July 28, 2016 / 10:20 AM / 2 years ago

Canadian miner Teck posts surprise profit as costs fall

(Reuters) - Canadian miner Teck Resources Ltd TCKb.TO TCK.N reported a surprise quarterly profit as its costs declined.

Teck, the largest producer of steelmaking coal in North America, said on Thursday its operating costs fell 15 percent to C$691 million ($525 million) in the second quarter.

A global commodity rout had pushed coal and copper prices to multi-year lows, forcing miners to sell assets, lay off workers, and cut dividends and capital spending to preserve cash and reduce debt.

Teck also raised its 2016 production forecast for coal to 26 million-27 million tons from 25 million-26 million, and for copper to 310,000-320,000 tons from 305,000-320,000.

“While the commodity cycle continues to be challenging, we are starting to see some positive changes in the direction of zinc and steelmaking coal prices,” Chief Executive Don Lindsay said.

Teck forecast coal sales of at least 6.8 million tons for the third quarter. The miner reported second-quarter coal sales of 6.3 million tons, below its forecast of 6.5 million.

The Vancouver-based company cut its 2016 cost of sales forecast to $42-$46 per ton from $45-$49, citing a fall in expenses and lower diesel prices.


Teck said the construction of the Fort Hills oil sands project in northern Alberta is more than 60 percent complete.

The company reiterated that it was on track for first oil production by late 2017, despite a nearly four-week halt to construction due to wildfires in Fort McMurray.

Teck owns a 20 percent stake in Fort Hills, which is majority owned by Suncor Energy Inc (SU.TO).

Net profit attributable to shareholders fell by more than three-quarters to C$15 million, or 3 Canadian cents per share, in the quarter ended June 30.

Excluding items, Teck earned 1 Canadian cent per share.

Analysts had expected a loss of 1 Canadian cent per share, according to Thomson Reuters I/B/E/S.

Revenue fell nearly 13 percent to C$1.74 billion.

Reporting by Anet Josline Pinto in Bengaluru and Nicole Mordant in Vancouver; Editing by Gopakumar Warrier and Kirti Pandey

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