Teck Resources Limited (TECKB) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Teck Resources Conference Call. [Operator Instructions] This conference call is being recorded on Tuesday, November 14, 2023. I would now like to turn the conference over to Fraser Phillips, Senior Vice President, Investor Relations and Strategic Analysis. Please go ahead.

Thanks, Jalene, and good morning, everyone, and thank you for joining us on short notice today for Teck's conference call to discuss the sale of our steelmaking coal business. We announced the full sale of our steelmaking coal business last night. That sales to Glencore and to Nippon Steel. The presentation on the transaction is available in the Investors section of our website at teck.com. On today's call, Jonathan Price, our CEO, will walk through the presentation to discuss the objectives, structure and benefits of the transaction and outline how we'll position Teck Resources to realize the full potential of our base metal business. We'll then conclude the session with a question-and-answer session. Please note today's call contains forward-looking statements. Various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statements. Please refer to Slide 2 for the assumptions underlying our forward-looking statements. In addition, we will reference various non-GAAP measures throughout this call. Explanations and reconciliations regarding these measures can be found in our latest MD&A and quarterly press release on our website. With that, I will turn the call over to Jonathan.

Thanks, Fraser, and good morning, everyone. Thank you for joining us today to share this important milestone for Teck. For some time now, we've been discussing the significant benefits to be realized by separating Teck steelmaking coal and base metals businesses. Today, after considering a range of alternatives through a comprehensive and competitive process, we've announced an agreement for a full sale of Teck's steelmaking coal business with Glencore acquiring a majority interest of Elk Valley Resources, or EVR, at an implied enterprise value of USD 9 billion; and Nippon Steel Corporation acquiring a minority interest. This transaction is a catalyst to refocus Teck as a Canadian-based critical minerals champion and unlock potential value upside by ensuring Teck is well capitalized to realize value from our extensive portfolio of copper growth options, deliver strong returns to our shareholders while maintaining a robust balance sheet. Glencore has committed to strong undertakings to ensure continued socially and environmentally responsible operations and generate enhanced benefits for Canada, the province and the employees, communities and indigenous peoples of the Elk Valley. Before we delve into the specifics of the sale, I'd like to take a moment to provide additional context on the process that led us to this decision. In April, our shareholders told us they favored the separation of our steelmaking coal business from our base metals business and that it should be simple and complete. In June, we confirmed that we had received a number of inbound indicators of interest regarding various forms of potential transactions involving the steelmaking coal business and committed to undertaking a comprehensive and thorough process to determine the best way to affect that separation. Special Committee and the full board have spent considerable time reviewing the extensive shareholder feedback we've received and evaluating the various proposals with a focus on achieving several key objectives, which include achieving a full separation of our base metals and steelmaking coal businesses, ensuring Teck is well capitalized to pursue our copper growth potential, realizing fair value from our steelmaking coal business for our shareholders and maintaining social and environmental commitments to our stakeholders. As a result of that process, we concluded that this transaction with Glencore in cooperation with NSC provides Teck shareholders with the cleanest separation for the highest value and the greatest proceeds, while also supporting continued responsible operations of the steelmaking coal assets for the long term, thus checking the box against each of our objectives. We are confident that this is the best path forward for Teck and our shareholders. So turning to the transaction on Slide 4. Glencore will acquire a 77% controlling interest in EVR at an implied enterprise value of USD 9 billion on a 100% basis and become the operator of the Elk Valley steelmaking coal mines. Nippon Steel Corporation will acquire a 20% interest in EVR at an implied enterprise value of USD 8.5 billion, including the exchange of their 2.5% interest in the Elkview operations. At the same time, POSCO intends to exchange its 2.5% interest in the Elkview operations and its 20% interest in the Greenhills joint venture for a 3% interest in EVR. The participation of NSC and POSCO and the transaction provides additional benefits to EVR and to Teck by cementing long-term business partnerships between these parties and EVR and accelerating a portion of the cash proceeds that Teck will receive. Overall, the implied total transaction value equates to USD 8.9 billion. Teck will continue to operate the steelmaking coal business and retain all interim cash flows from EVR until the close of the transaction with Glencore. Following the closing of that transaction, Teck will have no further financial interest in EVR. Closing of the transaction is subject to customary conditions and the receipt of relevant regulatory and competition approvals. These transactions are not interconditional. As part of the process leading to this agreement, we negotiated strong commitments from Glencore to create enhanced benefits and ensure responsible stewardship of operations. We are confident in securing the necessary approvals required to close this transaction, and we will work closely with Glencore to ensure a smooth transition of ownership. The transaction with NSC is expected to close in the first quarter of 2024 and the transaction with Glencore is expected to occur in the third quarter of 2024. Slide 5 outlines the transaction value and proceeds to Teck. The implied total transaction value is USD 8.9 billion, including the consolidation of minority interests. We expect to receive cash proceeds from the transaction totaling USD 8.6 billion, comprising USD 6.9 billion from the sale of Glencore and USD 1.7 billion from the transactions with the minority partners. And as I noted earlier, Teck will retain interim cash flows generated by EVR until the close of the transaction with Glencore expected in Q3 2024, estimated at USD 1 billion. In total, Teck is expected to receive an aggregate of USD 9.6 billion in cash through and at closing. Now as illustrated on Slide 6, the implied total transaction value for the sale of EVR is 3.8x on a 2024 consensus coal EBITDA or 5.5x on 2025 estimates. This implies a compelling valuation relative to publicly listed metallurgical coal companies, the median of which currently trade at 3.2x and 3.6x on 2024 and 2025 EBITDA estimates. The use of transaction proceeds is outlined on Slide 7. First, we expect to reduce