Good day, ladies and gentlemen. And thank you for standing by. Welcome to Teck Resources' Q3 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. This call is being recorded on Thursday, October 22, 2015. I would now like to turn the conference over to Mr. Greg Waller, Vice President, Investor Relations and Strategic Analysis. Please go ahead, sir.

Thanks, and good morning, Mark. Good morning, everybody. And thanks for joining us for Teck's third quarter 2015 earnings results conference call. Before we begin, I'd like to draw your attention to the forward-looking information on slide 2. This presentation does contain 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 statements. And with that, I'd like to turn the call over to Don Lindsay, our President and CEO.

Thanks, Greg, and good morning, everyone. I'll begin with a brief overview, and then Ron Millos, our CFO, will provide additional color from a financial perspective. And we will then close with a Q&A session, where Ron and myself, and additional members of our senior management team, would be happy to answer any questions. The commodity cycle continues to provide a very challenging environment, but we are responding with lower cost, reduced capital spending, I would say excellent operating execution, and further moves to strengthen our balance sheet. Our ongoing focus on cost continues to achieve cost reductions across all of our business units, and of course, it is helped by lower oil prices. Our revenues were helped by the strong U.S. dollar as well. Our close attention to cost has reflected in steelmaking coal where we had temporary production curtailments in the quarter and our costs were down and gross profit was up 5% versus the equivalent quarter last year. We also recently completed a silver stream agreement linked to Antamina and a gold stream agreement linked to Andacollo which generated a total of around CAD 1 billion in cash, and these deals are good examples of assets on our books with unrecognized value, and we have potential to do more on that front if need be. Overall, we are in a strong financial position to weather these market conditions. As of yesterday, our cash balance was approximately CAD 1.8 billion, including the receipt of the proceeds from the Antamina silver stream after quarter-end. It is important to note that we currently have cash in excess of the approximately CAD 1.5 billion of CapEx remaining on our share of the Fort Hills project. Also reflecting changing market expectations for commodity prices, we have taken impairment charges of CAD 2.9…

Thanks, Don. I've summarized our changes in cash for the quarter on slide 10. Our cash flow from operations and working capital is $560 million. We spent $349 million on capital projects including $218 million on Fort Hills, and capitalized stripping costs were $146 million in the quarter. We received proceeds of $327 million from sale of investments and other assets including proceeds from the Andacollo gold stream that Don talked about earlier. The Antamina transaction closed in October. We also paid CAD 201 million in interest and principal on our debt, and in addition, we paid CAD 86 million in dividends. After these items, distributions to non-controlling interests, foreign exchange translation and expenditures on financial investments and other assets, we ended the quarter with cash and short-term investments of approximately $1.5 billion. Subsequent to the end of the quarter, we received CAD 790 million in proceeds from the Antamina silver stream, and we also paid the $300 million note due on October 1 out of cash, which is equivalent to about CAD 400 million at current exchange rates. And including these items, our current cash balance is approximately CAD 1.8 billion as of yesterday. And as Don mentioned, we currently have more cash than the capital spending remaining for our share for Fort Hills project. And based on current commodity prices and exchange rates, we now expect our year-end cash balance to be about CAD 1.8 billion. And this, of course, assumes current commodity prices and Canadian-U.S. dollar exchange rate, we meet our 2015 guidance for product cost and capital spending, and also assume that we maintain our existing U.S. debt levels and have no unusual transactions or events for the remainder of the year. Moving on to the next slide, our pricing adjustments. Lower prices resulted in CAD…

Okay. Thanks, Ron. And I think simply to wrap up, we're closely managing our cash, and we now expect to finish the year with around CAD 1.8 billion, as Ron detailed earlier. So, with that, we'd be happy to answer your questions. And I do want to note that some of our management team members are on the line in different locations. So there may be a brief pause after you ask your question while we sort out who's the best person to answer. Okay. Thanks. Operator, we're open for questions.

Thank you. [Operator Instructions] The first question is from Wilfredo Ortiz from Deutsche Bank. Please go ahead.

