Mineral Resources as at 31 December 2018 ⁽¹⁾

Notes to Mineral Reserves and Resources Tables

⁽¹⁾ Mineral reserves and resources are mine and property totals and are not limited to our proportionate interests.

⁽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.

⁽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.

⁽⁸⁾ At Zafranal, gold in oxide material is considered to be non-recoverable.

Source: Annual Information Form

The reserves information set out below for the Fort Hills mine 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, 2018. Estimates of reserves and projections of production were prepared by GLJ using information provided up to December 31, 2018. The reserves information set out below for Fort Hills is taken from a report prepared by GLJ on January 28, 2019.  All reserves information in this section is based on Teck’s 21.3% interest in Fort Hills.

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 that 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 developed reserves since Fort Hills is now in operation. 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.

Fort Hills Mine

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, 2018. Future net revenues have been presented on a before and after tax basis in accordance with National Instrument 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 Mine” 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 Fort Hills are 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 that the Fort Hills partners use for planning and decision-making for the project, which are based on detailed engineering studies. See “Description of the Business ― Energy ― Fort Hills Mine” for a further description of the project operator estimates regarding costs.

All of our reserves are associated with Fort Hills. 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 as at December 31, 2018 (21.3%) share before deduction of royalties. “Net” in relation to Teck’s interest in reserves means Teck’s working interest as at December 31, 2018 (21.3%) share after deduction of royalties.

For additional information, please refer to page 70: 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 in November, 2010 updated in May 2014 and incorporated in National Instrument 43-101, Standards of Disclosure for Mineral Projects, 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 Canadian Institute of Mining, Metallurgy and Petroleum 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 National Instrument 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$9.40/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 0.11% copper equivalent cut-off and a 1.7 molybdenum factor. A 0.11% copper equivalent cut-off equals a net smelter return (NSR) of US$5.51 per tonne.

There was a net decrease of 54 million tonnes of Proven and Probable reserves in 2018 mostly as a result of normal mining activity.  The overall reduction is partially offset by updates to the resource model and changes in mine design.  Resources significantly decreased by 356 million tonnes when compared to 2017, primarily because of higher assumed long-term operating costs. 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$2.94/lb copper, US$1.05/lb zinc, US$7.96/lb molybdenum and US$19.54/oz. silver. Open pit and underground resource estimates were prepared assuming long-term metal prices of: US$3.30/lb copper, US$1.23/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.

Antamina engaged a third party to conduct an evaluation of the reasonable prospects for eventual economic extraction for both copper-only and copper-zinc ores to be mined by a more selective underground method than considered in 2017.  The mineralized material located below the 2018 mineral resource pit shell was targeted and reported at a conceptual level in sufficient detail to declare Inferred mineral resources. 

The total, open pit and underground, resources reported in 2018 are 565 million tonnes of Measured and Indicated and over 1.2 billion tonnes of Inferred. These figures are reduced from those reported in 2017 mostly due to the change in conceptual underground mine design method that reduces tonnes, partially offset by a positive impact in grade, and updates to the resource model.

Quebrada Blanca

Supergene reserves have been fully depleted in 2018.  The Quebrada Blanca (hypogene) reserve and resource estimates were prepared assuming a long-term copper price of US$3.00/lb and a long-term molybdenum price of US$9.40/lb.

The hypogene mineral reserves show an increase of 141 million tonnes due to optimization of tailings storage capacity. A more robust resource estimate with higher confidence, updated with over 23,000 m of drilling and revised geological models, supports reporting an additional 270 million tonnes of Measured and Indicated and 985 million tonnes of Inferred resources compared to 2017 reported figures.

Carmen de Andacollo

The Carmen de Andacollo operation includes a heap leach copper operation and a copper-gold hypogene concentrator.  The year-end 2018 reserves and reserves are based on the same models that supported 2017 figures; however, different economic assumptions were used to optimize the reserves and resources pit shells.   

The hypogene reserves and resources are estimated using a mine plan that considers hourly throughput rates in the optimization model. This variable estimates the processing plant hourly performance based on the ore hardness.  Hypogene reserve estimates assume long-term metal prices of US$3.00/lb copper and US$1,250/oz gold.  Mineral reserves show some reduction from 2017 by depletion from normal mining activities.  Hypogene resources have increased by 120 million tonnes due mostly to favourable operating costs that enabled a reduction of the cut-off for reporting resources.

NuevaUnión

Teck has a 50% interest in NuevaUnión. At the end of the first quarter of 2018, a prefeasibility study (PFS) on the NuevaUnión project was completed which incorporates key design changes to improve project economics and respond to community and Indigenous peoples input. Reserves and resources for two deposits, Relincho and La Fortuna have been updated based on this study. Reserves at Relincho and La Fortuna deposits consider a bulk open-pit mining operation that will be developed in three production phases that will alternate mining operations between the two deposits.

Relincho mineral reserves and mineral resources are reported using an average NSR cut-off of US$ 8.50/t, which assumes metal prices of US$ 3.00/lb copper and US$ 7.50/lb molybdenum.

La Fortuna mineral reserves and open pit mineral resources are reported using an average NSR cut-off of US$ 10.0/t, which assumes metal prices of US$ 3.00/lb copper and US$ 1,250/oz gold. Mineral resources outside of the mineral reserve pit are defined using a conceptual underground mining envelope. This approach assumes the same recoveries, metal prices, processing and general & administration costs as used for the open pits but with mining costs and dilution assumptions that are more appropriate to bulk underground mining.

