Ladies and gentlemen, thank you for standing by. Welcome to Teck's Second Quarter 2025 Earnings Release Conference Call. This conference call is being recorded on Thursday, July 24, 2025. I would now like to turn the conference over to Emma Chapman, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Teck's Second Quarter 2025 Conference Call. Today's call contains forward-looking statements. Actual results may vary due to various risks and uncertainties. Teck does not assume the obligation to update any forward-looking statements. Please refer to Slide 2 for the assumptions underlying our forward-looking statements. We will reference non-GAAP measures throughout this presentation. Explanations and reconciliations are in our MD&A and the latest press release on our website. On today's call, Jonathan Price, our CEO, will start with highlights for our second quarter. Crystal Prystai, our CFO, will follow with the financial and operational review of this quarter. Jonathan will then wrap up with closing remarks and a Q&A session. With that, over to you, Jonathan.

Thank you, Emma, and good morning, everyone. Before we dive into the quarter, I want to acknowledge the incident earlier this week at one of our peers' operations in Northwest British Columbia. Our thoughts are with the three workers still in the underground area, their families, friends, colleagues, and the emergency response teams, and we hope for a safe and swift rescue. Now, moving to our second quarter 2025 results, starting with highlights. Overall, we are progressing with our growth strategy while returning cash to shareholders. Our profitability has improved compared to last year, reaching $722 million in adjusted EBITDA. We saw strong performance in our zinc segment, with Red Dog sales surpassing our guidance and a notable reduction in zinc net cash unit costs, along with another profitable quarter for Trail. Our production across established operations is on track to meet annual guidance. At QB, we previously indicated we would be at the lower end of our guidance of around 230,000 tonnes this year. While the team is working diligently toward this goal, we recognize potential risks from external factors or delays in TMF development work. Consequently, we've adjusted our outlook for QB to between 210,000 tonnes and 230,000 tonnes for the year but still aim to reach design rates by year-end. Earlier today, we announced that the Board has approved the Highland Valley Copper Mine Life Extension project in British Columbia for construction. This project is central to our strategy to double copper production by the end of the decade. Given the strong demand for copper as an energy transition metal, it is expected to yield significant returns with an IRR well above our cost of capital and ensure access to this vital mineral for the next 20 years. The project will extend the mine's operational life to 2046, with an average annual copper production of 132,000 tonnes. We continue to return substantial cash to shareholders, with heightened share buybacks this quarter totaling $487 million or 9.8 million Class B shares. To date, we have returned $1.1 billion to our shareholders through dividends and share repurchases and have completed about 70% of our $3.25 billion buyback authorization, which equates to $2.2 billion. We are also maintaining our business's resilience, bolstered by a strong balance sheet that allows us to manage uncertainties and continue creating value. Our liquidity stands at $8.9 billion, including $4.8 billion in cash. Our commitment to safety and sustainability remains strong. Across our operations, our high potential incident frequency rate was low, at 0.09 for the first half of the year, below our 2024 target of 0.12. I’d like to mention the tragic fatality at Antamina on April 22, where Teck has a non-controlling interest. We are deeply saddened and extend our condolences to the deceased's family, friends, and colleagues. Teck participated fully in the investigation led by the Antamina team, and the lessons learned will be shared both within our company and the broader sector. We are proud to have been named one of Corporate Knights' Best 50 Corporate Citizens in Canada for 2025, marking the 19th consecutive year of this recognition, based on a review of sustainability indicators. Moving to QB, the second quarter performance was affected by ongoing TMF development work. We are advancing several initiatives to improve sand dredging rates and expedite the mechanical movement of sand to achieve consistent operations. This work did affect our mill online time this quarter, as previously disclosed. The planned pace for TMF development was based on initial design assumptions for dredging rates, which turned out to be unachievable. While modifications to cyclones showed improvement in sand dredging, they were insufficient to fully catch up during the quarter. Thus, we are initiating various additional measures to enhance dredging rates and expedite sand movement, including improved sand placement techniques and optimizing our grind size concentrator. Importantly, the TMF development work and transition to ongoing operations is a one-time milestone in ramping up operations, and once completed, it will be behind us for the facility's lifetime. While TMF development will continue into Q3, we still target design rates by year's end. Throughput has increased from the previous quarter, and we anticipate consistent grades of about 0.61% in the latter half of the year. We are actively working to boost recoveries by year-end, which will benefit from improved mill run time. The delay in the shiploader at QB's port facility, announced on June 2, is anticipated to extend into the first half of 2026. We have successfully managed to ship concentrate through alternative ports, maximizing shipments to local clients, so there has been no impact on production. However, alternative logistics have slightly increased our net cash unit costs, estimated to be around USD 0.10 per pound. We experienced a