Yes. Good morning, everyone. Just on the write-downs and the $75 WTI price that you're using for Fort Hills, I just wanted to get a sense as to the level of conservatism that you think you're taking relative to where spot prices are right now. And considering the discount, I guess, assumption that you are using relative to where I believe the discount is right now, relative to the forward curve. Or put another way, should prices remain at current levels, how could you adjust this price, and perhaps in the sense for further write-downs at Fort Hills?

We look at a range of different commodity prices for all the products and oil is one of them. We look at what market people are doing, what consensus is, what we think others are doing. And of course, these write-downs are based on substantial amount of judgment in the commodity price of the exchange rate and the various other factors that impact the ultimate netbacks that we get from the site. So, we think that those are generally conservative numbers, but others can have different views on what that would be. The other thing you need to – when we look at these write-downs, the accounting rule kind of requires us to use roughly what a market participant would use regardless of what our views are. So, we need to be in that range, and we think we are. Certainly, if current prices stay where they are for a longer period of time, we're required at the end of every quarter to look at impairments. But we would not expect that on a quarter-by-quarter basis, there would be a substantial change in what our view on the longer term prices would be.

Ron, I just like to add a comment on this market view aspect of it. This is Greg Waller, operator. The consensus view right now, when you look at the consensus summary of views provided by consulting firms, the commodity analysts with the big bang that cover us, is about – is CAD 79 a barrel. And again, as Ron said, we have to use what market expectations are and that CAD 79 a barrel, I also think, is probably a reflection of when people are asked about long-term, they're probably thinking 15, maybe 20 years. And keep in mind that this is a 50-year asset, and so we're using already a conservative number, that CAD 75, relative to the consensus view of CAD 79. But again, they're probably not contemplating the 50-year term that we need to think about for the valuation of this asset.

Got it. And if I may follow up on another question, regarding the letter of credit, I know the intension is to use the CAD 1.2 billion committed credit facilities. Could – is there a risk that at some point, some cash could be restricted if market conditions deteriorate or some of the ratios deteriorate rather than improve? I mean, is there a risk at any point in time that some part of the cash could be restricted?

Scott. Scott is our treasurer.

At this stage, we don't see that as a risk. We'll have to evaluate circumstances as they develop, but not a present concern.

Okay. Thank you very much.

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

Hi. Good morning. A couple more questions just on your liquidity. Do you think you have more room for other potential streaming deals across the portfolio? And then just to follow on, just curious what your new rates will be on the credit lines if they are drawn now that you're no longer investment grade. Thank you.

I'll let Scott answer the second one first and then I'll comment on your first question.

Sure. The drawn costs on our committed credit facilities would be LIBOR plus 2.25%.

Okay.

Okay. And on the potential for further streaming, the answer is yes, there is potential, but we are not looking at it at present because we're comfortable with the situation with having CAD 1.8 billion of cash currently more than the amount required to finish Fort Hills and a forecast of CAD 1.8 billion of cash at year-end at which time is only 18 months to go until commission for this. So, we feel comfortable and are not looking at [indiscernible].

Okay. But just so I'm clear in terms of optionality, do your North American under your debt indentures, are you allowed – would you be allowed to stream out any of the North American assets?

Yes.

Thank you.

Thank you. The next question is from Lucas Pipes from FBR. Please go ahead.

Hey. Good morning, everybody. To follow up on the streaming question, maybe could you expand on that and just give us a little bit of a sense for what other asset sales could be on the table if you choose to do so?

Well I think we've mentioned in previous times that you could look at several assets that have either silver or silver and gold, or results versus [indiscernible] a trail where you could create things. So, I don't think [indiscernible] than that. I want to repeat my statement. We are not looking at further streaming at the time.

That's helpful. Thank you. And then, on Fort Hills, I remember you wanted to update the market at some point on the transportation options that you're pursuing. Could you give us an update at this point in time on where you stand and when we could maybe look forward to more details on that side of the project?

[indiscernible]?

Yes. Thanks, Lucas. We are working hard to finalize our transportation or logistics arrangements beyond Hardisty. You will remember that we did announce with our partners on Fort Hills arrangements to both provide diluent to the site and blended bitumen service down to Hardisty to get us to that market hub in Alberta. And then, we are looking beyond that and we will put all those arrangements in place well ahead of Fort Hills startup in late 2017.

