Ladies and gentlemen, thank you for standing by, welcome to Teck Resources' Q4 2019 Earnings Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. This conference call is being recorded on Friday, February, 21, 2020. I would now like to turn the conference call over to Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis. Please go ahead sir.

Thanks very much Mirage and good morning everyone. And thank you for joining us for Teck’s fourth quarter 2019 results conference call. Before we begin, I would like to draw your attention to the caution regarding forward-looking statements on Slide 2. This presentation contains forward-looking statements regarding our business. This slide describes the assumptions underlying those statements. Various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statement. I would also like to point out, we use various non-GAAP measures in this presentation. You can find explanations and reconciliations regarding these measures in the appendix. With that, I'll turn the call over to Don Lindsay, our President and CEO.

Thank you, Fraser, and good morning, everyone. I will begin on Slide 3 with highlights from our fourth quarter and our year-end results, followed by Ron Millos, our CFO will provide additional color on our financial results. And we'll conclude with a Q&A session. Ron and I and additional members of our Senior Management Team would be happy to answer any questions. So commodity prices were negatively impacted by global economic uncertainty in 2019, this is continued into 2020. We’ve some signs of improvement in December and early January with an agreement on a U.S., China Phase I trade deal, but then the Corona virus emerged, and the full impact of the virus is still unknown. We are monitoring developments in order to be in a position to take appropriate action. It has been a difficult start to the year, in addition to the Corona virus, we are still making coal operations in British Columbia have also been impacted by logistics constraints caused by severe winter weather in January and early February. And then more recently, by railway interruptions across the country, and as many of you know, we are Canada's largest railway customer. Given this backdrop, our focus remains on those aspects of our business that are within our control. So with that, I'll turn to highlights from our fourth quarter of 2019. In that respect, we've made significant progress on our four key priorities. First, construction continues at QB2 with over 7,500 people actively working on site across the six major construction areas. We closed the $2.5 billion U.S. project financing in the fourth quarter and on February 3, we announced an agreement with AES Corporation to source approximately half of QB2’s total operating power needs from renewable sources. QB2 is a world class copper project and a…

Thanks, Don. I'll start with a summary of changes in our cash position during the quarter on Slide 17. We generated $782 million in cash from operations that we received $25 million in equity contributions for Sumitomo Metal Mining and Sumitomo Corporation for the QB2 project, and $14 million came from investments and assets sales in the quarter. We spent $883 million on capital projects and capitalized stripping costs were $152 million. We purchase $148 million in Class B shares, paid $71 million in interest and finance charges. Spent $55 million on investments and other assets and we made lease payments of $43 million. Quarterly dividend used $27 million in cash and after these and other major items -- minor items, sorry, we ended the quarter with cash and short-term investments of approximately $1 billion. Slide 18 provides an update in our companywide cost reduction program, which is implemented in Q3, 2019, in response to the global economic uncertainty. In Q4, we achieved approximately $210 million of capital and operating reductions and that exceeded our target of $170 million. And looking at 2020, we now expect around $400 million of capital and operating reductions which are included in our guidance. We’ve therefore increased our target for total reductions approximately $610 million from previously planned spending through the end of 2020. And that compares with our original target of $500 million. And to achieve our targeted cost reductions, we expect to eliminate approximately 500 full-time equivalent positions by the end of 2020, some of which we expect to come from attrition, the expiration of temporary contract positions and current job vacancies. And our target cash -- cost reductions do not include initiatives that would result in a reduction in the production volumes of our commodities or that could adversely affect the health and safety of our people. Turning to Slide 19, our financial position remains strong. We currently have approximately $5.8 billion of liquidity and that includes $532 million of cash. We have no significant debt maturities prior to 2035. And we have investment grade credit ratings from all four credit rating agencies. As Don mentioned, we closed the U.S. $2.5 billion limited recourse project financing facility to be used to develop QB2 that was set in the fourth quarter and we expect to start drawing on that facility shortly. And as we previously mentioned, the QB2 partnering transactions and the financing plan dramatically reduced tax funding requirements for the project and no contributions to the project are expected from Teck until early 2021. And as Don mentioned earlier, we reduced our total shares outstanding to 547 million shares through purchases under our normal course issuer. So with that, I'll turn the call back to Don, for his closing comments.

