Executives: Fraser Phillips - Senior Vice President, Investor Relations and Strategic Analysis Don Lindsay - President and Chief Executive Officer Glenn Burchnall - Director of Energy Marketing and Logistics Ronald Millos - Chief Financial Officer Réal Foley - Vice President-Coal Marketing Robin Sheremeta - Senior Vice President, Coal Dale Andres - Senior Vice President-Base

Metals
Analysts: Chris Terry - Deutsche Bank Orest Wowkodaw - Scotiabank Lucas Pipes - FBR Capital Markets Greg Barnes - TD Bank Alex Terentiew - BMO Capital Markets Carl Blendon - Goldman Sachs Brian MacArthur - Raymond

James
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Teck Resources Q3 2017 Earnings Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. This conference call is being recorded on Thursday, October 26, 2017.

I would now like to turn the conference call over to Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis. Please go ahead.

Fraser Phillips: Thanks very much, Elena. Good morning, everyone. Thank you for joining us for Teck's third quarter 2017 results conference call.

Before I begin, I'd like to draw your attention to the forward-looking information on Slide 2. This presentation contains forward-looking statements regarding our business. However, various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statement. With that, I'd like to turn the call over to Don Lindsay, our President and CEO.

Don Lindsay: Thanks very much, Fraser and good morning everyone. I'll begin on Slide 3 with some highlights from our third quarter results and then new this time, we have Glenn Burchnall, our Director of Energy Marketing and Logistics who will provide an update on Fort Hills and in particular on our sales logistic strategy for blended bitumen. He will be followed by Ron Millos, our CFO, who will provide additional color on our financial results and then we will conclude as always with a Q&A session, where Ron, Glenn and I and several additional members of our senior management team would be happy to answer any questions. We are very pleased with our performance in the third quarter. We achieved strong operating results, which together favorable commodity prices translated into strong financial performance.

And while there were a number of one items, which totaled about $0.17 a share, when you aggregate the Repo to the dollar with that $0.17, it certainly looks very strong to us. We reported our second highest quarterly sales with steelmaking coal, reflecting strong customer demand with record steel production in China in the third quarter and importantly strong demand in the rest of the world. We also reported record zinc production at Antamina for the second consecutive quarter. So these strong operating results and improving prices, our gross profit before depreciation and amortization was almost $700 million higher in Q3 than in the same period last year and we continue to generate significant free cash flow. At the same time we're preparing for first oil at Fort Hills, construction is now more than 96% complete and froth production was initiated in September, which will allow for commissioning to be accelerated.

When Fort Hills is running at full capacity, our cash flows related to the project will shift from significant capital going out the door to cash inflows. Also in the quarter we received approval to make a normal course issuer bid to purchase up to 20 million of our class B shares over the next 12 months, and we are also very pleased to be named to the 2017 Dow Jones Sustainability World Index for the eighth consecutive year, which indicates that our sustainability practices are in the top 10% of the 2,500 largest companies in the world. Turning to our third quarter financial results on Slide 4, our strong operative performance has enabled us to capitalize on favorable commodity prices in the quarter. Revenue was up, compared with the same quarter last year, primarily due to significantly higher steelmaking coal prices and helped higher zinc and copper prices as well. The bottom-line adjusted profit attributable to shareholders was 620 million and adjusted EBIDTA was 1.4 billion in the quarter.

Importantly, over the past 12 months to September 30, we generated a record 6.1 billion in adjusted EBIDTA. And note that was based on an average realized price of US $185 per ton of steelmaking coal and a copper price at 2.62 per pound and a zinc price of $1.23. Now to put that in context, our previous record of $5.9 billion which was said in 2011 when our average realized price for steelmaking coal was $257 versus that $185 in the last 12 months, so a $72 per ton difference, and the average copper price in back in 2011 was $4 per pound, that's a $1.38 per pound higher than what we just averaged in the past 12 months of $2.62, so quite a difference. Now it is true that the zinc price back then was $0.99 per pound, $0. 24 per pound lower and of course the Canadian dollar was stronger, so we have had a benefit of weaker dollar this past 12 months, but still, it is a very significant achievement which is a result of our ongoing focus on managing costs and optimizing production per our core assets, so once again higher EBIDTA with a coal price that was $72 a ton lower, and the copper price, it was a $1.38 per pound lower.

I also like to point out that the realized steelmaking coal price for the past 10 years has averaged $164 per ton and on inflation adjusted basis, that's US $183 per ton, which is very close to the 185 average that we just received in the 12 months ended September 30, so that 185 is not really that higher price relative to the average of the last 10 years. Turning to Slide 5, as I mentioned earlier, our adjusted profit attributed to shareholders was 621 million or a $1.08 per share. While we are pleased with our strong financial performance, our earnings and EBITDA were below consensus expectations for the quarter. There were a number of items and events that may have contributed to the shortfall including high share price with share-based compensation expense because our share price increased during the quarter. Environmental and care and maintenance cost due to regulatory changes, a higher effective tax rate, copper sales below production due to timing of shipments, so that they will show up in the next quarter, and lower gross profit Trail Operations due to lower silver production following some operative disruptions at some of our concentrate suppliers, and of course, lower zinc treatment charges.

I now run through highlights by business units starting with our base metal businesses and in particular copper on Slide 6. Production at Highland Valley is improving gradually through the year as we expected. We continue to expect full year copper production to a total for the division a 275,000 to 290,000 tons. Cash costs net of by-product margins were down from Q3 last year driven by strong cash margins per by-products and helped by strong zinc prices and zinc sales in Antamina and strong Moly sales at Highland Valley. Looking forward, we now expect full-year cash costs net of by-product margins to be in the range of US $1.30 to $1.40 per pound which is down from the previous guidance of US $1.40 to US $1.50 per pound.