notable increase in molybdenum production from key process improvements made during the quarter and expect continued enhancements, with the aim of achieving design throughput and recoveries at the molybdenum plant by year-end. Upon completing the TMF development work, QB will operate in steady-state, proving itself to be a Tier 1 asset within Teck's portfolio for generations. We are also defining a capital-efficient and value-accretive growth path for QB through mill optimization and low-capital debottlenecking opportunities that could raise throughput by 15% to 25%. QB is built on a substantial long-life deposit that supports multiple expansions and offers several avenues to deliver shareholder value, including exploring adjacencies with Collahuasi. The operation benefits from a very low strip ratio, which keeps all-in sustaining costs competitive. Earlier this year, we completed testing under QB's USD 2.5 billion project finance facility, confirming the robustness of design and operational capacity. Additionally, we have a tax stability agreement in effect until 2037. Taking these factors into account, we are well-positioned to generate significant future cash flows from this Tier 1 asset for decades. Moving to the Highland Valley Mine Life Extension, this project is pivotal in our portfolio as Highland Valley is Canada’s largest copper mine. We are excited to announce the sanction of the Highland Valley Copper Mine Life Extension project, a lower-risk and lower-complexity brownfield project fully owned by Teck. The extension aims to keep operations running until 2046, with an expected average annual production of 132,000 tonnes of copper over its life. Based on technical and engineering advancements, we have optimized project estimates, now ranging from CAD 2.1 billion to CAD 2.4 billion, considering contingencies, inflation, input cost increases, potential tariffs, and accelerated procurement. The MLE project involves the development of necessary infrastructure, grinding circuit upgrades, enhanced tailings storage, and improvements to power and water systems, in addition to waste stripping to access quality resources. The project demonstrates strong economic fundamentals, producing a robust internal rate of return significantly above our cost of capital, alongside a positive net present value at an 8% discount rate. This project's capital intensity is projected to be low, at USD 11,500 to USD 13,200 per tonne of copper annually, and we expect to see significant EBITDA and cash generation throughout its life. Our longstanding operation at Highland Valley and our successful execution of previous Mine Life Extensions positions us well for this project. Project readiness has been confirmed through independent assurance activities, including a construction readiness assessment and a review of technical details, costs, and execution strategies. We are poised for effective execution of the Highland Valley Mine Life Extension, with a strong team in place, all major permits in hand, nearly 70% of engineering complete, and advanced contracting. Construction mobilization is underway, with plans to begin construction soon, and we look forward to delivering on this valuable project. We have updated our guidance, as shown in our presentation. Production changes reflect the revised outlook for QB based on TMF development challenges. We noted earlier that we might be at the lower end of our guidance of around 230,000 tonnes this year. While this remains feasible, we recognize potential risks from external factors or TMF delays, leading us to adjust our outlook for QB to between 210,000 tonnes and 230,000 tonnes for the year, while still targeting design rates by year-end. Guidance for other operations remains unchanged, meaning that the adjusted QB outlook is the sole factor affecting total copper production, moly production, and net unit cash costs. Additionally, we've factored in the anticipated increase in copper production by 2028 and the growth capital investment stemming from the Highland Valley Mine Life Extension project sanction. For near-term growth, our ongoing trajectory is supported by our established portfolio of operating mines. The HVC MLE project is essential to our copper growth strategy and represents a significant milestone in boosting Teck's future copper output. Our high-returning Greenfield projects, Zafranal in Peru and San Nicolas in Mexico, are progressing on schedule, with a goal of sanction readiness by the end of the year. We've initiated early works in May after receiving the permit in April, which will enable immediate construction upon project sanction. We aim to receive the construction permit of Stage A approval, the first of two approvals, in Q3, with the earliest potential sanction decision expected in late 2025. Our engagement with government authorities and other stakeholders at San Nicolas is ongoing to support permitting applications, with a feasibility study slated for completion in the fourth quarter, positioning the project for a potential sanction decision once necessary permits are secured. These projects present reduced complexity and scope compared to QB, with lower capital intensities, attractive economics, and favorable risk-return profiles. Furthermore, we are identifying capital-efficient and value-accretive avenues for QB's growth through mill optimization and low-capital debottlenecking that could boost throughput by 15% to 25%. Our priority at QB remains completing the ramp-up, but optimization plans are progressing, and detailed debottlenecking planning is underway, allowing us to submit the environmental impact declaration on deferral application in the latter half of the year. Growth projects must meet high criteria for attractive risk-adjusted returns and compete for capital in line with our allocation framework. Overall, we expect to double copper production by the decade's end, aiming for annual copper output of up to 800,000 tonnes from these upcoming projects. Now, I will hand the call over to Crystal.