Red Dog

Teck reports reserves and resources for Red Dog 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”. 

In the “Mine” group, Teck is currently operating two deposits accessible by open pit mining: Aqqaluk, and Qanaiyaq. The Aqqaluk deposit, with first ore milled in August 2010; is scheduled to be mined through 2031.  Mining of the Qanaiyaq deposit started with first ore milled in January 2017 and is planned to have a life span through 2028. The Red Dog Mine area also contains the undeveloped Paalaaq deposit, which is currently only defined to a resource level of confidence.

The “District” group consists entirely of Inferred resources from the Anarraaq deposit which lies approximately 11 km northwest of the current Red Dog operations.  Resources for this deposit are unchanged, at 19.4 million tonnes, from 2017 statement.

All reserves and resources were estimated using long-term metal prices: US$1.10/lb for zinc, US$0.90/lb for lead and US$20.00/oz for silver.  Red Dog Mine reserve tonnage has reduced by only 1.5 million tonnes.  Gains due to higher metal price assumptions and lower costs and updated mine designs partially offset production depletion of 4.2 million tonnes. Red Dog Mine resources increased by 8.6 million tonnes, primarily due to reporting low-grade possibly reactive material as a resource for the first time.

Pend Oreille

Production in 2018 accounted for 380 kt depletion from reserves, and additional 152 kt from resources. Pend Oreille continued to develop and revise its mine plan with the inclusion of new mining shapes and adjustment of existing mining shapes based on new geologic interpretation. In 2018 the models for the different mine areas were continuously updated as infill drilling progressed.

The reserves and resources for the East Mine (Washington Rock and West Yellowhead resources estimates remain unchanged) are estimated using a 4.5% zinc cut-off. Recovery is 88% for zinc and 61% for lead. The reserves and resource for the MX area of Pend Oreille are estimated using a 4.5% zinc equivalent cut-off. All resources and reserves are estimated using US$1.10/lb zinc and US$0.90/lb for lead.

San Nicolás

Based on the results of the ongoing drilling program, mineral resources have been updated in 2018. NSR calculations include metal price assumptions as US$3.00/lb copper, US$1.10/lb zinc, US$1,250/oz gold and US$20/oz silver and scaled costs from previous studies. 

The 2018 resource estimate assumes different NSR cut-offs for different geometallurgical domains from US$9.20/t to US$12.00/t based on an estimate of the marginal cost of production for the relevant ore. 

Galore Creek

Teck has a 50% interest in Galore Creek. The year-end 2018 resource statement presents a conceptual change to the project. Only mineral resources are reported in 2018 and are estimated based on commodity prices of US$3.00/lb copper, US$1,200/oz gold and US$20/oz silver.

Schaft Creek

Schaft Creek resources are based on a 2018 Resource Model Update.  Open pit mineral resources are reported at an NSR cut-off of US$4.31/t and constrained by a conceptual open pit shape.  The resource estimate categorizes 10% of the mineral resources as Measured, 70% as Indicated and 20% as Inferred.

Mesaba

Mineral resources are reported at a cut-off of 0.2% copper, equivalent to a NSR cut-off of US$5.24/ton, and consider the estimates of copper, nickel, silver, cobalt, gold, platinum and palladium.

Zafranal

End-of-year 2018 resource and reserves are supported by a feasibility study being prepared for Compañia Minera Zafranal S.A.C. (CMZ). The resource model is built with updated geological interpretations and assay results from 404 drill holes totaling 120,300 metres. There has been approximately 22,359 metres of new core drilling since the completion of the prefeasibility study in 2016. 

Resource and reserves estimates at Zafranal are prepared using price assumptions of US$3.00/lb copper and US$1,200/oz gold. Mining and processing costs, as with other important input parameters, were updated from the prefeasibility study. The total contained metal used in the reserves table are based on variable metallurgical recoveries of up to 89.5% for copper and up to 56% for gold.  Open pit mineral reserves are reported using a variable NSR cut-off of US$6.10 to $6.35/t averaging US$6.11/t.

Fording River

The reserve economics assume a long-term selling price at the Port of Vancouver of US$130/tonne for metallurgical coal at an exchange rate of CAD$1.20 per US$1.00.

Elkview

Teck has a 95% interest in the Elkview mine.  The reserve economics assume a long-term selling price at the Port of Vancouver of US$130/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.  The reserve economics assume a long term selling price at the Port of Vancouver of US$130/tonne for metallurgical coal at an exchange rate of CAD$1.20 per US$1.00.

Line Creek

The reserve economics assume a long term selling price at the Port of Vancouver of US$130/tonne for metallurgical coal and US$75/tonne for oxide coal at an exchange rate of CAD$1.20 per US$1.00.

Cardinal River

The reserve economics assume a long term selling price of US$130/tonne for metallurgical coal and US$100/tonne for PCI coal at an exchange rate of CAD$1.20 per US$1.00.

Quintette (Mt Babcock)

The reserve economics assume a long-term selling price of US$130/tonne for metallurgical coal and US$75 for oxide coal at 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 headings “Description of the Business” and “Health and Safety and Environmental Protection” and under the heading “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 Robin Gold P.Eng., employees of Teck Coal Limited, who are the Qualified Persons for the purposes of National Instrument 43–101.

Source: Annual Information Form