At Highland Valley, a new five-year collective agreement was ratified by union employees resulting in $13 million one-time labor settlement charge. In addition, the board sanctioned our D3 project to install an additional boil mill at Highland Valley which is expected to increase mill throughput by 5% and copper recoveries by over 2%, and that is expected to be completed by mid-2019 at a cost of $72 million. Overall, gross profit before depreciation and amortization was up 60% from Q3 of 2016 to $281 million. Our zinc business units results are summarized on Slide 7, as a reminder Antamina's incremental financial results are reported in our copper business unit. At Red Dog, zinc sales were higher than our guidance for the quarter and are indicative of the tightness of zinc-concentrated market.

The concentrated shipping season was extended by two weeks and is expected to be completed in the first week of November, having shipped the maximum possible of around a million tons of zinc concentrate and 210,000 tons of lead concentrate. We now expect Red Dog sales that contain zinc to be around a 180,000 tons in Q4 reflecting stronger demand from customers, and of course, our normal seasonal pattern. In addition, the board sanctioned our VIP2 project to upgrade the mill at Red Dog which is expected to increase average mill throughput by around 15% over the remaining mine life to 2031. It is expected to be complete by Q4 [Technical Difficulty] Our one-time labor settlement charge, and we now have long-term labor agreements in place at all of our North-American operations, and again like we saw at Highland Valley in the settlement with the collective agreement there, Trail had this one-time settlement charge, and those are charges that analysts would not have been able to add in their models because they weren't disclosed until our release last night. For the full-year, we now expect our total zinc and concentrate production including coal product production to be 645,000 to 665,000 tons, and overall gross profit before depreciation and amortization was up 8% from Q3in 2016.

Turning to steelmaking coal on slide 8, as I mentioned earlier, we reported our second highest quarterly sales for steelmaking coal ever at 7.45 million tons reflecting strong customer demand. We expect Q4 sales to be approximately 6.5 million tons. Our average realized price was US$ 159 per ton in line with the historical average of 94% of the quarterly contract price and in line with the updated guidance we gave earlier. The relationship between our realized price and the quarterly contract price depends, of course, on our product mix and the timing of sales, and in that regard, in our fourth quarter we expect a one-time shift in our product mix to a higher proportion of non-premium steelmaking coal products. This is one time only.

We currently have low coal inventory levels due to restricted material movement to have here and due to mining in newly permitted areas. This change in product mix is expected to reduce our average realized price to approximately 85% of the quarterly contract price in Q4. We expect to recover our raw coal inventories and move back towards a more traditional product mix as we enter 2018. It is worth knowing that Q4 2017 is shaping up to be another very strong period per pricing. I note that the current rolling average for Q4 quarterly index is just under to US$ 194 per ton, and the spot price is just under a US$ 179 per ton with only five weeks left in the quarterly pricing period, so if we do the math on that, it looks like we are going to have a very strong quarterly benchmark price.

We have achieved record material movement in Q3 at 79 million bank cubic meters. As a result, we are well positioned to recover the material movement shortfall from the first half of the year and we have restored that operational flexibility. For the full year, we now expect production at the low end of our guidance range of 27 to 27.5 million tons and site costs near to high end of our guidance range of $49 to $53 per ton. Overall, gross profit before depreciation and amortization was up more than 500 million over the last year's third quarter. We have provided enough data on the Elk Valley Water Quality Plan on Slide 9 and at our West Line Creek Water Treatment Facility, we have successfully tested an additional treatment step to address the issue We are now proceeding with plant modifications with construction to be completed in Q3 2018 at a cost of around CAD$ 15 million.

The construction of our second plant at Fording River was pushed out to incorporate these design changes that will commence in 2018. Our spending plans at water treatment were delayed as a result, and you may call that in 2014, our capital cost estimate for water quality management was $600 million over a 5-year period from 2014-2018. We now expect that during the same period, our spending will be only around $300 million, so a $300 million less than the original $600 million that we had guided while we were working through technological challenges. For the next five-year period, starting in 2018, so from 2018 to 2022, we expect to spend between $850 and $900 million. Beyond that, we expect long-term water treatment costs to be around $6 per ton versus $4 per ton we have guided to previously, and now we will include capital and operating costs and assuming annual production of $27.5 million tons.

Just to emphasize that it includes both capital and operating costs. Of course, actual costs may vary depending on the results of ongoing environmental monitoring, and we continue to research and develop alternatives that have potential to reduce significantly our costs, some of which are very encouraging. And so with that I will turn over to Glenn with an update on Fort Hills and our sales and logistics strategy per blended bitumen.

Glenn Burchnall: Thanks, Don. Slide 10 provides an update on the Fort Hills project.

As Don mentioned earlier, we are preparing for first oil, which is now expected prior to yearend. Construction is now more than 96% complete, and 98% of Fort Hills operations staff have been hired. Five of the six major project areas have been turned over to operations and the focus remains on the construction of the secondary extraction area, which is now 95% complete. Importantly, first froth production commenced in September. The significance of this is that it allows for accelerated commissioning of the project.

Froth is an intermediate product and its production utilizes all the major components of the project prior to secondary extraction. The froth produced is currently being trucked to Suncor's base plant for further processing until construction of the secondary extraction area is completed. By the time secondary extraction construction is complete, early froth production should have resulted in the front-end of the plant being fully commissioned allowing the focus to shift to the startup of secondary extraction. We have developed a comprehensive sales and logistics strategy for blended bitumen product. The extent of our commercial activities in Fort Hills with that full production capacity are summarized on Slide 11.

Our share of bitumen production is expected to average 36,000, barrels per day and we will purchase around 11,000 per day of diluent for blending. We do not anticipate any issues with availability of diluent in the market in Western Canada. Total bitumen blend sales are expected to average 47,000 barrels per day. Fort Hills will produce a high-quality, lower carbon intensity products under the name Fort Hills Reduced Carbon Dilbit Blend as outlined on slide 12. Fort Hills utilizes paraffinic froth treatment or PFT, which is a solvent-based extraction process to remove fines and asaphaltines.

