Notes to Mineral Reserves and Resources Tables

​<sup>(1)Mineral reserves and resources are mine and property totals and are not limited to our proportionate interests.  Figures have been rounded.

(2)For heap leach and dump leach operations, copper grade are reported as % soluble copper rather than % total copper.  Soluble copper is defined by an analytical methodology which uses acid and cyanide reagents to approximate the portion of copper recoverable in the heap and dump leach processes.

(3)Coal reserves are reported as tonnes of clean coal</sup>.

<sup>(4)g/t = grams per tonne.

(5)Coal resources are reported as tonnes of raw coal.

(6)In 2015, an interest in future gold production from the Andacollo mine was sold.  Compañia Minera Teck Carmen de Andacollo has agreed to sell and deliver to the purchaser an amount of gold equal to 100% of the payable gold produced from the Carmen de Andacollo mine until 900,000 ounces have been delivered, and 50% thereafter.  Reserves and resources are stated without accounting for this production interest.

(7)Recoverable Metal refers to the amount of metal contained in concentrate or cathode copper.</sup>

Source: Annual Information Form

The reserves information set out below for the Fort Hills oil sands mining and processing operation is based upon evaluations conducted by GLJ, an independent qualified reserves evaluator.  

The effective date of the reserves data and other oil and gas information below for Fort Hills is December 31, 2017.  Estimates of reserves and projections of production were prepared by GLJ using information provided up to December 31, 2017.  The preparation date of the GLJ report that the reserves information set out below for Fort Hills is taken from is January 19, 2018.

All reserves information in this section is based on Teck’s 20.88925% interest in the Fort Hills oil sands mining and processing operation. 

Classifications of oil and gas reserves as proved or probable are only attempts to define the degree of certainty associated with the estimates.  There are numerous uncertainties inherent in estimating quantities of oil reserves.  It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of the reserves.  There is no assurance that the forecast price and cost assumptions will be attained and variances could be material.  The reserves estimates provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.  Actual reserves may be greater or less than the estimates disclosed.

Reserve Categories and Resources

Reserves

For oil and gas, reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on analysis of drilling, geological, geophysical and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable.  Reserves are classified into proved or probable according to the degree of certainty associated with the estimates.

Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable.  It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves.  It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

Each of the proved and probable reserves categories may be divided into developed and undeveloped categories.  All of Teck’s reserves are currently categorized as Undeveloped reserves.  Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g. construction of a primary extraction facility) is required and the necessary equipment is not yet installed to render them capable of production.  Teck does not have any developed reserves at this time.

Fort Hills Mining and Processing Operation

The reserves data presented below summarizes our proved and probable reserves and the net present values of future net revenue for these reserves. The reserves data uses forecast prices and costs prior to provision for, and therefore do not take into account, interest, general and administrative expenses or the impact of any hedging activities.  In addition, provisions for the abandonment and reclamation of the mines and associated facilities to which reserves have been assigned have been included; all other abandonment and reclamation costs have not been included.  These forecasts and other assumptions are taken from the GLJ evaluation report with an effective date of December 31, 2017, and do not take into account the increase in our interest in the project that occurred in January 2018.  Future net revenues have been presented on a before and after tax basis in accordance with NI 51-101.

The future net revenue, development and operating cost, exchange rate, price and other assumptions set out in this “Description of the Business ― Oil and Gas Reserves and Resources―Fort Hills Mining and Processing Operation” section of this AIF are the estimates or assumptions of GLJ, our independent reserves evaluator.  In order to estimate reserves and future net revenues, GLJ makes a number of assumptions, including assumptions regarding inflation rates, currency exchange rates and prices for oil and other products.  For planning, project economics, forecasts, accounting and other purposes our management makes assumptions regarding those same factors and our assumptions generally differ from those of GLJ.  Different assumptions would lead to different present value and net revenue figures, and could affect reserve estimates.

GLJ estimates capital and operating costs associated with the Fort Hills mining and processing operation based on Suncor’s estimates, as operator, with consideration to those achieved by other oil sands mining projects.  These GLJ estimated costs differ somewhat from those the Fort Hills partners use for construction planning and decision making for the project, which are based on detailed engineering studies.  See “Description of the Business ― Energy―Fort Hills Mining and Processing Operation” for a further description of the project operator estimates regarding development costs. 

All of our reserves are associated with our Fort Hills mining and processing operation.  Bitumen is the only product type associated with our reserves. 

Reserves are presented on a gross and net basis.  “Gross” in relation to Teck’s interest in reserves means Teck’s working interest share before deduction of royalties.  “Net” in relation to Teck’s interest in reserves means Teck’s working interest as at December 31, 2017 (20.88925%) share after deduction of royalties. 

