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TECK COMINCO CL B (NYSE:TCK)

Q4 2009 Earnings Call

February 09, 2010 11:00 am ET

Executives

Greg Waller - VP, IR and Strategic Analysis

Don Lindsay - President and CEO

Ron Millos - SVP, Finance and CFO

Tim Watson - SVP and General Counsel

Roger Higgins - SVP- Copper

Len Manual - SVP, General Counsel

Bob Bell - Teck Resources Limited, CCO

Analysts

Brett Levy - Jefferies & Company

Jeff Cramer - UBS

Dave Katz - JPMorgan

Orest Wowkodaw - Canaccord Adams

David Charles - GMP Securities

Michael Gambardella - JPMorgan

Oscar Cabrera - Bank of America

Greg Barnes - TD Newcrest

John Hughes - Desjardins Securities

Sunil Gathader - Sentinel Investment

Kerry Smith - Haywood Securities

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Teck's fourth quarter 2009 earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. This conference is being recorded on Tuesday, February 09, 2010. I will now like to turn the conference over to Mr. Greg Waller, Vice President, Investor Relations & Strategic Analysis. Please go ahead.

Greg Waller

Thank you, Melissa. Good morning, everyone, and thank you for joining us this morning on Teck's fourth quarter 2009 earnings conference call. Before we start, I need to draw your attention to the forward-looking information slides on pages 2 and 3 of our presentation package. This presentation contains forward-looking information regarding our business. Various risks and uncertainties may cause actual results to vary and Teck does not assume the obligation to update any forward-looking statements. And at this point, I'd like to turn the call over to Don Lindsay.

Don Lindsay

Thanks, Greg. Good morning and thank you all for joining us. Last year this time we were presenting results that looked quite different than what we see today and the world was still in a state of crisis. I think it is fair to say that the achievements we have made over the past year are testament to the strength of this company, the strength of our asset base and most importantly the strength of the entire team at Teck. I'll start with a review of the results for the year and the quarter and then turn the presentation over to Ron Millos, our Senior Vice President Finance and CFO to address the more in depth financial topics. A number of other members of the management team are on the call this morning and available to answer your questions.

Turning to slide 5, we are very pleased with the results for the year, we set a new record for the company for revenue this year at almost $7.7 billion, operating profit before depreciation and amortization of $3.7 billion was within 5% of the 2006 record when zinc touched $2. EBITDA was $4.1 billion; net earnings of $1.8 billion were the second highest ever. These financial results were supported by good operating performance across the company including record production of copper at Quebrada Blanca and of zinc at Red Dog and Antamina.

Slide 6 shows our earnings from continuing operations for the year and a comparison for last year. Earnings from continuing operations were $1.75 billion or $3.27 per share on a fully diluted basis. These results are more than double the earnings of $668 million last year or $1.47 per share as we had some gains on asset sales and foreign exchange translation gains in 2009 which improved earnings, but we also booked some asset impairment charges in 2008 which reduced earnings.

The chart on slide 7, the focus is on how we have reduced the term loan over the year, where we expected we will be with the closing of the Waneta sale and our comparative cash position. With the term loan reduced to under $1.2 billion and our expected cash position in the order $1.3 billion, we expect to be net-term loan fee by that point. As a result our net debt to net-debt plus equity ratio will be about 26%. Overall, we have reduced our total debt by $6.7 billion since we acquired the Fording Coal assets in October 2008. Thereafter the balance of the term loans will be repaid from our cash balances and from cash flow. We are generating very good cash flows, so we expect the balance of the term loan could be reduced quite quickly.

Turning to slide 8, there are a number of highlights in the quarter. Again this quarter we set a new record for revenue at almost $2.2 billion, operating profit before depreciation and amortization, a $1.035 billion was the highest we have recorded since Q4 2006 which was our previous record. Net earnings were at $411 million and EBITDA for the quarter was over $1 billion.

We have achieved a major milestone in the plant growth of our copper business with Andacollo reaching mechanical completion in the quarter and ready for commissioning. Having resolved the water issues, Andacollo is now in the start-up process and Tim Watson will speak to this a little later. Slide 9 shows our earnings from continuing operations for the quarter and in comparison to last year earnings from continuing operations in the quarter were $416 million or $0.70 per share. These results compared to a loss of $603 million last year in the quarter again reflecting the asset impairment charges at the end of 2008. Before the effects of these write-downs last year, earnings would have been $0.50 per share which compares to the $0.70 per share this year.

Slide 10, we show our view of comparative earnings for the quarter. The largest non-recurring items this quarter is the gain on asset sales that we recognized of $137 million. The evaluation of a US dollar debt to the Canadian equivalent resulted in $35 million non-cash exchange translation gain due to the strengthening of the Canadian dollar in the quarter. We have removed this from the adjusted net earnings. We also are removing the asset impairment charges which total $68 million.

As the result, adjusted net earnings were $312 million or $0.53 per share. I should note that due to appreciation in our stock price, stock-based compensation added about $25 million to G&A expense which we have not removed here in adjusted net earnings, if we had just to push up the adjusted EPS by above $0.03 per share. At the comparative net earnings line, we remove the impact of final pricing adjustments in the quarter and the higher copper price in the quarter mainly contributed to a positive pricing adjustment this quarter.

On slide 11, we are showing a comparison of our operating profit for the quarter and for the year compared to previous periods. I think it's pretty interesting to note that despite all of the attention that our coal businesses getting currently, operating profit from our copper business was equal to our coal business for the current quarter, I am sure that will surprise a few people. Our coal business had a good quarter meeting guidance for sale and delivering good cost performance what this does show of course is the good performance of our copper business and we expect that to improve as our copper production as expected to increase by about 10% this year and more thereafter.

Turning to prices for the quarter on page 12, the prices for our base metals were all up healthily compared to the same quarter last year. Canadian dollar was stronger this quarter compared to last year, mitigating somewhat the impact of the higher metal prices. Coal is much lower than last year and as majority of the coal being sold reflects the 2009 contract year pricing.

Turning to our operating results for the quarter. In our coal business on slide 13, our share of production sales is higher on a year-over-year basis reflecting our acquisition of a 100% interest in the coal assets in Q4 of 2008. Sales were 15% higher compared to the fourth quarter last year. The average realized price of $139 per ton is consistent with our guidance and a bit higher than we received in Q3 as the reduced volume of carry-over sales this quarter was more than offset by higher spot price sales. This quarter only 400,000 tons of total sales were at 2008 pricing. At year end, we still have 800,000 tons of carry over remaining from the 2008 coal year.