As a result, it will be a month lifecycle carbon intensity of any Canadian oil sands production with a lower carbon intensity than about half of the oil currently refined in the US. Overall, Fort Hills Reduced Carbon Dilbit Blend is a superior refining feedstock. It also has lower diluent requirements for pipelines. The Albian mining project operated by Canadian Natural Resources and the Kearl mining project operated by Imperial Oil also use PFT, so they are the best benchmarks for the product that will be produced at Fort Hills. The regional distribution network in Alberta is shown on Slide 13.

All components are now ready to receive products from Fort Hills. From the mine gate, bitumen will be transported via the Northern Courier hot bitumen pipeline to the East Tank Farm. They will be blended with condensate that arrives on the Norlite pipeline. Diluted bitumen will be transported on the Wood Buffalo pipeline to Hardisty Terminal where Teck has dedicated storage available for approximately 425,000 barrels. Diluent originates at the Edminton Terminal and Teck has dedicated storage available for 100,000 barrels of diluents at Fort Saskatchewan in Alberta.

Our sales and logistics strategy for blended bitumen is summarized on slide 14. Overall, it is based on diverse market as such and risk mitigation; 447,000 barrels of blended bitumen per day, we have contracted for 10,000 barrels per day of capacity on the existing Keystone pipeline to the US Gulf Coast, where there is significant refining capacity for heavy oil available. We have also contracted for 12,000 barrels per day of capacity on the proposed TransMountain pipeline to the West Coast of Canada which would provide access to the Pacific Rim. We plan to sell the remaining 25,000 barrels per day at Hardisty where customers may have their own contracted pipeline capacity and common carrier pipelines are available. We have long-term contracts in place for up to 20,000 barrels per day to be sold at Hardisty.

Remaining 27,000 barrels per day are expected to be sold on a monthly basis either to the US Gulf Coast to the Pacific Rim or at Hardisty. If the proposed TransMountain pipeline is not built or is delayed, we have additional options available including increasing our capacity on Keystone and selling additional product at Hardisty. In addition rail will be available as required. We are looking forward to fulfill at Fort Hills and we have a comprehensive plan in place for sales and logistics of our shared product. And with that I will turn it over to Ron, for additional color on the quarter from the financial perspective.

Ronald Millos: Thank you, Glenn. I am moving on to slide 15 which looks at 2 components of our other operating income and expense, so Donald mentioned earlier the third quarter pricing adjustments are summarized on the left side. Overall, we had a 93 million in positive adjustments this quarter compared with 25 million in positive adjustments in Q3 of 2016. There was a US$ 0.27 increase in the copper price and US$ 0.20 increase in the zinc price compared with US$ 0.1 and US$ 0.13 increases respectively in the same period last year. Now, these adjustments are included in the income statement under other operating income expense.

The chart on the left represents a simplified relationship between the change in the copper and zinc prices and the reported settlement pricing adjustments, and it continues to provide a good estimate of each quarter. Our third quarter share-based compensation expense is summarized on the right side. Overall, we had an expense of $52 million in Q3 compared with a $5 million positive contribution in Q2 of 2017. The chart on the right represents a simplified relationship between the change in our stock price and the reported share-based compensation expense and Q3 was a bit of an out layer on simplified models due to the particularly strong performance of our shares. Moving on to Slide 16 that summarizes the changes in cash, during Q3 our cash flow from operations was 901 million in the quarter.

We spent 390 million on capital projects including Fort Hills, capitalized stripping costs of 175 million, and we paid a 137 million in interest and finance charges and 78 million on financial investments in other assets. We repaid a total of 28 million in debt in Canadian dollar terms; in addition, we paid 29 million in dividends representing our new $0.05 per share quarterly based dividend. After these and other minor items, we ended the quarter with cash and short-term investments of around 889 million and our current cash balance is about CAD$ 1 billion right now. Turning to Slide 17, our financial position remains strong. We currently have approximately 4.9 billion in liquidity and that includes 1 billion in cash and our undrawn US$ 3 billion committed credit facility and meaningful progress will be made in reducing our debt and our strong free cash flow and noted by rating agencies and upgrades most recently by S&P a week or two back, who now rate us BB+ with a stable outflow.

Our net debt to EBITDA ratio for the 12-month period to September 30 is 0.9 times and that will likely move down further with closing of the [indiscernible] transaction which we expect around the end of the first quarter next year. And with that I will turn it back to Don for some closing comments.

Don Lindsay: Thanks, Ron. In summary on Slide 18, operational performance, strong markets for our key products and the approaching completion of Fort Hills have resulted in a successful quarter for the company and it positions well for ongoing profitability. Looking forward, we are generating strong free cash flow at current spot prices.

We are preparing for First Oil at Fort Hills by year end with comprehensive sales and logistics plan in place for our share production and our financial position remains strong for the future. With that, we would be happy to answer any questions. Please note that some of our management team members are calling in from different locations as you would expect, so there may be a brief pause after you ask your question as we sort out where to direct it. Okay, over to you operator.

Operator: Thank you.

We will now take questions from the telephone lines. [Operator Instructions] Thank you for your patience. The first question is from Chris Terry with Deutsche Bank. Please go ahead.

Chris Terry: Hi, Don and team.

My question is really around the coal division. I am just trying to get more comfort I guess as we are heading 2018 around but the realized price and also the geotechnical issues and the transition out of Coal Mountain and how you think about that. I guess on the realized price, should we expect that a jump straight away back into the historical normal range well above 90% for 1Q next quarter. Is it a ramp up as the product mix changes and how do you think about 2018 coal production, may be on a quarterly basis in the first couple of quarters in the next year? Is it still going to be hampered little bit by some of the moves and the geotechnical issues. Thanks.

