Definitions
Standard
Proven and Probable Mineral Reserves and Measured, Indicated and Inferred Mineral Resources have been estimated in accordance with the definitions of these terms adopted by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") in November 2010 and incorporated in National Instrument 43-101, "Standards of Disclosure for Mineral Projects" ("NI 43-101"), by Canadian securities regulatory authorities. Estimates of coal reserves and resources have been prepared and classified using guidance from the Geological Survey of Canada Paper 88-21. Classification terminology for coal conforms to CIM definitions incorporated into NI 43-101. Mineral Resources are reported separately from and do not include that portion of the Mineral Resources that is classified as Mineral Reserves. That portion of Mineral Resource which is not classified as Mineral Reserve does not have demonstrated economic value.
Definitions
Metallurgical Coal means the various grades of coal that are used to produce coke which is used in the steel making process.
The CIM definitions on Mineral Resources and Mineral Reserves provide as follows:
A Mineral Resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.
An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.
A Probable Mineral Reserve is the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
Methodologies and Assumptions
Mineral reserve and resource estimates are based on various assumptions relating to operating matters, including with respect to production costs, mining and processing recoveries, mining dilution, cut-off values or grades, as well as assumptions relating to long-term commodity prices and, in some cases, exchange rates. Cost estimates are based on feasibility study estimates or operating history.
Methodologies used in reserve and resource estimates vary from property to property depending on the style of mineralization, geology and other factors. Geostatistical methods, appropriate to the style of mineralization, have been used in the estimation of reserves at the Company's material base metal properties.
Assumed metal prices vary from property to property for a number of reasons. Teck has interests in a number of joint ventures for which assumed metal prices are a joint venture decision. In certain cases, assumed metal prices are historical assumptions made at the time of the relevant reserve and resource estimates. For operations with short remaining lives, assumed metal prices may reflect shorter-term commodity price forecasts.
Comments on Individual Operations
Highland Valley Copper
In 2011, normal mine production removed 42.3 million tonnes from reserve and processed an additional 6.2 million tonnes of low grade material. The low grade material, not previously included in the reserve, was processed to take advantage of short-term metal prices. After 2011 mine production was deducted, reported reserves increased from 624 million tonnes in 2010, to 673 million tonnes in 2011. Higher metal prices and updated mine designs on the Valley, Lornex and Highmont deposits added 612 million tonnes of measured plus indicated resource and 267 million tonnes of inferred resource. Mineral reserves and resources assume US$2.30/lb copper, US$12.50/lb molybdenum and a C$1.10 per US$1.00 exchange rate. Reserves are expected to support a mine life to 2026.
Antamina
Two general ore types occur at Antamina. These are copper ores from which copper and molybdenum concentrates are produced and copper-zinc ores from which copper and zinc concentrates are recovered. Mine production in 2011 removed 39.6 million tonnes from reserve and 6.1 million tonnes from resource. Reported mineral reserves and resource estimates assume US$1.99/lb copper, US$0.87/lb zinc, US$10.19/lb molybdenum and US$10.18/oz silver. Current reserves are expected to sustain mine operations until 2028.
Quebrada Blanca
Changes from the 2010 heap leach and dump leach reserve correspond to the removal of 29.1 million tonnes through normal mine depletion. Heap and dump leach reserves and resources assume US$2.60/lb copper, a 0.63% soluble copper cutoff for the heap leach and a 0.13% soluble copper cutoff for dump leach. Heap leach reserves will sustain mine operations until 2015. An updated hypogene (mill resource and reserve estimate is expected to be announced on completion of the hypogene project feasibility study in March 2012.
Carmen de Andacollo
The Carmen de Andacollo operation includes a heap leach copper operation and a copper-gold hypogene concentrator. Mineral reserve and resource estimates assume US$3.50/lb copper for the leach operation and US$2.30/lb copper and US$850/oz gold for the hypogene operation.
In 2011, the leach operation processed 1.2 million tonnes from reserve. Leach reserves are expected to feed the SXEW plant until 2014. Mill production removed 14.7 million tonnes from the hypogene reserve. Proven and probable hypogene (mill) reserves are expected to support mine operation until 2035.
Duck Pond
Reserve changes in 2011 are consistent with normal mining depletion (575,000 tonnes). Reserve and resource estimates assume US$3.50/lb copper, US$1.10/lb zinc, US$20.00/oz silver and a C$1.04 per US$1.00 exchange rate.