*Column does not add due to rounding.

For additional information, please refer to page 65: Annual Information Form 

Definitions for Mineral Reserves and Mineral Resources

Mineral Reserves and Mineral Resources: “Proven” and “probable” mineral reserves and “measured”, “indicated” and “inferred” mineral resources are estimated in accordance with the definitions of these terms adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) in November, 2010 updated in May 2014 and incorporated in National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”), by Canadian securities regulatory authorities. 

Mineral resources are reported separately from, and do not include, that portion of the mineral resources classified as mineral reserves.

Metallurgical coal: means the various grades of coal that are used to produce coke which is used in the steel making process.

PCI coal: means coal that is pulverized and injected into a blast furnace.  Those grades of coal used in the PCI process are generally non-coking.  PCI grade coal is used primarily as a heat source in the steel making process in partial replacement for high quality coking coals which are typically more expensive.

Thermal coal: means coal that is used primarily for its heating value.  Thermal coals tend not to have the carbonization properties possessed by metallurgical coals.  Most thermal coal is used to produce electricity in thermal power plants.

The CIM definitions for mineral resources and mineral reserves are as follows:

A “mineral resource” is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. 

An “inferred mineral resource” is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling.  Geological evidence is sufficient to imply but not verify geological and grade or quality continuity.  An inferred mineral resource has a lower level of confidence than that applying to an indicated mineral resource and must not be converted to a mineral reserve.  It is reasonably expected that the majority of inferred mineral resources could be upgraded to indicated mineral resources with continued exploration. An inferred mineral resource is based on limited information and sampling gathered through appropriate sampling techniques from locations such as outcrops, trenches, pits, workings and drillholes.  Inferred mineral resources must not be included in the economic analysis, production schedules, or estimated mine life in publicly disclosed prefeasibility or feasibility studies, or in the life of mine plans and cash flow models of developed mines.  Inferred mineral resources can only be used in economic studies as provided under NI 43-101.

An “indicated mineral resource” is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.  Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation.  An indicated mineral resource has a lower level of confidence than that applying to a measured mineral resource and may only be converted to a probable mineral reserve.  Mineralization may be classified as an indicated mineral resource by the qualified person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization.  An indicated mineral resource estimate is of sufficient quality to support a prefeasibility study which can serve as the basis for major development decisions.

A “measured mineral resource” is that part of a mineral resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit.  Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation.  A measured mineral resource has a higher level of confidence than that applying to either an indicated mineral resource or an inferred mineral resource.  It may be converted to a proven mineral reserve or to a probable mineral reserve. Mineralization or other natural material of economic interest may be classified as a measured mineral resource when the nature, quality, quantity and distribution of data are such that the tonnage and grade or quality of the mineralization can be estimated to within close limits and that variation from the estimate would not significantly affect potential economic viability of the deposit.  This category requires a high level of confidence in, and understanding of, the geology and controls of the mineral deposit.

A “mineral reserve” is the economically mineable part of a measured and/or indicated mineral resource.  It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at prefeasibility or feasibility level as appropriate that include application of modifying factors.  These studies demonstrate that, at the time of reporting, extraction could reasonably be justified.

A “probable mineral reserve” is the economically mineable part of an indicated, and in some circumstances, a measured mineral resource.  The confidence in the modifying factors applying to a probable mineral reserve is lower than that applying to a proven mineral reserve.

A “proven mineral reserve” is the economically mineable part of a measured mineral resource. A proven mineral reserve implies a high degree of confidence in the modifying factors.

Methodologies and Assumptions

Mineral reserve and mineral 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 Teck’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

Reserve and resource estimates were prepared assuming long-term metal prices of US$3.00/lb copper, US$10.00/lb molybdenum, US$20.00/oz silver and US$1,250/oz gold and an exchange rate of CAD$1.20 per US$1.00.  Resources and reserves are reported at a 0.10% copper equivalent cut-off.

Reserves in 2017 had a net increase of 42.9 million tonnes compared to 2016.  This increase was due to a 97 million tonne increase attributed to updates to the resource model and changes in mine design, which was partially offset by a 47.8 million tonne reduction in reserves due to mining activities.  Resources decreased 278.8 million tonnes compared to 2016 results, mostly due to higher long term operating cost assumptions and related changes in mine design. The resource estimate at Highland Valley is extremely sensitive to changes in these assumptions.

Antamina

Open pit reserve estimates were prepared assuming long-term metal prices of US$2.84/lb copper, US$1.00/lb zinc, US$8.01/lb molybdenum and US$19.47/oz. silver. Open pit and underground resource estimates were prepared assuming long-term metal prices of: US$3.30/lb copper, US$1.30/lb zinc, US$9.50/lb molybdenum and US$20.70/oz. silver.