Thanks, Ron. As I said at the outset, our focus remains on those aspects of our business within our control. We are focused on our four key priorities. First, the development of the QB2 project which is a key component of our future growth. Second, executing our RACE21 program to improve the efficiency and productivity across our business. Third, the execution of our priority project at Neptune Terminals. And fourth, our company wide cost reduction program, we’ve spent an increased target now of approximately $610 million of reductions up from the $500 million target previously, and that's from previously planned spending through to the end of 2020. These priorities are consistent with executing our straightforward strategy of running our operations safely, efficiently and sustainably, to generate cash, successfully execute our QB2 project and return additional cash to shareholders. And with that, we'd be happy to answer any questions, and I should say that some of our Management Team members are calling in from different location. So there may be a brief pause after you ask your question while we sort out who is going to answer it. With that, back to you, operator.

Thank you. [Operator Instructions] Our first question is from Orest Wowkodaw from Scotiabank. Please go ahead.

Hi, good morning. I was hoping we could get some more color on the guidance for the coal segment for 2020. I find it very confusing why the cost guidance is so high given last year, you were pushing volume in order to maximize margin, obviously, with the lower coal price, we've been hearing that contractors have been reduced over-time reduced strip ratio coming down. And then all of these efficiency programs RACE21 and others? How come we are not seeing that that all flow through the cost guidance in 2020?

Over to Robin Sheremeta.

Yes, you’ve got -- I guess the biggest influence that you are going to see on cost guidance through 2020, it really comes down to the production rate that we are able to operate at. So and we walk through the constraints that they are on the system, particularly in Q1, where we are going to be close to 5 million production and then Q2 and Q3 where we have a five-month plant shut down at Neptune. So when you take that production off, we are going to have to reduce our production at the mine sites. But, I want to come back to -- there are a number of factors that are changing and it's consistent with what you were thinking as far as a declining cost base. So I'll just walk you through those, because this is happening through the year, and you will see it really translating Q4 and into 2021 when we are back to full production levels. So we've got it. We do have a declining strip ratio. Our strip ratio was 11.4 in 2019, it should be around 10.6 this year, by 2021, it's going to be below 10. And it will be sustained below 10 going forward. We are moving Cardinal into closure this year. And that’s going to happen about mid-year. That's going to reduce the overall cost of the business by about $3 a tonne. We won't see that through 2020, but we will see that into 2021. And Elkview, which is our one of our lowest cost operations is moving from $7 million to $9 million. So that's part of the production constraint in the first quarter as we need to take a shutdown to get that expansion in. But that's also not only is going to reduce or replace the tonnage that we shutdown at Cardinal, it's at a much lower cost base and what Cardinal was. Now the work we are doing on Neptune that investment is going to significantly reduce our logistics costs and then as Don mentioned with RACE21, there's a huge amount of potential past -- certainly past 20 because we developed a program through 2020 into 2021. So all of those things combined, and you put them all together by Q4 of 2020, and going into 2021 will be at a cost base less than to $60 per tonne. So our costs are coming down and just -- we have to get through this production constraint period.

Okay, so when we look ahead to 2021, assuming you are back at your 26 million to 27 million tonne type of run rate for volumes, adding all these pieces together, we’re looking at potential $10 tonne savings, is that kind of the ballpark?

Yes, I'll stick to the $60 a tonne marker. So we will be below $60 a tonne and we’ll achieve that rate by Q4 of 2020.

Okay.

You are right that tonnage will be around 26 million to 27 million.

Thank you.

Thank you. A following question is from Matthew Korn from Goldman Sachs. Please go ahead.

