Teck's Greenhills Mine explosion won't hurt 3Q or 2010 results

Although coal sales gained momentum in the first half of the year, Teck Resources reported declines in copper, zinc and molybdenum production.

RENO, NV - 

Second-quarter net earnings for Vancouver's Teck Resources plunged 54% to Cdn$260 million (US$251mn) or 44-cents per share during the same quarter that Teck repaid its US$9.8 billion bank debt 18 months after the acquisition of the Fording Coal Trust.

Meanwhile, Teck announced Tuesday that the June 28^th explosion at the Greenhills Mine's coal dryer building near Elkford, British Columbia, "is not currently expected to have a significant impact on third quarter or 2010 results."

"However, our mitigation plans, which include activating a bypass system around the dryer to allow us to produce and ship wet coal for blending with dry coal from other mines, are in the early stages," the company said. "We have not yet established a firm construction schedule and any delay in completing the repairs could adversely impact our sales volumes in late 2010."

In financials published Tuesday, Don Lindsay, Teck CEO, said, "During the quarter we eliminated the outstanding balance of our term bank loan and have now repaid the US$9.8 billion bank debate related in the Fording acquisition in less than 18 months, just over two years ahead of schedule."

"In addition, all of our operations performed well, and we met or exceeded the guidance given in our previous quarterly report," he said, adding that the company re-established its investment grade credit ratings from all of the major rating agencies.

Earnings attributable to shareholders in the second quarter were C$260 million or 44-cents per share, compared with $570 million or $1.17/sh in the same period of 2009. Earnings in the second quarter of last year included a C$413 million foreign exchange gain on U.S. dollar denominated debt compared with a $42 million forex loss this year.

For the first half of this year, Teck reported earnings attributable to shareholders as C$1.17 billion or $1.98 per share, up from $811 million or $1.67/sh reported during the first half of last year.

Teck reported second-quarter 2010 coal sales increased 29% to 6.4 million tonnes. For the first half of this year coal sales jumped from 8.2 million tonnes in 2009 to 11.6 million tonnes. "We have agreed on prices with the majority of our contract customers for the third quarter of 2010 at or above US$225 per tonne for our highest quality products."

The company reported 149 tonnes of copper production for the first six months of this year, down from 153 tonnes for the same period a year ago. Teck also reported a combined total of 469 tonnes of zinc concentrate and refined zinc production for the first year of this year, down slightly from the combined total of 458 tonnes of zinc production for the first half of 2009.

During the first half of this year lead production increased to a combined total of 108 tonnes, up from 102 tonnes of combined lead production a year ago. Molybdenum production dropped from 3.7 million pounds in the first six months of 2009 to 3.68 million pounds this year.

Teck's planned capex for this year is C$1.05 billion including $675 million on development projects.

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