which was tied for Teck's best ever annual performance.

The Highland Valley Copper Mine Life Extension Project has a strong safety record, having achieved over 1.5 million hours worked without a high potential incident or lost time injury. I am personally very proud and impressed that during the severe weather events, our team responded quickly and safely with no high-risk incidents reported. Our teams not only kept people safe, maintained essential services, and restored our operations as conditions allowed, they also assisted regional recovery efforts by providing equipment and operators to help clear roads and restore access in affected communities. I would like to take a moment to acknowledge that a fatality occurred on October 27 at Antamina, in which Teck holds a non-controlling interest.

We are deeply saddened by this event and offer our condolences to the family, friends and colleagues of the deceased. Teck is supporting the organization and learnings from the investigation will be shared across our company and across the sector so we can learn together to improve the safety of our people. In sustainability, we announced that Teck had been named to the Forbes World's Top Companies for Women 2026 list for the second time on October 7. This list recognizes organizations that are highly rated by female employees and demonstrate a commitment to advancing women in the workplace. Slide seven summarizes our operational results for the third quarter of 2026.

Overall, we sustained our operating performance while dealing with severe weather events across our copper business. Compared with the same period last year, we grew our copper production by 11% to 116,000 tons, with increases at all operations except Carmen de Andacollo, which have an extended suspension of operations due to extreme weather. While Red Dog zinc production declined by 13% to 107,000 tons due to lower grades, as expected in the mine plan, refined zinc production at Trail Operations increased 18% to 62,000 tons. Antamina zinc production was down 70% due to a lower ratio of copper zinc ore, as expected in the mine plan and reflected in our annual 2026 guidance.

Turning to costs at the bottom of the slide and noting continued strong cost performance in the quarter. In copper, net cash unit costs improved 15% from a year ago to $1.77 per pound in the quarter. Year-to-date, our net cash unit costs are $1.72 per pound. In zinc, unit costs were $0.27 per pound in the quarter, reflecting lower volumes at Red Dog as expected. We continue to benefit from strong by-product prices and year-to-date, we're at $0.30 per pound. Higher by-product prices, together with strong operating discipline, have allowed us to lower our 2026 cost guidance for both copper and zinc.

Copper net cash unit costs for 2026 are now expected to be between $1.80 and $2 per pound. In zinc, we've reduced our guidance roughly in half, with net cash unit costs now expected to be between $0.30 and $0.40 per pound. Crystal will take you through the details shortly. Overall, we've delivered copper growth and cost discipline in the face of a challenging operating environment in the third quarter, demonstrating the resilience of our operations. There are no changes to our copper or zinc production guidance for 2026, including for QB, despite the impact of severe weather in the third quarter. On October 24th, a strike commenced at Highland Valley.

Contingency plans are in place, and HVC continues to operate at a reduced capacity. The impact on production depends on the duration of the labor action, and we do not expect any significant impact on construction timelines for the mine life extension project. Our focus is on maintaining safe and environmentally responsible operations while working towards a new collective agreement that is fair to employees and supports the long-term competitiveness of the operation. More broadly, the weather we experienced in the third quarter is a reminder of the very real impacts of climate change and of why building resilience into our operations matters.

We continue to adjust our planning processes and operating assumptions to account for climate-related risks, and our plans consider a range of scenarios. Turning now to QB on slide eight. QB's operating performance has been strong, excluding the impacts of the recent severe weather. QB's solid execution in the first half of the year continued through July, with key operating metrics consistent with or ahead of those used in our guidance for this year. However, severe weather in August caused intermittent power outages and downtime at the concentrator and affected our dewatering systems and other critical equipment. Wet conditions continued into September, reducing mine productivity and limiting our access to higher-grade ore.

As a newer operation, QB is predominantly operating in a single phase of the mine per the mine plan, resulting in limited operational flexibility to respond to severe weather conditions. These weather impacts, along with a planned maintenance shutdown in September, are reflected in QB's third quarter operating results. Asset utilization was 79%, throughput averaged 117,000 tons per day, and recoveries were just over 81%. On a year-to-date basis, QB's operating metrics remain consistent with those used in our 2026 annual production guidance, which is unchanged. Completion of the final plant shutdown for the year in September supports continued operational performance for the remainder of the year, and work is continuing on performance improvements for recoveries.

