[Management View]
Teck Resources reported a year-over-year increase in adjusted EBITDA for Q2 2025, driven by increased profitability at Trail operations, lower smelter processing charges, and reduced corporate overhead. The company sanctioned the Highland Valley Copper mine life extension project, raising its capital estimate to CAD2.1 billion–CAD2.4 billion due to inflation, contingencies, and accelerated equipment procurement. Operational setbacks at QB led to a reduction in copper production guidance for 2025 due to TMF issues, with incremental unit costs expected due to alternate shipping logistics after a ship loader outage.

[Outlook]
Teck Resources revised its copper production guidance to 470,000–525,000 tonnes for 2025, reflecting a lower outlook for QB due to TMF challenges. The company targets design rates by year-end and expects to stabilize long-term production. Growth projects at Zafranal and San Nicolas are targeted for sanction readiness by year-end, with all major labor agreements secured through multi-year terms.

[Financial Performance]
Adjusted EBITDA increased by 3% year-over-year to $722 million in Q2 2025. Copper segment gross profit before depreciation and amortization decreased by 3% to $673 million due to lower prices and higher costs. Zinc segment performance improved significantly, with gross profit before depreciation and amortization increasing 137% year-over-year to $159 million.

[Q&A Highlights]
Question 1: Did the tailings issue at QB2 impact throughput and will it affect 2026?
Answer: The tailings management facility (TMF) development work limited online time at QB2 in Q2 2025. Teck expects to resolve TMF issues by year-end, maintaining guidance for 2026 without additional capital investment.

Question 2: What is the pace of CapEx for the second half of 2025?
Answer: Teck expects to spend approximately $1.6 billion in the second half of 2025, driven by growth capital for the Highland Valley Copper mine life extension project and TMF development at QB.

Question 3: What is the status of ship loader repairs at QB and its impact on CapEx?
Answer: Ship loader repairs at QB are expected to extend into the first half of 2026. The assessment of damage and repair plans are ongoing, with no finalized capital number yet. Alternative shipping arrangements have minimized production impact.

Question 4: What is the sequence of projects for Zafranal and San Nicolas?
Answer: Zafranal is more advanced in permitting and construction readiness, but both projects are considered options with sanction decisions yet to be taken.

Question 5: Will Teck file a technical report for the Highland Valley extension and what is the expected throughput?
Answer: Teck will publish a technical report in August. Throughput will be variable depending on ore type, with production guidance for 2025 in the range of 140,000–150,000 tonnes.

Question 6: How are recoveries progressing at QB?
Answer: Recoveries at QB are expected to improve in the second half of 2025 with higher grade and better quality ore, moving past transitional ore challenges.

Question 7: Are there discussions regarding synergies between QB and Colawesi?
Answer: Discussions regarding potential synergies between QB and Colawesi are ongoing but confidential. Teck's priority is stabilizing QB production.

Question 8: What is the breakdown of the higher CapEx guide for Highland Valley mine life extension?
Answer: The higher CapEx guide reflects project level contingencies, inflation, cost escalation, potential tariffs, and accelerated procurement of mobile equipment.

Question 9: What is the status of the NewRange project in the U.S.?
Answer: The NewRange project is further out in the schedule, with ongoing work to define the right project configuration before approaching the permitting process.

Question 10: How does Teck decide whether incremental CapEx for QB TMF is project or sustaining capital?
Answer: Incremental CapEx for QB TMF is considered sustaining capital as the operation is producing copper and the costs are associated with ongoing mechanical movements of sand.

Question 11: Does Teck have insurance coverage for the ship loader issues at QB?
Answer: Teck has insurance coverage for the ship loader issues, including interruption.

[Sentiment Analysis]
Analysts expressed concerns about operational challenges at QB and the pace of CapEx spending. Management maintained a confident tone, emphasizing their strategies to resolve issues and achieve production targets.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|--------|---------|---------|------------|
| Adjusted EBITDA | $722 million | $703 million | +3% |
| Copper Segment Gross Profit | $673 million | $694 million | -3% |
| Zinc Segment Gross Profit | $159 million | $67 million | +137% |
| Copper Production | 109,000 tonnes | 109,000 tonnes | 0% |
| Zinc Net Cash Unit Cost | $0.49 per pound | $0.69 per pound | -29% |

[Risks and Concerns]
Teck lowered its QB annual copper production guidance due to ongoing TMF development issues and potential external delays. The ship loader outage at QB’s port facility is expected to extend into the first half of 2026, impacting net cash unit costs. Higher operating costs at Highland Valley and QB, along with lower copper and zinc prices, pose additional risks.

[Final Takeaway]
Teck Resources demonstrated resilience in Q2 2025 with improved adjusted EBITDA and significant progress in strategic projects. Despite operational challenges at QB, the company remains focused on achieving production targets and advancing growth initiatives. The Highland Valley Copper mine life extension project is foundational to Teck's strategy to double copper production by the end of the decade. Investors should monitor the resolution of TMF issues and ship loader repairs at QB, as well as the progress of growth projects at Zafranal and San Nicolas.