Thanks, Jonathan. Good morning, everyone. I will start with our second quarter 2025 financial performance on Slide 11. Our adjusted EBITDA increased by 3% in the quarter compared to a year ago to $722 million, primarily due to another profitable quarter from Trail Operations, lower smelter processing charges, and reductions in corporate overhead costs, partially offset by lower copper and zinc prices and higher operating costs at Highland Valley due to increased production and at QB. The improved performance from Trail Operations reflects the implementation of initiatives to improve profitability and cash flows, including increasing byproduct revenue. While the current low smelter processing charges are a headwind for Trail, Teck overall has a net benefit from them. We successfully reduced our corporate overhead cost by 21%, reflecting our ongoing efforts to reduce costs across our business. We continue to expect lower annual corporate overhead costs compared to 2024. Importantly, we continue to return cash to shareholders, with $548 million returned in the second quarter. This includes $61 million of base dividends and $487 million of share buybacks, which equates to 9.8 million shares and reflects elevated daily share buying levels throughout the quarter. Year-to-date, we have returned over $1.1 billion to our shareholders. Turning to Slide 12, which summarizes the key drivers of our financial performance in the second quarter compared to the same period in 2024. Our adjusted EBITDA increased by $19 million to $722 million, driven by another profitable quarter from Trail Operations, lower smelter processing charges, reductions in corporate overhead costs, and lower royalties. It also reflects higher sales volume and an increase in commodity prices for our byproducts and positive foreign exchange impact. Trail's improved results reflect higher by-product production volumes such as silver, germanium, and indium, and higher refined lead production compared with a year ago. These factors were partially offset by a $91 million reduction in settlement pricing adjustments and higher operating costs at Highland Valley due to increased production and at QB. Now looking at each of our reporting segments in greater detail, starting with copper on Slide 13. In the second quarter, gross profit before depreciation and amortization from our copper segment declined by 3% to $673 million compared to the same period last year, primarily due to lower copper prices and higher operating costs, partially offset by increased coal product and byproduct revenues from zinc and molybdenum and lower smelter processing charges. Copper production remained similar to the same period last year at 109,000 tonnes. At QB, though online time was impacted by the TMF development work required to complete the ramp-up of the operation as expected. Our established operations are performing in line with guidance, and our outlook remains on track for the balance of the year. Production improved significantly at Highland Valley, driven by higher grades and mill throughput as we advance mining in the Lornex pit. Production at Antamina was lower, reflecting a shutdown of approximately one week due to the fatality, as well as the processing of a lower proportion of copper-only ore as expected in the moly plant. The site returned to full production in June. Carmen de Andacollo had higher production in the quarter driven by higher grades and recoveries as water availability improved compared with the same period last year, which was impacted by drought conditions. The improved performance in Q2 of 2025 was despite maintenance at SAG mill for approximately one month for repairs. The operation has been running at full rate since it successfully restarted at the end of June. Our net cash unit costs improved by USD 0.14 per pound to USD 2.02 per pound. While the cost of sales increased, particularly at QB and Highland Valley, this was more than offset by increased flat product credits, including significantly higher zinc revenue from Antamina and additional molybdenum revenue from Highland Valley and QB, as well as much lower smelter processing costs. In the quarter, we finalized labor agreements at QB and Carmen de Andacollo. QB's third labor union provides a new three-year collective bargaining agreement in early April, completing all labor negotiations for QB's workforce and ensuring that labor agreements are now in place through 2028 across our QB operations. At CdA, both union contracts were ratified in June and July, with each covering a three-year period. Looking forward, we continue to target design rates at QB by the end of this year. We also continue to expect higher quarterly copper production at Highland Valley through the balance of this year as we process increasing proportions of higher grade Lornex ore. As mentioned earlier, we've updated our annual production and unit cost guidance based on our revised QB operational outlook. Copper production has been revised to 470,000 tonnes to 525,000 tonnes. And copper net cash unit costs have been revised to USD 1.90 to USD 2.05 per pound. Turning now to our zinc segment on Slide 14. Performance in our zinc segment was very strong in the second quarter. Our profitability in zinc improved substantially with a 137% increase in gross profit before depreciation and amortization compared with the same period last year to $159 million. This improvement was driven by higher byproduct revenues as a result of our updated operating strategy at Trail and lower operating costs. Red Dog performed well despite lower grades that we expected in the mine plan. Red Dog sales of 35,100 tonnes were higher than our guidance range of 25,000 tonnes to 35,000 tonnes due to the timing of sales. Our net cash unit cost for zinc improved significantly, decreasing by USD 0.20 per pound to USD 0.49 per pound, primarily due to lower sulfur processing charges and higher byproduct credits. At Trail operations, profitability was strong in the quarter, reflecting our updated operating plan to improve profitability and cash flow generation in challenging smelter market conditions. We have curtailed our refined zinc production and increased production of byproducts such as silver, germanium, and other critical metals compared to the same period last year. We also implemented cost reductions in Q4 of 2024, the benefit of which continued into Q2. Overall, this strong performance led to a 13% improvement in our gross profit margin before depreciation and amortization for our zinc segment to 28% compared to the same period last year. Looking forward to the third quarter, we expect zinc and concentrate sales from Red Dog of 200,000 tonnes to 250,000 tonnes. And with Red Dog shipping season commencing on July 11, we expect reductions in Red Dog inventory in the third quarter, reflecting the normal seasonality of sales. Our annual production and unit cost guidance for our zinc segment is unchanged, as they can concentrate production of 525,000 tonnes to 575,000 tonnes; refine zinc production of 190,000 tonnes to 230,000 tonnes and net cash unit cost of USD 0.45 per pound to USD 0.55 per pound. Looking at our cash return to shareholders on Slide 15. We continue to build on our strong history of cash return to shareholders. We have returned a total of approximately $6 billion since 2020. This includes over $1.1 billion year-to-date, reflecting elevated daily share buyback levels in the second quarter. We have now completed $2.2 billion or approximately 70% of our $3.25 billion authorized buyback, leaving approximately $1 billion remaining. And with the strong cash flow generation potential of our business, we can see further cash returns to shareholders in line with our capital allocation framework. We remain committed to returning between 30% and 100% of future available cash flows to our shareholders. Looking now at our balance sheet on Slide 16. We remain focused on maintaining the resilience of our business, including the strength of our balance sheet. As of yesterday, our cash balance remained significant at $4.8 billion, and our liquidity is strong at $8.9 billion. We also continue to maintain investment-grade credit ratings. We have moved into a small net debt position in the quarter as we continued to deploy the proceeds from the sale of the steelmaking coal business to shareholder return. But we do expect a release of working capital build of Red Dog inventory to unwind in the third quarter, reflecting the normal shipping season. Since 2024, we have reduced our debt by USD 2 billion, and our USD 1 billion outstanding term notes are long-dated. We made a semiannual repayment of USD 147 million on the QB project finance facility in the quarter. And through these payments, we are further deleveraging our balance sheet on an ongoing basis. Our near-term growth projects, including the HVC MLE project, remain well funded, and we are strongly positioned for continued value creation as we execute on our strategy. With that, I'll turn it back to Jonathan.