As the mine plan advances through the fourth quarter and into 2027, multiple mining phases will be opened, enhancing operational flexibility and ore sourcing optionality and resulting in improved reliability and resilience. Turning to an update on QB's TMF on slide nine. As you can see in the photos, development work on the TMF continues to advance. The third quarter of 2026 marks our fourth consecutive quarter with no TMF-related downtime. Sand deposition has improved significantly from a year ago, and in July, we achieved our highest monthly deposition rate. Construction of the secondary cyclone station is expected to further improve sand deposition performance and provide additional operational flexibility.

As previously disclosed, we brought forward material placement originally planned for 2027 into 2026 and commenced construction of Rock Bench 6 in Q3. This allows us to install the permanent TMF pipeline infrastructure, which began in October. The updated scorecard on slide 10 summarizes our latest progress on QB's TMF. We expect to complete all of our near-term TMF development objectives by the first quarter of 2027. We are working hard to advance the three remaining major components. Commissioning of the secondary cyclone system is expected in the first quarter of 2027. Construction of Rock Bench 6 and installation of the permanent TMF pipeline infrastructure are also expected to be completed in the first quarter of 2027.

The photo on the right shows installation of the jacking header, which is part of the permanent pipeline infrastructure and will mechanically raise the tailings and sand pipelines once completed. Successful completion of these three remaining components of the TMF will support more efficient and optimized TMF performance and enable steady state operations at QB. Turning now to the mine life extension at Highland Valley on slide 11. Construction is progressing well, and the project is now more than 25% complete. More importantly, construction of the project is proceeding safely with more than 1.5 million hours worked without a high potential incident or lost time injury.

Work is underway across the project, including tailings and power infrastructure, earthworks, pipelines, and brownfield work. Towards the end of the third quarter, we began a planned temporary shutdown of one grinding line to allow for upgrades to the processing plant, and we expect that work to be completed in January 2027. Our project capital guidance is unchanged, CAD 900 million-CAD 1.2 billion for 2026 and CAD 2.1 billion-CAD 2.4 billion in total. We invested CAD 230 million of project capital in the third quarter and CAD 672 million year-to-date. In line with the mine plan, capitalized stripping activity for the project is expected to continue ramping up in the fourth quarter.

I'll now hand over to Crystal, who will take you through the financial results in more detail.

Crystal Prystai: Thanks, Jonathan. Good morning, everyone. Starting with the overview of Q3 2026 financial performance on slide 13. Overall, we had strong financial performance in the quarter, reflecting increased production, disciplined execution, and record copper prices, which averaged $6.40 per pound. Compared with the same period last year, we doubled our adjusted EBITDA to CAD 2.3 billion, driven by significantly higher copper and zinc prices, higher byproduct revenue, and lower smelter processing charges. Our adjusted EBITDA margin increased to 51%, up from 35% a year ago. We generated CAD 1.6 billion of cash flow from operations, nearly 2.5x the CAD 647 million we generated in Q3 2025.

During the quarter, we recorded a pre-tax impairment reversal of CAD 888 million on Trail Operations. This reflects higher expectations for long-term commodity prices, stronger market fundamentals for strategic metals, and increased cash flow from our optimized feed strategy. Turning to the key drivers of our higher profitability in Q3 2026 on slide 14. Higher commodity prices, primarily copper and zinc, were the largest contributor, adding just over CAD 1 billion to adjusted EBITDA compared with a year ago. Higher co-product and byproduct pricing, mainly silver, added another CAD 198 million, and lower smelter processing charges added CAD 50 million.