Hi, good morning. A follow-up on coal. When you are looking at the coal ops holistically, we've seen this persistent challenges, are you confident you're looking at the business today that the Neptune build-out, the Elkview investments this is going to be really enough to provide long-term stability to the segment or is there more that you may need to do to invest to get there? Like is there any practical way to add redundancy bypass – is there bottlenecks in the chain between your storage and your port that you may have to do just looking for idea there?

Yes, well, I mean, a lot of the work we've done over the last three years in terms of expanding some of the mining areas at Elkview, at Fording River, at Greenhills, at Line Creek these are the assets that we've consolidated down to have a stable base of strip ratio, getting the strip ratio down below 10 to 1 that's critical to the business. Moving away from the higher cost operations like Cardinal, that's going to be good for the business. The work we're doing at Neptune this is going to strengthen our entire logistics chain. So that's a stability that we require and we've suffered for the last few quarters. So I think that's incredibly positive. And then just, again, the potential of RACE21 has to the coal business and all the business entirely is tremendous. And we saw good evidence that many of the programs we've initiated in coal are starting to yield that kind of benefit. So we're much stronger going into this Q4 of this year. Unfortunately, again, we have to get through couple quarters of transition, but as we get into Q4 and into 2021, we're pretty well set up here in a very strong cost base.

All right, let me then rotate it to copper yield. On QB2 development, can tell us a bit more what's been the nature exactly the permitting delays. How much of the delay has there been with those permits versus the initial expectations and has the social unrest remained an ongoing pressure there as you try to move materials people around to the site?

Okay, we're going to start with the Dale Andres on that and the Alex Christopher might touch it as well.

To start with, I’ll talk about permitting. Primarily, the delays have been in the sectoral -- and sectoral permits. So the small number -- huge number of permits, but small permits. So let's say construction overall, we have over 2,000 of these permits. And there's multiple levels of government that we need to work through to get those. So that has slowed things down on the archaeological clearances, and part of that is also due to the social unrest. But the regulatory agencies that process these applications and permits have been slower than we anticipated, but partly due to the social unrest. And one of the agencies was even on strike for part of that period as well. So that has had an impact. Just back to the social unrest, I think QB2 has made out much better than other projects and other operations in Chile. But there's no question we have been impacted. It does affect movement of equipment, movement of people through the period in particular after October 18, our workers were concerned about their families and homes. And so the logistics of getting the workforce up to site has had an impact on the project. And I think as we put in our release, we are in the middle of completing updated cost estimate and schedule for the project and that will be released before the end of the quarter.

All right. Thank you very much.

Thank you. A following question is from Greg Barnes from TD Securities. Please go ahead.

Yes, thank you. I just want to take the cost guidance on the call. This is a step further, if I can. The transportation costs this year over $40 a tonne. Given all the moves you've taken, how do you expect that to evolve over the next several years?

Well, what we will say is certainly going to go down, but how much it goes down will depend on the tonnages that goes through each of the ports. And that will be determined Greg until sometime, probably towards the end of the year. So we can't give you an exact answer, but we're highly confident that will be going down and it should be a very, very beneficial thing. And then the reliability will be going up which is incredibly important and contamination won't happen. So that's also important.

I’m little curious about the decision to delay the prefeas on QB3, that can't be a big expense item?

No, it wouldn't be a big expense item. It's more about keeping the focus on QB2 and making sure everything's going smoothly there. And it's also probably just part of overall CRP and the company cost reduction programs. So we slowdown on all the Project Satellite as well and [used] reduced in Galore Creek and other so it’s part of the whole thing. It's not really specific to QB3.

Okay. Thank you.

Thank you. The following question is from Chris Terry from Deutsche Bank. Please go ahead.

Hi, Don. Couple questions from me. Maybe just starting with overall capital management and then thinking about any asset sales, just wondered, if you could comment on any of the Project Satellite areas. Will there could be asset sales there over the course of that – of this year and whether that would then be tied back to capital returns in the next 12 to 24 months? Thank you.

Yes, as I said before, we think Zafranal in the not too distant future, San Nicolás, are projects that there's a lot of interest in out there, and pre-Corona virus, I would have said that this year there would be at least one asset sale and that the Board would probably look at that capital, how much it was in terms of additional buybacks that sort of thing. With Corona virus still prevailing, I think most people are going to wait and see how that shakes out, it's still unknown what the long-term effect is, not just the disease itself, but the effect on inventories at different nodes in the supply chain. I think we have to get a better view and see how long that takes to clear whether it's two or three months or 10 or 12 months. And so someone making investments like that would probably want to see that too. So we'll go pretty slow on that for now. But, if the market starts to clear, and we think buyers have confidence, and we will be back at that pretty quick.

Okay, thanks Don. And then just to circle back to a couple of the other questions that were asked already, but just in a slightly different way. Just want to be quick. So on the cost target the 16 mill, and you're expecting to get coal costs into 2021 below $60 a tonne. Is that where the majority of the savings will actually be shown in the numbers or it will be in the OpEx and now that the portion of CapEx as well or is it outside of coal as well, just trying to get a feel for where we will actually see those savings come through the financials. Thanks?

Over to Ron.

So that was the cost reduction program.

Yes.

Yes, they're all over the place. There's, obviously various buckets of capital spending. And there within the -- each of the various business units, there's savings in the Satellite projects, as Don mentioned earlier, there's administrative cost savings, some of them will be included in the sort of the G&A number that you see others will be in the admin costs sites. There's other income expense items in there where as an example we've monetized some hedging contracts that we had in place for small dollar amounts. So split all over the place. The basic split for $210 million for 2019 was about $60 million in capital, sorry $150 million in capital, $16 million OpEx, and about 75% of that came from the operating business units. And then the other 25% came from the Satellite, the corporate initiatives, and then go forward on the $400 million about 65% of that is at the operating business units. The big swing there is that, one of the big initiatives is we were planning on refreshing a lot of our IT Systems, and that's been put on hold. So that's the reason for the drop in the percentage allocated to the producing business units and more to the other business units. And the target for the $400 million target, that's 220 of OpEx and 180 of CapEx.

Maybe just related to the coal part of your question, and I am not sure if people are grasping this, but for further clarity, in closing Cardinal River, which was 1.4 million tonnes and replacing it with 2 million tonnes at Elkview is quite significant. So the Cardinal River tonnes were lower revenue per tonne than the new tonnes at Elkview, and the Cardinal River tonnes in terms of costs we're close to double the cost that we’ll have at Elkview. So it's really big improvement in the business. And that's why we moved it up to get it done as fast as we can. So a couple of quarters from now the business will be much stronger for having done this.

Okay, thanks for the color. Just last couple for me. The RACE21 program, just to be clear, does that have any CapEx associated with it?

Yes, it does.

Yes, in our guidance, there's about $85 million for CapEx the total spend, when you read the news, about $140 million, the RACE21 is another sort of awkward one from an accounting perspective and that, there is physical equipment, there's a software and algorithm writing, and then there's assessment costs, so the costs will get split in three buckets, they'll be included in our research and innovation line item on the face of the P&L. And in the cash flow, they'll be in investments and in property plant equipment. And effectively the piece that goes into investments, it's intangible assets and it's -- that's basically the software, the algorithms. So things that you can touch and kick and feel going to fixed assets other things that can get capitalized go into the intangible asset bucket and investments and then sort of assessment costs that you're looking at the various initiatives before you've come to a conclusion whether they're going to look or work or not those would be expensed as incurred.

Okay, thanks. Thanks for that. So I mean, it sounds like on net basis, the savings not nearly as high as the headline numbers when you put in the costs to actually implement the program?

Well, the savings grow every year, right whereas the costs are one-offs.

Okay. Okay, and just the last one for me. Just in terms of -- just to get full clarity on the port situation to understand that in coal, can you step through maybe 2020, 2021 and 2022, the percentage from each port that you're expecting over that time just trying to understand how you manage the Neptune situation as you take that offline, just making sure we've got the tonnes [understood]?

Yes, as I said earlier, we won't be able to do that till probably towards the end of the year that it hasn't yet been decided how many times we'll go through each of the three ports.

Okay, that's it for me. Thank you.

Thank you. The following question is from Gordon Lawson from Paradigm Capital. Please go ahead.

Thanks for taking my question. In terms of railway delays, if they were to end in the near-term, do you believe you can make up for the losses by the end of Q2 or could this be more drawn out? And also given current share prices, do you anticipate being more active in the NCIB program in the near-term?

I'll take the first one and then turn it over to Ian Anderson on the project segment. On the NCIB, we've done about $800 million of the $1 billion that we announced. So that will resume when the blackout’s finished. So short answer is yes. And on rail, it’s hard to know, but give your best view.

So the weather conditions, we anticipate where we encountered in Q1, those appear to be largely resolved of the blockade situation and the inventory situation that we're in now is very fluid. And so we do not anticipate at this point that we'd be able to make up those volumes over the first two quarters. And we'll look forward to doing that as the course of the year progresses and things to come.

Okay. Thank you very much.

Thank you. The following question is from Carlos De Alba from Morgan Stanley. Please go ahead.

Okay, thank you very much. Don maybe just a follow up on RACE21, is there any split, even if it is just ballpark figure on how the savings will be distributed or broken down by segment?

Yes, I will turn that over to Andrew Milner, our Senior VP of Transformation.

So if we look at the 2019 year, the majority of the benefits came through the processing environment, so throughput improvements largely in the base metals business, so we tackled the projects that we saw there that are offering the greatest value. That will continue into 2020. We're now shifting as part of RACE21 to the broader aspects of the program is integrating the autonomous work, the full data integration work,. So we'll see a ramp up in the analytic space in mining, predictive maintenance, etc. So in initial phases, it's largely been throughput increases with cost savings being seen also but to a lesser extent, with that will certainly ramp up as we head into 2020. The other one I just like to say on earlier point just on the value capture, on value uplift here, the value proposition is actually -- is substantial, if you just look at the example of 2019, we invested $45 million runoff to capture $150 million or $160 million, what was achieved in recurring benefits. So it's actually quite a compelling investment. And going forward, our approach will be very much one of aligning investment to value uplift. So we have a program in place now where we've got stage gates and criteria for assessing projects. We'll invest in those projects will look at the value uplift and then we'll make future decisions on future investment as we go forward. But, we're very confident that we will achieve the $500 million uplift this year and $1 billion by the end of ‘21.

All right, thank you. And then another follow up on the share buyback, you were – as it was mentioned before, 80% has been completed from the previously authorized program. Don, how do you see the timing for a potential expansion or a new authorization on buybacks in light of the potential review in the CapEx of QB2? Would that happen or would management propose to the Board a new program just after the new QB2 CapEx is announced? And then depending on how that – how the -- higher CapEx, what is the higher CapEx then you will propose to Board to a new program or it doesn't really matter and not linked to QB2 CapEx?

Well, we got to finish the first program, the current program. I'm not sure how long that'll take but once that's done, and that would likely be passed when the QB2 information on CapEx and schedule comes out. So it's a Board decision. There's nothing planned at the moment and the Board would assess how the overall market looks Corona virus, coal price all the normal things that you would think about and look at our capital needs and decide if there's a surplus to add or asset sales. Nothing planned at the moment, but the Board will always be monitoring these and each meeting that we have.

Great. Thank you very much.

Thank you. Our following question is from Lucas Pipes from B. Riley FBR. Please go ahead.

Hey, good morning everyone. Just another one on the coal side. And things do seem out of sync there at this time. And just wanted to get a little bit more color. Is this related to Neptune at the end of the day, or is this a perfect storm with weather rail and your Neptune development coming together or are there may be more specific processes that you could improve on your side that could avoid similar outcomes in the future? Thank you very much.