Don Lindsay: Okay. Good question. Thank you, Terry, and I am going to start with Réal Foley who is on the line on the first part of your question and back to Robin Sheremeta on the second. Real, over to you.

Réal Foley: Thanks, Don.

So Chris, when we look at our products usually in our annual information form, we have sent that for 2015 and 2016, lies in 25% of sales where non-premium hard coking coal, so by Q4 2017 that has been out layer and the non-premium hard coking coal will be around 30% of our sales or so, which is what is leading price our realized price relative to the premium steelmaking coal assessment about in 5% as we said in the release. Our expectation is that we will recover our coal inventories as indicated through Q4 and those inventories have already started to improve in Q3, and we will transition to our traditional product mix as we get into 2018.

Chris Terry: Okay. So, we should expect to return to high realized pricing and no continued impact, I guess, from some of the current issues you have had from the actual operations side.

Réal Foley: Yeah, that's correct.

Chris Terry: Okay.

Don Lindsay: Over to Robin, on the part two.

Robin Sheremeta: I can, may be, add a little bit more, I guess, to what's going into 2018. I just going through all the mine plans actually over the last couple of weeks are being prepared by just for next year. As Don mentioned, we set a pretty strong performance level through Q3 on total material and expect that to continue through the rest of the year and into next year.

So as relatively we are building our inventories at site again and we will be back up to levels that are quite typical through into 2018. May be a little bit on geotechnical issues there; there are two localized issues at two of our smaller operations, and they have impacted in short-term anyways in access to coal yard, out of one of the operations, we are all starting to get some color on that. The other one is still charged, but overall with the strong performance across the other operations, we are able to make up for that short-fall on raw so coal at least by year end. We are still working through, obviously the ramp-up as we recovered from the first half, so pretty confident in 2018 for sure.

Chris Terry: Okay.

Thanks guys. Just one other quick question maybe for Don, in terms of QB2, and are you thinking about making a commitment, I guess, around the middle of next year. Can you provide more timing on when you might look at a strategic partner or the minority stakes? Is it definitely pre-did or do you make a decision to commit to the project and then look at the second part and I'm just trying to get a bit more color on how you should think about your timing of that.

Don Lindsay: We are really focused on getting the permit, and as you know, there is an election in Chile coming and so yeah, there is a bit of uncertainty there, and we think it is going to come early next year but until we really have the permit a lot of those kind of decisions that you are referencing wouldn't really be pursued at the board level until we know what we have got and so that's kind of a question that actually I don't think we could answer for several months at the moment, and when we do take a look at it, it would be in the context of what our balance sheet looks like then, and of course, we would expect that we neither would have closed sometime hopefully by the end of Q1 which is 1.2 billion of cash, and at these commodity prices, we are generating pretty good cash, and we would look at what our balance sheet looks like at that stage as well, so between now and when we hope to sanction the project which would be around April of 2018, our financial position could be really quite strong and so that would be a factor that the board would look at and determine whether partner was needed or not, so the short answer is "I can't quite answer your question and yeah, but that is at least how we think about it.

Chris Terry: Okay, great.

Thanks, Don.

Operator: Thank you. The next question is from Orest Wowkodaw with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi, just going back to the coal again.

Obviously, I was surprised by the guidance for the Q4, specifically around the mix and I just want to be absolutely clear in terms of "are you expecting the realizations to go back to the normal level, starting Q1 and what gives you confidence as you transition out of Coal Mountain that you can maintain the mix at the same 27.5 million tonnes in the next couple of years.

Don Lindsay: Okay. Same two people to answer those questions, but this time will start with Robin on the production levels post Coal Mountain.

Robin Sheremeta: Yeah, so post Coal Mountain, we've got a number of things are being done at the other four operations within the valley they're going to make up that tonnage. So across all four operations there is additional production capacity with small amounts of gap in some cases, and some of the work we have been doing over the last few quarters, anyway, to get stripping up is in preparation for that, so that we have got coal available to those other operations.

So that plan has been developed over the last couple of years, should be able to transition from Coal Mountain into sustained production post closure of that operation, and the product mix then coming out of that is going to be more around the product that you would expect from those other four operations which are typically the premium hard coking coal, so that's a little bit on long-term on Coal Mountain.

Don Lindsay: That last point was really important. Okay, with that, over to Réal on the first part of the question.

Réal Foley: Thanks, Don. As a result of other operations picking up production as Robin just described, we will see our price realization is returning to historical levels starting in 2018

Orest Wowkodaw: Of your mines, which two of the ones are having geotech issues, and in terms of the quality mix, where does the lower quality coal mostly come from, which mine?

Réal Foley: Well, Coal Mountain is A - primarily semi-soft with small amounts of terminals, so that's on balance of products, that's the bulk of the lower quality products.

Every operation has a range of products, but in the other form of valley they are more towards the high coking coal.

Orest Wowkodaw: So actually Coal Mountain is closing or actually reduces your amount of lower quality coal then?

Réal Foley: It does. Yeah. That is replaced by higher quality coking coal from the other four operations that represents the balance of the reserve.

Orest Wowkodaw: That's great.

Thank you very much.

Operator: Thank you. The next question is from Lucas Pipes with FBR Capital Markets. Please go ahead.

Lucas Pipes: Yes.

Thank you, very much and good morning, everybody. So, I heard you stay on the coal side, but I wanted to maybe ask a bigger picture question on the cost front so, obviously cost were in the 50s year-over-year that compares to I think 43 and you mentioned a couple guidance that contributed to the higher cost on a year-over-year basis and I just wondered. Are you - some of those going to reverse again if you think about it play turn over [ph] for example or a stripping ratios as you look into 2018 where could cost go? Thank you.