Unit site costs were lower compared to last year due to lower strip ratios and diesel costs. Overall, cost for the year came in at $55 per ton. Unit transportation costs were again almost 25% lower compared to Q4 of last year due to the impact of reduced rail rates resulting from the successful arbitration ruling in July and lower coal prices impacting coal price participation provisions in our core contracts. For the year, transportation costs were about 18% lower.

Turning to page 14. In our copper business unit, overall production was down 7% versus Q4 of last year due to reductions in Antamina as we processed a greater proportion of copper zinc ores in the quarter. In Highland Valley as (inaudible) reduced our throughput and at Andacollo as the transition from cathode production to concentrate production commenced. Offsetting this somewhat was another good production quarter at [QB], but we set a production record for the year of over 87,000 tons; we are very pleased with that.

Sales volume was off by about 12% reflecting the lower production, the operating profit before depreciation and pricing adjustments is equivalent to a cash margin of $2.01 per pound of copper sold. This cash margin changes of course with operating costs, treatment charges, by product [credit], but it does demonstrate the continued strength of our copper business, the weighted average overall cash cost for the quarter were $0.99 a pound. Cash costs have increased somewhat in a few of the operations. Highland valley is experiencing reduced production and the resulting impact on unit costs is expected to continue through 2010.

QB costs have increased somewhat as well and is now moving more waste material to maintain ore production rates and Andacollo is in transition from cathode to concentrate production, as a result unit costs are higher there. These higher costs have been offset by Antamina with a lower unit cost due to the byproduct value which has resulted in overall unit cost being relatively stable over the past few quarters.

Turning to page 15, in our zinc business, zinc cost rate production for the quarter was about 27% higher than last year as both Red Dog and Antamina produced a higher rate. In fact Red Dog and Antamina set new annual production record for zinc. I should note that even though we show Antamina's share of zinc production in these figures, the financial results of Antamina are fully recorded in our copper business.

Production of refined zinc at Trail for the quarter was similar to last year as we were still recovering from the curtailment of metal production that had been instituted in Q4 2008. Our zinc business contributed $205 million in cash operating profits this quarter, up considerably from last year as the zinc price at $1 per pound is almost double than last year in the quarter.

I will now turn the call over to Ron Millos to address the financial issues.

Ron Millos

Thanks Don and I am on slide 17. As Don noted earlier, our debt position at the end of the quarter had been reduced to about $7.6 billion which left us with a net debt to net-debt plus equity ratio of about 31%. Since the end of the quarter, we made a further $442 million of payments against the term loan and it is due to be reduced even further with closing of the Waneta transaction, proceeds of which will go to debt reduction.

This slide shows the pro forma expected debt and cash level after the closing and we expect our net-debt to net-debt plus equity ratio will be about 26% and I should note that the debt amount shown in the table are net of unamortized issue costs and discounts. When the term debt is fully repaid, we expected our debt to debt-plus equity ratio will be well under 30% and our net debt to net-debt equity ratio will be well under 25% which we believe is within the credit rating agency guidelines for investment grade credit risk metrics.

Our pro forma debt-to-EBITDA ratio will be under two times compared to our target of under 2.5 times, how long the rating agencies take to make their decision to put us back to investment grade is of course their call.

On slide 18, we have summarized our changes in cash for the quarter, cash flow from operations was $697 million in the quarter including the working capital change and our working capital change was positive as it normally is at this time of the year due to the seasonality of our business most of which is related to the timing of the shipping season at our Red Dog mine.

Capital expenditures and investment were $230 million in the quarter. Investments in the oil sands was only $16 million of this total, with Fort Hills being put on care and maintenance, our funding requirements for 2010 are expected to be approximately $1 million per month. We made debt repayments of $352 million in the quarter with net proceeds from asset sales and from our operating cash flow.

After allowing for the effective exchange rate changes on cash and cash flow from discontinued operation, our net change in cash in the quarter was an increase of $247 million to a balance at the end of the quarter of $1.4 billion and the restricted cash on our balance sheet can only be used to make payment on our term loan.

Slide 19 shows our final pricing revenues for the fourth quarter as we highlight each quarter pricing adjustments on sales of our various products can have a significant impact on revenues, outstanding provisionally priced receivables at the end of any quarter are finally priced based on contractual quotational period for subsequent period resulting in positive or negative price adjustment. Final pricing adjustments for this quarter were overall positive, but relatively minor compared to the quarterly volatility we have seen over the past year. The largest impact within copper where we had 105 million pounds of copper receivable set over the quarter at $0.20 per pound higher than the price at which they were provisionally booked in the third quarter.

In Canadian dollar terms, this increased our revenues in the quarter by $19 million. We also improved a positive adjustment in zinc where we had a 155 million pounds settled in the quarter at $0.11 per pound higher than the price at which they were provisionally booked. We also recorded pricing adjustments on sales booked during the quarter and these are mark-to-market a quarter end. With the increase in metal prices at quarter end, it contributed an additional $63 million in pre-tax revenue and remember when analyzing the impact of price changes on our final pricing revenues, refining and treatment charges and the Canadian US dollar exchange rate must be included in your calculation. In addition you need to consider taxes, royalties, and minority interest when trying to analyze the impact on net earnings.

Moving on to slide 20, we have summarized our production guidance for the year, coal production guidance is for production in the range of 23.5 to 25 million tons which will be approximately 25% higher than the rate we produced at in 2009, but only about 15% higher than the annualized rate we produced at for the last half of 2009.

Copper production is expected to be about 10% higher than last year primarily due to increased production at Andacollo with the transition to the concentrate production. Zinc production is expected to be about 650,000 tons of zinc and concentrate which includes Red Dog and our share of production from Antamina. Zinc and concentrate production will be down principally due to reductions at Antamina. Refined zinc production at Trail is expected to be 290,000 tons.

And with that I'll turn the call back to Don Lindsay

Don Lindsay

Thank you, Ron. Turning to slide 22. I'd like to highlight a few items that you should be thinking about regarding earnings estimates for the first quarter. As always there is seasonality in our zinc sales due to the shipping season at Red Dog and we're currently expecting about an 110,000 tons of zinc sales in Q1, which was down from the 200,000 tons we've sold in Q4.