Red Dog
Reserve changes at Red Dog are consistent with normal mining depletion. Mine production removed 1.4 million tonnes of reserves from the Main pit and 2.3 million tonnes from the Aqqaluk pit. Proven reserves have been drill defined at 30 metre centres, probable reserves at 30 to 60 metre centres and resources at 60 to 120 metre centres. All mineral reserves and indicated resources are mineable by open pit methods and assume US$0.90/lb zinc and US$0.80/lb lead.
Pend Oreille
In February 2009, Teck temporarily suspended operations at the Pend Oreille mine due to economic factors. The operation will remain on care and maintenance until market conditions improve. Mineral reserve and resource estimates assume US$0.95/lb zinc and US$0.90/lb lead.
Relincho
In 2011, Teck completed a prefeasibility study on the Relincho porphyry copper and molybdenum project in Chile. Mineral reserve and resource estimates assume US$2.62/lb copper, US$12.50/lb molybdenum and US$15/oz silver.
Galore Creek
Reserve and resource estimates on the Galore Creek project are supported by a 2011 prefeasibility study and third party report. Reported mineral reserves and resource estimates assume US$2.65/lb copper, US$1,100/oz gold and US$18.50/oz silver.
Other Copper and Zinc Resources
Mineral resource estimates at San Nicolas were prepared in 2001 assuming US$0.90/lb copper, US$0.50/lb zinc and a C$1.50 per US$1.00 exchange rate, together with then current capital cost estimates.
Fording River
Reserve increases in 2011 were attributed to the addition of the new Swift and Castle mining areas, which more than offset reserve reductions due to mine production of 7.8 million tonnes. The reserve estimate assumes a long term selling price at the Port of Vancouver of US$130/t for metallurgical coal at an exchange rate of C$1.10 per US $1.00.
Elkview
Teck has a 95% indirect interest in the Elkview mine. Reserve reductions since 2010 are attributed to normal mine production depletion. Losses due to geology changes, deeper oxidation depths and changes to minimum mineable thickness and coal recovery factors are offset by the addition of the new Adit Pit and South Pit reserves and transfer from resource to reserve in Baldy Ridge 4 pit. The reserve estimate assumes a long-term selling price at the Port of Vancouver of US$130/t for metallurgical coal at a C$1.10 per US $1.00 exchange rate.
Greenhills
Teck indirectly owns a 80% of the Greenhills joint venture. The 2011 production of 4.8 million tonnes accounted for most of the reduction in reserves. The reserve estimate assumes a long term selling price at the Port of Vancouver of US$130/t for metallurgical coal at an exchange rate of C$1.10 per US$1.00.
Line Creek
A new mine design in the proposed Burnt Ridge North mining area has added 29.7 million tonnes of additional reserves. This mining area is currently in the permitting process. The reserve estimate assumes a long term selling price at the Port of Vancouver of US$130/t for metallurgical coal at an exchange rate of C$1.10 per US$1.00.
Coal Mountain
The Coal Mountain Operation is a relatively low strip ratio open pit operation that primarily mines PCI coal from a highly folded and faulted deposit. The reserve estimate assumes a long term selling price of US$90/t for PCI coal at an exchange rate of C$1.10 per US$1.00.
Cardinal River
The Cardinal River mine in west central Alberta produces metallurgical coal for international sale. The reserve estimate assumes a long term selling price at the Port of Vancouver of US$180/t for metallurgical coal at an exchange rate of C$1.10 per US $1.00.
Quintette
Quintette is currently in the final stages of a feasibility study which is expected to be completed in the second quarter of 2012. Reserves are expected to be reported from the approved pit design in the second quarter of 2012, on completion of the feasibility study. The resource estimates assume a long-term selling price of US$130/t for metallurgical coal, US$90/t for clean PCI, US$80/t for clean thermal coal and an exchange rate of C$1.10 per US$1.00.
Other Coal Properties
Other properties include Mt Duke (92.6% interest) south of Tumbler Ridge BC, Elco (75% interest) at the north end of the Elk Valley and the Marten Wheeler property south of Elkview. The resource estimates assume a long term selling price of US$90/t for clean PCI, US$80/t for clean thermal coal and an exchange rate of C$1.10 per US$1.00.
Risks and Uncertainties
Mineral Reserves and Mineral Resources are estimates of the size and grade of the deposits based on the assumptions and parameters currently available. These assumptions and parameters are subject to a number of risks and uncertainties, including, but not limited to, future changes in metals prices and/or production costs, differences in size, grade, continuity, geometry or location of mineralization from that predicted by geological modeling, recovery rates being less than those expected and changes in project parameters due to changes in production plans. There are no known environmental, permitting, legal, title, taxation, sociopolitical, marketing or other issues that are currently expected to materially affect the mineral reserves or resources. Certain operations will require further permits over the course of their operating lives in order to continue operating.