Don Lindsay: Yeah, where the things that I think I am sure we represented the increasing cost to the last half of the year has been the use of contract mining to catch up. So, in order to get ourselves back on track in terms of a balanced strip ratio going into 2018, we have to make up for a short fall to the first half.

And so that was done by additional capacity, which obviously is going to come with a higher unit cost, but its temporary. So, once we have brought ourselves to a level of strip ratio that can support the plant in 2018, those cost come out of the plant. So, contract mining will end to the extent that we are using it now. And we will be able to sustain the cost forward with the same structure we did in the past.

Lucas Pipes: So, so that must be A - could cost be lower year-over-year in '18 versus '17?

Don Lindsay: That's pretty much of bound because here is a couple of things going on as well if you remember strip ratio has come up to around a ten to one so slowly higher than you would have seen earlier in 2016.

So that's part of the stripping being replaced of the other operations from coal mounts so coal mounts quite well [ph] strip ratio operation the other ones are in around ten to one. So that also contributes to the cost structure forward, but that's the one which we are forecasting now for some time.

Lucas Pipes: Okay. Thank you.

Don Lindsay: Just one, on cost - on production the detailed guidance for 2018 will come out when we issue our fourth quarter's results to evaluate as well so stay tuned for that information.

Lucas Pipes: Great, and then on the water treatment side, that the long-term cost estimate in between capital and operating cost increased there from $4 to $6. What drove that increase and which you may be expand a little on the things you are working on, could maybe lower the cost maybe back down to $4 level? Thank you.

Don Lindsay: Okay, there is fair bit going on with their question. so there is two main things that have changed I guess in terms of the forward views. So one was the work that was done after 2014 where we upgraded many deposits within West Line Creek plant and the second piece was the identification of an issue was winning [ph] compounds and the development of a strategy to result that which is the tail piece of oxidation process.

So that's a bought-on process on to a current design of the West Line Creek plant that will, so that problem. So there are two shorter cycles I guess of enhancements made to this treatment strategy that led to our higher cost. The other part of that I guess possible is that we had to delay the start of the second water treatment plant in Fording River, so we resulted some of those issues. We are still on pace for the other treatment plants in the schedule forward to delay Fording River that's now compressed into the next five-year period. So that's why you see in jump in capital for the next five years.

And in long term that increase from four to six really does reflect the additional cost that around the design of the plants forward. Now there is certainly something that we are excited about. We are currently in a process of a pilot unsaturated fills which has a potential to be a really strong strategy as far as treatment of water, so if that goes well through next well that will be an exciting development I guess in terms of that strategy so there is something like that that we are working on as well. But right now that the plant forward is water treatment plants that's - it's a proven technology we can make work and that's the solution that we know we are so for.

Lucas Pipes: That's helpful.

Sorry so should we layer in the 850 to 900 million in capital cost kind of run a gradual basis into the model through that period '20, '22 and then in addition to that what should we be thinking of in terms of coal sustaining capital?

Don Lindsay: In terms of schedule you are talking about how the scheduling of that capital will occur, I think that sort of refreshed we are planning roughly for 2018 around $ 100 million so the rest of that schedule I think will up to be taking lock down the spending across that five years which we did on the different.

Réal Foley: Yeah, Lucas that is –it's right put the right evidences evenly for the time being in end model and that maybe somewhat we can say about that in February with the guidance for next year.

Lucas Pipes: Perfect. Okay thank you very much everybody.

Don Lindsay: Maybe just for a clarification the saturated fill project that revenues referring to would replace water treatment plants to a certain extent.

At the moment we are giving you that number because we have to go with known technology that will work, and a number of plants will have to be built and that's where we cost but our hope of course is the new technology will prove out and some of those plants won't be necessary and that's hundreds of millions of dollars, but we won't be able to make those kind of decisions for some time a couple of years and so in term of trying to put in your model that's going to happen. I think price is right you have got to put something in so try that things are going to likely change in the next year or two.

Lucas Pipes: Yeah, that's great. I am sure you are going to be learning up - moving up the learning curve really quickly so I appreciate your comment. Thank you.

Operator: Thank you. The next question is from Greg Barnes with TD Bank. Please go ahead.

Greg Barnes: Yeah, thank you. A couple of clarifications.

If I am putting in a couple of hundred million dollars a year sustaining capital into my model for coal currently, should I be increasing that by another couple of hundred million between 2018 and 2022, so $400 million year end sustaining.

Don Lindsay: Just hold that talk for a minute because some of that was already in, but we will come back to you what is the second clarification?

Greg Barnes: Then if come out Coal Mountain was the bulk of your lower quality coal the soft coal, semi soft, should not your price realization actually get better going forward as you get a higher percentage of higher quality coal?

Don Lindsay: And certainly, what I hope [indiscernible] so conservative. Real, would you like to comment on that?

Réal Foley: Yeah, so Greg the other mines will also produce some different grade material, so it's a little bit early days, I mean at this point we're comfortable saying that we will return to typical realizations but as some of our mines are going to new mining areas we also need to clarify that before we can say whether or not we could actually do better.

Greg Barnes: Okay, fair enough.

Don Lindsay: And you know just for working on the answer for your first question I want to make comment on the arithmetic technically.

Recall that we sell about 40% of our coal at the bench mark which is calculated on a three months going average one-month lag and the 60% is spot. And so if you are looking at the average realization for a quarter it highly depends on what the spot price is rising during the quarter or falling during the quarter. So for example we have been seeing the price falling for the last while those seems to stabilize lately, but that would mean that relative to a bench mark set earlier that you would have your 60% of volume showing at lower prices and that would open up this spread the realization spread between bench mark and spot. Conversely when the spot price is rising you are selling more at prices that could even exceed the bench mark can have on several occasions and you end up with quite a tight realization. And as an example if you just go back four quarters I think the bench mark was 93 or 92.50 and our realize was 92 almost exactly the same.