Thanks Lucas. So as usual it's a combination of things. But, it's probably closer to the perfect storm if you had to pick one. So if you start big picture and say look, the Corona virus has hit, its hit commodity markets we don't know how it's going to shake out, but generally they'd be weaker for a period of time until this whole thing sources itself out throughout the supply chain. So we're saying, we'll do our part and cut back production a bit. I noticed that that's helping to strengthen the coal prices has been very effective so far. That then, with reduced production, gives us opportunity to take the five-month shutdown Neptune which assists with construction and helps manage things there. So it's kind of seeing an opportunity and taking it in terms of making those decisions. We got to get through these two quarters, but only assess the business up in a really good position as we get to the end of the year like this transfer from Cardinal River to Elkview is very significant. It's a much higher quality business once we've completed that. So a lot of it's happening in these two quarters, no question, but it certainly comes to an end and this is in good shape after that.

That's, that's a helpful perspective. I appreciate that. And then my second question on QB2, and I appreciate it. We'll have an update here before the end of the quarter, but I'm sure you can appreciate that this has been an overhang for the stock and investors are eager to kind of find out what the number is. And I understand it's early and there is still some -- I'm sure some work to be done. But, can you maybe ballpark the potential cost inflation could be 10%, 20% below that, any color that you could share at this point, I think it would be really appreciated by the market. Thank you.

Firstly, I certainly understand why you're asking the question but I'm sorry, I am not going to be able to do that. We will give you the answer. It's only maybe six weeks away not even that and then you'll get lots of detail and then will be available on April 1 in the Investor Day to go through all the detail, I think it's best to get the true story rather than making the estimates at this time. But, I might just add back on the coal business, when I say we got to get through these two quarters, but once you get into really even into Q3 and Q4, we go into a period of time where coal costs continue to go down firstly, the Elkview expansion that we talked about, but then as Robin said, this strip ratio is coming down this year and again next year, then we get Neptune in place and that lowers our costs in the logistic side. So we're quite excited about the coal business. It’s going to be so much stronger six months from now, but yes, we got to go through these quarters. I know the markets, short-term always, always is short-term, but even medium-term or not even quite. It's not that long until this business looks awfully good.

That's very helpful. Really appreciate it. And best of luck to you and the team.

Thank you.

Thank you. Our following question is from Brian MacArthur from Raymond James. Please go ahead.

Good morning. I'm sorry to go back to the coal again. And I hear everything you're saying about getting to the next two quarters. But there's also a statement in here about the risk if you don't complete Neptune on time and your Westshore Terminal contract expires, you may have to pull back production and sales. So can you just go through it looks like you have some mitigation in there with your deal on Ridley, but can you just answer that really deal that goes from 3 to 6 and then you have an option to 9 million tones, if for some reason Neptune's delayed, Westshore expires, can you get 9 million tonnes through Ridley next year in that short period of time while you're offering everything because that'll impact the cost too, can you just go through that scenario, please.

Yes, I'll make two quick points and then turn it over to Real and Ian. So the language in our disclosure, as you would expect that we do, it's our job to highlight the risks. So we've done, so it's nothing more than that. In terms of -- let's go to the Ridley contract now then. So who wants to, Real? You want to go?

So when you look at what we've announced on contracts, I mean, there is additional capacity on CN, there is additional capacity adequately, like you've described, what we're actually doing is continuing to progress, commercial and operational options to complement our capacity at Neptune. And keep in mind also that the five-month [shutdown] that we're doing at Neptune will bring benefit to the schedule and there is a possibility that we will also get benefit from tonnage, going through Neptune. It's difficult to estimate at this point. And then with respect to other alternatives, we're not going into -- we're not going to go into further details at this point because it's actually commercially sensitive.

Great. Thanks very much.

Thank you. Following question is from Alex Hacking from Citi. Please go ahead.