And Q1 is typically our most difficult quarter for coal shipment because of the impact of snow in January, February or rain in February and March can disrupt rail haulage temporarily. Although with the winter we're having this year, it is rain that was more likely the issue. In coal, even though spot pricing is very strong, we're still selling most of our coal on the basis of the 2009 contract year pricing albeit with between 5% and 10% of sales still on the 2008 contract year pricing.

Copper production will be lower at Highland Valley this quarter versus last year as we continue to deal with the additional striping requirement and lower at Andacollo as it is in transition from cathode production to concentrate production. This had a consequent impact on unit costs as well. And with the correction of prices, we've seen recently if prices were to stay at similar levels for the rest of the quarter, we would incur negative settlement adjustments on sale, that we've had provisionally priced at the end of the fourth quarter.

Of course, with the closing of the Waneta transaction, this quarter our sales of surplus power will be pretty much eliminated at some point this quarter, and so I think it's important to note that even though we feel we've had a very good year in 2009 and we think the outlook for the balance of 2010 is very strong. This quarter we still have all these factors involved in it right through till March 31st.

Now on slide 23, I would like to talk to you briefly on the status of our after sales, and on the project to expand copper production at Andacollo and Antamina. Slide 24 summarizes the facts for the transactions that we have announced. We have closed all the gold transactions now and except for the equity positions that we still hold, have applied the proceeds from all these to debt reduction.

We still have to close the final transaction, the one-third interest in Waneta Dam as we've discussed earlier. And in summary, these assets sale will have generated total proceeds of $1.6 billion, but I think it is very important to note that this represents only 5% of our total asset base. And equally important the sale of the gold asset wants the execution of the strategy to capture the unrecognized value in our gold assets that we have communicated a number of years ago.

As we've said, on many occasions gold will never be fully valued in a diversified metals or resources company at the gold multiples that others enjoy so for Teck shareholders to benefit from our activities in gold. Ultimately, we do have to sell the asset to attain those higher valuation. We announced that we would do that couple of years ago and that was executed in 2009.

The only new asset sale that took place in last year's program was one-third interest in Waneta and that represents only about 2.5% of our asset base, so the main point here is that we have 100% of core assets in Teck and today we have more reserves and resources and production than we did at the start of 2008. So we are well positioned going forward into the future.

Turning to page 25, I'd like turn over to Tim Watson, our Senior Vice President of Project Development to discuss the Andacollo project.

Tim Watson

Thank you, Don. The photograph that's presented on slide 25 you have seen before, this is the most recent photograph taken just a few days ago. This shows the entire facility now complete and in the early stages of commissioning and [step up]. Some of the milestones that were achieved at the tail end of the project; mechanical completion was achieved in December 2009. The primary crusher began crushing material in early December 6 and first ore was introduced into the concentrator on January 19 of this year and the first very minor amount of concentrate was produced on February 2.

So with that I will turn it back to Don.

Don Lindsay

Thank you, Tim. Turning to slide 26, we announced in early January with our partners the decision to go ahead with the expansion of the Antamina mine. The concentrator will be expanded from 94,000 tons to 130,000 tons of ore throughput per day. The mine [fleet] will be expanded to support the higher throughput. This will increase copper production by about 40% for the first two years. Zinc production will be higher than the case without expansion, but in fact it will decline somewhat due to a change in ore mix.

Moly, silver and lead production will also increase. The expansion project CapEx will be funded by a combination of Antamina's existing cash flow, reinvestment of profits which reduces taxes in the short term and some borrowings at the CMA level and some equipment leasing. Net result of taxes that we don't actually put new cash in the project and expected dividend distribution to us over 2010 and 2011 will be reduced by less than about a $100 million in total.

Slide 27, in summary our diverse portfolio of high quality mining assets provide investor's exposure to commodities with strong fundamentals and therefore are among the most favorite by market analysts. Our long-term strategy is to continue to build our existing businesses and we look to broader diversification opportunistically.

In our copper business, we expect to deliver 40% growth in production in the near to medium term through 2012 from announced projects. Longer term, we expect that over the period of years, we can triple production with the development of the existing resources that we have right now. There is no need for any acquisitions of new resources. In our coal business, we expect to be able to grow production by over 50% over the medium term, again from existing resources already in the portfolio.

In our zinc business, our focus for the next two years will be on growing demand for zinc through the International Zinc Association initiatives such as Zinc in Fertilizers. And our move into the oil sands is another important diversification for us. We expect it will provide us with participation over the long term in high-margin, very long life assets. Our involvement in oil sands is very much an extension of our core skills, large scale surface mining in the [north]; in the near term it represents a valuable long term coal option as well.

With that, I will like to thank you for your attention and we are open for questions.

Question-and-Answer Session

Operator

(Operator Instructions). The first question is from Brett Levy of Jefferies & Company.

Brett Levy - Jefferies & Company

Can you talk a little bit about plans to hedge any input, output or currency as you look at your current situation?

Don Lindsay

Our policy has been to generally not hedge other than the situations where we have a large capital expenditure, we want to assure return of that capital investment, or if the franchise or particular parts of it are risked in some way. So when we went back to the fall of 2008, we did hedge copper at that stage at an (average of 243 when it was in steep decline and that turned out to work out all right. In the earlier part of 2010, we also hedged some copper while we were in negotiations with banks to demonstrate some stability, but those hedges I think finished in last July and since then there has been no further hedging in terms of currency.

In the coal business because the price for coal has historically been set annually. Once the coal price was known, we have hedged the Canadian dollars because our cost in Canadian dollars and our revenue is in US dollars and that provides a stable margin. At this stage we don't know how coal negotiations are going to go, as you may have heard there is a lot of discussion about going to coal [re-pricing] or shorter-term pricing and more spot business being done, so we will wait to see how those negotiations go until we make a decision on hedging the Canadian dollar, but in general that would still be a stable margin in that business.

If the business does go to quarterly pricing, it will be a little easier from a hedging point of view. The thing is you know our copper zinc business re-prices daily, if the US dollar decline and Canadian dollar prices where as the coal price historically has been annually, so that sort of a hazard in that business and I think hedging and doing it quarterly would make it more stable. That's basically the position we are in.

Brett Levy - Jefferies & Company

What are the major elements in the CEDAR or 1.1 billion CapEx budget and then can you get us to sort of pro forma for the asset sales, what the maintenance CapEx is?

Don Lindsay

I'll turn it over to Ron Millos, the appropriate [Technical Difficulty] the general categories we won't be getting into (inaudible).