We were very, very close and not the normal 92 or 94% that we see. So I see there is a lot of focus on the 85 we give that as an estimate to try and guide to be helpful and to highlight that we will have a different mixes quarter. But, that 85 could change dramatically if the spar price changes or stabilizes, so I wouldn't be too exact about it.

Greg Barnes: Okay now looking to Ronald or Fraser if you can give more just on the

Ronald Millos: Yeah on the sustaining capital Greg, we haven't given out the guidance for 2018 yet, but we will do that in mid-February when we release our results there. But and effectively whatever your deal is at this point in time for the CapEx or seeing CapEx at that time, nearly dead, and whatever your view is on when we would send that hit list on the water treatment plants.

But, there would be more clarity in February when we give that out. So, we are in the process of going through the plans right now, so we have to finalize the 2018 capital planning yet.

Greg Barnes: Okay just a bit difficult for us to access this property on our NAV, we've got a $850 million that we are not very sure, were I think that mental over that's what increases in the number we have in the model.

Ronald Millos: It's not included in it shouldn't be included in your current model, unless you have something in for that original 600. So you have to sort that out.

Greg Barnes: Okay thank you.

Don Lindsay: It's important Greg that you know we signal that this is what it could be. I think anything that people put in the mouth now is going to change very significantly in the next year too on this question. So, once again from the NAV that you calculated is only as good as the assumptions and the assumptions are likely to change.

Greg Barnes: Okay, fair enough.

Operator: Thank you, the next question is from Alex Terentiew with BMO Capital Markets, please go ahead.

Alex Terentiew: Hi, good morning guys, it's just a one follow-up question on the call cost, these $6 a ton long term cost post 2022, you're talking about, are that cost you are currently incurring are part of that? I mean you already have your Westline Creek, and you are doing other activities, so are those $6 incremental to cost today or they are only $2 that you are spending today that are part of that?

Don Lindsay: Yeah, good question, Ronald?

Ronald Millos: Yeah, they are inclusive of all outstanding today, so the $6 long term or whatever remaining capital is involved as well as the operating of all of the class that we put into play over the next five years basically. So, the cost being incurred now, are included in that $6 long term.

Alex Terentiew: And it could be wrong here, but I think recalled talking to somebody about this years ago, but I think that cost now is somewhere in the 150 range, is that about right or

Ronald Millos: I think it's around $1. I think that's a pretty rough number.

Alex Terentiew: Sure, no I understand. And then just one follow-up question, Highland Valley copper, I know the grades have been, they've got me much through a low-grade phase in the past nine twelve months or so. And so recoveries have been low, but when do you expect them to kind of get back into the mid operating range, you know you are doing a million-handsome project, that should have a couple of percent in 2019 or so, but the mid 80s in next year reasonable and then back up to the upper 80s by later 2019?

Ronald Millos: Yeah, thanks for the question Alex, as we drop from the upper levels in both the Lauren X pit and for the Valley pit, basically doing the West Wall pushback, while we were in the upper phases in those two pits, the grades are lower, but the all characteristics are also not conducive to high recoveries. So, it will take a few years to get back to historical recoveries, it's one of the reasons we really want to do these three new projects, the grade will help gradually recovered. Recoveries also will take some time to get back to historical numbers.

Don Lindsay: We do anticipated an increase next year, but not till the mid 80s and we'll come out as Ron said with guidance at the end of the full quarter.

Alex Terentiew: Okay, that's good thank you.

Operator: Thank you, the next question is from Carl Blendon with Goldman Sachs, please go ahead.

Carl Blendon: Hi good morning guys, thanks for taking the time in the question, just thinking about some of the alternatives that you have now for capital allocations. And you do have lot of cash on hand, and more coming in, when you are thinking about what the most attractive things might be relative to QB2, what comes to mind, you know, you had put in a bid for a 50% of copper as if back in 2015.

So, just trying to think if M&As is in a game plan at all.

Don Lindsay: Not that we can see, I guess the first decision that the board will make relate to capital allocation will be the supplemental, which we will determine end of the board meeting next month and what we choose to do there, could have an effect on other capital allocations including QB2. So, I think we really have to get through that, and then see what the picture looks like. As I said earlier, you know, at these prices zinc is looking very strong. Co-market is stabilizing at a pretty nice level, we will generate fair bit of cash, and presume some position to make some good decisions.

So, the first one up is the supplemental mess next month.

Carl Blendon: Gotcha, and then on that top package you think about capital allocation, your discussions with the accreditation fees, I know, you can work about investment great being and objective that you can consider at that time. What do you think is the gating factor right now? Diversifying portfolio, strong cash and ratio leverage, what it's going to take to have the move, any idea?

Don Lindsay: Good question, obviously we work very hard to get back to investment grade which is very important to us, if you calculate our ratio's obviously, they are pretty strong, and they are going to get stronger when $1.2 billion of cash comes in and hoping again a t Q1. So, when you look at the numbers, I think we got a pretty strong case, having said that, what the real agencies will look for is the completion of four hills and progress on the ramp up, next year, which of course we are quite optimistic about given how well the bitumen froths tests have gone in the early going here. But they don't want to see that completed, they also want to see what our decisions are on supplemental and they want to see what the final kind of capital estimates on QB2 and when that decisions are made.

So, those are three key decisions for them, but if you look at their numbers we got a pretty strong case.

Carl Blendon: Thanks, probably it will take a little while for them to get all the charity they need but, still on the cards?

Don Lindsay: Yeah, you know, time flies pretty quickly and Fort Hills 96%, first oil in December. This is October, what 26, let's get pretty close.

Carl Blendon: Okay, thanks a lot for the time, appreciate it.

Operator: Thank you, the next question is from [indiscernible], please go ahead.