Qualified Persons
Estimates of the mineral reserves and resources for our material base metal properties have been prepared under the general supervision of Paul C. Bankes, P.Geo., who is an employee of Teck Resources Limited. Mineral reserve and resource estimates for Antamina have been prepared under the supervision of Marco Maulen, MAusIMM(CP), who is an employee of Compañía Minera Antamina S.A. Messrs. Bankes and Maulen are the Qualified Persons for the purposes of National Instrument 43-101. Estimates of reserves and resources at Elkview, Fording River, Greenhills, Coal Mountain, Line Creek and Cardinal River were prepared under the general supervision of Don Mills, P.Geo., and Eric Jensen, P.Eng., employees of Teck Coal Limited, who are the Qualified Persons for the purposes of National Instrument 43–101.
Source: 2011 Annual Information Form (327KB PDF)
Oil and Gas Resources at December 31, 2011
A contingent resource for oil and gas reporting purposes is different than a mineral resource. Contingent resources for oil and gas reporting purposes are estimated in accordance with the standards set out in the COGE Handbook. As further described below, contingent resources are defined in the COGE Handbook as those quantities of oil and gas that are estimated on a given date to be potentially recoverable from known accumulations but are not currently economic. There is no certainty that it will be commercially viable to produce any portion of the resources.
Teck does not have any oil and gas reserves and hence no related future net revenue.
Fort Hills Project
Teck holds a 20% limited partnership interest in the Fort Hills Partnership, which is developing the Fort Hills oil sands project. The Fort Hills Partnership retained independent reserves evaluators GLJ Petroleum Consultants Ltd. ("GLJ") to assess the reserves and/or contingent bitumen resources for the Fort Hills project as at December 31, 2011.
The range of contingent bitumen resources associated with the proposed Fort Hills oil sands project as determined by GLJ is summarized as follows:
| |
December 31, 2011
Contingent Bitumen Resource
|
| |
100% |
Our 20% share |
| |
(million barrels) |
(million barrels) |
| Low estimate |
2,460 |
492 |
| Best estimate |
3,420 |
684 |
| High estimate |
3,840 |
768 |
The bitumen estimates in the above table were calculated on the basis of the amount of bitumen that can be mined and recovered in the proposed extraction plant. The current Suncor mine plan for the project is the basis of the best estimate. Reserves were not assigned.
Teck Resources/SilverBirch Joint Venture
Equinox and Frontier Projects
As at December 31, 2011, Sproule, as independent reserve evaluators, presented a contingent resource estimate for the Frontier project, which is summarized as follows:
| |
December 31, 2011
Contingent Bitumen Resource
|
| |
100% |
Our 20% share |
| |
(million barrels) |
(million barrels) |
| Low estimate |
1,509 |
755 |
| Best estimate |
2,449 |
1,224 |
| High estimate |
2,743 |
1,371 |
As at December 31, 2011, Sproule, as independent reserve evaluators, presented a contingent resource estimate for the Equinox project, which is summarized as follows:
| |
December 31, 2011
Contingent Bitumen Resource
|
| |
100% |
Our 50% share |
| |
(million barrels) |
(million barrels) |
| Low estimate |
286 |
143 |
| Best estimate |
375 |
188 |
| High estimate |
420 |
210 |
Contingent Resource Estimates
Volumes of contingent bitumen resources are calculated at the outlet of the proposed extraction plant. There is no certainty that it will be commercially viable to produce any portion of the contingent bitumen resources.
Contingent resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as ''contingent resources'' the estimated discovered recoverable quantities associated with a project in the early project stage.
There is no certainty that any of the Fort Hills project, the Frontier project or the Equinox project will produce any portion of the volumes currently classified as "contingent resources". The primary contingencies which currently prevent the classification of the contingent resources disclosed above as reserves consist of: current uncertainties around the specific scope and timing of the development of each of the Fort Hills project, the Equinox project and the Frontier project; lack of regulatory approvals for certain aspects of the Fort Hills project; uncertainty regarding receiving regulatory approvals for the Frontier and Equinox projects; the uncertainty regarding marketing plans for production from the subject areas; uncertainty in estimation of project costs; and need for approval of a decision to proceed by each of the partners in the relevant project; and those other risks and contingencies described above under "Cautionary Statement on Forward-Looking Information" and in the public filings described there. Contingent resources do not constitute, and should not be confused with, reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent bitumen resources.
Source: 2011 Annual Information Form (327KB PDF)