Cut-off grades at Antamina are based on the net value before taxes that the relevant material is expected to generate per hour of concentrator operation at assumed prices, and varies by year in an effort to maximize the net present value of the pit.

A third-party study was completed in 2017 to evaluate copper-only mineral resources that could be extracted using an underground operation.  The underground resource has been estimated at 500 million tonnes of inferred, and 12 million tonnes of indicated, copper-only ore resources.  Although underground methods would reduce existing open pit resources by 383.0 million tonnes, there is a net increase of 123.5 million tonnes of resources.

Quebrada Blanca

Supergene reserves were estimated assuming a short-term copper metal price of US$2.38/lb, given the short-term nature of the operation.  The supergene reserves are expected to be exhausted in 2018.

The Quebrada Blanca Phase 2 hypogene (concentrator) mineral reserves and resources are unchanged from 2016.  The hypogene mineral reserves and mineral resources were estimated assuming a long-term copper price of US$3.00/lb and a long-term molybdenum price of US$10.00/lb variable metallurgical recoveries that average approximately 91% for copper and 76% for molybdenum.

Carmen de Andacollo

The Carmen de Andacollo operation includes a heap leach copper operation and a copper-gold hypogene concentrator.  The resource model was updated in February 2017 with adjustments to the lithology, mineral zones and alteration models based on new drilling. 

Supergene mineral reserve estimates assume a 49.7% leach recovery for soluble copper, long-term copper price of US$3.00/lb and cut-off of 0.20% soluble copper.  Supergene reserves are estimated to sustain mining until 2018 from direct mill feed and existing stockpiles. 

The hypogene reserves are estimated using variable mill recovery values for copper and an average fixed mill recovery of 67.6% for gold.  Hypogene reserve estimates assume long-term metal prices of US$3.00/lb copper and US$1,200/oz gold.  Current hypogene feeds are expected to sustain concentrator operations until 2035.  Certain reserves were reclassified as resources in connection with permitting matters, although this reclassification was largely offset by increases in reserves due to lower assumed operating costs and pit design changes. Ultimately there was a net 17.1 million reduction in hypogene reserves in 2017, which is equivalent to depletion due to production in the year.  

Hypogene resources increased to 221 million tonnes due mostly to the reclassification of certain reserves to resources, lower assumed operating costs and pit design changes.

NuevaUnión

Our Relincho project has been combined with Goldcorp Inc.’s El Morro (La Fortuna) project, forming NuevaUnión.  Teck has a 50% interest in NuevaUnión.

Relincho reserves have been reported within the designed life of mine pits created during the 2013 feasibility study for the project, assuming US$2.80/lb copper and US$13.70/lb molybdenum and assumed metallurgical recoveries of 88.8% for copper and 47.2% for molybdenum. La Fortuna copper reserves and resources are estimated assuming US$2.80/lb copper and US$1,200/oz gold.

The NuevaUnión staff are evaluating combined mine planning alternatives for both deposits through a prefeasibility study that will be completed in early 2018.

Red Dog

Reported reserves and resources for Red Dog are divided into two reporting groups based on the spatial proximity and the land ownership associated with the deposits in and around Red Dog. The names assigned to these groups are “Mine” and “District”. 

Mineral reserves are reported for Aqqaluk and Qanaiyaq deposits only.  In addition to reserves, Indicated and Inferred resources are reported from both deposits and from the neighbouring Paalaaq deposit. All three deposits are included in the “Mine” group.

The “District” group consists entirely of inferred resources from the Anarraaq deposit which lies approximately 11 km northwest of the current Red Dog operations.

Reserve and resource estimates assume long-term prices of US$1.00/lb zinc and US$0.90/lb lead.

Red Dog Mine reserves increased by 6.7 million tonnes in 2017, mostly due to the transfer of resources to reserves due to the approval of the VIP2 project and the completion of engineering required for a future tailings dam raise to a prefeasibility level.  The low-grade resources are scheduled to be stockpiled and may be processed at the end of the mine life.

Red Dog Mine resources decreased by 11.0 million tonnes primarily due to the transfer of resources to reserves.

Red Dog District resources remained unchanged at 19.4 million tonnes, with all of the resources attributed to the Anarraaq deposit.

Pend Oreille

Production in 2017 accounted for 377 kt depletion from reserves, which was largely offset by the addition of 375 kt of reserves from other mine areas.

The reserves and resources for the East Mine area of Pend Oreille, scheduled to be mined in the near term, are estimated using a 4.5% zinc cut-off calculated assuming metal prices of US$1.35/lb for zinc and US$1.00/lb for lead.