Ron Millos

Okay, and the sustaining capital will be about $375 million of the total and about $675 million will be the development. The main development projects would be the completion of Highland Valley's push back and resolving the geotechnical issues there. The Antamina expansion that Don spoke to, additional equipment at the pool and then starting work on forming up what we potentially will be doing, with the key (inaudible) concentrate project and some of our oil sands projects. At the sustaining level, the copper will be about $130 odd million, coal will be about 125 million and the zinc business will be about $100 million.

Don Lindsay

To put it in context, basically the order of magnitude is roughly the same level of last year, a little bit higher but last year had a large component of oil sand Fort Hills as management was over $300 million. This year that reduces to 9 and so that increment is being devoted primarily to copper. We know its important to grow the coal business right now so that not only it can benefit this year but we see looking 2011 and 2012 to be quite positive and we want to make sure that we ramp up production and so that's why we've increased the capital on the coal side and as Ron said on the copper side, its really geotechnical issues at Highland Valley and the other things you mentioned.

Brett Levy - Jefferies & Company

Okay last question is debt to capitalization. Right now you are performing at 26% investment grades, in theory 25%. Are you going to cash it where you are deliver slowly or do you want to blow through that as a way to perhaps move the rating agencies faster to upgrading new investment grade.

Don Lindsay

Right now our full focus is on repaying the term loan and it wasn't any of that. At that point all we would have left is the bonds outstanding. There are some that we could look closely at that. That is just to me those numbers aren't necessarily that economic, but I think over time you will see that our debt levels will continue to reduce.

Operator

The next question is from Jeff Cramer from UBS. Please go ahead.

Jeff Cramer - UBS

Just on the expansion, the 24 million tons this year, coal production, can you just can talk about the steps that were being taken. To me it sounds like you are spending some money on additional equipment. From a cost perspective it would be flat year-over-year. So I guess there's extra stripping that needs to take place, just some color on that.

Ron Millos

Okay I am going to turn over to Bob Bell from our Teck Coal business to give you some thoughts on that.

Bob Bell

When you look at the expansion on the coal side, the investments both on mining equipment and on the plant side, we're also hiring additional employees to see that growth.

Jeff Cramer - UBS

And how much further do you expect that you can take production up in '11 and '12. Is the reach of physical limit at some point or kind of what's that limit

Don Lindsay

What we said that in the longer term we are really targeting towards a 50% increase which should take us up towards 30 million tons, would take a few years to get there and a lot of steps between here and there but we're taking all those steps to prepare ourselves for that.

Jeff Cramer - UBS

And I guess what are you expecting for 2010 as far as your mix of medical sales as far as that financing goes?

Don Lindsay

Well in 2009 we saw a quite a significant increase in to Asia. So we went from less than half of our sales in to North Asia and we were up to 70% and in 2010 we will see increased demand from our more traditional customer base. So we will see some sales returning to that more traditional customer base, but we will see higher sales in Asia than we have before 2009.

Jeff Cramer - UBS

That's like 60% Asia, 42% Europe and South America?

Don Lindsay

I don't think we can give you a specific breakdown. I know but it will definitely be more than half in Asia.

Jeff Cramer - UBS

Okay great and as far as the net tons in the fourth quarter, somewhat deferred into this quarter, is there a rough number you have for that?

Don Lindsay

I am sorry I didn't hear the question.

Jeff Cramer - UBS

The tonnage that was deferred from the fourth quarter of '09 due to weather in to the first quarter, is there a rough number that you have for that?

Don Lindsay

I don't think we gave a specific breakdown was really a couple of vessels, a couple of vessels and we'll see those sales being made in the first quarter.

Operator

Thank you. The next question is from Dave Katz from JPMorgan, please go ahead.

Dave Katz - JPMorgan

Hi when you guys are saying that you expect 2010 coal mine site cash unit cost to be similar to 2009 levels. I was curious if you're referring to the 4Q, '09 levels or the higher 2009 full year average levels.

Don Lindsay

I was really referring to the entire year.

Dave Katz - JPMorgan

Okay and what would be driving the cost up then from what we are seeing as lows in fourth quarter?

Don Lindsay

Well, it's clearly a function of our overall strip ratios that we are expecting for the year at all businesses and other mining cost. And when we look at those compared to 2009 that's how most of our conclusion's on the cost.

Dave Katz - JPMorgan

Okay and then in terms of the carryover tonnage, and previous question I think you touched on a little but are you expecting the majority of the carryover tonnage to be sold in the first half of the year?

Don Lindsay

Yes. It would be more than half of the first half, probably but half of the total in the first quarter and then there is a balance which spread over the remainder of the year.

Dave Katz - JPMorgan

Okay. And then finally on when you were talking about the possibly your further coal production increases in 2011 and 2012. I was hoping that you could go through the steps necessary to make that happen.

Don Lindsay

Well, I mean the most important things for us to do the upfront work that allows the people to have a look at what we're calling for in terms of capital spending and potential returns and then people make decisions based on what we come forward and what we're doing is making sure that we are taking all those steps so that people can make those decisions. So that's engineering work and doing our exploration and stuffs along those lines.

Dave Katz - JPMorgan

And then lastly, and I believe in the past you had mentioned Don that you will not be opposed to making whole on the missed dividend payments. Is there still something that you guys are considering and if so what would be the possible timing on that?

Don Lindsay

It is true that when I was interviewed by one of the media, they asked about that issue and I said yes, it was something that I was firstly interesting and that's the kind of thing that the board decision is not something I think that people should be building into any models, and that's what they tend to do, policy is up to the board and it will be reviewed at each board meeting going forward.

Ron Millos

If I add a comment on the coals and spending lot of time on this equity to the Teck general managers last week to ensure that our guidance is still in line, but one of the comments on cost as we look at the different configurations in order to be able to increase the production, there is a number of things that you can do including such things as moving coal from one plant constrained mind over to another where there is plant capacity and that by definition would increase a component of the cost if you are doing that but is still very profitable business with the outlook for the coal price that we see. So some of those kind of things in the next year are very worthwhile to do even though it would have the effect of increasing cost return marginally, the margin of that kind of business is very, very healthy. So I think that those are some things that should be kept in mind in 2010.

Operator

The next question is from Orest Wowkodaw from Canaccord Adams

Orest Wowkodaw - Canaccord Adams

Just a couple of operational questions, your coal production in Q4 is about a million tons short of what we were looking for, could you give us a bit of color in terms of what happened there and what gives you confidence that you can ramp up here from that 5.3 million ton a quarter rate to a minimum of 5.9 average per quarter in '10 to meet the minimum to low end of your guidance.