That's helpful. And if I may ask one final question, on the cost side, obviously you've done a great job bringing down costs, specifically on the coal side. And I wonder, could you maybe give us a flavor on what else we could be looking at as we head into 2016?

Is that within coal or just across the board? [indiscernible] just answer both of that. Yeah. So we are intensely focused on further cost reductions. We have lost and we have won specific programs in coal at the moment but watched closely by copper and zinc, and we've targeted finalization of some new plan to present to our board next month. So we believe we will be able to make further cost reductions, but we couldn't quantify at this point what the amount would be.

Great. I appreciate it.

Work in progress, but certainly some interesting potential ideas and very good focus.

Great. Well, good luck with everything.

Thank you.

Thank you. The next question is from Greg Barnes from TD Securities. Please go ahead.

Yeah. Thanks. Just approaching the carrying values of the coal assets from a different side rather than the price, what about costs, what kind of long-term costs have you assumed? Are they in line with where we are now and going up slightly or how do you model that out in the carrying value calculation?

Greg, they're pretty much in line with where we're at now. And the teams are – in this low price environment, the models are obviously being tweaked on how they would change the mine plans and everything in response to this low price. But they're generally in line with the current prices at we're at.

[indiscernible]. I'm sorry.

Yeah. And Greg, I comment that the nature of your question highlights kind of what the nature of impairment issue is that a lot of it is [indiscernible] if you assume low commodity price in the future then you're likely modifying your mine plans between higher prices and you have different sort of production profile. And you recall last quarter we were working on the mine plans and chose to finish that job and to see if there were more data points on the market before make our decisions on that. And we could look out to two or three quarters from now and have a completely different situation in all the things for commodity price, exchange rates, cost profile and the rest. So at the end of the day, we take our best judgment on them.

Okay. Just a second question on the zinc market, in the context of the cuts, large cuts announced by Glencore that was surprising large in my view. I'm just wondering what your take is and why that level of cut back was required

I'm going to let Andrew Stonkus answer that [indiscernible] not much surprises me.

Thanks, Ron. Thanks, Greg. With regards to their [indiscernible] they make it for their own reasons, and they didn't add much commentary other than the fact that they want to take the resource out of the ground at these evaluations. So, that's their own decision. But you have to remember that this is on top of the – the closures are taking place at Century mine which the final concentrates are being delivered as we speak to the market. So, on top of the Century closure and the Lisheen mine closure coming up to the end of the year, this is as to the shortfall on concentrates we're going to be seeing in the months ahead. And that will just cascade into the metals side. So, we're – it's unfolding as we thought in terms of the concentrate shortfall that's going to transpire over the next few months.

Yeah. The zinc price really haven't done much.

Yeah. I think though the zinc price will – the fundamentals are aligning up. On the supply side, it's going to be a challenged situation on concentrate availability. We look at the Chinese imports, the 60% of concentrates imports into China. But those concentrates will not be available to the marketplace with these closures, so that will have probably an impact on metal production out of China.

Okay. Thank you.

Thank you. The next question is from Oscar Cabrera from Bank of America. Please go ahead.

Thank you, operator. Good morning, everyone. I was wondering – just following up on Greg's question with regards to your coal assets. If you could give us a sense if any of the reserves that you have reported at the end of 2014 were impaired with the changes in mine plant.

Could you repeat? We didn't hear the end of the question, Oscar. If you could repeat that.

Yes. Sorry. My new phone is just not great. Apologies. I'm just saying with the new assumption in long-term met coal prices, would any of your reserves – because you had about 1 billion tonnes in reserves at the end of 2014. And with the change in mine plans, did any of those reserves become impaired, i.e. do you have a lower number?

We're in the process of finalizing that work. There may be changes between reserve and resource, but it's still preliminary at this stage, Oscar, to give a definitive answer on that. We don't anticipate that it's going to be substantive, but the work is ongoing.

Okay. And then with regards to your comments on cost containment, the grades in some of the copper assets like Highland Valley have been this quarter was – or last quarter and this quarter were pretty high. So how sustainable is that, and how do you think that – what sort of expectation do you guys have in terms of mine plan going forward for Highland Valley specific?

Dale Andres will answer.