Yes, good morning. Just one question for me. On the energy business, right now, I guess, generating negative cash flows, negative headlines. Where does this business fit in your portfolio in your portfolio on the long-term? Especially given your targets around carbon neutrality and stuff like that. Thank you.

Hey, I'm sort of a big picture question and answer it in two parts. First, what we've said is that against this is really focused on Fort Hills. So Fort Hills has been very successful from an engineering and operating point of view. And the only month that -- the last month it was allowed to run full out it, it averaged 104% of capacity and cash cost of 23 Canadians was pretty good asset. Since that time we've had the capacity shut in Alberta, and it doesn't look like it's going change anytime soon. And that, of course, is due to the pipeline issue. And so really, Fort Hills to achieve the kind of results that it was built for, we have to wait for the pipelines to be completed. And during that time Suncor believes there's really good bottlenecking – debottlenecking opportunities that can increase the capacity as much as 20%. So allowing those two things to happen, certainly increases the value of Fort Hills. We've said that at that time, which is a couple years off, that if we're not getting paid in the Teck Resources share price for that asset, which might be one of our top three assets at that time, then we would look at doing something to release that value whether it's a spin-out or sale or some sort of transaction, we looked to make sure that the shareholders get to some value. So that that's how we think and I think we did that and then probably Frontier and Lease 421 would go with it. The specifics on Frontier, of course, is right before federal cabinet now. We don't know what the decision is going to be. And I think we've come this far, we're just kind of wait to see what the answer is at this stage, as I've said before, it's anyone's guess.

Thank you. Our following question is from Orest Wowkodaw from Scotiabank. Please go ahead.

Thanks for taking my follow-up. Just in your three-year guidance for Highland Valley Copper at 155,000 tonnes to 165,000 tonnes, does that assume an expansion kicks in somewhere in that timeframe.?

No, in fact specifically, it doesn't assume that. And an expansion of anything could probably even potentially drop that for a short while. But that's the existing plan. It's better grades as we go deeper in the pit, and we're getting tremendous benefit from RACE21 throughput initiatives as well as the recent D3 mill that was installed and commissioned in 2019.

Okay, thank you. And then just on QB2, I realized the study is underway, but can you give us a sense of how much of the original CapEx was exposed to the peso versus the dollar?

Yes, it's close to 70% and the other part of that question and answer is that the U.S. dollar component is generally more upfront in terms of the things you're purchasing. Whereas now -- between now and finish the project, high percentage of labor, which of course is in Chilean pesos. So peso’s around 800 today, so it's pretty big benefit. Just to remind people when we sanction the project, [625, 20] pesos to the U.S. dollar.

I think we've got time for one more question. Thanks.

Certainly. Our last question is from Greg Barnes from TD Securities. Please go ahead.

I just want to squeeze in around the trout issues in the Elk Valley, how serious is that? And what mitigation measures do you think you need to make?

We're turning to Robin Sheremeta to go then.

Yes, I mean, we're still evaluating it. We had the one, one population measured last through the summer season. So and that showed a decline in the population. And right now we're into a technical review, that's going to take some time. There's multiple different possible causes from anything from water quality issues to flow conditions, habitat availability, predation, lots of different scenarios around natural causes. So we have to get through that process of understanding what the potential root cause is. We are confident that whatever we find as a root cause, we will be able to mitigate and move forward, but that's about where we sit right now. There's not much more we can say until we get through this study.

We're not going to tell them --

How long?

Possibly three to four months is what I think we're looking at, that's the last update. I had a really strong team that's on it, external people have come in to help us to understand that what’s happened so. Well, three to four months should know by the middle of the year.

Okay.

Thank you. That concludes the Q&A session. Please go ahead Mr. Lindsay.

Okay, I just want to say thank you to all for joining us today. And maybe just to remind you that, particularly when talking about QB2 none of the information that we addressed is new, it’s all sort of been things we've disclosed for several months now. And we look forward to being able to fully answer the question on CapEx and schedule at Investor Day on April 1, and we hope to see all there. Thanks very much.