Bob Bell

It's Bob here. In fourth quarter, these mines are flexible and complex and you end up with certain configuration of (inaudible). Sometimes you are not releasing as much coal as you might want to. But when we look at the overall plans that's come in here and certainly these plans have been reviewed very thoroughly and we're quite confident that we will be able to produce within our guidance. So that the equipments coming out in the in fact we are able to hire the employees we need, we do not see any issue with falling within our guidance.

Orest Wowkodaw - Canaccord Adams

Should we anticipate lower production in the first of the year and a big ramp up in the second year or do you think its going to be pretty even?

Bob Bell

There will be a ramp up later in the year as equipment comes on that we've already have (inaudible). So we'll be lower in the first half.

Orest Wowkodaw - Canaccord Adams

Okay and at Antamina the Molybdenum productions are really falling off there only 5.5 million pounds in '09 n 100% basis used to do well over 13 can you give us a view of what your expectations are for '10 and forward and how the expansion will impact the moly production?

Unidentified Company Representative

Moving to Roger Higgins our Senior VP copper.

Roger Higgins

Thanks you (inaudible). We did have quite a bit one year for a couple of reasons as you will be aware the (inaudible) which is quite variable as each push back comes down the wall varied with high copper zinc ores and hence very high zinc production and correspondingly less molybdenum production during the course from, generally speaking our grays were low during the year and also the entire floatation component in the [circuitry] and immediately required to keep the zinc and copper preparations going so there was less attention paid and less attention to the (inaudible) continue recovery molybdenum rates were low anyway.

It does change, we will have some of our production in 2010 with a number at (inaudible) million pounds in the expectation. And though it is almost totally a function of what material is in the face of the mine as the mine progresses down through each of the (inaudible).

Orest Wowkodaw - Canaccord Adams

Okay. And just one last question if I may, in your copper guidance for '10 at 340,000 tones what contribution have you assumed for and declare when that number?

Bob Bell

We have a small production from CapEx steel is around about 10,000 tons of CapEx and ultimately 50,000 contains from of property (inaudible).

Operator

Thank you. The next question is from David Charles from GMP Securities. Please go ahead.

David Charles - GMP Securities

Hi, good morning, I was just wondering in respect of the Aqqaluk permit appeal, what would be the worst case scenario if for some reason the appeal was appalled and the development of Aqqaluk was delayed?

Unidentified Company Speaker

I'll turn over to Len Manual, our Senior VP and General Counsel.

Len Manual

The worst case scenario would be a stay of one of the core permits either the NPDES permits for the supplemental environmental impact statement itself. That would be an appeal to the entire middle appeal board structured inside EPA itself. We would try to expedite that process but that could delay on our excess capital on upfront 12 months to 18 months.

David Charles - GMP Securities

And how would that impact production from Red Dog hinge overall?

Len Manual

Well the current mining plan calls for blending of higher grade material from Aqqaluk with the lower grade material in main tip as we move towards exhausting that tips in the fall this year, and that we're not unable to pre-strip and access Aqqaluk than the operation could shutdown as early as October this year.

David Charles - GMP Securities

Does that mean that the operation would completely shut down and you would lose almost all production or would you still have a residual production from the low grade material in the current pit?

Len Manual

The low grade materials in the current pit have been some opportunity to blended with higher grade material would not be economic, and we move to complete curtailment of operation.

David Charles - GMP Securities

And could you give me sort of an idea what the time table at the moment would be to how you see it on the resolution of the appeal?

Len Manual

First of all, we have to have an appeal, and we haven't seen that yet. We have been encouraged by statements made by the environmental NGOs and the tribal groups that they do not intend to shut down the mine, and are also encouraged by the fact that all though it's been an appeal of the state certification of the NPDES permit issue by the EPA in January. There was no request for a stay. We fully expect these people to act responsibly, and if they do they'll target their appeal to specific issues in the NPDES permit and not (inaudible) of the entire permit. And we are in a constant dialogue to try and not trying to address they are reasonable concerned.

David Charles - GMP Securities

Finally, if I'm not mistaken you said that you need to have some sort of resolution by the end of the first quarter so there wouldn't be any impact, what's the likelihood that you'd be able to meet that timetable?

Len Manual

The appeal period at the in front of the NPDES and (inaudible) expired on February 17, if no appeal is by that date we are still waiting for a wetlands permit from a the corp of engineers which we need to start to prestrip Aqqaluk. So we all know (inaudible).

David Charles - GMP Securities

Okay and maybe if I can ask just one final question I was just wondering you did Don say earlier that the board reviews obviously that dividend policy every quarter can you just highlight again what would be the key drivers for the board to make a decision to reinitiate the dividend?

Don Lindsay

I said that we are completely focused on its payment term loan and that what we are going to do and we won't be doing anything other than that, that's not too far that the rate we are going but we are going to stay focused on that.

Operator

Thank you. The next question is from Michael Gambardella from JPMorgan, please go ahead.

Michael Gambardella - JPMorgan

I have a question about the great optionality value you talk about in oil sands business and how do you see that real good optionality value in oil sands is it just a higher oil price in your mind or is there something else to it or what oil price could you expand on that because you still seemed pretty enthusiastic about oil sands.

Don Lindsay

Yeah, long term we think it is a very good fit for our portfolio, it's right next door in Alberta, large open thick mining which is something that we are always good at. There is no particular reserve of exploration if you like because we have the resources, we have resources are which measured in billions of wells and now when we had zero two, four years and how we create value for that in the long-term remains to be seen but whether its built some of the properties or some of the properties and in the meantime we spend very little money on it over the next couple of years and just continue to add value to properties from a regulatory point of view towards permitting. And off course its (inaudible).

So, we see a number of different ways there to create value per share count and then long-term on the oil price I guess we believe that oil will be important part of the energy needs for the world and its convention oils are in decline so and so we have to see in the meantime for the next couple of years with very little money spend on it.

Michael Gambardella - JPMorgan

What oil price do you need to make it attractive?

Don Lindsay

That depends which projects you are talking about and what form of project what (inaudible) in the infrastructure all those things, we only put those things and right now were waiting for quarter to complete its studies and that will take some time but we are quite confident that the result of their will make the project look even better. What oil price that will say the you need to get an appropriate rate of return we'll have wait and see what the result there, what's given in terms there.