Thanks. Thanks, Oscar. We were very pleased with the performance of Highland Valley in the third quarter. It's unusually high grade. We don't expect those kinds of grades to continue, although grade will be above reserve grade for the fourth quarter. As we head into next year, we are going to be coming towards the end of the high-grade phase, Phase 8 in the mine plan in the Valley pit. So towards the end of the year, next year, the grades will start to drop down significantly. But for the next four quarters, we should see above reserve grade. So, in general, how that translates into cost, obviously that helped our costs in the third quarter. There are puts and takes, depending on the different operations. But in general, we're quite confident in our cost guidance for the year and we'll achieve that.

Okay.

And just some further color, Oscar, on your original question on coal. We keep a certain tonnage in the reserve category, but really we look at the business and the overall resource probably defined which is 5.9 billion tonnes and the work that we're doing which we report at the end of the year. Nothing substantial would be changed in terms of the nature of the business related to adjustments to mine and plant currently.

Okay. That's helpful. Thank you.

Thank you. The next question is from Kerry Smith from Haywood Securities. Please go ahead.

Good morning. Firstly, Ron, could you just remind me the CapEx left to spend at Fort Hills, the CAD 1.5 billion, does that include the working capital for the ramp-up through the 12 months after you start up?

That's the construction cost, Kerry.

Okay. So that doesn't include working capital, okay. Okay. And can you hazard against this to what you think the working capital requirement might be?

Not at this stage.

We'll get back...

Yeah. We'll get back to you. Yeah.

Okay. And then, just on Pend Oreille, it's not making any money at the operating level at these prices, but obviously there are benefits to having that concentrate going to Trail. Is there a price that you think about, possibly taking that 45,000 tonnes of zinc cost to market or would you – is there no price that makes sense to you. It makes more sense to ship it to trail.

Well, we have shutdown before, so obviously there is a price. We are, I guess, in this low commodity price environment reviewing all assets kind of constantly. That one certainly on the list. No decision has been made, but you're quite right. It is a key source of concentrate for trail for a number of reasons and transportation cost being just one. So, [indiscernible], we couldn't say much more than that. But I think it's a valid question.

Okay. And then, Ron, just one last thing. You have talked previously about exiting this year with CAD 1 billion cash. Now, you're CAD 1.8 cash, but that's after basically CAD 1.3 billion of, call it, asset sales if you want to count streams. So, the delta there is sort of CAD 0.5 billion difference to the negative. Is that all from price or are there other?

It assumes the same debt level. At the beginning of the year, when we put out the CAD 1 billion, we assumed that we were going to refinance the CAD 300 million note with the revolver. We've chosen to use cash to do that to basically save the fees on the banking agreements. And then the rest is the transactions that we've talked about and the various changes in costs, commodity prices, et cetera. The exchange rate also moved in our favor as well. So...

Right. Okay. But the net effect of the lower price is in the favorable changes really that CAD 0.5 billion. Okay, that's fine. Yeah, okay. And then just maybe one last question, just a follow up on Dale's comment about the grades at Highland Valley which will come down by the end of next year. Are there any other significant changes that you could see in any of the mine plants at any of the other operations that might significantly affect your C1 cash costs like in Antamina, say, or anything. I'm just wondering if the copper cost – the cash cost you've got now is about CAD 45 a pound is pretty good. I'm just wondering how sustainable that is if there's maybe something in the mine plant that might impact that either positively or negatively next year, let's say.

Yeah. Thanks for the follow-up. Yeah. For Antamina, we anticipate costs and production to continue to be strong into next year. I guess CDA, we don't anticipate any material changes from this year heading into next. I guess, the one question Mark and we're currently working upon is the Quebrada Blanca mine, and we'll provide further update at the end of the fourth quarter on that. But that's relatively small percentage of our current tonnes currently and heading into next year.

Okay. That's good. Thank you, Dale.

Thank you. And we have a question...

Sorry. Just supplemental on the Pend Oreille question, the other aspect is that we're just sort of finishing the ramp-up in getting the full production this quarter. And that will allow us to sort of come to view on what the real cost structure is at full production which is a key factor in any decisions going forward. We are quite encouraged by the outlook for further reserves and resources in terms of the longer-term mine plant. So, these are all things that are in the back of our mind.