gross debt with a target to maintain investment-grade credit metrics. Second, we expect to return significant cash to shareholders with the Board to determine the amount and form of the cash return following the close of the transaction. Additionally, we will retain cash on the balance sheet to fund ongoing copper growth opportunities, ensuring we focus on execution to derisk project delivery whilst driving strong returns. Finally, we expect to incur taxes related to the transaction approximating USD 750 million payable in the first quarter of 2025 after the completion of the transaction. As shown on Slide 8, Teck remains committed to our capital allocation framework. The significant upfront cash proceeds from this transaction will strengthen our balance sheet and ensure we are well capitalized to realize value from our base metals business while delivering strong returns to our shareholders. Looking ahead, QB is expected to generate significant additional EBITDA and free cash flow at full production, which will further build on our financial resilience. As demand for copper continues to rise and constraints on new supply persist, so will the value of high-quality, low-cost copper assets. Slide 9 articulates why we believe Teck warrants a premium valuation. With the announcement today, and as QB ramps up to full production, Teck is well positioned as a leading pure-play base metals company. We are already a top 10 copper producer in the Americas with a premium portfolio of producing assets in stable jurisdictions, and we have the most attractive suite of copper growth options in the industry. Our industry-leading production growth has the potential to unlock significant value upside for our shareholders. Teck's extensive portfolio of copper projects is underpinned by a solid foundation in long-life producing assets that generate strong cash flow, including Antamina in Peru, Highland Valley Copper in British Columbia and Red Dog in Alaska. Turning to Slide 10. Quebrada Blanca, or QB, is a transformational asset for Teck and a cornerstone of our copper portfolio for decades to come. The team and I have the pleasure to host a number of our investors and analysts on a visit to QB last week to witness firsthand this world-class Tier 1 asset with fully integrated infrastructure. As I mentioned when we reported our Q3 results, despite the CapEx increase, we are pleased with the ramp-up and strong asset performance to date at QB. Concentrator is performing well, and we are producing quality copper concentrates with multiple consecutive days at or above design throughput levels. We have maintained a deliberate focus on both throughput and recovery to ensure we maximize the benefit we extract from the ore, and we continue to expect to achieve full rates by year-end. In total, Teck is expected to deliver consolidated copper production growth of more than 130% through 2025 compared to our copper peers at 7% and diversified peers at 24%. Importantly, QB's low-cost position will propel Teck into the first quartile on the copper cost curve and enable us to deliver meaningful cash flow and earnings growth. Beyond QB2, we have the potential to deliver 1 million tonnes of annual production by the end of the decade and drive significant value creation for our shareholders. As you can see on Slide 11, Teck has several significant near-term development options, including San Nicolas, Zafranal, QB asset expansion and the mine life extension at Highland Valley, all of which are simpler and lower in complexity and scope in comparison to QB2. There is significant work underway to advance the development of each of these projects. While it's early days, we are encouraged by the early performance data at QB, as noted earlier. The mills are performing well, and in particular, the lower than planned power draw from the SAG mills presents potential opportunities for optimization and debottlenecking. We will ensure we have a clear understanding of the full capability of QB's currently installed infrastructure before determining the most capital efficient and highest return configuration for a future expansion. We continue to progress the optimal path to value for each of our assets with a focus on derisking project delivery. This involves building out our teams, advancing engineering, design, execution and contracting strategies while evaluating our development sequence options. Slide 12 provides a full view of our unrivaled suite of copper growth opportunities, diversified by geography, scale and time to development. We continue to make prudent investments to advance our next phase of growth with a focus on generating strong financial returns by derisking project delivery, both financially and operationally through a partnership approach, such as in the case of San Nicolas. It is important to note, however, that we do not expect to sanction new development projects for a minimum of 12 months. We will first conduct a detailed review of the QB2 project, utilizing third-party expertise to ensure all lessons learned are fully incorporated before we move forward with any new development project. Turning to Slide 13. As part of this transaction, we remain committed to ensuring the continued responsible operation of the steelmaking coal assets. As I noted earlier, as part of the transaction agreement, Glencore is committed to a comprehensive suite of strong undertakings to ensure continued socially and environmentally responsible operations and generate enhanced benefits for Canada, for province and the communities in the Elk Valley. This includes, among other commitments, establishing a Canadian head office in Vancouver, maintaining strong employment levels, increasing local investments and implementing nature-positive and net zero goals. Glencore's commitments will ensure responsible operation of the steelmaking assets to the Elk Valley for the long term while providing enhanced benefits to all EVR stakeholders. EVR is a fantastic business, and Glencore and NSC's ownership will ensure a resilient, strong EVR going forward. In closing, today's announcement marks a major step forward for Teck. This transaction achieves a simple and full separation of our base metals and steelmaking coal businesses, and we are confident this is the best path forward for our company and our shareholders. The significant upfront cash proceeds ensure Teck is well capitalized to realize value from our extensive portfolio of copper growth projects, deliver strong returns to our shareholders while maintaining a robust balance sheet. And as we work towards close of the transaction with Glencore in the third quarter of 2024, we expect to benefit from significant incremental cash flow from EVR. As I said at the AGM, my job is all about creating value for shareholders, and this transaction is a big step forward. We are very pleased to reach this outcome for a full separation, successfully setting up Teck for long-term value creation. We look forward to unlocking significant value upside for our shareholders as we embark on our next chapter as a Canadian-based pure-play critical metals champion. With that, I'll turn it back to the operator and open up the line for questions.

