RPT-UPDATE 2-Miner Teck beats expectations, eyes further coal cutbacks

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July 23 (Reuters) - Canadian miner Teck Resources Ltd
TCKb.TO TCK.N reported a better-than-expected quarterly
profit on Thursday, reflecting higher metals sales and lower
costs, but said coal output could need further cutbacks if grim
market conditions continue.
The company, the largest producer of steel-making coal in
North America, has begun rotating shutdowns at six Canadian coal
mines and said it may take further actions in the fourth quarter
if the supply-demand balance does not improve. ID:nL1N0YJ0VW
That move will reduce Teck's third-quarter coal production
by about 1.5 million tonnes to 5.7 million tonnes, with sales
seen in the range of 6 million to 6.5 million tonnes.
Hurt by a slowdown in Chinese demand and a glut of new
supply from Australia, Teck forecasts annual coal production of
25 million to 26 million tonnes.
With prices for all its major commodities down
significantly, the company said it is focusing on cost cutting
and disciplined use of capital.
Vancouver-based Teck reported adjusted earnings of 14
Canadian cents per share, above analysts' average estimate of 11
Canadian cents, according to Thomson Reuters I/B/E/S.
"Results were above expectations, primarily due to stronger
coal, copper, and zinc sales than expected," said RBC Capital
Markets analyst Fraser Phillips in a note to clients. "Operating
results were solid in each segment."
Revenue of C$2 billion ($1.54 billion) was in line with
estimates.
Average realized prices for coal fell 14 percent to $95 per
tonne, while average realized prices for copper fell 11 percent
to $2.74 per pound.
Teck said it has reached agreements with the bulk of its
coal customers for the third quarter, based on a quarterly
benchmark of $93 per tonne.
Copper output for 2015 was lowered by 5,000 to 10,000
tonnes, to 340,000-350,000 tonnes, due to lower production at
Quebrada Blanca in Chile. Output was suspended last month due to
ground movement issues, but partial production has since
resumed. ID:nL1N0ZB2H3
The company had $4.2 billion of undrawn credit and C$1.5
billion in cash at quarter-end.
Earlier this month Teck agreed to sell future gold output
from its Carmen de Andacollo copper mine to Royal Gold Inc
RGLD.O for an upfront payment of $525 million.
ID:nL3N0ZP67B
Teck has said it could do more so-called "streaming" deals
on silver output from its mines. Analysts speculate that Teck
may want to raise funds for acquisitions or to help fund its
portion of the Fort Hills oil sands development.
($1 = 1.3004 Canadian dollars)