These gains were partly offset by lower zinc volumes at Antamina and Red Dog, in line with our mine plans, which reduced adjusted EBITDA by CAD 126 million. Turning to our copper segment on slide 15. Despite severe weather, our copper business generated significant profit and delivered strong margin growth, demonstrating operational resilience. Gross profit before depreciation and amortization more than doubled to CAD 1.6 billion, with a margin of 65%. This was primarily driven by another record quarterly average copper price. Copper production grew 11% compared with the same period last year to 116,000 tons, with increases at QB, HVC, and Antamina. Higher production at Highland Valley and Antamina reflects higher copper grades in line with our mine plans.

QB production of 47,000 tons was higher than the same period last year. However, it was lower than in Q2 2026, reflecting the severe weather impact in the quarter and limited flexibility while we are predominantly mining in a single phase. Carmen de Andacollo operations were suspended for an extended period in Q3 due to extreme weather and returned to full operations by the end of September. Copper net cash unit costs improved 15% to $1.77 per pound, reflecting strong cost performance, lower treatment charges, and higher byproduct credits. Looking forward, we have lowered our 2026 copper net cash unit cost guidance to $1.80-$2 per pound from $1.85-$2.20 per pound to reflect strong performance and byproduct pricing year-to-date.

Our annual copper production guidance is unchanged. We continue to expect QB to produce between 200,000-235,000 tons this year, despite the impact of severe weather in the third quarter. At Highland Valley, we expect 2026 production towards the high end of our guidance range of 115,000-135,000 tons, despite the strike. At Antamina, we continue to expect 2026 production to be within our guidance range of 95,000-105,000 tons. As a result of the extreme weather in Q3, we expect production at Carmen de Andacollo to be at the low end of our 45,000-55,000 ton guidance range. Turning to our zinc segment now on slide 16. Our zinc business continues to generate significant value.

Gross profit before depreciation and amortization increased 41% to CAD 638 million, with a margin of 31%. This was primarily driven by higher zinc prices and higher byproduct revenues. Red Dog's production declined by 13% to 107,000 tons due to lower grades in line with the mine plan, and Red Dog sales were within our previously disclosed guidance range at 247,000 tons. Refined zinc production at Trail Operations increased 18% to 62,000 tons. Trail Operations profitability improved significantly again this quarter, with gross profit before depreciation and amortization of CAD 169 million, up from CAD 54 million a year ago, reflecting our optimized feed strategy and strong commodity prices.

The zinc net cash unit cost increased by 59% to $0.27 per pound, driven by lower volumes at Red Dog as expected. Higher byproduct revenues, especially from silver, partly offset the increase, and year-to-date unit costs continued to be below our previously disclosed guidance range. As a result of strong cost performance and higher byproduct pricing, we have improved our 2026 zinc cash unit cost guidance. Total cash unit costs are lowered to between $0.70-$0.80 per pound, down from $0.80 to $0.90. Net cash unit costs are lowered to between $0.30 and $0.40 per pound, down from $0.65 to $0.75.

Looking forward, we expect Red Dog's shipping season to be completed by early November and Red Dog sales to be between 65,000 and 75,000 tons in Q4 2026, reflecting the normal seasonality of sales. Our zinc production guidance is unchanged. Based on strong year-to-date performance at Red Dog, we expect our 2026 zinc in concentrate production to be at the high end of our guidance of 410,000 to 460,000 tons. We also expect our 2026 refined zinc production at Trail to be at the high end of our guidance.

We significantly improved our copper EBITDA margins compared to the same period last year, from 42% to 67%, primarily driven by record copper prices, higher production and sales volumes, and lower copper net cash unit costs. We also increased our zinc EBITDA margin from 28% to 30%, primarily driven by higher zinc prices, stronger by-product revenues, and our continued focus on feed optimization at Trail. The ongoing improvements in our EBITDA margins demonstrate the underlying strength of our business. Looking more closely now at our unit costs on slide 18. Year-over-year, our net cash unit costs were lower in copper and higher in zinc.