[Operator Instructions] Our first question is from Carlos De Alba with Morgan Stanley.

The first question I have is regarding the tax payment of USD 750 million. Could you please provide a little bit more color as to what exactly these tax payments include. Is this capital gains or any other sort of taxes, that will be very useful. I have a follow-up after that, Jonathan.

Yes. Carlos, those tax payments are essentially capital gains on the sale.

All right. And at this point, is the full tax liability that you foresee from this transaction?

Yes, it is, yes.

All right. And just a follow-up is on the USD 1 billion cash flows that you expect to collect during this time and the time of the closing. What are the assumptions in terms of coal prices that you are embedding in that USD 1 billion calculation?

Yes, Crystal, would you like to comment on the basis for that, please? It is an estimate, of course, Carlos, between now and then. Crystal?

Yes, Carlos. Thanks for the question. Just in terms of the coal price and FX, both of those are based on consensus pricing. So we can circle back with you after on the specifics. But they aren't estimates, they're consensus. So you should just -- sorry, Helen's pinged me now, $250 a tonne for coal pricing.

The next question is from Liam Fitzpatrick with Deutsche Bank.

Jonathan and team, congrats on the deal. First question, and I'll have one follow-up. But the first question is just to clarify which liabilities are going to be transferred with EVR. My understanding is there's around USD 1 billion of rehab provisions, but are there any other material balance sheet movements we should think about, whether that's provisions or deferred tax liabilities?

Yes. So at the headline level, Liam, you have it right. Let me just ask Crystal, if there's any further color on that.

Yes. I think that is correct. The only thing I would say is you're referencing a U.S. dollar number that reclamation liability is Canadian dollars, just over $1 billion. I think the best reference I would give you is to look at the carve-out financial statements that we published in our information circular in March. For the first round of separation, there are details that split out the liabilities there. And I think that's a good proxy for you to use.

Okay. And just on this point of tax, I think you covered it on the previous question, but the tax on your coal cash flows next year, I assume that will be payable by Teck or a liability for Teck payable in early 2025. Is that the right way to think about it?