Thank you. The next question is from Jeremy Sussman from Clarksons. Please go ahead.

Yes. Hello, there. Just I guess based on kind of where you see things now, can you give us a sense of kind of how you see maintenance CapEx, growth CapEx and deferred stripping kind of coming into play next year and how that's coming into play next year and how that compares to 2015 levels?

Okay. There's, sort of, questions there – we're going to start with Greg [indiscernible].

Well, yeah, Jeremy, we've had that question a lot recently. Really, all we can say at this point is we give our formal guidance in our Q4 report we conduct in February. But broadly, I think you can assume it will be in the same order of magnitude as where we are now. If you look at where we are in the four major brackets of capital, so sustaining capital, we've got down quite a bit. We think we can run in that range for a few years. New growth projects, Fort Hills construction will peak next year. So right now we're running about CAD 200 million a quarter. We'll be up a little bit higher from that next year. So let's say maybe CAD 225 million a quarter, so in the CAD 900 million range. So that pushes up a bit from the CAD 850 million guidance this year. Of course, we are at a higher share earlier this year. We've now stepped down to 20%. So that's one of the reasons why our – we're only spending CAD 200 million a quarter right now, roughly. And then on capitalized stripping, that will continue to be in the same level. So all in, we would expect to – again, subject to giving our more formal guidance in February, but we would expect the number to be broadly similar to where we are right now.

Okay. That's very helpful. And maybe just switching gears on the coal front. Are you seeing sort of any signs of life, anything positive out there at this juncture or is it sort of status quo and you're still kind of – obviously, we're all waiting for some of the high class production that seems to be a bit stickier then. Most of us would have thought to come offline, so I'll listen to what you have to say. Thank you very much.

We're all smiling around the table but [indiscernible] status quo is the answer. We were just waiting for the first question on coal. [indiscernible]. Go ahead.

All right. Thanks, Jeremy. I guess to summarize it maybe off the top, there's been a lot of production cuts that have been announced and close to CAD 50 million now, and about half of that has been implemented by our estimates. The thing, however, is that as those production cuts are happening, we're also seeing seaborne demand from China come down by very similar levels. So the two numbers are kind of happening at the same time, and that explains why prices are still under pressure. Now, when we look a little bit closer at the numbers, you realize that U.S. is under a lot of pressure. I guess all suppliers are under pressure, but U.S. even more so. And if you look at the stats, U.S. exports, annualized year-to-date at the end of August, are down by 7 million tonnes compared to last year. We're just getting into negotiation for annual pricing in the U.S. as we speak, and we expect that pricing in the domestic market for 2016 will come down even further, so, again, adding more pressure on suppliers, especially in the U.S. So that could lead to additional production cuts for 2016.

Great. Thank you very much.

Thank you. The next question is from Garrett Nelson from BB&T Capital Markets. Please go ahead.

Hi. Good morning. Another question on the write-downs. The silver lining from an earnings perspective is that lower book value should equate to lower D&A. And it looks like your coal D&A was running at about CAD 28 per tonne year-to-date. Could you help us out with what D&A per tonne we should be modeling from that segment going forward?

We might have to get back to you on that one. But overall, the company's DNA is going to be about CAD 10 million a month lower because of the impairments.

CAD 10 million a month?

Yeah. Company-wide.

Okay. That's helpful. And then how are you thinking about the dividend at this point? Are you comfortable maintaining the CAD 0.30 annualized level, or has your thinking changed at all regarding whether it would be better to keep that CAD 170 million or so of annual cash?

The dividend is always the board's decision, and I think 9 of the last 10 years, we reviewed that at the November board meeting. And so it'll be the same this year. The board will take a look at it in November.

Okay. Thanks a lot.

Thank you. Your next question is from Ralph Profiti from Credit Suisse. Please go ahead.

Good morning. Thanks for my question. Just have one, Don. There was an implied 700,000 tonne draw on coal inventories in Q3. I'm just wondering how is Teck positioned from an inventory standpoint into Q4 coal deliveries, relative to previous years? I'm just trying to gauge how close we are from, say, weather factors or logistics issues becoming an issue to your end. Thank you.