Michael Gambardella - JPMorgan

And just last question on it, have you had parties approach you interested in buying any if your oil sand leases?

Ron Millos

We have discussions from time-to-time with a number of parties in the industry and every other source of (inaudible).

Operator

The next question is from Oscar Cabrera from Bank of America

Oscar Cabrera - Bank of America

Just on your coal sales for 2010 what are your plans or projections for the spot sales and then secondly one of you can give us a little bit more color on the capital expenditures for development projects. Just figures for coal (inaudible) I think we saw a good idea but Highland Valley.

Ron Millos

I think question is percentage of spot sales?

Oscar Cabrera - Bank of America

Yeah your percentage of sales because I mean I believe in the last quarter you said that there was an indication that you were to pursue a higher volume of sales in the spot market.

Ron Millos

Last year I think we earned up like 20% of our sales were spot market versus previous year basically zero or almost zero that was a significant increase. We are still working on our marketing plan for next year, so the amount hasn't been determined but order of magnitude it should be similar to last year but that'll depend on the negotiations customers and pricing and the mix of quarterly versus annual and so and so. Little premature to give a harder number on asset in the range of last year and for the capital world to Bob Bell.

Bob Bell

That's right, and (inaudible) its probably not correct we've developed some relationship that we worked down in 2009 using the spot markets and vehicles to do that and so certainly the shorter term pricing cycle but some of them may actually turn it away into more of a contractual relationship over the short term pricing cycle to build on the work with last year?

Oscar Cabrera - Bank of America

Sorry to interrupt Bob would that be something similar to what BHP is after like quarterly settlements for this prices?

Bob Bell

I think there is a lot of talk in market of both of these mature pricing cycling at least we can see the benefits of maturing cycles even if we loose our way we are supported, but regardless of what the overall market does, what have been spot sales would certainly be short term pricing cycle because we'll continue to build on relationship we have in Chinese market, that we remain focused and pricing cycle is already shorter in Chinese market.

Oscar Cabrera - Bank of America

And then I'm sorry on the CapEx. The development CapEx for the 2010 on the coal side?

Ron Millos

Its about 230 million.

Oscar Cabrera - Bank of America

And then do you have a number for Highland Valley?

Ron Millos

On the development side we've got a 140 million.

Oscar Cabrera - Bank of America

Now you mentioned in your release that you were planning to capitalize this CapEx so what should think about in terms of cost on a per ton basis? On 2010 versus 2009.

Bob Bell

With respect with (inaudible).

Oscar Cabrera - Bank of America

Sorry, this Highland Valley

Ron Millos

Operating cost?

Oscar Cabrera - Bank of America

Yes, operating cost.

Ron Millos

Can we get back to you on that one afterward?

Operator

Thank you, the next question is from David (inaudible) Partners. Please go ahead.

Unidentified Analyst

Good morning gentlemen. Wanted to see if you could provide a little bit more of a macro view on where commodities are at this point in the cycle, coming out of last years credit markets and we have seen a trajectory that's been essentially straight up and we have seen that prices are obviously in the short run, just recently it started to head back down. We will see any idea as far as will production be kept at these levels or will the they [apply] you think on the macro view started to take effect and we'll some normalization of prices and see a little bit of them to weaken somewhat.

Ron Millos

Okay, we could talk at linked on that question so let me explain (inaudible) this way. It differs commodity by commodity and just our fleet to our commodities, our view at near term fee bore net coal has the most interesting prospects primarily as a result of the dramatic increase and influence that China has in fee bore net coal, it went from 2.4 million tons I think in '08 to 34 million tons in '09 and that's before a number of these large we'll plant from a code built and so combine that with the fact that for the US and Western European really starting the full recovery so if China keeps doing what its doing it doesn't have to grow, just stay where it is.

US and Western Europe and the rest of the world recovered that market is going to be very, very tight for the next two three years because there is not that much that the producers do we are all trying to increase production, but let me tell you there is all sort of challenges and difficulties and its stopped and I think when you go through company by company they will tell you how difficult it is.

In copper, we think copper has the best kind of medium to long term outlook, because the major mines around the world they are headway during decline that are some of the very large ones is Chile have been through the higher grade of course at the beginning and they haven't moved more rock to produce (inaudible) and there aren't that many large projects available, exploration hasn't been that successful globally even though $7 billion a year plus has been put in that space.

So, we think that over the next 10 year period if copper demand grows even at a moderate rate the mining industry will not be able to keep up. Right now its still in the small surplus, there's been quite a bit of participation by financial players in copper, but I think the reason why it's still trading at the levels it 290ish today when people understand the long term view that there's not much the industry can do to keep up the demand. And things probably tracking copper about a year and a half to two years behind there hasn't been a lot of money go into zinc exploration and there aren’t a whole list of large mines to be developed, there is still a surplus, no question about that and the big question is how much zinc can China produce when the price goes up. We saw an example in 2006, 2007 when in those years, the price averaged $1.47, both year is at exactly at the same price, there is a fair amount of production from literally thousands of small mines in China.

Whether they can do that again or not, it remains open a question to receive, but elsewhere around the world, there is more of kind of production in decline from say Antamina shifting into more copper and less zinc, ultimately Brunswick at some point will deplete and so on. So in the long term they could be tight as well. But tracking cost of probably year and half or two years behind. So those are some thoughts for the moment.

One thing and we are seeing whether it was the water issues we had in Chile and Andacolla or the (inaudible) permitting Alaska, every operation even currently running operations are difficult to keep going, let alone trying to open new production. This is going to be tough and tough as the years gone to develop new production.

Unidentified Analyst

It sounds like there’s more concern with just trying to be flexible and able to supply and increase your production at times that is the actual price of that commodity itself. I mean just recently I was reading about how imports for copper this year might level off and that’s kind of where the basis of my question was and that obviously was the ongoing crisis with some of the other on the EU, so that was kind of where I was going, how flexible would you need to be in the very, very shorter run and looking out in 2010 and are you guys capable of moving quickly?

Don Lindsay

Just structurally in the mining business, you don’t have that much flexibility. You can't turn on a tap and have copper flow. It takes a long lead time, lots of capital and permits and licenses. So the industry will do everything it can to increase production. We are doing it, we know our competitors are, but it takes time and I think demand is going to outgrow supply.

The other thing I would say on a cautionary note, the odds that at some stage we will see another global recession or the market will continue to be volatile, the economies will continue to be cynical and at any time an event could occur that causes market, both financial and commodity markets to become quite cautious and everyone stop (inaudible) that we saw in '08.

So, we have to kind of build that into our thinking going forward. It’s a very volatile world. So along the way, even though the industry may have difficulty keeping up the production and demand might be strong and (inaudible) expect at some stage there will be big downturn. So we will have to see going into those.

Operator

The next question is from Greg Barnes from TD Newcrest.

Greg Barnes - TD Newcrest

Don, just quickly you mentioned other diversification and remaining opportunistic, I it’s a bit early to be asking this question, but what are you thinking on that avenue?

Don Lindsay

I appreciate the question, but we don’t have any plan to sort of make any major steps in the near future, we are still focused on repaying the term loan. We like the growth profile that we have as it is in our current business, near to medium term, the copper at 40% and longer term with [QB] hypogene and Relincho quite material.

Coal is there to be had and so we are totally focused on getting that and then eventually second quarter we will finish with studies and that we think will help (inaudible). So there is a quiet bit of internal growth which means there is less of a need for any kind of acquisition to drive growth, but further to your question, if we are trying to build an ideal portfolio, so what will be the next addition be. I haven’t often said that it makes a lot of sense for us to be in iron ore because it’s complementary to our coal business. I just don’t think that that's going to be something we could do in near term, because anybody who is in the iron ore business right now is enjoying the best times they have ever seen in their careers and they won’t to tell anything for the reason of price. I don’t anticipate that much will change in the near term.

Operator

The next question is from John Hughes from Desjardins Securities.

John Hughes - Desjardins Securities

Don you noted activity in the spot market in coal and I just want to touch base on Q1 in terms of events there and your participation in the spot market, can you give us some sort of idea on what kind pricing that your seeing and/or participating in the spot marketing in Q1?

Don Lindsay

We want to be helpful here, but we also have to be careful on our discussions in these things because we are starting to get in discussions with customer. I guess I will just repeat what we would read in the trade journal as same as anyone else, but we have seen recorded spot business in FOB Australia in the 200 to 225 range. We have different coal specialist employed in China tracking the pricing and cost there and certainly there is a pretty strong upward trend in that market which is a big factor in the coal market. Now in fact we think that cost curves should all be redone and include the [Shangshu] province are coking coal in it too, because that’s really what's going to compete with the stock market and stock market tends to drive long-term pricing. So, overall we see a pretty healthy increase over the last year but we couldn’t be much more specific than that.

John Hughes - Desjardins Securities

No that's good regarding health. On Red Dog, just two quick ones on the permitting front that the appeal of the state's certification of that water discharge permit. I know there is no stay which is great, I am just wondering in terms of if all the other permitting processes whether it be the army core, indoor, anything else in terms of permitting is completed by the 17th Feb without any appeal processes being initiated etcetera. Specific to the appeal that's already in place, is there a potential for that appeal to in essence be upgraded or downgraded depending on your view to include a stay?

Don Lindsay

No not at this time, if they wanted to stay they should have asked for it at the outset. The appeal was the state certification should not impact our schedule for accessing Aqqaluk.

John Hughes - Desjardins Securities

Okay so the two real outstanding ones are one getting through the February 17 period and then securing that wetlands permit from the Army Corp engineer.

Don Lindsay

That’s correct?

John Hughes - Desjardins Securities

Have you heard anything on the Army Corp? I mean, again there is no specified period established for an appeal of that permit. I’m assuming that that permit can be appealed.

Don Lindsay

Yes it can, there is an outside six year limitation period but in reality we would expect an appeal relatively soon after the core permit was issued but everything we've heard from the NGO’s and the tribal groups don’t implicate the wetlands permit. Their concern is seemed to be with the clean water apps and that would presumably implicate the MPDS blood discharge permit. But we're working with them to address their concerns and we'll hold them to their word that they don’t intend time to shutdown the mine.

John Hughes - Desjardins Securities

Okay and the termination date for appeal of February 17th cannot be changed, can it be pushed say to the 20 or?

Don Lindsay

No, that’s an absolute date.

John Hughes - Desjardins Securities

All right, and so one last one, I guess Don on that, the sale of the Juanita interest, is there any objection to that sale or is there any reason to believe that that won't close, that there are an appeal process in essence on the sale of that asset?

Don Lindsay

No. We see no reason why the deal wouldn’t close.

Operator

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

Unidentified Analyst

You have many précis and feasibility studies in process for the many fine projects under evaluation. Could you provide a little more update as to the likely timing of the completion of the studies and whether you're going to evaluate each of these one-by-one, or sort of put them in a collective review process trying to determine whether Galore is better than Relincho as opposed to another project etcetera, etcetera. Question to follow data in your decision process.

Don Lindsay

That's a very interesting question and I guess right to the core of our team here. We have a quarterly review meeting of all the projects which is one of the most fascinating meetings that occurs in our team, and it's true that we do have a number of projects sort of a scoping study, (inaudible) ability and so that they are moving along and we like that. If you look back five years ago, we are kind of a resource challenged in corporate certainly and some others now we feel we're resource rich company and that the key over the next five years is to sequentially develop these things in and convert them in to production for shareholders.

There is debate as some like one project better than another depending on various factors, and we do review that. We have a stage gating process as each project moves along that gets a very fair review from all functions within the company from engineering to sustainability and so on.

The nearest terms one, the QB hypogene is probably the next up ones, we finished commissioning into coil and that's in prefeasibility stage to be finished middle of this year and then will go straight into the full feasibility study. (inaudible) is falling back perhaps about a year behind Roger Higgins is here with me and I think that's the right project? And we did sort of decide that we aren’t going to be doing those two simultaneously but there are those in the company that debated to which one is better and along the way meanwhile Fort Hills is being reviewed by Suncor and we think that’s a good project in the long term and we know they do too. So those were kind of the three near terms ones that you could see actual construction decisions sometime in next five years on all three of them if we certainly hope so and beyond that there is a long list of earlier stage projects. I'll probably leave that for another day.

Operator

Thank you the next question is from Sunil Gathader from Sentinel Investment, please go ahead.

Sunil Gathader - Sentinel Investment

Thanks I just wanted to know what are the debt, on your debt what you have to comply with?

Ron Millos

The main financial covenants are interest coverage and leverage ratio based on a rolling 12 month EBITDA and our debt levels, they are based on defying terms within the agreements so you will not be able to sort of calculate those numbers the agreement is that publicly available but our current leverage ratio is two times and the coverage ratio is 5.75 times I believe this stage.

Sunil Gathader - Sentinel Investment

So they are within the range basically for you to get the investment grade ratings?

Len Manual

We are well within the range under the term loan agreement and we believe we are well within the investment grade range but that’s up to the rating agencies to decide what they think on this year.

Don Lindsay

At this point because the term loan will be gone as-soon-as we can make it going, not worried about those particular issue, we are a little more interested in what the rating agencies ratios are. We have published targets that we are gone through for the last year.

And with the closing of Juanita I think it's safe to say we will meet those target here after the what the rating agencies used to do is up to them.

Sunil Gathader - Sentinel Investment

Okay. You talked about the gas cost for coal but that’s going to be 2009 barrels, how about cost cut for the copper mines for the copper productions?

Roger Higgins

As we commented earlier there are couple of particular things happening in 2010 particularly the first half that and want to drive the commissioning and a clear concentrator and it is normal under circumstances, the treatments will be somewhat large as we test each of the system and ramp that up during the first half of the year, that will result in that particular operation having somewhat our unit cost because production will be less than the name place as we test the systems and that process is underway. And equally (inaudible) we have this stripping requirement to compensate the technical issue but to (inaudible) as side generally we save this cash costs are being sent out pretty much in line with where we have been. We do have kind of high stripping requirements at (inaudible) because the body is getting a little deeper, very normal things that happened in operations of this kind and we manage the revenue emerging to antenna cash custom that dollar tests are done.

Tim Watson

If I have to put it to get all these things together basically can extrapolate that the cash cost for 2010 might be slightly higher than 2009 in that case with the margins moving

Len Manual

Just back on the covenants, I will just clarify the leverage ratio, the maximum is 5.25 we are down around the two level and the interest coverage the minimum is two times and we are well above that so those are the current figures.

Sunil Gathader - Sentinel Investment

You talked about the spot sales likely to be around the same 2009 level about 20% for 2010 and then you said for the coal side the contract pricing, the coal in the first quarter would be at 2009 contract. Have you negotiated any contracts beyond the first quarter for the 2010 on the coal side or you are still un-priced?

Don Lindsay

Just to clarify the spot sales or sales that we might talk about and going to 2010 the tonnage will be similar to what was in 2009 the percentage will be lower because of these sales in 2009 were lower but the tonnage will be look the same. But we are still making coal, we did some spot sales of thermal coal in 2009 and we probably more than anything like that in 2010 but there they are still making coal about the same as far as 2010 full year contract negotiations we are really anticipating very early stage, very preliminaries. There are some contract that’s are priced beyond the end of the first quarter but most of the contracts are price staring in April one and we've only just begun with that.

Sunil Gathader - Sentinel Investment

And these contracts are on FOB business or CIF business.

Don Lindsay

Most of our term contracts on FOB basis small percentage would be C&F basis most of our shorter term pricing and spot contracts are on CIF basis.

Sunil Gathader - Sentinel Investment

Okay and all the sales most of the sales are going to be going to Asia in fact (inaudible).

Ron Millos

More than half to Asia

Operator

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

Kerry Smith - Haywood Securities

Thanks operator, Don if you get the pre fees done on QB sulfides by middle of 2010 then could we sort of assume by 12 months later you'd have the fees done so you would be in the position to make a decision to go ahead sort of mid 2011 is that reasonable?

Don Lindsay

A little bit longer than that end of 2011, so we would be looking at construction decisions may be in the fourth quarter board meeting that sort of thing but at the earliest..

Kerry Smith - Haywood Securities

And for Highland Valley Copper the operating cost in the quarter on a per ton basis were quite a bit lower than they were a year-over-year is that just related to a lower strip ratio or is there some other decline in certain unit mining cost that we should be thinking about there?

Roger Higgins

Highland Valley had a mixed portfolio because we are addressing the question of (inaudible) in the Southeast. We did bring in new equipment during the quarter which haven’t start to operate yet we have now approximate it was a little bit normal in the quarter I think we should expect something closer to the longer term rather than the fourth quarter.

Kerry Smith - Haywood Securities

Yeah okay. And then you talked about lower graded Highland Valley for the next couple of years, is it going to be like 5% lower grade like just roughly, how should we think of that?

Roger Higgins

[Gone] for the number around it is a little lower may be plus 10.

Kerry Smith - Haywood Securities

Okay. And Ron just can you give any guidance on what your expense expiration might be this year and what the G&A would be before any stock based compensation for 2010?

Ron Millos

The G&A before stock based compensation is sort of in the $90 million to $100 million range couple of items in there will be pensions of the big number and that pension expense can go up and down quite dramatically depending what the market does obviously. Expiration we are in the process of finalizing our budget, so we don’t have a pin in that number but I would expect it would be similar in level to 2009.

Kerry Smith - Haywood Securities

Okay. So that's good enough for what I needed. And then just one last question on, now that you start to produce more concentrate, what have you done for TCs or what are you thinking of OTCs on the copper sides for 2010?

Unidentified Company Speaker

(inaudible)

Andrew Stonkus

Yes Kerry its Andrew here. We are in the midst of our negotiations with our long-term customers for our existing production and for into coil, so but we are in the early stages we do have some [maths] in place but we are still in all of those discussions that and from our comments on the specifics obviously that the market as Don was mentioning is for raw materials it’s a tight market right now.

Don Lindsay

Sorry, Kerry I think we are going to have to bring this call to a close. We went over our normally allotted time for the estimate.

Ron Millos

But I think there is a number in more detailed modeling questions that as you can be in touch with Greg can help you out on. Just as a closing comment I do once again want to draw people's attention to slide 22, and well read it in the market place there are both short term and long-term investors, and what we have seasonality in our business in the first quarter we do every year due to the shipping at Red Dog and we are still receiving the low coal price from last year's counter price and the high (inaudible) so and so. I do want people to be sure to pay attention, that as a morale of the first quarter that I'm encouraged to see the reports coming out on the outlook for the year, and there is no question that we're well positioned in that coal operating, the zinc going forward to benefit and in fact I noted this point that one of the port has this being net debt free by the end of the next year, so clearly strong free cash flow coming. So for the long-term investors that's got great potential.

Anyway thank you all for your attention this morning. We look forward to the next quarter.

Greg Waller

And for those of you who may still been on the queue, please feel free to give me a call. Its Greg Waller and I can talk to you a little later this morning. Thanks.

Operator

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

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Source: TECK COMINCO CL B Q4 2009 Earnings Call Transcript
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