Yes, so the tax -- yes, sorry, Crystal, go.

Yes, that's right. We will pay tax on the cash flows that we earn in 2024 and the USD 750 million is in relation to the transaction taxes.

And as a final quick one, just on the capital structure. Is there any sort of steer you can give us at this point in terms of what the optimal net debt or balance sheet structure that you're aiming to run once this deal completes, just to give us a sense of kind of how to think about the shareholder returns and post deal completion.

I'll leave that with you, Crystal, as well just to discuss the approach to the balance sheet and preferred leverage going forward.

Yes. I think generally, we want to be comfortably within investment-grade credit metrics through the cycle. So that's sort of a range of 1.5x to 2.5x, 2.5x being sort of at the higher end. Right now, our net debt to adjusted EBITDA is around 1x. So I think we would like to be just comfortably in that range.

Okay. So you wouldn't want to run a net cash position. Is it fair to say that?

Yes, that's fair.

Next question is from Orest Wowkodaw with Scotiabank.

Congrats on the transaction. A couple of questions from my perspective. Just on this issue of the balance sheet. I mean, your debt is well termed out and is pretty low cost, plus you've got the project level debt at QB. What debt do you actually foresee paying down, or is this more of an issue of just putting cash on the balance sheet to effectively just materially reduce your net debt?

I think the answer is a bit of both, Orest. But Crystal, if you'd like to talk a little bit more about how we're thinking about debt reduction in general terms.

Sure, Orest. Look, I think for us, the reductions are -- we haven't finalized them yet. We're going to be looking at near-term maturities and the debt that has higher interest rate, making sure we get sort of the most economic deployment of the debt reductions across our debt stack. But as Jonathan noted, it will be some combination of a higher cash balance and a reduction in debt. And the cost, obviously, of the debt reductions and the interest savings is going to depend on what we take out. So the other piece I would just note, certain of our public notes require make whole premiums, so we just want to make sure we're doing the most economic transactions, but we'll communicate further once we've determined what that looks like.

Okay. And can you confirm, is there a standstill agreement with Glencore at the corporate level, and curious how long is it and when does it go into effect?

Orest, yes, there is. It comes into effect at completion of the transaction with Glencore, and it's in place for 24 months.

24 months, okay. And finally, is there a break fee embedded in this transaction?

Yes, there is. It's USD 400 million. Yes, which is connected to ICA, Orest.

The next question is from Lucas Pipes with B. Riley Securities.

This is Nick Giles asking a question on behalf of Lucas. Congratulations here. In the press release, you noted that the Board will determine the amount and form of -- on a significant capital return. Should we think about this as one within the current framework or something that could be outside of that framework?

I mean I think the framework very much applies here in that we look at the capital structure, as we've just been discussing in terms of the right level of debt and cash on balance sheet. We will have a view as to future cash that is required to fund some of the near-term copper projects that we've spoken about, and those are things such as San Nicolas, Zafranal and the life extension of the Highland Valley copper mine here in British Columbia. And then, of course, the operation of the capital allocation framework is that a minimum of 30% of available cash flow is then returned to shareholders, but there is, of course, discretion of the Board then to return amounts in excess of that. As mentioned, that will be a determination that we take at or around completion of the transaction. By that point, of course, we'll know exactly the quantum of cash flows that we've received from the coal business in that interim period between today and completion. And of course, we'll have regard to the outlook for the business and the markets that we're trading in at that point in time. So all of those things as ever, will factor into our decision-making process.

That's helpful. Maybe just a quick follow-up. What level of cash do you anticipate to keep on the balance sheet, and then what SG&A savings would you anticipate at close of this transaction?

Yes, I'll pass the latter question on to Crystal. But for the former, as I mentioned, we'll be thinking about those projects that we have ready for investments in the near term. As I mentioned, we want to sanction any new development projects for at least 12 months to make sure we implement all the learnings from QB2 into future project decisions. But we do have a suite of attractive and high-returning projects in various stages of completion of feasibility studies or permitting, which we think could be ready in the first quarter of 2025 for sanction. So the thinking here is that we ensure that we have cash available to ensure that those projects are fully funded. Crystal, over to you on the question in relation to G&A, please?

Yes. Just in the context of the portion of our G&A that would go to the coal business. I think you can use -- again, I'll reference back to the carve out financial statements that we did as part of [ Project Kappa ]. I think that is a -- or sorry, in the context of our first separation is a reasonable proxy. I think it's about 40% of the G&A would go over to the coal business.