The reserves and resource for MX area of Pend Oreille are estimated assuming a 4.0% zinc equivalent cut-off calculated using US$1.10/lb zinc and US$0.90/lb for lead.

Galore Creek

Reserves and resource estimates were prepared assuming US$2.50/lb copper, US$1,050/oz. gold and US$16.85/oz. silver.  The reserve and resource estimates are unchanged from 2011, when the estimates, including the metal price assumptions, were produced.

San Nicolás

The resource estimate is based on a scoping study produced in 2012 and remains unchanged.  This study assumed US$2.75/lb copper, US$1.00/lb zinc, US$1,275/oz gold and US$22.50/oz silver.

Fording River

Total reserves decreased from year-end 2016 by 7.9 million tonnes of clean coal, primarily due to production of 8.3 million tonnes. The reserve estimate assumes a long term selling price at the Port of Vancouver of US$125/tonne of metallurgical coal at an exchange rate of CAD$1.20 per US$1.00.

Elkview

Teck has a 95% interest in the Elkview mine.  Mine production in 2017 removed 6.2 million tonnes of clean coal reserves. There were significant increases to reserves due to the expansion and mine rephasing, and changes to the geology interpretation. These factors resulted in a net increase of 27.6 million tonnes of reserves at 2017 year end as compared to 2016.  The reserve estimate assumes a long-term selling price at the Port of Vancouver of US$125/tonne for metallurgical coal at an exchange rate of CAD$1.20 per US$1.00.

Greenhills

Teck is an 80% member of the Greenhills joint venture, which operates in certain areas of the Greenhills Operations.  Normal mine depletion accounted for a 6.2 million tonnes reduction in clean coal reserves. An additional decrease of 1.9 million tonnes of reserves was due to minor design changes and geotechnical issues in a pit. The reserve estimate assumes a long term selling price at the Port of Vancouver of US$125/tonne for metallurgical coal at an exchange rate of CAD$1.20 per US$1.00.

Line Creek

Mine production removed 3.6 million tonnes from reserves in 2017.  Pit design changes resulted in an additional 1.6 million tonnes of reserves. The reserve estimate assumes a long term selling price at the Port of Vancouver of US$125/tonne for metallurgical coal at an exchange rate of CAD$1.20 per US$1.00.

Coal Mountain

Coal Mountain production removed 2.7 million tonnes from reserves in 2017, which was offset by geology interpretation and the re-addition of thermal reserves which added 1.1 million tonnes. The reserve estimate assumes a short term selling price of US$90/tonne for PCI coal and US$65/tonne for clean thermal coal at a short-term exchange rate of CAD$1.20 per US$1.00.

Cardinal River

In 2017, production reduce reserves by 1.3 million tonnes, which was offset by changes to geology interpretation and a minor pit design that added 0.9 million tonnes. The reserve estimate assumes a long term selling price of US$125/tonne for metallurgical coal at an exchange rate of CAD$1.20 per US$1.00.

Quintette (Mt Babcock)

Quintette reserves remain unchanged from 2016 year end. The resource estimates assume a long-term selling price of US$125/tonne for metallurgical coal and an exchange rate of CAD$1.20 per US$1.00.

Other Coal Properties

Other properties include Mt Duke (92.683% interest) south of Tumbler Ridge BC, Elco (75% interest) at the north end of the Elk Valley and the Coal Mountain Phase 2 property south of Elkview.  The resource estimates for these other coal properties assumed a long term selling price of US$125/tonne for metallurgical coal, US$90/tonne for clean PCI, US$65/tonne for clean thermal coal and an exchange rate of CAD$1.20 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.  Except as expressly described elsewhere in this Annual Information Form, 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. Where management expects such permits to be issued in the ordinary course, material that may only be mined after such permits are issued is included in proven and probable reserves. Specific current permitting issues are described in the narrative concerning the relevant operation under the heading “Description of the Business” and “Health and Safety and Environmental Protection” and under the headings “Risk Factors — We face risks associated with the issuance and renewal of environmental permits.”

Qualified Persons

Estimates of mineral reserves and resources for our material base metal properties have been prepared under the general supervision of Rodrigo Marinho, P.Geo., who is an employee of Teck Resources Limited.  Mineral reserve and resource estimates for Antamina have been prepared under the supervision of Luis Mamani and Lucio Canchis, who are both SME Registered Members and employees of Compañía Minera Antamina S.A.  Messrs. Marinho, Canchis and Mamani are the Qualified Persons for the purposes of National Instrument 43-101.  Reserve and resource estimates for coal properties 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: Annual Information Form