February 2006

Toronto Branch

Strength through diversification

The CIM Toronto Branch was updated on Teck Cominco’s diversified assets on October 20, when Don Lindsay, president and CEO, spoke about Enhancing the Strength of Diversification.

Teck Cominco is the world’s top zinc miner, is the number two producer of metallurgical coal, and the company is diversified across copper, gold, specialty metals, and power. Currently, copper is the largest contributor to profit.

Last year, Teck Cominco made news by moving into the oil sands arena. Lindsay explained the oil sands logic is consistent with the company’s diversification strategy. With a 15 per cent interest that is equivalent to the largest base metal mining projects in the world, a long life asset of over 40 years, and attractive risk/reward ratio, the oil sands are another opportunity to leverage the company’s core skills.

The project of choice: Fort Hills, worth a total of US$8,403,000,000. The other partners include Petro Canada (55 per cent and operator), and UTS (30 per cent). Fort Hills has a 2.8 billion barrel mine plan, at 190,000 barrels per day. Initial production is anticipated for 2010. The magnitude of the resource allows for additional expansion potential, and Teck Cominco has the potential to acquire 50 per cent of lease 14. In addition, the company is facing other opportunities to become a mining partner on other start up and expansion projects in the oil sands.

Meanwhile, the company’s other operations are strengthening as well. Highland Valley Copper’s mine life was extended five years from 2008 to 2013, at a cost of $40 million. The expansion targets +175 million tonnes of ore, at 0.448 per cent Cu, and .0067 per cent Mo.

Another project, the Pogo Gold Project in Alaska, is targeted to start up this quarter. Teck Cominco is the operator and 40 per cent partner. With reserves of 7 million tonnes at 16 grams per tonne, the mine plan is to produce 350 to 500 k ounces per year. Construction was 85 per cent complete at the time of the Toronto Branch meeting.

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