The next question is from Bill Peterson with JPMorgan.

Yes. Can you give us a feel for what jurisdictions need to approve, what countries? I assume maybe you, U.K., U.S., but what about China or India? And have you gotten any feedback already on this, any early feedback?

Yes, there's actually 11 jurisdictions in which these approvals or antitrust approvals are required. Pretty early days at the moment, Bill, from a transaction perspective. So no specific feedback at this point.

Okay. Second one, you mentioned CapEx of CAD 2 billion for over 3 years. So we assume that's very linear for your portion that you would need to fund the EVR for next year until the transaction is completed?

Yes. I mean, we will, of course, continue funding all CapEx until completion of the transaction here. We haven't guided to that at this point for 2024. And of course, beyond completion, Glencore will pick up all CapEx going forward, of course. But nothing specific and nothing unusual. We will continue, of course, with the investments we're making today, including the AMC project and including the investments that we're making in water treatment and water management infrastructure.

The next question is from Lawson Winder with Bank of America Securities.

Jonathan and Crystal, I wanted to ask a similar question to the prior one, which is with respect to Investment Canada, I imagine your conversations with them have been very extensive over the past 8 to 9 months. What is your sense in terms of their views and concerns, and what is your comfort level with that approval?

Yes. Look, I mean, we're obviously confident in receiving that approval, Lawson. We wouldn't have proceeded with the transaction if that wasn't the case. Glencore put forward here a very comprehensive package of undertakings with enhanced benefits for EVR. And as I mentioned, some of those are related to employment. They're related to future investments in the business, including in areas such as R&D and community investments. And they also relate to the social and environmental commitments and practices in relation to that business. Ultimately, we think that, that package of commitments is good for EVR, but also good for the province of British Columbia and good for Canada. And of course, that is the relevant test when it comes to the ICA approval.

Fantastic. Great color. Also I wanted to ask about just the copper growth chart. I mean we talk about it frequently on these calls, but just in light of the potentially enormous capital inflow that will be coming from this transaction. The churn on Slide 11 as indicated like HVC 40 sand mix after analysis sort of all starting and being sanctioned at the same time. Is there a world in which all will be sanctioned in construction at the same time? And just what are the moving parts around how ordering might be determined if, in fact, they won't be, which I don't think is the case.

Yes. Thanks, Lawson. Obviously, sort of different styles of projects here, Highland Valley being a brownfield at our existing operation, that one is 100% Teck. We consider that to be very low risk, given essentially, that's a mine pushback and a relocation with some existing infrastructure. San Nicolas, of course, will be a project that's ultimately delivered by the San Nicolas joint venture, which, as you know, is 50-50 Teck and Agnico Eagle. Again, that is a very simple, very low risk, low complexity, high-returning projects. And then Zafranal, of course, is 80% Teck and 20% Mitsubishi. So Teck would take the lead on that project. So if you look at the 3 of those, we've got sort of one greenfield that Teck would take the lead on being Zafranal, one delivered by a joint venture and one low-risk brownfield that's 100% Teck. From a QB and I said expansion potential, as we spoke last week, our first priority on QB, of course, is getting that ramped up to full production, finishing all of the outstanding areas of construction, but demonstrating that, that operation will run at the rates and the unit costs that we previously articulated. We will then really sweat that asset. It's a great plant. It's a growth facility that we've built, but we need to understand the full potential of that before we consider the right scope of a potential further expansion. So it's for that reason that you see the QB asset expansion a little bit further out here in the time frame. And I think it's safe to say that we certainly wouldn't be sanctioning the QB asset expansion and Zafranal at the same time, they are projects, given their scope that do need to be staggered and staged as you see it here. So these are target sanction windows. Of course, we will only sanction projects if they offer high returns for our investors. And that will be the function of the feasibility study and the permitting work that is now ongoing. But I think what you see on the slide here is a reasonable representation of how we might progress these projects in the future.

If I could ask one more question, I would greatly appreciate it. Just wanted to get your thoughts on Teck's strategic positioning post closing this. I mean to what extent might Teck have an appetite for acquisitions in the strategic metal space looking out a year?