Unidentified Analyst: Hey guys, thanks for taking my questions. I guess first with respective Antamina, operate job on the referencing production by the way, with respect to that, what do you expect in terms of zinc production next year including what kind of greens and recoveries you expect to see and how do you see this influencing the buy product credits for your copper costs and follow-up as well?

Dale Andres: Yeah, so the zinc production in Antamina is variable, quite variable quarter-by-quarter, it is managed as a byproduct, so copper is the primary contributor in revenue driver. That being said, we do anticipate, strong zinc production, I think at the end of last year we gave three-year guidance, from 2018 up to 2020 and I think average was about 80, 000 tonnes of contained zinc, therefore our share, and that year you know, we'll update our guidance at the end of the year, but I don't anticipate any major change. Zinc production will be strong next year.

Unidentified Analyst: Okay helpful, helpful.

And then separately turning to Fort Hills, what the relative to the WTI price what do you see in terms of the aggregate discount and also what you're expecting for operating margins when it starts producing?

Dale Andres: Okay, we've got three people to choose from for that question, but I might just make a comment first. When you say aggregate discounts, there is a number of differences relying out of that you go through in that calculation and those are moving parts. Once we get into operation and start seeing how it, melts down stabilizes, then your point is favor it at time, taking people through the morals so they can calculate what kind of margins we are going to get. At this stage the focus is really on just getting it completed and up and running. Whatever operating issues we'll make fine to work those out and get into stage 3 production at designed capacity.

And that's the Sand Course focus and the partnerships focus, so we really don't have operating cost to share at this stage going forward. And that's not our focus. What we usually do is when people ask us to say questions, we point to Sand Course results at the base operations and note that the announced yesterday and they are pretty strong, pretty impressive and we think the Fort Hills would be better. So that's not going to get to that point until, you know 2019 at the earliest 2018 is going to be a ramp up here. I should think I may have answered the questions.

So, all I leave is a tag and a subsequent question.

Unidentified Analyst: Yeah got it, alright thank you guys, I appreciate it.

Operator: Thank you, the next question is from Brian MacArthur with Raymond James, please go ahead.

Brian MacArthur: Hi good morning. Thought of going to the backwater valley, but I just don't understand the numbers here, you talked historically that 600 million from 2014 to 2018 and now you're saying it's 300 million, of which you mentioned a 120 as spent, and some of them from 2017 included in your sustaining tap level, if I'm reading this correctly.

So, if I go and assume, just never minding exact numbers conceptually if I have 300 to spend, I spent 120, I know but I had a 180 to go between 17 and 18, I take some out of it and your sustaining this year, I contend up with the leftover number which I shouldn't add to the 850 to 900 going forward, is that the way to work the capital going forward?

Dale Andres: Just before Ronald says, I wanted to give some more context. If you go back in time to when we first guided to the $600 million, all of that was included in our sustaining capital budgets at that time. The reason why we haven't been acquainted precise to the question that was asked earlier is we haven't done our budgets yet, we haven't finished them for next year. And decided what component is in, sustaining capital or not and that why Ron said he'll give you the final guidance on that later on. So, you're a little bit ahead of us and trying to get to this position in your morals, but that 600 was all sustaining capital at that stage.

Okay Ronald back to you.

Ronald Millos: Yeah Bob, I'm not going to follow you on your calculation but, essentially, we've planned to spend 600, we are going to spend roughly 300, to the end of 2018. So, 300 million that we had intended to spend in that five-year period did not get spent and will be advanced into the next five-year period. That's probably the way to look at it. We've got another indicia mentioned, we expect around $90 million to be spent in 2018 now.

So, that will be part of the 2014 to 2018 calculation you are trying to do.

Brian MacArthur: So, that one number that, I think you mentioned, I'm not sure, I am quite honest a 120 million to date, I think it's more than that. I think the balance will come out to the 300 million across that five years, is what should calculate over to, ending in 2018.

Ronald Millos: You know that makes sense, the 120 I just got it, what you gave us for what he spent on West line Creek. So, I assume there's something else a s well too.

Okay and then on top of that.

Dale Andres: That 120 was the number the original number when we perceptive it has been things done to the plant since 1940.

Ronald Millos: And then on top of that should it run like couple of dollar tone for not capital cost but operating cost and that will continue through from 2017 through to 2022. Till we get the long term $6 a tonne which includes both operating and capital. Is that the right way you think about it?

Don Lindsay: Yeah again it's like there was a creek operating cost, that's what it's up.

It's a little hard to depend on something because we've been going through the work of bringing up flat to a fully operational stage with the attachments. And we stopped it on the evac oxidation process. There's still work being done on the Westline Creek, they will walk down with it operating cost, but that's roughly in the range I think. And then the other plants that are constructed will be in addition to that dollar I guess, looking forward, does that make sense.

Brian MacArthur: Okay, that was very helpful.

And then secondly back to the earlier question about the closure of Coal mountain, I maybe I got this wrong, but I believe it has a lower stress and a lower realized core price. So, and yours comment little may be marking reasons why you do this? Because I moved to Coal mountain replaced at the other mines, you would soon I don't have a class for that. The strips can be higher, so my cast is going up, so why wouldn't I sell higher premium cooking coals and post to just semi-soft. Back to earlier question which will lead to a you know, a higher percentage of the realized price, all else being equal. Are there some other marketing reason you do that?

Ronald Millos: Again I think at the front end of that, you are right I am just going to follow the logics.

The Coal mountain is a large preparation, produces all coal products, as we transfer into the other operations, the costs are higher, cause of higher preparation, but they help higher quality products on balance. But they do still have a portion of semi-soft or lower quality products and I think, in reality speaking to us but in the market, there is value in having some range of products. So, we are still working out what this will look like in balance I think. And maybe, Ron its better you speak to that. But generally on balance we should have a hard proportion of high quality cooking coal being produced out of the 27 million that we produce Post Coal Mountain.

Don Lindsay: Real, over to you and then I'll comment.