Thanks, Crystal. On Slide 18, we remain focused on our priorities to create value for our shareholders. Completing the TMF development work at QB and ramping up the operation, targeting design rates by year-end; driving operational excellence, including growing our copper production, reducing our unit costs, and improving our margins; continuing to return cash to our shareholders through execution of our authorized share buyback program and our base dividend, and progressing our value-accretive near-term copper projects to create options for our next phase of copper growth. And maintaining the resilience of our business, including our strong balance sheet. We are committed to continuing to balance investment and growth in copper with cash returns to shareholders. Turning to Slide 19. We can continue to significantly impact the accretive growth potential of our metrics on a per-share basis. Last year, with the ramp-up of QB and a significant portion of our $3.25 billion share buyback completed, we increased our copper production per share by 54% compared to the prior year. By 2026, our copper production per share could increase by a further 33% to 50% as we stabilize QB at full production while completing the remaining authorized share buyback. And our copper production per share could increase substantially beyond that as we bring on near-term value-accretive growth projects. And this does not consider the impact of any further share buybacks that could be authorized under our capital allocation framework given the strong cash flow generation potential of our business. Our copper production has the potential to increase rapidly long-term on a per-share basis. So thank you. And with that, operator, please open the line for questions.

The first question comes from Orest Wowkodaw with Scotiabank.

Some questions on QB2, please. Firstly, the tailings issue that's limiting throughput and then the new investment required here, is there any knock-on impact to 2026? I mean, will tailings still be a constraint next year?

Hi Orest, thank you for that question. Yes, as you point out in the current quarter and to some extent as well expected in Q3, the TMF development work has been limiting online time for QB. Actually, throughput at the plant and the recoveries of the plant have been good, considering these constraints, but online time is an issue. Our expectation here, Orest, is that we can work through the TMF development issue and put that behind us so that it won't deconstrain operations on an ongoing basis. On that basis and based on what we see in terms of throughput and recoveries and grade, of course, the operation we have maintained our guidance for 2026. But of course, as we noted, we'll continue to monitor the progress of the TMF development work through the balance of this year.

Is there potentially more investment required in the tailings next year?

At this point, we've guided to the incremental capital spend for this year. We don't expect additional investment next year. We expect normal operating conditions around the TMF and its ongoing development, but we don't expect to signal additional capital essentially as we have done in the current quarter.

Okay. Given the current ramp-up situation, I'm struggling to see how feasible it is for QB to reach even the lower end of its guidance for 2026. This would require a monthly production of 23,000 tonnes, which has not been achieved in any single month so far. What gives you confidence that you can end the year with a run rate close to that?

Yes. So our view, Orest, is that when we confirm the TMF issue is behind us and we can therefore improve the online time at the plant that we see from the throughputs, recoveries, and grade perspective, the potential on the guidance for 2026. So these are assumptions that we are able to underpin by operating parameters that we have experienced and deliver at the plant. Of course, it requires us to run the operation consistently through the year to achieve those numbers. They're consistent with design, of course, and at the low end of the range, we have seen operating results already that give us confidence that those numbers are achievable. As you can imagine, we continue to interrogate both the operational parameters at QB and we continue to interrogate the forward guidance for QB. But at this point in time, we don't see any changes to 2026 and believe with a period of consistent operation without the constraints of TMF development that we can move forward and deliver.

The next question comes from Matthew Murphy with BMO Capital Markets.

I have a question just on the pace of CapEx this year. So first half of the year, you've done almost $700 million CapEx. That's growth and sustaining not including capitalized stripping. And then your guidance is around $2.4 billion, if I'm not mistaken. So you have to spend $1.6 billion to $1.8 billion, call it, back half of the year. Am I thinking about that right?

Yes. I'll let Crystal speak to the details behind that. Of course, we have increased our capital guidance for the second half of the year in large part based on the sanctioning of HVC MLE, which goes to both capitalized stripping, but it also, of course, goes directly to the growth capital as well as some of the additional capital that we've just discussed for TMF development at the QB. But Crystal, over to you.

Yes. Thanks, Matt, for the question. You're right. So year-to-date, we've spent $700 million on capital expenditures, excluding capitalized stripping, and our total for the year is at the low end, $2.3 billion. So that's a reasonable run rate in terms of what you're thinking that would put us around $1.6 billion over the second half of the year. Again, a large portion of that is in relation to growth and that number, again, has increased because it previously didn't include the sanction capital associated with HVC MLE over the balance of the year. So we have now embedded that spending for the second half of the year. And that's why I think you're seeing that increase in the run rate. Of course, we also have embedded the TMF expected costs associated with that work in the plan, and you'll see some of that coming through in the third quarter as well.

Okay. Yes, it's just the magnitude of the step up. I mean, do you worry about being able to get that done this year? Or are there some big ticket items in there that you're confident you'll see that spend? And is a lot of the tailings spend, therefore, yet to come in the back half of the year?

Yes. I think the run rate is reasonable. We've done a detailed scrub through the projects to understand exactly what is remaining ongoing. We do have a few larger projects on the sustaining side that we expect to kick off, including the Antamina tailings lift associated with the Mine Life Extension. We have the QB truck shop that we're continuing construction on. We also have some demobilization of facilities as we begin the next phase of mining there. So with that, in addition to HVC MLE, which, of course, we have a rigorous schedule associated with the project and the CapEx that we've articulated is in line with that schedule. And then in the context of TMF, we have spent cash to date. We haven't disclosed what that figure is, but we can get that out to folks as required, but we do expect that spending to continue through the second half of the year. And really maybe to articulate a bit more about why that number is the number that it is. We did have spend associated with TMF embedded in our sustaining capital guidance for this year. But the amount and distance of mechanical movement of sand related to the TMF and the related cost of that work has increased that expected cost and guidance in relation to staffing.

The next question comes from Carlos De Alba with Morgan Stanley.

Could you provide more details about the shiploader repairs? How long will it take if you have already started? Also, is there any material impact on CapEx due to the repairs?

Yes, Carlos, thank you for that question. As you know, we disclosed the challenge with the shiploader back in June of last year; essentially, the cause for that was a brake failure on the shovel, which caused an overextension of the shiploader and of course, some damage associated with that. It took some time to be able to access the shiploader. We've even assessed the repair work, and that was because we were required to apply for and obtain some marine permits. The assessment of that damage is ongoing, and the repair plans are being finalized associated with that work as well. As we've said, we do think that's going to be an extended shutdown now that will extend in the first half of 2026. We haven't got a finalized capital number for that repair at this point in time because that assessment is ongoing. Importantly, as we've said, the work on the shiploader and the downtime of the shiploader is not impacting our production here. As you'll recall, previously, we had in place trucking arrangements while we were awaiting the completion of the shiploader originally, that allowed us to move material to either smelters in Chile or to other ports in Chile. We've just reactivated that, and we have that trucking fleet operating daily. So no production constraints, and that's allowed us to minimize any buildup in inventory at the port.

Right. Fair enough. And then just if I may, a second question, just on the sequence of the projects for Zafranal and San Nicolas, well, both are likely to be sanctioned or may be sanctioned by the end of this year at the earliest. Is it fair to think that Zafranal probably is ahead and maybe will be developed earlier?

I think it's fair to say that Zafranal is more advanced in terms of the permitting status, in terms of the construction readiness of that team, for example. However, we consider both of those to be options while we're saying we would like to get them ready for sanction by the end of the year. Of course, those are decisions that are yet to be taken and the range of factors that will play into those decisions. So I wouldn't give any particular guidance now on the sequencing of those projects. Think of them as options that we have in the portfolio as we look to derisk and progress those options to the point that we could take sanction decisions when ready.

Our next question comes from Craig Hutchison with TD Cowen.

Just on the Highland Valley extension. Now that you guys have made a final investment decision, is there a plan to file a technical report? And just maybe as an interim, can you give me a sense of what throughput you're looking at to achieve that annual production rate of 132,000 tonnes a year?

Yes. So we will publish a technical report. We expect that to happen in August of this year. And of course, you'll get all the details associated with that. The throughput throughout the life of the future mine will be variable. Of course, it's going to be a product of the ore we're mining. You'll see in our disclosure that we go through various phases here, where we're mining different pits. Of course, there's different ore harnesses associated with the ore coming from those pits. So there will be variable throughput, is the answer, and variable grade, of course, that goes with that.

And Craig, we did disclose in our Investor Day in November of what a production profile would look like for HVC MLE. So I just encourage you to go back and look at that as you think about it, it shows the variability.

Crystal, I guess to get to the 132,000 tonnes per year, I would assume the throughput has to be materially higher just based on your reserve grade unless I'm missing something.

I mean I think we are adding capacity to the circuit. We're adding mills there to increase the throughput of material and also to improve recoveries of material. I should say. I mean, last year, you saw our production at HVC come in just below 100,000 tonnes. This year, of course, that production guidance is materially higher in the sort of 140, 150 range. If you see that year-on-year, currently through the operations that HVC and that's been driven this year by the processing of additional Lornex ore. And I think that's what you should expect going forward is variability depending on the ore type that's dominating mill feed at any point in time.

Okay. And then just on QB, how are the recoveries progressing? Do you feel like you'll be through the transitional ore this quarter, or is that still expected in Q4?

Yes, I'll just ask Shehzad to talk about that in terms of the transition ore, where we are on recoveries and what we're doing there to continue to drive those higher.

Thanks, Craig. As we had noted last year that we did expect lower recoveries in the first half as we were dealing with more transition ores. And our recovery performance was just slightly below what we had expected due to the inconsistency in the first half of the down dates. We do expect to have better quality ore in the second half with a higher grade and higher recoveries. And the transition ores will be variable. But yes, we expect a lot less transition ore in the second half and in 2026.

The next question comes from Myles Allsop with UBS.

Yes. Just a couple of questions. Maybe first on QB and Collahuasi, as mentioned in your presentation, it sounds like discussions are not happening at the moment. Is that right? Or is there any progress in terms of looking at that option seriously?

Look, there are discussions regarding QB-Collahuasi. I'm not going to go into those because, of course, they're confidential in nature. But as we've said before, we recognize the potential of the opportunity there for synergies. We will always do what's in the best interest of our shareholders in that regard. As you can see, right now, we have our hands full with ramping QB up to steady state, which has to be our priority here to make sure we get stable production there and then the cash generation that this asset is capable of delivering. But as I mentioned, in parallel, we continue to think about, continue to discuss the potential synergies there, but I won't unpack discussions given they're confidential.

That's fair. Going back to the two issues at QB, why is it taking a year to fix the shiploader if it's overextended? It's a new shiploader, which seems like a long time. There's also a significant operational expense impact. Regarding the tailings, when do you expect to complete that? Can we assume it will mostly be resolved by the end of this year, or will it take longer?

So I'll hand the shiploader question over to Ian Anderson in a moment. I'm just going to talk about tailings. I mean, of course, given the fact that we have maintained our guidance for 2026, our expectation is that we put the TMF issues behind us this year. And that's what we're providing for in our guidance. So as I mentioned, it's sort of a one-time event associated with ramp-up. When we get through that phase of work, we move into a steady-state operation. So it's not something we expect to be plaguing this operation indefinitely at all. It's something we expect, it's a discrete piece of work, we'll get that resolved and move past it, and then we'll be able to secure the online time essentially that we need from this operation and impeded. Ian, would you like to make some comments just on the shiploader outlook, please?

Sure. Thank you very much, Myles, for the question. So despite the fact that we said it would conclude in the first half of 2026, that's not saying that it will, in fact, take a year. At this point, we're really carefully defining the nature of that work. So as a result of the brake failure, of course, we have to assess all of the structural elements, make sure that, shiploader has returned safely. Similarly, do we complete all the work to get it back into great condition? And so we'll progress that project as we go. Of course, we are dealing with maritime authority. That can cause permit delays, and we certainly want to be cautious about how we deal with that announcement. So I want to make sure that continues at pace, but at the same time, the nature of the incident must be managed delicately.

The next question comes from Bill Peterson with JPMorgan.

On the higher CapEx guide for Highland Valley Mine Life Extension relative to last year's strategy day, it looks around 15% to 20% higher. Can you provide additional color or breakdown between materials inflation, contingencies you mentioned, or any other factors? And then is there any read-through for project sanctioning for Zafranal or San Nicolas, for example, should we expect a similar sort of double-digit increase at this stage just to be prudent? Or any read-through at all?

Yes. Look, so on the HVC piece, I mean, I won't specifically give that breakdown. But as I mentioned, there's a range of things in there. Project-level contingency, inflation, cost escalation, the potential for tariffs on construction materials, which we think is a real driver, of course, particularly in between the U.S. and Canada. So that is something that we've reflected here. Importantly, as I mentioned, it's also the acceleration of the procurement of mobile equipment that we've brought forward from later project phases. And that materially derisks the project and the rate at which we'll be able to essentially access the valley pit for the long term. So those are important derisking elements in our view. And I'll also ask Crystal just to comment on some of the process by which we looked at this capital spend through the investment approach here that we've taken and our determination to ensure that we give robust capital numbers that can be delivered.

Sure. No. Thanks, Bill. Look, we've advanced this project through the final stages of our project delivery framework as well as through our governance processes, including through our investment committee. Those processes embed the final project requirements, the construction readiness, probabilistic modeling around various facets of the estimates involved as well, we had detailed independent assurance provided on many areas of the business plan as well as in the context of construction readiness. So all of those are learnings that we took from the QB projects that we've committed to embedding as we go forward into future projects, including in HVC MLE. And the conclusion of that work ahead of sanction has led to the capital range that we're disclosing, of course, in addition to the factors that Jon noted in the context of what's embedded in that analysis.

So I think, it will be as read-through for future?

Yes. I was just going to pick up on that. Look, every project has its own characteristics. We will take the same approach with future projects that Crystal just outlined in terms of using independent assurance, taking probabilistic modeling to ensure the full range of, obviously, economic outcomes associated with the project, but also the full range of potential input assumptions here that goes in capital because we need to ensure that we are reflecting uncertainties or known unknowns in the project as we're setting for the assumptions here. But again, as I mentioned, these projects have their own unique characteristics. So I don't think you should take a direct read-through from that. But what I can say is we will apply the same rigorous approach in Zafranal and San Nicolas that we've applied to HVC.

Well understood. My next question is not something the team has talked about recently, but as new range, the potential project in the U.S. Just any update on where that project stands in terms of permitting, community engagement, and I guess, an opportunity to potentially move faster than what appears to be a pretty strong support within the U.S. in terms of permitting and promoting domestic production?

Yes. Look, I mean, that remains an interesting option for us. It's clearly further out than the Zafranal or San Nicolas here in the schedule. I think the key for us there is to define what is the right project, what is the configuration that will deliver the greatest value in the event that project is developed, and that's the work that we're doing now. Of course, you have to define that before you can start to approach the permitting process in any detail. So I think that's a conversation for later, Bill. We have our hands full with other things right now, but we do continue to work that in parallel.

The next question comes from Chris LaFemina with Jefferies.

I just wanted to ask about, first, on the incremental CapEx for QB for the TMF. How do you decide whether you're going to include CapEx in the project CapEx or in sustaining? Because I would think if you're spending money to ramp the project to full capacity for whatever reason, that would have been part of the project CapEx. I understand it's really just a question of semantics, but when we think about the capital intensity of the project, why wouldn't that be a project CapEx rather than sustaining?

I will hand over the semantics question over to Crystal.

Hi, Chris. Thanks for the question. In the context of TMF, when we thought about the growth capital for the project, of course, there were construction costs associated with that embedded in the project capital that we reported against in our results over the first years. I think the pieces that I add to why it's sustaining, I mean, firstly, we're running the operation, and we're producing copper. So I think these things are no longer growth capital. We did expect to spend on the TMF, but that amount, as I mentioned, is more significant than we expected as we are now moving significantly more sand further distances than we expected for mechanical movement, and the related cost to that work has increased that expected cost and guidance in relation to staffing.

Okay. That's fair enough. And then secondly, just on the shiploader. Do you have any insurance related to the issues there? Or is it all on you?

Ian, do you want to comment on that as well?

Yes. Certainly, we are investigating the root cause, and we'll understand based on that what the next steps will be in terms of insurance. So yes, we do have insurance coverage and that includes interruptions.

Thank you. We are out of time for further questions. I will now hand the call back over to Jonathan Price for closing remarks. Please go ahead.

Thank you, operator, and thanks again to everyone for joining us today. We look forward to welcoming many of you to our QB site visit on November 3 and 4 of this year. Please reach out to Emma Chapman and our IR team for further information on the site visit or, of course, if you have any follow-up questions on the quarter. So thank you, and enjoy the rest of your day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.