Yes. Look, the primary focus, of course, is the development of this project pipeline because we think it is unique. And if done well and if we make the right decisions around the right projects for the right sequence, we think that this can offer a very strong returns to shareholders. Of course, on a go-forward basis, like all companies, I guess, we'll continue to review the potential for strategic asset acquisitions. But the primary focus and the primary cornerstone of our strategy is very much on the -- on realizing the value of this suite of projects that we've been developing and derisking over many years.

The next question is from Alex Terentiew with Stifel.

Congrats on getting this done. Just a couple of questions from me. Just circling back on some past thoughts here. On the use of proceeds, I know the answer to this depends on a multitude of factors. But do you have an estimate of how much debt Teck could look to retire? And I'm asking because at my estimates at spot copper prices to maintain investment-grade credit rating and keep your net debt to EBITDA in the range you noted there, Crystal. It doesn't look like you would need to repay much, if any. And then the second question, if I may, is on the regulatory front, I know this is early days, but to get us across the board, I'm just curious if you've engaged in any regulators thus far to help structure the commitment that you're asking from Glencore and that they proposed here. It was great to see that you guys have put those details out there. But I'm just wondering what sort of engagement with regulators there has been thus far, if any?

Crystal, do you want to just talk to Alex's first question on the debt, please?

Yes, sure. Alex, look, I think we can't really be specific at this point. I think we want to obviously take the time, and our Board has to approve where the direction we're going in terms of the use of proceeds. And as Jonathan said, we want to take into account the market conditions at the time of closing. So we'll revert back once we have completed our analysis over the next few months.

Yes. And on the engagement point, Alex, we've had what I would describe as normal course engagement with regulators and of course, key players, both at the provincial and federal level here. These commitments have been put together on the basis of extensive engagement with Glencore. We believe they're very well thought out. They're very robust and they're comprehensive in their scope, essentially picking up all of the commitments that Teck has today and then enhancing those in a number of areas.

Our next question is from Chris LaFemina with Jefferies.

Congratulations on the announcement from this morning. I just have a question back to the economics of this transaction. So in the slide deck and the press release and multiple times in this call, you referred to the enterprise value of USD 9 billion. But that really is just the equity value, right? Because that doesn't include the deferred tax liabilities or the shareholder loan or the environmental liabilities on EVR, right? So it's actually that USD 9 billion plus the assumed liabilities. Is that correct?

Yes, you're right. The numbers that we're using are simply a gross up of Glencore's equity valuation of this to represent that USD 9 billion.

So I'm trying to understand what the overall value of the purchase is. So it's USD 9 billion plus -- if we look at the carve-out balance sheet, between deferred tax liabilities, the environmental liabilities and a shareholder loan, it's, I don't know, CAD 5.5 billion of liabilities on top of the USD 9 billion implied equity value for the purchase, right? So the question I would ask, first of all, is that right, is USD 9 billion plus the CAD 5.5 billion liabilities on the balance sheet. I think the working capital is probably close to 0. So that would be the overall EV, USD 9 billion plus CAD 5.5 billion. The second question, that's based on the carve-out balance sheet from the end of 2022. How might that look by the time this deal closes in the third quarter of next year? Are you going to pay down a significant portion of those deferred tax liabilities, what portion of the shareholder loan gets paid down. So what is the net liability to the buyer look like by the time the transaction closes?

So the first thing I would say is that the shareholder loan is entirely eliminated upon completion of this transaction. So that won't be anything residual post completion. In addition to that, there are liabilities that Crystal previously spoke to associated with this. There has been -- or there is a deferred tax payment in relation to coal that has to be made in the first quarter of 2024 that we've signaled previously. Of course, that will be paid by Teck Resources because that is precompletion of this transaction. So I think, Chris, there's a number of things that you've referenced there being the shareholder loan and being some of the tax liabilities that will actually be not remaining in place upon completion of this deal.

Liability might be less than -- the liability could be less than what's shown on the carve-out balance sheet, but there are incremental liabilities that are not included with the USD 9 billion purchase price?

Yes, that's exactly right, Chris, yes.

That's all the time allocated for questions this morning. I'd like to hand the call back over to Mr. Price for closing remarks.

Thank you. Look, I would like to thank you all for joining us on the call today. And I do want to take a moment to thank the entire Teck team. Throughout this process, the team has remained focused on continuing production of essential metals and minerals for our customers and partners with leading sustainability performance and keeping an unwavering focus on health and safety. We could not be more excited to reach today's conclusion to this process, and we look forward to sharing our progress as we refocus Teck as a Canadian-based global critical minerals champion. Thank you.

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