The decline in copper unit costs was driven by strong cost discipline with lower cash cost of sales. Lower smelter processing charges were also a benefit. The contribution from by-products remained strong, though lower year on year as the benefit of higher by-product prices was offset by lower by-product volumes. Higher zinc net cash unit costs were driven by higher cash cost of sales as a result of lower volumes at Red Dog, as expected in our mine plan, with a small offset from lower smelter processing charges.

Higher diesel costs have negatively impacted our operating costs this year, particularly in our copper segment, and at the same time, by-product revenues continue to provide a material benefit to our unit costs. As I noted on the last slide, based on our performance year-to-date, we have reduced our 2026 unit cost guidance for both our copper and zinc segments. We have provided sensitivities of our net cash unit cost to by-product prices and to WTI oil prices as a proxy for diesel. In copper, our net cash unit costs are most sensitive to WTI and silver. For every $10 per barrel change in WTI, our annual copper net cash unit costs are expected to move $0.03 per pound.

For every $10 per ounce change in the silver price, our annual copper net cash unit costs are expected to move $0.02 per pound. In zinc, our net cash unit costs are most sensitive to silver. For every $10 per ounce change in the silver price, our annual zinc net cash unit costs are expected to move $0.05 per pound. Our exposure to diesel prices is lower in our zinc segment, where every $10 per barrel change in WTI is expected to move our annual net cash unit cost by only $0.01 per pound. Red Dog purchases diesel for the full year during each shipping season.

Most of this year's supply was delivered in the third quarter, and the operation has now started using it. That diesel was purchased at higher prices than last year. We are maintaining our strong focus on cost discipline and productivity. In today's inflationary environment, value creation isn't just about growing tons, it's about protecting margins and generating attractive returns. Turning to our balance sheet on slide 19. We've continued to strengthen our balance sheet while funding the Highland Valley Copper Mine Life Extension Project. This is driven by our strong cash flow from operations, which were CAD 1.6 billion in the quarter.

As a result, our net cash position increased by CAD 655 million in the quarter and by CAD 1.7 billion year-to-date to CAD 1.9 billion. Our liquidity was CAD 10.9 billion at the end of September, including CAD 6.7 billion of cash and our undrawn $3 billion sustainability-linked revolving credit facility. We returned CAD 61 million to shareholders in the quarter due to payment of our regular base quarterly dividend of CAD 0.125 per share. We continue to maintain investment-grade credit ratings, and we continue to reduce debt through our scheduled semi-annual repayments under the QB project finance facility. The ongoing strength of our balance sheet provides a strong foundation as we advance towards the launch of Anglo Teck.

I will now pass it back to Jonathan for closing remarks.

Jonathan Price: Thanks, Crystal. I will wrap up on slide 21. It is an exciting time at Teck. Into the final quarter of the year, our focus is clear. Finish 2026 strong and deliver on our commitments. Our priorities in the near term are unchanged. Disciplined execution, safe and reliable operations, and continuing to unlock the potential of our assets. This quarter's results demonstrate the quality of our business and the strong foundation we have built as we advance towards Anglo Teck.

We will be entering our next chapter from a position of strength, built on the foundation of a high-quality critical minerals portfolio with safe and productive operations and attractive short, medium, and long-term copper growth optionality, backed by a very strong balance sheet. We are moving towards completion of the merger with Anglo American and progressing towards the creation of a new global critical minerals champion and top five copper producer. With that, over to you, operator, for questions.

Operator: Thank you. To join the question queue, please press star then one on your touch-tone telephone. You will hear a tone acknowledging your request. We ask that you please limit yourself to one question and one follow-up. If you are using a speakerphone, please ensure you lift the handset before pressing any keys. If you wish to remove yourself from the question queue, you may press star then two. The first question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi, good morning. Jonathan, I am wondering if you can give us a bit more color on the current status of the regulatory approval in China. Specifically, there have been some media reports not that long ago that China is looking for security of copper concentrate offtake. I am just wondering if you can confirm that, and is that the only thing China is looking for?

Jonathan Price: Hi, Orest. Thank you for the question. As you'd expect, I can't say much about the nature of the discussions we're having with the regulator in China. I'd say that the process with SAMR is unfolding very much in the normal course. We continue to respond to information requests, and we continue to expect completion within 12-18 months from the date of announcement. We're, of course, looking forward to receiving that approval so we can complete the merger with Anglo American. Unfortunately, Orest, I can't really say more than that about the nature of those discussions.

Orest Wowkodaw: Okay. Could you maybe then just comment in terms of, if you can't comment on the nature of just where the status is? I assume it's a back-and-forth process in terms of requests for information and your response. Could you characterize maybe where things are at in that process? Are we in the late stages or are we still call it in the midst of negotiations?

Jonathan Price: Yeah. Again, Orest, unfortunately, I'm not going to sort of unpack the details of the process and the engagements other than to say that it's a constructive engagement. We continue to have confidence in receiving that approval within the timeline that we set out of 12-18 months from announcement. On that basis, we're closer to the end than we are to the beginning. Aside from that, there's really no additional color that I can provide.

Orest Wowkodaw: Okay. Thanks very much.

Jonathan Price: Thanks, Orest.

Operator: Next question comes from Liam Fitzpatrick with Deutsche Bank. Please go ahead.

Liam Fitzpatrick: Good morning, Jonathan team. Two questions. Firstly, just on QB, it seems like it's the grade uplift that's going to be key to hitting the production range or guidance for next year. So what's the level of confidence in that grade uplift, and when will that start to come through? Is it the early part of 2027 or potentially later in the year? And then second question is on copper concentrate sales into next year. Can you give any color in terms of the strategy, whether you're still looking to lock up the bulk of volumes under an annual benchmark, whatever that turns out to be, or whether you're shifting the book more towards shorter term or spot sales?

Thank you.

Jonathan Price: On the QB piece, Liam, as we've noted, we'll have significantly more optionality in the mine as we move through this quarter, but also into next year as we open up a second and third phase in the mine. Of course, we'll be able to access grades, but we expect to see them to be relatively stable throughout the course of next year. It will also, of course, give us enhanced blending optionality across the different ore types, which will help us with recoveries ultimately. So this is all reflective of a maturing mine and the operational flexibility that we'll continue to have as we go forward there.

In terms of copper concentrate sales, I mean, we'll continue very much in the normal course in terms of contracting with customers. But I'll just ask Ian, our Chief Commercial Officer, whether he has any further comments to make on pricing mechanisms.

Ian Anderson: Only just saying thanks for the question, Liam. Of course, the existence and preservation of the copper benchmark is still a bit at question, and so won't comment on where those negotiations might result with both other customers and other producers. But would say that we carefully balance our book between both existing long-term contracts and spot sales. That's gone well this year, and we don't see a change for next year.

Liam Fitzpatrick: Okay. Thank you.

Jonathan Price: Thanks, Liam.

Operator: The next question comes from Chris LaFemina with Jefferies. Please go ahead.

Chris LaFemina: Hi, thanks. Hey, guys. Congratulations on another good quarter. Maybe following up on what Liam asked about the guidance. So, when you first laid out the guidance for QB this year, there is a lot of people in the market questioning whether you would be able to hit the targets, and you are showing that you are comfortably hitting the targets. Even in a quarter when you had horrific weather, you are still producing at a level that is effectively within the guidance range. It appears, with the benefit of hindsight, that the guidance was relatively conservative. Now your 2027 and 2028, particularly 2028 overall copper guidance, is for a pretty significant decline in production.

Part of that is grade related. I am wondering if we should assume the same level of potential conservatism in that guidance as well. Is the risk of that leaning more to the upside? Thanks.

Jonathan Price: Yeah, thanks for the question, Chris. Look, when we established our guidance, we, as you know, anchored it very much in observable performance at the operation. But we did also include, as we worked through the forward guidance years, improvements in that performance, which are built into those plans. The 2028 year and the lower guidance there has always been a function of grade and a function of the mine plan. That is not materially different as we see it today compared to when we guided to that previously. I think we had, as I mentioned, a stellar first seven months of the year. I think the mine was performing very, very well.

We were meeting all of the metrics that we set out, in some cases marginally exceeding those. We have had a couple of challenging months due to weather effects, as you note in Q3, and the focus now is on full recovery of operations and a strong fourth quarter. I would not describe that guidance as conservative. I would describe it as reflective of what is a complex system. Tier one mines are complex systems, and an ongoing improvement in the underlying performance metrics required to deliver those numbers. As you see in our numbers today, we have not made any change to the 2027 and 2028 guidance, signaling our comfort with those numbers being appropriate.

Of course, we always continue to evaluate as things change and performance changes. But right now, we are comfortable with the numbers we have.

Chris LaFemina: Thank you. Good luck.

Jonathan Price: Thank you, Chris.

Operator: The next question comes from Myles Allsop with UBS. Please go ahead.

Myles Allsop: Great. Thank you. Maybe just first on QB again. When is the next maintenance shutdown expected to take place? Is it Q1 or Q2 next year? Maybe on Red Dog as well. Obviously, we have guidance out to 2028, 250,000 tons, so continuing to fall. How long is the life of the existing operation, and when do you need to approve the sustaining project to avoid a full closure of the operation?

Jonathan Price: Thanks for those questions, Myles. On the first one, the next shutdown at QB is in the first quarter of next year. As mentioned, we do not have one this quarter, which is important for us. I think it was a very comprehensive shutdown in September. That went very well in terms of the activities that were undertaken, and it gives us important operational continuity through the back end of the year. In terms of Red Dog, generally, we have seen an end of the current mine life there at around 2031. Of course, we continue to review that to see if there is additional reserve available to extend that life.

But I think that is the best working assumption at this point in time. We are working very hard on understanding the potential for the mine life extension there. We have two world-class ore bodies within about 15 km of the existing operations at Red Dog. Very good grades, and very rich in some of the specialty metals that have been so important to our profitability at Trail. We continue to evaluate that. We are in the PFS stage. We are working on opening up the portal there to get better access to those resources. And sanction will be several years from now is probably the best way to put that at the moment.

We have to complete pre-feas and get through feasibility study, until we get to that decision. It is a way out, but it is something the projects and operations teams are working very hard on.

Myles Allsop: Just be clear. On QB, is it going to be two or three maintenance shuts in 2027? And on Red Dog, just a quick follow-up there as well. With the opening up these new ore bodies, is it going to be like a three, four-year construction? If we are going to avoid a zero in 2032, we need to get there by 2027, 2028 in terms of the approvals.

Jonathan Price: On the first question, just in shutdowns, we would expect to have three major shutdowns at QB next year. You will recall that when we started up the operation, they were quarterly. We are sort of extending the time between shutdowns now. That would be the expectation for next year. Of course, with Red Dog, we are working hard to try and avoid a production gap at that mine. That is what we are driving towards. Of course, that would be the ideal outcome. That will be a product of many things, including the existing mine plan and of course the progress of the project. We will be able to say more about that in due course.

Myles Allsop: Thank you.

Jonathan Price: Thanks, Myles.

Operator: The next question comes from Carlos De Alba with Morgan Stanley. Please go ahead.

Carlos De Alba: Yeah, thank you. Good morning, everyone. Just maybe on the zinc side, any comments on what the expectations you have for zinc TC/RC next year, just given what we have seen recently in China and also globally, I guess. Then, if you could provide any more color on the CGF investment at Trail. I think it was presented as equity-like, but do you have any more details if it will be equity or what you mean equity-like? Thank you.

Jonathan Price: Carlos, thank you very much. I will hand over to Ian for the zinc TC/RC or TC conversation.

Ian Anderson: Thank you, Carlos, for that question there. I think, really, there are a few things that have happened there coming out of LME, and we think that zinc is a positive story. Certainly, it performed very strongly in 2026. You saw pricing peak at about $4,000 a ton in Q3. In fact, zinc was LME's best-performing metal for the year. Rightly, as you point out, that supply story is starting to get more attention. I think what you're seeing is something that has growing similarities to copper, so highly negative treatment charges. We are expecting our treatment charges to continue the direction that you've seen in the spot market, in 2027, which answers your question.

Certainly, there's not enough concentrate to meet smelter needs. You're seeing Chinese smelters pulling hard on concentrate imports whenever there's material available. As well, the trading houses are starting to come into it. Really, I think that challenge is driven by maintaining supply in existing mines. You can see an example of that with Antamina based on the existing mine plan, lower in zinc production for the year. On the whole, in the zinc market, mines are depleted faster than new ones are being added. You're also not seeing the elastic supply that would come from smaller Chinese operations coming into the market.

China similarly has been challenged in terms of their imports, particularly for obvious reasons, both in Iran and with reference to Russia. Essentially, zinc supply is about the same as we've seen a decade ago. We're also seeing some demand implications on the finished side, particularly in North America for 2027. Overall, I think that's a good success story. The pieces on zinc, in terms of fundamentals, this is an asset that, of course, or a product that's consumed in its use. As you start to see infrastructure spend flow through as it has in the world, and in the era of climate change, I think that in a hotter, wetter world, the world needs more zinc.

So we're looking forward to the future of that commodity.

Jonathan Price: Yeah. Just to move on to your question about the CGF funding, Carlos, as you know, that's been very much centered around germanium, antimony, and gallium, and increases of production for each of those metals at Trail. We continue to be working very constructively with the Canadian government on that and with the Canada Growth Fund. We haven't finalized those discussions yet. Of course, we'll announce them when we do. They are very interested in supporting the expansion of that capacity which we know is for small markets and comes with some risk. So we're working with them on the nature of funding that will reflect both the opportunity and the risk associated with those investments.

But nothing more to communicate at this stage.

Carlos De Alba: Thank you. Jonathan, if I may just follow up on QB. How's October ramping up after the production in September? In particular, I think that was the only operation where you didn't highlight if you expect to be at the low end or the high end of the production, unchanged production range. Any color there? Thank you.

Jonathan Price: Look, the operation is recovering well from the challenges we had through August and September, and as I said, we hope to finish the year strong here and get that back to sort of steady state and full rates. But yeah, things have improved significantly as we've worked through the last couple of months.

Carlos De Alba: Thank you.

Operator: The next question comes from Craig Hutchison with TD Cowen. Please go ahead.

Craig Hutchison: Hi. Good morning, guys. Let me just follow up from the last question. As you highlighted weather issues in Q3, have you had any weather-related issues at either QB or Carmen de Andacollo creep into Q4 at this point, or has it been fairly steady state?

Jonathan Price: No, it's been pretty steady state, Craig. The weather in Chile generally has been quite up and down, including through the month of October, but nothing has had a direct impact on our operations.

Craig Hutchison: Okay, great. Then just on Highland Valley, the work that you're doing at the mill, the mill upgrades, the upgraded flotation circuit, what's the timing around that completion? Once it's done, what are you guys hoping to achieve from maybe a throughput and a recovery perspective? Thanks.

Jonathan Price: Yeah, thanks for that. That is an AG to SAG conversion, essentially, which will allow us to process harder material more effectively. The timeline for that is Q1. Of course, it is complicated when you are doing these things inside a constrained operating environment, but that work is going well. That conversion is well underway right now, and as I said, we plan to have that finished in the first quarter.

Craig Hutchison: Okay, so the plan would be just to sort of maintain the steady-state throughput, considering you will be dealing with harder ore?

Jonathan Price: That is exactly right. Yes.

Craig Hutchison: Okay. All right. Thank you.

Jonathan Price: Thank you, Craig.

Operator: Thank you. We are out of time for further questions. I will now hand the call back over to Jonathan Price for closing remarks. Please go ahead.

Jonathan Price: Thank you very much. That wraps up our third quarter of 2026 conference call. As always, please feel free to reach out to Edwin and the IR team with any further questions. So thank you again for joining us and enjoy the rest of your day.

Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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