Okay. Réal Foley is going to answer that. Réal Foley: Thanks, Ralph. So yeah, you're right. We have reduced inventory during the quarter. But we're in a position to meet all of our contractual commitments and committed sales going into Q4. So at this point, we don't see any major issues with meeting our commitments.

Thank you.

Thank you. The next question is from Geoffrey McKinney from Bank of America Merrill Lynch. Please go ahead.

Hi. Good morning. Thank you. I just wanted to confirm a couple of points on the LC, if that's okay, the CAD 1.15 billion figure updated as of this quarter. Is that related to the CAD 985 million and the CAD 91 million that you disclosed in the annual report that looked to be related to the uncommitted facilities, or is this a new figure?

Sorry. You were breaking up a little bit there. I missed the first figure that you referred to.

Apologies. The CAD 1.15 billion figure for this quarter...

Yeah.

...for the LCs related to the uncommitted CAD 1.5 billion of credit facilities. Is that related to the CAD 985 million and the CAD 91 million as of calendar year-end that was disclosed in the...

Yeah, those are all for basically outstanding reclamation commitments...

Okay.

...and those amounts grow as you disturb more land, et cetera.

Okay. That's helpful. Thank you. Can you describe how these uncommitted facilities are negotiated from an extension standpoint, given the reference to generally having a one-year term? Is it reasonable to expect any changes in terms of size or terms of these facilities? And if so, would we reasonably expect the CAD 1 billion sub limit on the 2020 credit facility to kind of be the backstop here?

Scott Wilson?

Sure. Thanks for the question. The uncommitted facilities, first of all, are distributed amongst about 10 of our relationship banks, including Export Development Canada who's a very significant participant in all of this. And they are renewed and will be negotiated every year, and we would expect to continue to be able to do that going into the future. To the extent that we need to increase these facilities, as Ron mentioned, the reclamation obligations generally grow a little bit each year, and so we've been adding a little bit to them as we go. And if we need more letter of credit capacity on our principal committed credit facilities, we would expect to be successful with the banks to increase those as well.

Okay. Thank you. And lastly, in reference to the expectation for met coal where it's staying under pressure next year and kind of the market where it is today for both copper and zinc, can you just talk about how you're thinking about the balance sheet as we move closer to 2017, given the upcoming maturities in 2017 through 2019 and the CAD 1.2 billion credit facility and just how you would think about managing that when you would potentially start to address it and kind of where you think the capital structure can move to?

Scott will start with that and we'll see what's left.

Sure. The CAD 1.2 billion credit facility has a two-year maturity. And we would typically talk to the banks every year about a further extension of the tenure of those facilities. So, next spring, I expect we would be talking with the lenders there to extent the term of that facility should it be required. And we would also consider during that on the main CAD 3 billion facility as well.

Okay. And kind of understanding that the cash balance at year-end is expected to effectively offset the Fort Hills spending over the next two years and the potential changes to the credit facilities. And just kind of curious how you're thinking about managing the upcoming maturities beginning in 2017 given that we're one quarter closer at this point, and this is under the assumption that certainly under the risk that commodity prices don't rebound in the next, call it, 12 to 15 months.

Yeah. So I just want to highlight just in case others on the call aren't sure what you're referring to. The upcoming maturities are just CAD 300 million in January 2017 and then another CAD 300 million, I believe, in August of 2017. So not a material challenge but Scott will be...

Sure. Thanks. First and foremost, I guess, we would look to refinance those maturities in the public debt market. That market would be a little bit challenging today for sure, but possible. And assuming that those markets are available, that's probably what we'd do. If those markets were not available, our credit facilities are sized at this stage to be able to handle debt refinancing. And we would point out that Fort Hills is scheduled to be finished construction in the middle of 2017, so after just one of those CAD 300 million maturities. So, the cash profile of the company which is over CAD 850 million [indiscernible] hopefully within a matter of months from that cash flow coming in, so quite a switch.

Thank you. That's helpful. And lastly if I can the negotiations around deferring the DLCs, should we think about that kind of it from a temporary deferral or are you looking for more of a kind of permanent restructuring of terms or how should we think about that?

It's just. We have to provide the counterparties with comfort that we're financially capable of managing our operations or our obligations to them and we think that we can do that. But there are provisions in the agreement when we're not investment grade that they have the ability to ask for some sort of security [indiscernible]. So we think they'll be mindful but they will generally be one year extensions I would think. So if we are successful convincing them that we'll be able to honor obligations we'll get that for a year and then we'll go back and do it at the following year, and the following year, and the following year.

Okay.

So we go back – hopefully go back to investment grade.

Okay. Thank you, guys, very much. I appreciate that.

Thank you. The next question is from Karl Blunden from Goldman Sachs. Please go ahead.

Hi. Good morning, guys. Thanks for taking the call. I just want to do the focus a little bit on the debt here. You mentioned that you would look for the 2017 maturities to refine the debt market if those are open to you. Any kind of thoughts of unsecured debt or would you do secured debt as well if the rate is reasonable?

It's Scott again. Our preference would not be to have to issue secured debt. That would have implications for the unsecured holders. It is an alternative and we have disclosed in the liquidity section of our news release the company's capacity to do that. But it wouldn't be our first choice.

Got it. Thanks. And then just a follow-up on the revolver. I guess it's a two-part. How much would you be comfortable drawing on the revolver versus issuing secured debt? You mentioned if the public markets are open, you'd do the revolver. And then the second thing is, any restrictions on drawing on those revolvers in an unsecured fashion – so if you – sorry. If you're to issue secure debt, would you need to secure the revolver? Anything we should know about the restrictions and limitations there?

Scott again. No. If we were to issue secured debt, there would be no requirement to have to also secure the unsecured credit risk, if you will, provided that we didn't exceed the secured limit basket, which is in the range of CAD 3 billion.

Perfect. Thanks very much. Appreciate that.

Okay.

The next question is from Matt Vittorioso from Barclays. Please go ahead.

Yeah. Thanks for taking my questions. Just a couple of quick modeling questions. Just want to make sure that we are reflecting the streaming agreements coming out of your EBITDA. So it looks like in the third quarter, you essentially zeroed out the gold ounces that are going to Royal Gold. Is that how you'll approach the Franco stream as well that you will essentially reduce your by-product revenue in the copper business by that silver stream?

John Gingell, our controller.

It's a fourth quarter transaction, and we are still under discussion as to how we'll do that. It will either reduce our costs or our revenue – or add to our revenues. I'm unsure as to which way we'll go on that at this stage.

Okay. And can you comment on how much generally say, either on a quarterly or annual basis, either volume of silver or cash dollars are essentially going out to Franco. I think you have disclosed in the past that you, I think, produced about 12,000 ounces of silver at Antamina or – yeah, I think 12 million ounces. Is that a good run rate going forward? How do we think about the cash going to Franco from that stream?

Andrew Golding?

Yeah. Hi. Very simple terms. If you look at the 2014 production, Antamina produced 12 million ounces of silver. Our share is 22.5% of that. If you effectively model it as the loss of 95% of the silver revenue, then depending on what silver price you assume, you can easily calculate silver revenues foregoing as a result of the stream. So, 22% of 12 million ounces was the figure in 2014. It varies a little bit from year-to-year going forward. That's a rough reasonable approximation.

And 12 million ounces going forward is at least ballpark?

Yeah. And the thing to remember is that we retained an ongoing payment of 5% at the prevailing spot price of silver.

Yeah. One last modeling question for me. When you report zinc business unit revenue, say, in the third quarter of CAD 805 million, would it be possible to break that up between payable pounds of zinc that were sold, how much revenue was generated from actual zinc sales versus, say, lead, and some of the other coal products? Do you guys have that by metal, the CAD 805 million of zinc revenue by metal?

Greg Waller?

Matt, I think the best thing to do on that is come to our modeling workshop coming up in Toronto in November 4 that we'll go through the details of how you take gross production and get that down to payable pounds. And this is for anybody who's listening, if you're interested in attending this modeling workshop, something we do every two years just to help people take our reported financial information, add it to the information that's generally available on the markets to understand how to model a company going forward. And that's, again, November 4 in the afternoon in Toronto. If you're interested in attending, send us an email and we'll get an invite out to you.

Okay. Thanks.

Thank you. The next question is from Matt Farwell from Imperial Capital. Please go ahead.

Hey. Thanks for taking my question. Just a question on the coal production, 25 million to 26 million tonnes. Do you have any flexibility to reduce production further than that with regard to the [indiscernible] and court agreements that you have? Just looking at the – sort of, the all-in cost of the production including the maintenance CapEx and production stripping, it seems like the cost is higher than current spot prices. So is there any flexibility regarding those agreements?

Okay. Just checking. Ian Kilgour, are you on the line?

Yes, Don.

Are you able to take that question? Did you hear it?

Yeah, for sure. Yes. Matt, we do have flexibility. If we were going to alter our production, but at this point, as you said, our production is [indiscernible] cash positive. So we intend to produce, as we said in the release, in alignment with our sales expectation.

Okay. And then you're talking about looking to refinance the unsecured notes. Have you also considered – I know this question comes up often, in addition to cutting the dividend, perhaps issuing equity as a means to lower your cost of capital.

Thank you. The next question is from [indiscernible].

Sorry, operator. We haven't responded. We're just – Don is going to respond.

Could you repeat the question?

Yeah, sure. This question has come up in the past, and you did address the dividend and that board decision and we're also discussing means of refinancing near-term maturities. Just looking at the cash numbers, it seems like putting cash on the balance sheet might be a way of reducing your overall cost of debt, if you were to come to the market within any kind of deal as suggested. So, just wondering management's comments on that issue.

Okay. So I apologize, but I still don't understand the question. You're talking about us issuing more debt to put cash on the balance sheet.

Issuing equity.

Equity. Yeah.

Issuing equity.

Issuing equity?

Yes.

Absolutely not. I think we've been very clear on this issue. On the next quarter call, we have no plans to issue equity.

Thank you very much.

Thank you. The next question is from [indiscernible]. Please go ahead.

Coming back on zinc, I'll ask the amount for zinc, has it further rise or developing in China and India?

Okay. I didn't come with the latest number on that, but certainly we got the formal recommendation from the Ministry of Agriculture I think about a year-and-a-half ago, there's been a lot of trainee programs disseminating the information to the farming community. And many field agents from the ministry that are out educating the farmers, I think there at least six companies now manufacturing fertilizer that contains 1% zinc. And so, it is rolling out throughout China. And we track actually the number of incremental tonnes that we used as a result of the increase of its use in fertilizers. But we'll have to get back to you with that number because I didn't bring it with me this morning. But it's certainly a positive development both from a consumption of zinc point of view but more importantly from a co-productivity point of view. Because the results have been very exciting for each of the rice and wheat and corn and so on. So now, we continue to rollout, but it will take several crop cycles before it reaches its maximum. With that, operator, we're going to cut questions now. We're at the top of the hour. If anybody still on the call, the backlog in the call. So, we're certainly happy to do a call with you later this morning or later today, your time. So, let us know and we can certainly get back to you. Now, let's turn it over to Don, at this point, for some closing comments.

Okay. Just a couple of comments. I guess, offering some perspective. A lot of the questions today were fairly short term in nature, as we understand people are trying to update their models. And as Greg said, we do have the modeling workshop coming, and that will be helpful for that. And also, there are sort of different kind of what if questions that are kind of based on the overall question of what if the cycle is dead and [indiscernible] prices sort of stayed at the spot levels forever. I'd point out that when we deal with large institutions such as banks and other companies that are involved in long-term investments, whether they be in infrastructure or mining or rather commodities, that they don't believe that the cycle has disappeared, and they fully recognize that there are down cycles and up cycles. And so I think that's important context. I would point out that we have a confident, battle-tested team that is systematically working our way through what our or at least some commodities that we're smartly conditioned in almost every one on the phone's lifetime. And you could look up the prices in real terms and relative to cost curves and you'll see what I mean. But I'd also remind you that the best and most effective cure for low commodity prices is, and always has been, low commodity prices. And remember that the darker the winter is, the brighter the spring will be. So, thank you very much for listening today, and we look forward to talking to you one quarter from now.

Thank you. The conference call has now ended. Please disconnect your lines at this time, and thank you for participating.