Réal Foley: Okay, so yeah as Robin says the reality is that we have a range of products across our operations in the out valley. So, as we are congestioning into those new mining areas, we need to also develop markets for these new products. So, that's the reason as well where we say, that we will be back on our typical realization, here's a chance we might be able to do better but it's a little bit too early to say whether or not that can happen. So, we'd rather be more realistic I guess, and say we know that we can get back to our typical realizations and then let's just see what will be the products that will come out, with looks like and what will be the response in the market for those new products.

Brian MacArthur: And then Connor, I want to make is anything that might be a bit too much for the fixation on the percent realized and if you think about, what we really should be doing is maximizing the profit ability during the quarter. Coal amount is quite a profitable operation, if you wanted to just manage to realize you start coal mountain rate right now, and have higher proportion of premium quality colossal and you minimize your discount to the benchmark. And you have a high percentagisation, these have little profits. So, I think people should keep the whole thing in contact, so we give this disclosure to give you things to work, but in the end, maximizing profitability is important.

Don Lindsay: Elena, we've gotten to the end of our time, maybe if there is still one more question we could take and then we wrap up.

Operator: Certainly thank you, the last question will be from Orest Wowkodaw, a follow-up question with Scotiabank.

Orest Wowkodaw: Hi, thanks for taking my follow-up. I think there's some confusion still there on the water treatment cost, is that correct the easiest way to think about this, is you're originally you put at 600 million of CapEx guidance, now you're saying 850 to 900. But, of the original 600, you only spent 300, so effectively the capital is doubled, were used to be 600 million is now 1.2 billion.

Don Lindsay: What was in the 600 million originally was the four constructional avoid treatment plant that didn't happen.

So, Falling River water treatment plant was included in that 600 million, in the five-year period 32014 to 2018. That was delayed because of the issues we've discussed and so now that capital will fall into the next five-year period. And as well, there are other treatment plants that were to be built within this next five-year period, so, it's not doubling.

Orest Wowkodaw: But you actually spending 300 million, between 14 and 18 and then another 900 million between 18 and 22?

Don Lindsay: Yeah, it's a different scope of work.

Orest Wowkodaw: Okay.

Don Lindsay: You're also comparing two different time periods; we only gave guidance on 14 to 18, to begin with. There's always going to be capital from 18 to 2022, it sounds deliberate, but we've never disclosed the numbers, so two different time periods.

Orest Wowkodaw: Is it your capital beyond 2022 beyond the six bucks a tonne?

Don Lindsay: The capital beyond '22 is included in a $6 a tonne so that's it tails off its other capital almost be done but its comes as small and small percentage, so it comes to stop.

Orest Wowkodaw: Okay.

Don Lindsay: Once the plants are built beyond building capital will be replaced upon some of the normal sustaining type capitals keep those operations running.

Orest Wowkodaw: Okay, but this assumes all the plants are built by '22?

Don Lindsay: Not necessarily, this would address the largest at the fun end [ph] of the plants to be build there are other plants that are in current schedule passed out. That are smaller capacity, but again they are all included in for $6 a tonne post 2022.

Orest Wowkodaw: Okay. Thank you.

Operator: Thank you.

This concludes the question-and-answer session. I would now like to turn the medium back over to Mr. Lindsay.

Don Lindsay: Okay, thanks very much and thank you all for your questions. I want to make four comments related to these things.

First on costs and capital, it is our obligation to give timely disclosure and as much transparency as possible and so putting those numbers out was very important even though as you can tell that have been nailed down yet and we will give you more precise numbers at the February call once we finished the work. Some of your questions are ahead of where we are, but I wouldn't want to have not put some estimates now at this point I think it's important that you have feel for it. But in our mind certainly it looks it been over reaction. Secondly, I am always intrigued by the cost position people are trying to get to on their models and whether is a $4 to $6 and whether it includes the dollar, or you spend so, and I would know that quarter to quarter costs swing by much larger margins of that system on exchange rates and other things and you shouldn't if you are putting in end models you should probably incorporate things that we are going to do to help reduce cost. So, for example we think on our logistic stands that we are going to be make some real progress in the next few years in terms of reducing costs there.

Our advanced management program has been very successful and continues to be successful as the purchasing program that we have. So, when you may have $2 there we are certainly intending to take more than that significantly more than the other costs as we go forward. Second point the coal market is stabilizing. You know the decreases from the peak of about $212 we are significant first, but we haven't seen very significant clients in the last week or two and we do have a synchronized global growth, we have the strongest demand in Europe that we have seen ten years and while there is lots of people focused in China. Don't forget the other markets because they are equally strong, so we feel quite comfortable and that demand is absorbing the increases in exports that we have seen in the U.S.

and the recovery in Australia. So, we feel pretty solid markets elsewhere and frankly China's GDP growth numbers are really solid as well. Then on the one of the items as I said at the beginning of the meeting $0.17 where things that if you were modelling before our results that you might not have been able to get to that's $0.03 a share on the tax rate, $0.02 on the copper sales that are just timing it will come in this quarter regulatory changes on environmental maintenance are $0.05 and $0.07 on share based compensation. If you have back to $0.17, you get a pretty good number for the quarter so also some calling as a mess we certainly think of it as to be and pretty solid quarter. And as you look forward to Q4 with the rolling average where the bench mark would be calculated just under 194 today while sales are likely to be lower than the second highest of all time that we had in Q3, that is still pretty solid quarter and pretty solid price, so we think that Q4's results look pretty good to us right now.

And finally, on the plan I made at the beginning that we had over $6 billion of EBITDA in the last 12 months and an average price of 185 and when you look at the average price on over the last 10 years that's a 183. So, the earnings generation capabilities of this company is quite substantial and I am not sure that the market realizes at this point. So, with that thank you all for your attention. We look forward to talk to you in February.

Operator: Thank you.

The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation.