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[LOGO - TECKCOMINCOO]
ANNUAL INFORMATION FORM
March 1, 2006
TECK COMINCO LIMITED
Suite 600, 200 Burrard Street
Vancouver, British Columbia
V6C 3L9
AN ADDITIONAL COPY OF THIS ANNUAL INFORMATION FORM
MAY BE OBTAINED UPON REQUEST FROM THE CORPORATE SECRETARY,
TECK COMINCO LIMITED AT THE ABOVE ADDRESS OR FROM THE COMPANY'S
WEB SITE - WWW.TECKCOMINCO.COM
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TABLE OF CONTENTS
NOMENCLATURE...............................................................III
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION........................III
GLOSSARY OF TECHNICAL TERMS.................................................VI
CORPORATE STRUCTURE..........................................................1
NAME, ADDRESS AND INCORPORATION...........................................1
INTERCORPORATE RELATIONSHIPS..............................................2
GENERAL DEVELOPMENT OF THE BUSINESS..........................................2
THREE-YEAR HISTORY........................................................2
2003...................................................................2
2004...................................................................3
2005...................................................................4
SIGNIFICANT ACQUISITIONS AND DISPOSITIONS IN 2005.........................5
FORT HILLS OIL SANDS...................................................5
DESCRIPTION OF THE BUSINESS..................................................5
GENERAL...................................................................5
PRODUCT SUMMARY........................................................6
INDIVIDUAL OPERATIONS.....................................................7
ZINC...................................................................7
COAL..................................................................10
COPPER................................................................14
GOLD..................................................................17
FORT HILLS OIL SANDS..................................................19
EXPLORATION...........................................................21
MINERAL RESERVES AND RESOURCES........................................22
SAFETY AND ENVIRONMENTAL PROTECTION......................................26
SOCIAL AND ENVIRONMENTAL POLICIES........................................28
HUMAN RESOURCES..........................................................28
FOREIGN OPERATIONS.......................................................29
COMPETITIVE CONDITIONS...................................................29
RISK FACTORS.............................................................30
RISKS INHERENT IN THE MINING AND METALS BUSINESS......................30
COMMODITY PRICE FLUCTUATIONS AND HEDGING..............................30
RISKS ASSOCIATED WITH FORT HILLS......................................31
COMPETITION FOR MINING PROPERTIES.....................................32
COMPETITION IN PRODUCT MARKETS........................................32
FUTURE MARKET ACCESS..................................................32
RESERVE AND RESOURCE ESTIMATES........................................32
CURRENCY FLUCTUATIONS.................................................33
INTEREST RATE RISK....................................................33
ENVIRONMENT...........................................................33
ABORIGINAL TITLE CLAIMS...............................................34
FOREIGN ACTIVITIES....................................................34
LEGAL PROCEEDINGS.....................................................34
DIVIDENDS...................................................................34
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DESCRIPTION OF CAPITAL STRUCTURE............................................35
GENERAL DESCRIPTION OF CAPITAL STRUCTURE.................................35
RATINGS..................................................................35
MARKET FOR SECURITIES.......................................................37
TRADING PRICE AND VOLUME.................................................37
DIRECTORS AND OFFICERS......................................................38
DIRECTORS................................................................38
OFFICERS.................................................................40
AUDIT COMMITTEE INFORMATION..............................................42
MANDATE OF AUDIT COMMITTEE............................................42
COMPOSITION OF THE AUDIT COMMITTEE....................................42
PRE-APPROVAL POLICIES AND PROCEDURES..................................43
EXTERNAL AUDITOR SERVICE FEES.........................................43
OWNERSHIP BY DIRECTORS AND OFFICERS......................................44
LEGAL PROCEEDINGS...........................................................44
TRANSFER AGENTS AND REGISTRARS..............................................44
MATERIAL CONTRACTS..........................................................44
INTERESTS OF EXPERTS........................................................44
ADDITIONAL INFORMATION......................................................45
SCHEDULE A.................................................................A-1
AUDIT COMMITTEE MANDATE.................................................A-1
SCHEDULE B.................................................................B-1
REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES
EVALUATOR OR AUDITOR....................................................B-1
SCHEDULE C.................................................................C-1
REPORT OF MANAGEMENT AND DIRECTORS ON DECEMBER 2005 OIL
AND GAS DISCLOSURE......................................................C-1
NOTE: ALL CURRENCY REFERENCES ARE TO CANADIAN DOLLARS UNLESS OTHERWISE NOTED.
- ii -
NOMENCLATURE
In this Annual Information Form, unless the context otherwise dictates, "we",
"Teck Cominco" or the "Company" refers to Teck Cominco Limited and its
subsidiaries and a reference to Teck Cominco Metals refers to Teck Cominco
Metals Ltd. and its subsidiaries.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
This Annual Information Form and certain documents incorporated by reference
in this Annual Information Form contain certain forward-looking information
and forward-looking statements as defined in applicable securities laws. These
statements relate to future events or our future performance. All statements
other than statements of historical fact are forward-looking statements. The
use of any of the words "anticipate", "plan", "continue", "estimate",
"expect", "may", "will", "project", "predict", "potential", "should",
"believe" and similar expressions is intended to identify forward-looking
statements. These statements involve known and unknown risks, uncertainties
and other factors that may cause actual results or events to differ materially
from those anticipated in such forward-looking statements. These statements
speak only as of the date of this Annual Information Form or as of the date
specified in the documents incorporated by reference in this Annual
Information Form, as the case may be. These forward-looking statements include
but are not limited to, statements concerning:
o prices and price volatility for zinc, copper, coal, gold and other
primary metals and minerals as well as oil, natural gas and
petroleum products;
o the long-term demand for and supply of zinc, copper, coal, gold and
other primary metals and minerals;
o our premiums realized over London Metal Exchange cash and other
benchmark prices and the sensitivity of our financial results to
changes in metals and minerals prices;
o treatment and refining charges;
o our strategies and objectives;
o our interest and other expenses;
o our tax position and the tax rates applicable to us;
o political unrest or instability in countries such as Peru and its
impact on our foreign assets, including our interest in the Antamina
copper, zinc mine;
o the timing of decisions regarding the timing and costs of
construction and production with respect to, and the issuance of the
necessary permits and other authorizations required for, certain of
our development and expansion projects, including, among others, the
Fort Hills Project;
o our estimates of the quantity and quality of our mineral and oil
reserves and resources;
o our planned capital expenditures and our estimates of reclamation
and other costs related to environmental protection;
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o our future capital and mine production costs and production levels,
including the costs and potential impact of complying with existing
and proposed environmental laws and regulations in the operation and
closure of various operations;
o our cost reduction and other financial and operating objectives;
o our exploration, environmental, health and safety initiatives;
o the availability of qualified employees for our operations,
including our new developments;
o the resolution of labour disputes and the satisfactory negotiation
of collective agreements with unionized employees, including at the
Elkview mine, the Antamina mine and the Fording River mine;
o the outcome of legal proceedings and other disputes in which we are
involved;
o general business and economic conditions;
o the outcome of our coal price negotiations and negotiations with
customers concerning treatment charges, price adjustments and
premiums; and
o our dividend policy.
Inherent in forward-looking statements are risks and uncertainties beyond our
ability to predict or control, including risks that may affect our operating
or capital plans including risks generally encountered in the development of
mineral properties such as unusual or unexpected geological formations,
unanticipated metallurgical difficulties, ground control problems, adverse
weather conditions, process upsets and equipment malfunctions; risks
associated with labour disturbances and unavailability of skilled labour;
fluctuations in the market price of our principal commodities which are
cyclical and subject to substantial price fluctuations; risks created through
competition for mining properties; risk associated with lack of access to
markets; risks associated with mineral and oil and gas reserve and resource
estimates; risks posed by fluctuations in exchange rates and interest rates,
as well as general economic conditions; risks associated with environmental
compliance and changes in environmental legislation and regulation; risks
associated with our dependence on third parties for the provision of
transportation and other critical services; risks associated with
non-performance by contractual counterparties; risks associated with
aboriginal title claims and other title risks; social and political risks
associated with operations in foreign countries; risks of changes in tax laws
or their interpretation; and risks associated with tax reassessments and legal
proceedings.
Actual results and developments are likely to differ, and may differ
materially, from those expressed or implied by the forward-looking statements
contained in this Annual Information Form. Such statements are based on a
number of assumptions which may prove to be incorrect, including, but not
limited to, assumptions about:
o general business and economic conditions;
o interest rates and foreign exchange rates;
o the supply and demand for, deliveries of, and the level and
volatility of prices of zinc, copper, coal and gold and our other
primary metals and minerals as well as oil, natural gas and
petroleum products;
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o the timing of the receipt of regulatory and governmental approvals
for our development projects and other operations;
o the availability of financing for our development projects on
reasonable terms;
o our costs of production and our production and productivity levels,
as well as those of our competitors;
o power prices;
o our ability to secure adequate transportation for our products;
o our ability to procure mining equipment and operating supplies in
sufficient quantities and on a timely basis;
o our ability to attract and retain skilled staff;
o the impact of changes in Canadian-US dollar and other foreign
exchange rates on our costs and results;
o engineering and construction timetables and capital costs for our
development and expansion projects;
o costs of closure of various operations;
o market competition;
o the accuracy of our reserve estimates (including, with respect to
size, grade and recoverability) and the geological, operational and
price assumptions on which these are based;
o premiums realized over London Metal Exchange cash and other
benchmark prices;
o tax benefits and tax rates;
o the outcome of our coal price and refining and treatment charge
negotiations with customers;
o the resolution of environmental and other proceedings or disputes;
and
o our ongoing relations with our employees and with our business
partners and joint venturers.
We caution you that the foregoing list of important factors and assumptions is
not exhaustive. Events or circumstances could cause our actual results to
differ materially from those estimated or projected and expressed in, or
implied by, these forward-looking statements. You should also carefully
consider the matters discussed under "Risk Factors" in this Annual Information
Form. We undertake no obligation to update publicly or otherwise revise any
forward-looking statements or the foregoing list of factors, whether as a
result of new information or future events or otherwise.
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GLOSSARY OF TECHNICAL TERMS
BALL MILL: a rotating horizontal cylinder in which ore is ground using metal
balls.
CARBON-IN-PULP: a process used to recover gold that has been dissolved after
cyanide leach agitation.
CATHODE: an electrode in an electrolytic cell which receives electrons and
which represents the final product of an electrolytic refining process.
CLEAN COAL: coal that has been processed to separate impurities and is in a
form suitable for sale.
COKE: the substance formed when coking coal is heated to a very high
temperature in the absence of air, primarily used in the process of steel
making in integrated steel mills.
CONCENTRATE: a product containing valuable minerals from which most of the
waste mineral in the ore has been eliminated in a mill or concentrator.
CUSTOM CONCENTRATE: concentrate sold to third party smelters for smelting.
DORE: unrefined gold and silver bullion bars.
DRIFT: a horizontal passage from one underground working place to another and
parallel to the strike of the ore.
FLOTATION: a method of mineral separation in which a froth created in water by
a variety of reagents floats certain finely crushed minerals, whereas other
minerals sink, so that the valuable minerals are concentrated and separated
from the waste.
GRADE: the classification of an ore according to its content of economically
valuable material, expressed as grams per tonne for precious metals and as a
percentage for most other metals.
HARD COKING COAL: a type of metallurgical coal used primarily for making coke
in integrated steel mills.
KIVCET FURNACE: a smelting furnace which produces lead bullion and slag.
METALLURGICAL COAL: various grades of coal suitable for making steel, such as
coking coal.
MILL: a plant in which ore is ground and undergoes physical or chemical
treatment to extract and produce a concentrate of the valuable minerals.
MINERAL RESERVE: the economically mineable part of a measured or indicated
mineral resource demonstrated by at least a preliminary feasibility study.
This study must include adequate information on mining, processing,
metallurgical, economic and other relevant factors that demonstrate, at the
time of reporting, that economic extraction can be justified. A mineral
reserve includes diluting materials and allowances for losses that may occur
when the material is mined.
PROBABLE MINERAL RESERVE: the economically mineable part of an indicated and,
in some circumstances, a measured mineral resource demonstrated by at least a
preliminary feasibility study. This study must include adequate information on
mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be
justified.
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PROVEN MINERAL RESERVE: the economically mineable part of a measured mineral
resource demonstrated by at least a preliminary feasibility study. This study
must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of
reporting, that economic extraction is justified.
MINERAL RESOURCE: a concentration or occurrence of diamonds, natural solid
inorganic material, or natural solid fossilized organic material including
base and precious metals, coal, and industrial minerals in or on the earth's
crust in such form and quantity and of such a grade or quality that it has
reasonable prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a mineral resource are known,
estimated or interpreted from specific geological evidence and knowledge.
INDICATED MINERAL RESOURCE: that part of a mineral resource for which
quantity, grade or quality, densities, shape and physical characteristics, can
be estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and
grade continuity to be reasonably assumed.
INFERRED MINERAL RESOURCE: that part of a mineral resource for which quantity
and grade or quality can be estimated on the basis of geological evidence and
limited sampling and reasonably assumed, but not verified, geological and
grade continuity. The estimate is based on limited information and sampling
gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes.
MEASURED MINERAL RESOURCE: that part of a mineral resource for which quantity,
grade or quality, densities, shape, and physical characteristics are so well
established that they can be estimated with confidence sufficient to allow the
appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the deposit.
The estimate is based on detailed and reliable exploration, sampling and
testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.
ORE: naturally occurring material from which minerals of economic value can be
extracted at a reasonable profit.
OREBODY: a contiguous, well defined mass of material of sufficient ore content
to make extraction economically feasible.
PRESSURE LEACHING: extracting a soluble metallic compound from an ore or
concentrate by dissolving it in a chemical solvent, accelerated by means of
increased temperature and pressure.
RAW COAL: coal that has been removed or exposed for removal from a mine, but
that has not been processed.
REFINERY: a plant in which metal or minerals are extracted from an ore or
concentrate, or in which metallic products of a smelting process are refined
to higher purity.
ROASTING: the treatment of sulphide ore or concentrate by heat and air, or
oxygen-enriched air, in order to oxidize sulphides and remove other elements.
- vii -
SEMI-AUTOGENOUS GRINDING (SAG): a method of grinding rock into fine particles
in which the rock itself performs some of the function of a grinding medium,
such as steel balls.
SHAFT: a vertical or inclined passageway to an underground mine through which
a mine is worked, E.G., for ventilation, moving personnel, equipment, supplies
and material, including ore and waste rock.
SLAG: a substance formed by way of chemical action and fusion at furnace
operating temperatures: a by-product of the smelting process.
SMELTER: a plant in which concentrates are processed into an upgraded product
by application of heat.
STOPE: an underground excavation formed by the extraction of ore.
STRIKE: the direction, course or bearing taken by a structural surface as it
intersects the horizontal.
SULPHIDE: a mineral compound containing sulphur but no oxygen.
TAILINGS: the effluent that remains after recoverable metals have been removed
from the ore during processing.
THERMAL COAL: coal that is used primarily for its heating value and that tends
not to have the carbonization properties possessed by metallurgical coals.
TREATMENT AND REFINING CHARGES: the charge a mine pays to a smelter to cover
the cost of conversion of concentrates into refined metal.
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CORPORATE STRUCTURE
NAME, ADDRESS AND INCORPORATION
Teck Cominco Limited, previously Teck Corporation, was continued under the
CANADA BUSINESS CORPORATIONS ACT in 1978. It is the continuing company
resulting from the merger in 1963 of the interests of The Teck-Hughes Gold
Mines Ltd., Lamaque Gold Mines Limited and Canadian Devonian Petroleum Ltd.,
companies incorporated in 1913, 1937 and 1951 respectively. Over the years,
several other reorganizations have been undertaken. These include our merger
with Brameda Resources Limited and The Yukon Consolidated Gold Corporation in
1979, the merger with Highmont Mining Corporation and Iso Mines Limited in
1979, the consolidation with Afton Mines Ltd. in 1981 and the merger with
Copperfields Mining Corporation in 1983. On July 20, 2001, we completed a
merger with Cominco Ltd. by acquiring all of the issued and outstanding share
capital of Cominco Ltd. that we did not previously own by way of a plan of
arrangement under the CANADA BUSINESS CORPORATIONS ACT. Pursuant to the plan
of arrangement, Cominco Ltd. shareholders received 1.8 Class B subordinate
voting shares of the Company plus six dollars in cash for each Cominco Ltd.
common share held. On July 23, 2001, Cominco Ltd. changed its name to Teck
Cominco Metals Ltd. and on September 12, 2001, we changed our name to Teck
Cominco Limited.
Since 1978, the Articles of the Company have been amended on several occasions
to provide for various series of preferred shares and other corporate
purposes. On January 19, 1988, our Articles were amended to provide for the
subdivision of our Class A common shares and Class B subordinate voting shares
on a two-for-one basis. On September 12, 2001, the Articles were amended to
effect the name change described above and to convert each outstanding Class A
common share into one new Class A common share and 0.2 Class B subordinate
voting shares and to enact "coattail" takeover bid protection in favour of the
Class B subordinate voting shares. See "Description of Capital Structure" at
page 35 of this Annual Information Form for a description of the attributes of
the Class A common shares and Class B subordinate voting shares.
On November 28, 2003 our Articles were amended to provide for the designation
of 790,000 preference shares as "Preference Shares Series 1" and by
designating 550,000 preference shares as "Preference Shares Series 2." See
"Description of Capital Structure" at page 35 of this Annual Information Form
for a description of the attributes of the Series 1 and Series 2 preferred
shares.
The registered and principal offices of Teck Cominco are located at 200
Burrard Street, Vancouver, British Columbia.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 1
INTERCORPORATE RELATIONSHIPS
Our financial statements consolidate the accounts of all of our subsidiaries.
Our material subsidiaries as at December 31, 2005 which are wholly-owned are
listed below. Indentation indicates that the voting securities of the relevant
subsidiary are held by the subsidiary listed immediately above.
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JURISDICTION OF INCORPORATION/FORMATION/
COMPANY NAME CONTINUATION
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Teck Financial Ltd. Bermuda
Teck Base Metals Ltd. Bermuda
Teck Cominco Metals Ltd. Canada
Teck Cominco Coal Partnership Canada
Cominco Mining Partnership British Columbia
Teck Cominco American Incorporated Washington, U.S.A.
Teck Cominco Alaska Incorporated Alaska, U.S.A.
Teck-Hemlo Inc. Ontario
Teck Gold Limited Canada
Teck-Pogo Inc. Alaska, U.S.A.
Teck Resources Inc. Colorado, U.S.A.
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In addition to the wholly-owned subsidiaries listed above, we own, directly
and indirectly: a 97.5% partnership interest in the Highland Valley Copper
partnership; a 15% limited partnership interest in Fort Hills Energy Limited
Partnership; through Teck Cominco Coal Partnership, a 39% partnership interest
in the Elk Valley Coal Partnership; and, through Teck Base Metals Ltd., a
22.5% indirect share interest in Compania Minera de Antamina S.A., which owns
the Antamina copper zinc mine in Peru.
GENERAL DEVELOPMENT OF THE BUSINESS
THREE-YEAR HISTORY
2003
Realized zinc and copper prices in 2003 averaged US$0.38 and US$0.85 per pound
respectively compared with US$0.35 and US$0.71 per pound in 2002. Gold prices
continued to increase during the year, with an average realized price of
US$359 per ounce, up from US$314 per ounce in 2002. Partially offsetting the
higher metal prices were a weaker US dollar and lower coal prices, which
declined from an average of US$45 per tonne to US$44 per tonne in 2003.
On February 28, 2003, we completed a transaction with Fording Inc., Westshore
Terminals Income Fund, Sherritt International Corporation and the Ontario
Teachers' Pension Plan Board to combine the metallurgical coal assets of
Fording, Luscar Energy Partnership and Teck Cominco in the Elk Valley Coal
Partnership ( "Elk Valley Coal"). We contributed our Elkview mine and $125
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 2
million in cash to obtain an initial 35% interest in Elk Valley Coal. Under
the agreement between the Company, Fording, Quintette Coal Partnership and
Teck-Bullmoose Coal Inc. providing for the formation and operation of Elk
Valley Coal (the "Partnership Agreement"), our interest could be increased to
40% should Elk Valley Coal attain certain synergies and realize certain cash
flows from the Elkview mine during the four year period ended March 31, 2007.
Our interest was increased in 2004 and 2005. We also paid $150 million for a
9.1% interest in the Fording Canadian Coal Trust ("FCCT"), formed by the
reorganization of Fording into an income trust. FCCT owns the remainder of Elk
Valley Coal and certain other assets.
In April 2003, the Bullmoose metallurgical coal mine closed after exhausting
its coal reserves following twenty years of operation.
We had provided the lenders of senior debt financing of the Antamina mine with
a guarantee of its 22.5% share of project debt. Effective July 1, 2003, the
project debt became non recourse to the project sponsors when certain
completion tests were met. Completion resulted in the removal of certain
voting restrictions imposed on us in relation to the management of Antamina.
Consequently, we began to proportionately consolidate our investment in
Antamina effective July 1, 2003.
In October 2003, we sold our interest in the Los Filos gold property in Mexico
for US$48.4 million in cash.
In November 2003, we completed our acquisition of the Lennard Shelf zinc mines
in the Kimberley region of Western Australia for AUS$26 million plus taxes and
transaction costs. We subsequently agreed to sell a 50% interest in Lennard
Shelf to Noranda Inc. (now Falconbridge Ltd.). Falconbridge can earn its
interest by matching our investment in Lennard Shelf. The Lennard Shelf mines
were placed on care and maintenance by the vendor prior to our acquisition.
Studies are underway to determine the feasibility of reopening the Lennard
Shelf mines. A decision to restart the mines will depend on the outcome of
this program, as well as on zinc market conditions and exchange rates.
2004
Realized prices for our principal products increased further during 2004,
following changes in market conditions which commenced in the fourth quarter
of 2003. Realized zinc and copper prices averaged US$0.48 and US$1.35 per
pound respectively compared with US$0.38 and US$0.85 in 2003. Realized
molybdenum prices increased to an average of US$17 per pound in 2004 from US$4
per pound in 2003. At the end of the year, the molybdenum price was US$30 per
pound. Coal prices also increased from US$45 per tonne to US$52 per tonne in
2004. These price increases were somewhat offset by a weaker US dollar. Higher
prices substantially improved earnings and cash flows at all of our major
operations.
In March 2004, we completed the purchase of an additional 33.57% interest in
HVC, through the exercise of a right of first refusal, for US$73 million. The
additional interest contributed $75 million to earnings during 2004.
The Partnership Agreement establishing Elk Valley Coal provided that we could
increase our interest in Elk Valley Coal by up to 5% from an initial 35%, to
the extent that operating synergies realized by Elk Valley Coal and
distributable cash generated by the Elkview mine (collectively, "Incremental
Returns") exceeded certain cumulative targets during the four year period from
April 1, 2003 to March 31, 2007. An independent engineering firm was retained
to assist in the determination of Incremental Returns. Following receipt of
the opinion of the independent engineer, the Company and FCCT reached
agreement in July 2004 on the amount of Incremental Returns and the resulting
adjustments to our interest in Elk Valley Coal. Our initial 35% interest was
increased by 3% effective April 1, 2004, and was increased by an additional 1%
on April 1, 2005. Pursuant to the July 2004 Agreement, our interest will be
increased by a further 1% on April 1, 2006, bringing our total direct interest
in Elk Valley Coal to 40% on April 1, 2006.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 3
In May 2004, following the withdrawal of an appeal in relation to the issuance
of a key environmental permit, site construction began at the Pogo gold
project in Alaska. Elk Valley Coal also commenced the development of the
Cheviot pit at the Cardinal River mine.
On December 15, 2004, we completed the sale of our 85% interest in Refineria
de Cajamarquilla S.A., which owns the Cajamarquilla zinc refinery in Peru, for
proceeds of $168 million after repayment of debt related to Cajamarquilla of
$56 million. Under the agreement of purchase and sale, we are entitled to
receive additional price-linked payments of approximately US$365,000 for each
US$0.01 that the average annual price of zinc exceeds US$0.454 per pound in
each of the years from 2005 to 2009 inclusive. In addition, if the purchaser
elects to expand the refinery during the first three years following the sale,
we are entitled to an additional payment of US$12.75 million in year one,
declining to US$4.25 million in year three. On January 17, 2006 we received
the first price-linked payment of approximately $6 million.
As a result of the record earnings and operating cash flow in 2004, we
finished the year with cash balances of over $900 million against long-term
debt of $627 million. In November 2004, we announced that we were increasing
the semi-annual dividend payable to shareholders of record on December 31,
2004 from $0.10 to $0.20, bringing the total annual dividend for 2004 to $0.30
per share.
2005
In 2005 realized prices for our principal products increased further. Realized
zinc and copper prices averaged US$0.67 and US$1.82 per pound respectively
compared with US$0.48 and US$1.35 in 2004. Realized molybdenum prices
increased to an average of US$26 per pound in 2005 up from US$17 per pound in
2004. Realized coal prices increased dramatically from US$52 per tonne to
US$99 per tonne in 2005. Higher prices significantly improved earnings and
cash flows at all of our major operations, although results at Canadian
operations were somewhat adversely affected by a weaker US dollar.
In April 2005, Donald R. Lindsay was appointed our President and Chief
Executive Officer, succeeding David Thompson and in October 2005, Ronald A.
Millos was appointed Senior Vice President, Finance and Chief Financial
Officer, succeeding John Taylor.
In November 2005 pursuant to an agreement with UTS Energy Corporation ("UTS")
and Petro-Canada, we subscribed for a 15% interest in the Fort Hills Energy
Limited Partnership, which is developing the Fort Hills oil sands project in
Alberta, Canada (see "Significant Acquisitions and Dispositions in 2005"
below).
Construction of the Pogo project in Alaska progressed to substantial
completion by the end of 2005. The project is expected to reach commercial
production in the second quarter of 2006. In September 2005 we announced that
we would extend the life of the Highland Valley copper mine by 5 years to
2013.
In September 2005 we issued US$300 million aggregate principal amount of ten
year notes and US$700 million aggregate principal amount of 30 year notes. The
net proceeds of the offering will be used to repay indebtedness maturing in
2006 and to fund new investment opportunities, including our investment in the
Fort Hills oil sands project, and for general corporate purposes.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 4
As a result of record earnings and operating cash flow in 2005 as well as our
issuance of debt securities, our cash balance at December 31, 2005 was $3.1
billion against long term debt including the current portion of long term debt
of $1.7 billion, excluding our exchangeable debentures.
In April 2005 we announced that we were increasing the semi-annual dividend
payable to shareholders of record on June 30, 2005 from $0.20 to $0.40 per
share. In December 2005, we deferred payment of our dividend payable to
shareholders of record on December 15, 2005 to January 3, 2006 in light of
proposed changes to the Canadian tax treatment of dividends.
SIGNIFICANT ACQUISITIONS AND DISPOSITIONS IN 2005
Fort Hills Oil Sands
In November 2005 we acquired a 15% interest in the Fort Hills Energy Limited
Partnership (the "Fort Hills Partnership") which is developing the Fort Hills
oil sands project in Alberta, Canada. The other partners in the project are
UTS with a 30% interest and Petro-Canada with a 55% interest. An affiliate of
Petro-Canada is the project operator. The aggregate subscription price is $475
million. The subscription price will be satisfied by our contributing 34% of
project expenditures (or $850 million) until project spending reaches $2.5
billion and our 15% share thereafter (see "Individual Operations - Fort
Hills").
UTS has also agreed in principle to grant to us the right to acquire at fair
market value a 50% working interest in "Lease 14", an oil sands property
contiguous to the Fort Hills property.
DESCRIPTION OF THE BUSINESS
GENERAL
Teck Cominco is engaged primarily in the exploration for, and the development
and production of, natural resources. We have interests in the following
principal mining and processing operations as at March 1, 2006:
TYPE OF OPERATION JURISDICTION
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Red Dog Zinc/Lead Alaska, USA
Pend Oreille Zinc/Lead Washington, USA
Trail Zinc/Lead Refinery British Columbia, Canada
Elkview Coal British Columbia, Canada
Fording River Coal British Columbia, Canada
Greenhills Coal British Columbia, Canada
Coal Mountain Coal British Columbia, Canada
Line Creek Coal British Columbia, Canada
Cardinal River Coal Alberta, Canada
Antamina Copper/Zinc Peru
Highland Valley Copper/Molybdenum British Columbia, Canada
David Bell/Williams Gold Ontario, Canada
Pogo Gold Alaska, USA
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Our principal products are zinc concentrate, metallurgical coal, copper
concentrate and refined metals including zinc, lead, indium and germanium. We
produce gold from three operating mines. We also sell electrical power that is
surplus to our requirements at the Trail metallurgical operations.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 5
The following table sets out our revenue by product for each of our last two
financial years
REVENUE BY PRODUCT
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PRODUCT 2005 2004
$(000'S) % $(000'S) %
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Zinc(1) 945 21% 889 26%
Copper((2)) 1,208 27% 792 23%
Coal 1,173 27% 645 19%
Other((3)) 1,089 25% 1,102 32%
TOTAL 4,415 100% 3,428 100%
(1) Zinc revenues include sales of refined zinc and zinc concentrate
(2) Copper revenues include silver by-product revenues from the
Antamina and Highland Valley mines
(3) Other revenues include gold, lead, molybdenum, chemicals, and
power sales
PRODUCT SUMMARY
Zinc
Our principal markets for zinc concentrates are Asia and Europe. Approximately
25% of Red Dog's concentrate production is sold to our metallurgical operation
at Trail, BC. The balance of Red Dog's production is distributed to customers
in Europe and Asia by ship.
Our principal markets for refined zinc are, in order of importance, United
States and Asia. Refined zinc produced at Trail is distributed to customers in
the United States by rail and/or truck and to customers in Asia by ship.
All of our revenues from sales of refined zinc and zinc concentrates (other
than Red Dog zinc concentrates treated at Trail) are derived from sales to
third parties. Zinc concentrates and refined zinc are fungible commodities. We
strive to differentiate our products by producing the alloys, sizes and shapes
best suited to our major customers' needs.
All of the zinc concentrates produced by our Pend Oreille mine in Washington
State are shipped by truck to the Trail metallurgical operations. Trail's
supply of zinc and lead concentrates other than those sourced from our own
mines is provided through long-term and spot contracts with mine producers in
North America, South America and Australia.
We have substantial long-term frame contracts for the sale of zinc
concentrates from the Red Dog mine to customers in Asia and Europe.
Treatment and refining charges rise and fall depending upon the supply of zinc
concentrates in the market and the demand for custom zinc concentrates by the
zinc smelting and refining industry. In 2004 treatment charges fell for the
fourth consecutive year as the global demand for concentrates was surpassed by
demand from refineries. In 2005 treatment charges fell further to record low
levels as the tightness in the concentrate market continued. The price of zinc
fluctuates with the overall supply and demand for refined zinc. Slowing supply
of zinc concentrate coupled with demand growth for refined zinc by China has,
in large part, driving the price of refined zinc in the last two years.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 6
Metallurgical Coal
Our principal markets for metallurgical coal are the hard coking coal markets
in Asia and Europe. Processed coal is shipped by rail to the Westshore and
Neptune Terminals in the lower mainland of British Columbia or directly by
rail to North American customers or by rail and ship through Thunder Bay
Terminals in Thunder Bay, Ontario. Rail service to the five Elk Valley mines
is provided by Canadian Pacific Railway, and Canadian National Railway
provides rail service to the Cardinal River mine in central Alberta.
Substantially all of Elk Valley Coal's production is sold under evergreen or
long-term agreements with coal prices that are negotiated annually.
Elk Valley Coal competes primarily with producers in Australia and the United
States. The supply of coal in global markets and the demand for hard coking
coal among world steel producers has historically provided for a competitive
seaborne market. Coal pricing is generally established in US dollars and the
competitive positioning among producers can be significantly affected by
exchange rates. The competitive position of Elk Valley Coal continues to be
determined primarily by the quality of its various coal products and its
reputation as a reliable supplier, as well as by its production and
transportation costs compared to other producers throughout the world.
The seaborne hard coking coal markets are cyclical in nature. Over-supply in
the years 1997 - 2000 and the economic downturn in a number of Asian countries
caused prices to drop by more than 30%. Demand strengthened in 2003 and prices
have strengthened significantly through 2004 and 2005.
Copper Concentrates
Our principal market for copper concentrates is Asia. Copper concentrates
produced at Highland Valley Copper are distributed to customers in Asia by
rail to a storage facility in Vancouver, British Columbia, and from there by
ship. Copper concentrates produced at Antamina are transported by a slurry
pipeline to a port at Huarmey, Peru and from there by ship to customers in
Europe, Asia and North America.
The copper concentrate business is cyclical. Treatment charges rise and fall
depending upon the supply of copper concentrates in the market and the demand
for custom copper concentrates by the copper smelting and refining industry.
In 2004 treatment charges rose in the second half of the year as the global
concentrate market moved into surplus. As mine production, fuelled by the
rising copper price, rose in 2004 and 2005, the rise in treatment charges that
started in 2004 continued up in 2005.The price of copper fluctuates with the
comparative supply and demand for refined copper. Demand growth for refined
copper by China has, in large part, driven the relatively high price of
refined copper in the last two years.
INDIVIDUAL OPERATIONS
ZINC
Mining Operations
RED DOG MINE, UNITED STATES (ZINC, LEAD)
The Red Dog zinc-lead mine, concentrator and shipping facility in the
Northwest Arctic Borough near Kotzebue, Alaska, commenced production in
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 7
December 1989 and began shipping concentrates in July 1990. The Red Dog mine
is 100% owned and operated by Teck Cominco Alaska Incorporated, subject to a
royalty as described below.
The mining method employed is conventional drill and blast open pit mining.
The main pit has an expected life of seven years at current rates of
production. Additional reserves have been identified in the vicinity of the
processing facilities sufficient to extend the life of the operation by a
further 16 years for a total mine life of 23 years. The mineral processing
facilities employ conventional grinding and sulphide flotation methods to
produce zinc and lead concentrates.
The mine and concentrator properties are leased from, and are being developed
under the terms of a development and operating agreement with, the NANA
Regional Corporation, Inc. ("NANA"), a native Alaskan development corporation.
NANA receives an annual advance royalty equal to the greater of 4.5% of the
value of annual production or US$1 million until we have recovered our capital
investment and an interest factor (the "Capital Pool"). After those amounts
have been recovered, we will pay NANA a percentage of the net proceeds of
production from the mine, starting at 25% and increasing to 50% by successive
increments of 5% at five-year intervals. Advance royalties paid will be
recoverable against the 25% royalty on net proceeds of production. In addition
to the royalties payable to NANA, the operation is subject to state and
federal income taxes.
All contaminated water from the mine area and waste dumps is collected and
contained in a tailings impoundment and seasonally discharged through a water
treatment plant. Mill process water is reclaimed from the tailings pond. The
mine and an associated port facility operate under effluent permits issued by
the United States Environmental Protection Agency and air permits issued by
the State of Alaska. The operation is in material compliance with all of its
permits and related regulatory instruments and has obtained all of the permits
that are material to its operations. Permit renewal applications are underway.
Additional permits will be required for future development at Red Dog.
Red Dog is comprised of a number of sedimentary hosted exhalative (SEDEX)
lead-zinc sulfide deposits hosted in Mississippian-age to Pennsylvanian-age
sedimentary rocks. The orebodies are lens shaped and occur within structurally
controlled (thrust faults) plates, are relatively flat lying and are hosted by
marine clastic rocks (shales, siltstones, turbidites) and lesser chert and
carbonate rocks. Barite rock is common in and above the sulfide units.
Silicification is the dominant alteration type.
The sulfide mineralization consists of semi-massive to massive sphalerite,
pyrite, marcasite and galena. Common textures within the sulfide zone include
massive, fragmental, veined and, rarely, sedimentary layering.
Approximately 25% of the zinc concentrate produced at Red Dog is shipped to
our metallurgical facilities at Trail, British Columbia and the balance to
customers in Asia and Europe. The lead concentrate production is shipped to
Trail and to customers in Asia and Europe. The majority of concentrate sales
are pursuant to long-term contracts at market prices subject to annually
negotiated treatment charges. The balance is sold on the spot market at prices
based on prevailing market quotations. The shipping season at Red Dog is
restricted to approximately 100 days per year because of sea ice conditions
and Red Dog's sales are seasonal with the majority of sales in the last five
months of each year. Concentrate is stockpiled at the port facility and is
typically shipped between July and October.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 8
PEND OREILLE MINE, UNITED STATES (ZINC, LEAD)
Construction was completed at the Pend Oreille mine, near Metaline Falls,
Washington, in early 2004 at a total cost of US$74 million and the mine is now
in commercial production. We own 100% of the Pend Oreille mine. A proven and
probable reserve of 4.7 million tonnes grading 7.0% zinc and 1.2% lead is
expected to provide a mine life of 7 years with some potential for extension.
Inferred and indicated resources of 2.3 million tonnes grading 6.7% zinc and
1.3% lead require further drilling and evaluation to qualify as reserves.
Pend Oreille holds all permits necessary for its operation and is in material
compliance with these permits.
The Pend Oreille mine is a carbonate hosted zinc-lead ore body situated within
the Metaline Formation in the southern portion of the Kootenay arc, an
arcuate, narrow belt of sedimentary, volcanic and metamorphic rocks separating
Precambrian metasediments to the east and Mesozoic volcanic and sedimentary
units to the west. Metaline carbonates host the known zinc-lead deposits
within the district.
Mineralization at the Pend Oreille mine is located within the Yellowhead
horizon of the Metaline Formation, an intensely altered stratabound dolomitic
solution breccia, which has been invaded and replaced by fine grained pyrite
with lesser Zn and Pb sulfides. The sulfide zone has relatively simple
mineralogy. Sphalerite and galena are the two ore minerals of interest. Gangue
minerals include pyrite, dolomite and calcite.
The Pend Oreille mine is an underground mine. The mineral processing
facilities employ conventional grinding and sulphide flotation methods to
produce high quality zinc and lead concentrates. Annual mill throughput in
2005 was 697,000 tonnes of ore, producing 45,000 tonnes of zinc concentrate
and 8,000 tonnes of lead concentrate. The concentrates are hauled by truck to
our Trail Metallurgical Operations.
Refining and Smelting
TRAIL METALLURGICAL OPERATIONS
Teck Cominco Metals owns and operates the integrated smelting and refining
complex at Trail, British Columbia. The complex's major products are refined
zinc and lead. It also produces silver and gold. germanium dioxide, indium,
cadmium and copper compounds as metal co-products, along with a variety of
sulphur products and ammonium sulphate fertilizers.
Trail's zinc operations consist of six major metallurgical plants, one
fertilizer plant and two specialty metal plants. The facility has an annual
capacity of approximately 295,000 tonnes of refined zinc. Zinc concentrates
are initially treated in roasters or pressure leach facilities. The zinc and
other elements are put into solution before the zinc is purified and
electroplated onto cathodes in an electrolytic refining plant. Refined zinc is
produced by remelting the zinc cathodes and then casting the zinc into various
shapes, grades and alloys to meet customer requirements. A range of valuable
metals, including indium and germanium, are extracted as co-products. Lead
concentrates, recycled batteries, residues from the zinc circuits and various
other lead and silver-bearing materials are treated in the KIVCET flash
furnace and electro-refined into lead in the refinery. Silver and gold are
also recovered from this circuit after further processing.
Metallurgical effluent and drainage water from the smelter site that requires
treatment is collected in ponds and treated through a water treatment plant.
The smelter operates under a variety of permits, including effluent and air
emission permits, issued by the British Columbia Ministry of Environment. The
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 9
operation is in material compliance with all of its environmental permits and
has obtained all of the permits that are material to its operations.
Teck Cominco Metals also owns the Waneta hydroelectric power plant near Trail.
It has an installed capacity of 450 megawatts and an annual average output of
approximately 2,700 gigawatt hours of energy. This plant, pursuant to
agreements with B.C. Hydro and Fortis Inc., provides electric power to the
Trail metallurgical operation. The operation of Waneta and other hydroelectric
plants in the watershed is governed by the Canal Plant Agreement (CPA), a
contractual arrangement with B.C. Hydro and other related parties under which
we receive 2,690 gigawatt hours per year of energy even during low water
years. A new CPA that extends the existing arrangements through 2035 has been
executed by all parties and is currently going through a regulatory process
that is expected to be complete in the first half of 2006.
During 2006 we will be upgrading the fourth generating unit at Waneta which
will provide an additional 40 gigawatt hours per year.
We also own a 15 kilometre transmission line from Waneta to the United States'
power distribution system. Power that is surplus to our needs at Trail is sold
in Canada and in the United States.
COAL
Elk Valley Coal Partnership
We hold our metallurgical coal mining interests through our 39% interest in
Elk Valley Coal (other than the Bullmoose mine which will be transferred to
Elk Valley Coal when reclamation is complete). We hold a 38.836% interest in
Elk Valley Coal through the Teck Cominco Coal Partnership, a partnership
between Teck Cominco (99.992%) and Teck-Bullmoose Coal Inc. (0.008%).
Quintette Coal Partnership (which is directly and indirectly wholly-owned by
us) owns an additional 0.164% interest in Elk Valley Coal. Teck Cominco Coal
Partnership is the managing partner of Elk Valley Coal. The remaining 61%
interest in Elk Valley Coal is held by Fording Limited Partnership, a
wholly-owned subsidiary of FCCT. Under the terms of the Elk Valley Coal
Partnership Agreement, we could increase our interest in Elk Valley Coal by up
to 5%, bringing our interest to 40%, to the extent that certain operating
synergies realized by Elk Valley Coal and distributable cash generated by the
Elkview mine (collectively, "Incremental Returns") cumulatively reached
certain specified targets in the four year period from April 2003 to March 31,
2007. As a result of our agreement with FCCT in July 2004 on the amount of
Incremental Returns and the resulting adjustments to our interest in Elk
Valley Coal, our 35% direct and indirect interest in Elk Valley Coal was
increased by 3% effective April 1, 2004, by 1% on April 1, 2005 and will be
increased by an additional 1% on April 1, 2006.
In addition to our interest in Elk Valley Coal, we own an approximate 8.75%
interest in FCCT.
Elk Valley Coal is a general partnership established under the laws of the
Province of Alberta. In its capacity as managing partner of Elk Valley Coal,
Teck Cominco Coal Partnership manages and makes all decisions relating to the
business and affairs of Elk Valley Coal, subject to obtaining the approval of
Fording Limited Partnership in respect of certain enumerated matters. These
matters include certain fundamental changes with respect to Elk Valley Coal,
and approval of an annual operating and capital plan and budget for Elk Valley
Coal.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 10
Elk Valley Coal has a $200 million five-year revolving floating rate, annually
extendible credit facility that can be used for general operating purposes.
Elk Valley Coal has also given an unsecured guarantee, limited in recourse as
against Teck Cominco to the assets of Elk Valley Coal and our interest
therein, with respect to borrowings by FCCT under FCCT's $400 million credit
facility, which was initially incurred principally in connection with the
financing of the transaction pursuant to which we acquired our interest in Elk
Valley Coal. The FCCT and Elk Valley Coal credit facilities have the same
attributes, terms and conditions.
While the foregoing guarantee is in place, FCCT may not sell its interest in
Elk Valley Coal or carry on any business other than in respect of Elk Valley
Coal or its industrial minerals business substantially as currently conducted,
unless in our reasonable judgment the carrying on of such business could not,
under any reasonably foreseeable circumstances, have an adverse effect on the
financial condition of FCCT.
Elk Valley Coal has six operating mines. It wholly owns Fording River, Coal
Mountain, Line Creek and Cardinal River, has a 95% partnership interest in the
Elkview mine, and has an 80% joint venture interest in the Greenhills mine.
Five of the six mines are located in close proximity to each other in the Elk
Valley region of southeast British Columbia. The Cardinal River mine is
located in west central Alberta. All of Elk Valley Coal's mines are open pit
operations and are designed to operate on a continuous basis, 24 hours per
day, 365 days per year. Operating schedules can be varied depending on market
conditions. All of the mines are accessed by two lane all-weather roads which
connect to public highways. All the mines operate under permits granted by
Provincial and Federal regulatory authorities. Provincial remediation
reclamation permits are placed to permit all facets of the mining process.
From time to time each of the mines may require additional permits in respect
of the location of additional dumps and tailings impoundment areas that will
be required as mining operations proceed. All permits necessary for the
current operations of the mines are in hand and in good standing.
The following chart lists significant coal rights held by Elk Valley Coal as
at December 31, 2005:
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MINERAL HOLDINGS (THOUSAND HECTARES, CROWN LEASE
ROUNDED) FEE SIMPLE AND LICENSE TOTAL
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Coal
British Columbia 39 68 107
Alberta 1 39 40
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All Mines and Minerals except
Petroleum & Natural Gas
British Columbia 10 - 10
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TOTAL 50 107 157
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In British Columbia, coal licenses are issued for one-year terms and have an
initial cost of $7 per hectare, increasing by $5 per hectare every five years
to a maximum of $30 per hectare. Elk Valley Coal currently pays license fees
ranging from $7 to $30 per hectare. Coal leases are granted for periods of 30
years and have an annual cost of $10 per hectare. In Alberta, Crown leases are
granted by the provincial government and are generally issued for 15 years.
Annual lease rentals are approximately $3.50 per hectare. In the past,
renewals of these licences and leases have generally been granted although
there can be no assurance that this will continue in the future.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 11
Five of Elk Valley Coal's six coal mines operate in British Columbia and are
therefore subject to mineral taxes. British Columbia mineral tax is a 2-tier
tax with a minimum rate of 2% and a maximum rate of 13%. A minimum tax of 2%
applies to operating cash flows, as defined by the regulations. A maximum tax
rate of 13% applies to cash flows after taking available deductions for
capital expenditures and other permitted deductions.
Elk Valley Coal's mines employ conventional open-pit mining techniques and
coal preparation plants. Following mining, the coal is washed using a variety
of conventional techniques and conveyed to coal-fired dryers for drying.
Processed coal is conveyed to clean coal silos or other storage facilities for
storage and load-out to railcars.
COAL TRANSPORTATION AND SALES
Coal from the coal mines owned by Elk Valley Coal is principally transported
by rail pursuant to long-term rail contracts to the Roberts Bank coal port
near Vancouver operated by Westshore Terminals Ltd. ("Westshore"). Westshore
provides coal loading services under long-term agreements with Elk Valley
Coal.
Rail service to the five mines located in the Elk Valley is provided by the
Canadian Pacific Railway Company ("CPR") pursuant to an agreement expiring
March 31, 2009. Rail service to the Cardinal River mine is provided by
Canadian National Railway.
Westshore provides ship-loading services at Roberts Bank for approximately 75%
of Elk Valley Coal's metallurgical coal pursuant to long-term contracts. Elk
Valley Coal has requested a review of the loading rate for the Elkview
operations effective April 1, 2005. The relevant contract provides that if the
parties cannot agree on appropriate adjustments to the rate, the matter will
be settled by arbitration. Neptune Terminals, in which Elk Valley Coal has a
46.4% ownership interest, provides ship-loading services for approximately 12%
of Elk Valley Coal's metallurgical coal. The remaining 13% of Elk Valley
Coal's metallurgical coal products are shipped from the sites to eastern North
American customers either directly by rail or by rail and ship via Thunder Bay
Terminals in Thunder Bay, Ontario. A small amount of product is shipped by
truck to customers in western Canada.
Elk Valley Coal's coal is sold principally under evergreen contracts at
annually negotiated prices.
ELKVIEW MINE, CANADA
Elk Valley Coal has a 95% partnership interest in the Elkview mine. The
remaining 5% is held equally by Nippon Steel Corporation and POSCO, a Korean
steel producer, each of which acquired a 2.5% interest in 2005 for US$25
million. The Elkview mine is an open pit coal mine located in the Elk Valley
in southeastern British Columbia. The mine has a current annual design
capacity of 6 million tonnes of clean coal but is currently undergoing an
expansion program to increase the capacity to 7 million tonnes per year by the
end of 2007. At current production rates, the Elkview mine is estimated to
have a remaining reserve life of 35 years.
The mine is a conventional open pit operation comprised of 14,700 hectares of
coal lands of which 3,526 hectares have been mined or are scheduled for
mining. The mine proper and the associated fee simple lands at Elkview mine
cover a portion of the Crowsnest coal field that runs from just north of the
Elkview property to 20 kilometres south of the City of Fernie, British
Columbia. The mineral reserves associated with the Elkview mine lie in the
Mist Mountain formation of the Crowsnest coal field with the mine exploiting
16 coal seams in the area of Baldy and Natal Ridge, just outside the Town of
Sparwood, British Columbia, bounded by Michel Creek to the south and the Elk
River to the west.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 12
Annual in-fill drilling programs are conducted to confirm and update the
geological model used to develop the yearly mine plans.
The coal produced is a high quality mid-volatile hard coking coal. Lesser
quantities of lower grade hard coking coal are also produced. The Elkview mine
uses conventional open pit truck/shovel mining methods. The preparation plant,
which has a capacity of 7 million tonnes per year of clean coal, is a
conventional coal washing plant, using standard technology of cycloning and
heavy media flotation.
FORDING RIVER MINE, CANADA
The Fording River mine is located 29 kilometres northeast of the community of
Elkford, in southeastern British Columbia. The mine is a conventional open pit
operation comprised of 20,304 hectares of coal lands of which 4,150 hectares
have been mined or are scheduled for mining.
Construction of Fording River as a 3 million tonne per year operation was
commenced in 1969. It has operated continuously since that time. Coal mined at
Fording River is primarily metallurgical coal, although a small amount of
thermal coal is also produced. An expansion program was completed in 2005 at
Fording River and the current annual production capacity of the mine and
preparation plant is 10.5 million tonnes. Annual in-fill drilling programs are
conducted to refine mine plans and confirm and update the geological model.
The majority of current production is derived from the Eagle Mountain pit.
Proven and probable reserves at Fording River are projected to support mining
at 2005 production rates through 2030. Fording River's reserve areas include
Eagle Mountain, Greenhills, Turnbull, Henrietta, and Castle Mountain.
GREENHILLS, CANADA
The Greenhills mine is located eight kilometres northeast of the community of
Elkford, in southeastern British Columbia. The mine site is comprised of
10,092 hectares of coal lands of which approximately 2,200 hectares have been
mined or are scheduled for mining. Greenhills holds a forest licence and
manages a 7,610 hectare forest located outside the active mining area.
The Greenhills operation was constructed in the early 1980s and has operated
continuously since 1993. Coal mined at Greenhills is primarily metallurgical
coal, although a small amount of thermal coal is also produced. The current
annual production capacities of the mine and preparation plant (on a 100%
basis) are 5.2 and 5.5 million tonnes, respectively.
Greenhills is operated under a joint venture agreement (the "Greenhills Joint
Venture Agreement") among Elk Valley Coal, POSCO Canada Limited ("POSCAN") and
POSCAN's parent, POSCO. Pursuant to the agreement, Elk Valley Coal has an 80%
interest in the joint venture while POSCAN has a 20% interest. The mine
equipment and preparation plant are owned by Elk Valley Coal and POSCAN in
proportion to their respective joint venture interests. Under the Greenhills
Joint Venture Agreement, Elk Valley Coal is the manager and operator of
Greenhills. Elk Valley Coal and POSCAN bear all costs and expenses incurred in
operating Greenhills in proportion to their respective joint venture
interests. POSCAN, pursuant to a property rights grant, has a right to 20% of
all of the coal mined at Greenhills from certain defined lands until the
Greenhills Joint Venture Agreement terminates. Pursuant to an extension
agreement reached between the parties in 2003, the Greenhills Joint Venture
Agreement terminates on the earlier of: (i) the date the reserves on the
defined lands have been depleted; and (ii) March 31, 2015.
Coal mined at the Greenhills mine is primarily metallurgical coal, although a
small amount of thermal coal is also produced. Production is derived from the
Cougar reserve, which is divided into two distinct pits, Cougar North and
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 13
Cougar South. Cougar North has been fully developed and currently produces the
bulk of the coal for the mine. Development and pre-stripping of Cougar South
is underway and is expected to provide a long-term source of coal. Proven and
probable reserves at Greenhills are projected to support mining at 2005
production rates through 2025.
COAL MOUNTAIN, CANADA
The Coal Mountain mine is located 30 kilometres southeast of Sparwood in
southeastern British Columbia. The mine site is comprised of 2,521 hectares of
coal lands of which approximately 650 hectares are currently being mined or
are scheduled for mining. Coal Mountain produces both metallurgical and
thermal coal. The current annual production capacities of the mine and
preparation plant are 2.5 and 3.2 million tonnes, respectively. Proven and
probable reserves at Coal Mountain are projected to support mining at 2004
production rates until 2015.
LINE CREEK, CANADA
The Line Creek mine is located approximately 25 kilometres north of Sparwood
in southeastern British Columbia. Line Creek supplies metallurgical and
thermal coal to a variety of international and domestic steel producers and
Pacific Rim electric utilities. The Line Creek property consists of 8,124
hectares of coal lands of which approximately 1,150 hectares are currently
being mined or are scheduled for mining.
The mine is a conventional open pit operation. Raw coal is transferred to an
11 kilometre coal conveyor for transportation to a processing plant, where it
is crushed, cleaned, and dried using conventional technology. The current
annual production capacities of the mine and preparation plant are 2.5 and 3.2
million tonnes, respectively.
The metallurgical and thermal coal at Line Creek is mined from 9 seams lying
in a syncline. The seams average 2 to 13 metres in thickness, with the
thickest seam reaching 15 metres in several places. Line Creek has an
estimated remaining reserve life of approximately 7 years.
CARDINAL RIVER MINE, CANADA
The Cardinal River mine is located approximately 42 kilometres south of
Hinton, Alberta. In 2005, Elk Valley Coal completed the development of the
Cheviot Creek pit located approximately 20 kilometres south of the Cardinal
River coal plant. The total capital cost for the haul road, pit development,
plant refurbishment and mobile fleet was approximately $120 million. In the
fourth quarter of 2005, Cheviot Creek reached its production capacity of 2.8
million tonnes per year. Cheviot Creek is expected to have a mine life of
approximately 20 years.
COPPER
Copper Operations
ANTAMINA MINE, PERU (COPPER, ZINC)
In July 1998 we acquired 25% of the Antamina copper, zinc project in Peru,
with the balance then held by BHP Billiton, through Rio Algom, and Noranda
Inc. ("Noranda"). Subsequently, in October 1999, Mitsubishi Corporation
acquired a 10% interest in the Antamina project, resulting in a reduction of
the other participants' interests to 33.75% for each of BHP Billiton and
Noranda and 22.5% for us. The participants' interests are represented by
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 14
shares of Compania Minera Antamina S.A. ("CMA"), the Peruvian company that
owns and operates the project. Our interest is subject to a net profits
royalty of 1.667% on the project's free cash flow after recovery of capital
costs and an interest factor on 60% of project expenditures.
The Antamina project property consists of numerous mining concessions and
mining claims (including surface rights) covering an area of approximately
14,000 hectares. CMA also owns a port facility located at Huarmey and an
electrical substation located at Huallanca. In addition, CMA holds title to
all easements and rights of way for the 302 kilometre concentrate pipeline
from the mine to CMA's port at Huarmey.
Project financing was arranged in the amount of US$1.32 billion of senior
loans with a consortium of 20 banks and export/import credit agencies. The
balance of required funding was arranged pro rata by the CMA shareholders.
Our share of the project cost to completion was approximately US$490 million,
of which US$300 million was provided by the project financing. Total
development cost was US$2.206 billion. In July 2003, CMA achieved completion
under the project finance documentation and the project debt became
non-recourse to the CMA project sponsors, including Teck Cominco.
The deposit is located at an average elevation of 4,200 metres, 385 kilometres
by road and 270 kilometres by air north of Lima, Peru. Antamina lies on the
eastern side of the Western Cordillera in the upper part of the Rio Maranon
basin, a tributary of the Amazon River.
The open pit is a truck/shovel operation. The ore is crushed at the rim of the
pit and conveyed through a 2.7 kilometre tunnel to a coarse ore stockpile at
the mill. It is then processed utilizing a SAG mill, followed by ball mill,
grinding and flotation to produce separate copper, zinc, molybdenum and
lead/bismuth concentrates. A 302 kilometre long, slurry concentrate pipeline,
approximately 9 inches in diameter, with a single pump station at the minesite
transports copper and zinc concentrates to the port where they are dewatered
and stored prior to loading onto vessels for shipment to refineries and
smelters world-wide.
Power for the mine is taken from the Peru national energy grid through an
electrical substation constructed at Huallanca. Water requirements are sourced
from a dam-created reservoir upstream from the tailings impoundment facility.
The tailings impoundment facility is located next to the mill and waste dumps
are located adjacent to the pit. Fresh water from mill operations is collected
and contained in the tailings impoundment area. Mill process water is
reclaimed from the tailings pond. The operation is subject to water and air
permits issued by the Government of Peru and is in material compliance with
those permits. The operation holds all of the permits that are material to its
operations.
The Antamina polymetallic deposit is skarn hosted. It is unusual in its
persistent mineralization and predictable zonation, and has a SW-SE strike
length of more than 2,500 metres and a width of up to 1,000 metres. The
deposit is located mainly between elevation 4,350 and 3,790 metres, but
outcrops up to elevation 4,650 metres. The deepest drill hole, which
terminated at 3,632 metres elevation, was still in mineralized skarn. The
skarn is well zoned symmetrically on either side of the central intrusion with
the zoning used as the basis for four major subdivisions being a brown garnet
skarn, green garnet skarn, wollastonite/diopside/green garnet skarn and a
marbleized limestone with veins or mantos of wollastonite. Other types of
skarn, including the massive sulfides, massive magnetite, and chlorite skarn,
represent the remainder of the skarn and are randomly distributed throughout
the deposit.
Antamina has entered into long-term copper and zinc concentrate agreements
with major smelting companies and refineries which in aggregate account for
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 15
over 85% of the mine's production of copper and zinc concentrates. The price
of copper and zinc concentrate sales under these long-term sales agreements is
based on LME prices at the time of the sale with treatment and refining
charges negotiated with reference to current world market terms. The remaining
copper and zinc concentrate is sold to affiliates of the Antamina project
sponsors. Molybdenum concentrates are sold to third party refiners on market
terms.
HIGHLAND VALLEY MINE, CANADA (COPPER)
We have an aggregate 97.5% partnership interest in the Highland Valley copper
mine located near Kamloops, British Columbia. The remaining 2.5% is held
indirectly by third parties through their interests in Highmont Mining
Company. Highland Valley is also a significant producer of molybdenum.
Our current interest is held through an 11.4% direct interest in the HVC and a
50.001% interest in the Highmont Partnership, which holds a 5% interest in
HVC. Our remaining 83.6% interest is held directly and indirectly through Teck
Cominco Metals. The property comprising the Highland Valley Copper mine
consists of mineral leases, mineral claims and crown grants which will be kept
in good standing beyond the shutdown of operations. The mine covers a surface
area of approximately 34,000 hectares and HVC holds the surface rights to that
area pursuant to various leases, claims and licenses.
The HVC operation is located adjacent to a highway connecting Merritt, Logan
Lake, and Ashcroft, British Columbia. The mine itself is approximately 80
kilometres southwest of Kamloops, and approximately 200 kilometres northeast
of Vancouver. The mine operates throughout the year. Power is supplied by B.C.
Hydro through a 138kv line which terminates at the Trans Canada Highway west
of Spuzzum in the Thompson Valley. Mine personnel live in nearby areas,
primarily Logan Lake, Kamloops, Ashcroft, Cache Creek, and Merritt.
The mine is an open pit operation. The mill, which uses semi-autogenous
grinding and conventional flotation to produce metal in concentrate from the
ore, has the capacity to process 136,000 tonnes of ore per day. Water from
mill operations is collected and contained in a tailings impoundment area.
Mill process water is reclaimed from the tailings pond. The operation is
subject to water and air permits issued by the Province of British Columbia
and is in material compliance with those permits. The operation holds all of
the permits that are material to its operations.
Ore is mined from two main sources, the Lornex and Valley pits, as well as the
Highmont pit. Both are located in the Guichon Batholith which hosts all of the
ore bodies located in the area. The Lornex ore body occurs in Skeena Quartz
Diorite host rock, intruded by younger pre-mineral Quartz Porphyry and Aplite
Dykes. The Skeena Quartz Diorite is an intermediate phase of the Guichon
Batholith and is generally a medium to coarse grained equigranular rock
distinguished by interstitial quartz and moderate ferromagnesian minerals. The
sulphide ore is primarily fracture fillings of chalcopyrite, bornite and
molybdenite with minor pyrite, magnetite, sphalerite and galena.
The host rocks of the Valley deposit are mainly porphyritic quartz monzonites
and granodiorites of the Bethsaida phase of the Batholith. These rocks are
medium to coarse-grained with large phenocrysts of quartz and biotite. The
rocks of the deposit were subjected to hydrothermal alteration followed by
extensive quartz veining, quartz-sericite veining, and silicification.
Bornite, chalcopyrite and molybdenum were introduced with the quartz and
quartz-sericite veins and typically fill angular openings in them. Accessory
minerals consist of hornblende, magnetite, hematite, sphene, apatite and
zircon. Pre-mineral porphyry and aplite dykes intrude the host rocks of the
deposit.
In September 2005 we announced that we would proceed with a plan to extend the
mine life of Highland Valley Copper by approximately 5 years to 2013. The
capital cost associated with the mine life extension is approximately $40
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 16
million. In addition, the plan involves approximately $150 million of
incremental stripping to release additional ore from the Lornex pit and push
back the Valley pit wall. Two in-pit crushers in the Valley pit will also be
relocated. Copper concentrate production over the remaining mine life is
expected to average approximately 400,000 tonnes per annum. During a
transitional period of higher strip ratios and lower grades, concentrate
production will decline starting in 2007, to a low of approximately 305,000
tonnes in 2008. Molybdenum production is expected to range from 3 million to 8
million pounds per annum, averaging 4.4 million pounds over the remaining mine
life. Head grades for the remaining mine life are expected to average 0.403%
copper at a strip ratio of 0.5:1.
Concentrates are transported by Rail to customers in North America and
Vancouver for export overseas, with the majority being sold under long-term
sales contracts to smelters in several countries. Treatment and refining
charges under long term contracts are negotiated annually on a "brick" system,
under which annual negotiated treatment charges are averaged with prior years'
terms. The balance is sold on the spot market.
Copper Projects
SAN NICOLAS PROJECT, MEXICO (COPPER, ZINC)
The San Nicolas property, which is located in Zacatecas State, Mexico, is a
major massive sulphide deposit containing copper, zinc, gold and silver. The
property is held by Minas de San Nicolas S.A. de C.V. ("MSN"), which is owned
40% directly by us and 60% by Minera Tama S.A. de C.V. ("Tama"). Tama in turn
is owned 65% by us and 35% by Western Copper Holdings Ltd. ("Western Copper")
resulting in our holding a net 79% interest in the property. Our interest may
vary depending on certain financing elections the parties may make under the
agreements governing the project.
We completed and delivered a feasibility study to Western Copper on December
21, 2001. The project is being held on a care and maintenance basis.
GOLD
HEMLO OPERATIONS, CANADA (GOLD)
We have a 50% joint venture interest in two gold mines in the Hemlo Gold Camp
located near Marathon, Ontario: the Williams and David Bell gold mines (the
"Hemlo Operations"). Homestake Canada Inc., a wholly-owned subsidiary of
Barrick Gold Corporation ("Homestake"), holds the remaining 50% joint venture
interest. Our share of production is subject to a 2.25% net smelter return
royalty at Williams and a 3% net smelter return royalty at David Bell.
The Hemlo Operations lie adjacent to the Trans-Canada Highway in the Hemlo
district of Ontario, and operate throughout the year. The mill located at the
Williams mine processes ore for both the Williams mine and the David Bell
mine. Power for the Hemlo Operations is taken from the Ontario Hydro grid, and
back-up standby diesel generators are available at the site to provide some
emergency support should the grid not be able to supply power. Water
requirements are sourced from Cedar Creek and personnel from both mines live
in nearby areas, the majority in Marathon, Ontario.
The Hemlo Operations operate a combined tailings management system including a
tailings basin and polishing pond. The property includes one tailings pond,
located approximately four kilometres from the Williams mill, and four waste
stockpiles located adjacent to the Williams open pit. The Williams effluent
treatment plant employs polishing pond water as feed water and the Williams
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 17
mill reclaims water from both the tailings basin and the polishing pond. The
David Bell mine reclaims mine water for use in the backfill process along with
raw water from Cedar Creek. Both operations comply with certificates of
approval for industrial wastewater and air, which are administered by the
provincial regulatory authorities. The Williams mill and both mines hold all
the necessary permits and certificates that are material to the operations.
The Hemlo Operations are located in a small east-west trending Archean
Greenstone Belt in central Ontario known as the Hemlo zone. The Williams mine
is located at the western end of the Hemlo zone, the David Bell mine is
located at the eastern end of the Hemlo zone, and Newmont Mining Corporation's
Golden Giant mine is located between the Williams and David Bell mines along
the Hemlo zone. The total length of the mineralized zone comprising the
Williams, David Bell and Golden Giant mines is over three kilometres.
The Williams and David Bell ore bodies lie at the contact between overlying
metasedimentary rocks and underlying felsic metavolcanic rocks. The Williams
ore zone dips north at 60-70 degrees and the David Bell ore zone dips north at
50-60 degrees. The ore zones continue to approximately 1,200 metres below the
surface and vary in width from 45 metres to 1 metre at Williams and from 15
metres to 1 metre at David Bell. The ore at both mines is hosted by three
principal rock types, feldspathised porphyry, muscovite schist and biotite
fragmental, and is characterized by gold, pyrite, molybdenite, and barite and
various arsenic, mercury, and antimony mineral species. Both main ore bodies
are composed of fine grained quartz-feldspar rock with gold occurring as
finely disseminated particles within the groundmass as well as with pyrite
grains.
Our share of gold production from the Hemlo Operations is sold on a spot basis
at prevailing market prices at the time of production. We have also entered
into certain hedging contracts in respect of certain portions of our
production.
WILLIAMS MINE
The Williams mine, primarily an underground operation with some open-pit
mining, has been operating since the fall of 1985. The property comprising the
Williams mine consists of 11 patented mining claims and 6 leased claims. The
mine covers a surface area of approximately 270 hectares.
The Williams mine is one of the largest gold-producing mines in Canada. The
underground mine is accessed by a 1,300 metre production shaft, and mining is
carried out by longhole stoping with paste backfill. The Williams open pit
mine lies immediately above and adjacent to the underground mine, and ore from
these two sources and the David Bell mine is treated in the Williams mill. The
mill started production in 1985 at the rate of approximately 3,000 tonnes per
day, and capacity was expanded to 6,000 tonnes per day in late 1988. The
Williams mill presently operates at the rate of approximately 10,000 tonnes
per day. The Williams mill uses semi-autogenous grinding and a carbon-in-pulp
gold recovery circuit. Approximately 20% of the gold is recovered by a gravity
circuit. The Williams mine is scheduled to close in 2011.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 18
DAVID BELL MINE
The property comprising the David Bell underground mine consists of granted
mining leases and mining claims, covering a surface area of approximately 274
hectares.
The David Bell mine was developed through a 1,160 metre production shaft, and
mining is by longhole stoping with delayed cemented hydraulic backfill. The
David Bell mill is currently on care and maintenance, and all ore from the
David Bell mine is transported to, and processed at, the nearby Williams mill.
The David Bell mine is scheduled to close in 2009.
POGO MINE, UNITED STATES (GOLD)
In June 1997, we entered into an agreement with Sumitomo Metal Mining America
Inc. and SC Minerals America Inc. to earn a 40% joint venture interest in the
Pogo gold deposit located in Alaska, 40 air miles (64 kilometres) from Delta
Junction at the terminus of the Alaska Highway. The Pogo property is
approximately 16,700 hectares in size. The mine area is the subject of a
mining lease, which requires annual rental payments. The balance of the
property is comprised of 1,281 State mining claims, each requiring a specified
nominal amount of annual assessment work.
Our 40% interest was earned by delivering a production commitment. Our
interest is subject to divestment should we not complete construction of the
project and bring the project to commercial production substantially in
accordance with the feasibility study. Commercial production is expected to be
achieved by the end of the second quarter of 2006. We are the project operator
and are entitled to a management fee.
The property is subject to a 1.5% net smelter return royalty payable by the
venturers on the first two million ounces of gold produced. After the first
two million ounces of gold is produced, the 1.5% net smelter return royalty is
no longer payable. However, we (through our indirect wholly-owned subsidiary,
Teck-Pogo Inc. ("TPI")) must then pay Sumitomo Metal Mining America Inc. and
SC Minerals America Inc. a production royalty on TPI's share of any additional
ounces of gold that it takes as its share of production from the property.
This royalty on each ounce of gold to TPI's account is equal to the greater of
5% of the price of gold and US$25.
Construction of the mine and associated facilities was substantially completed
at the end of 2005, although underground development is still in progress. The
project consists of an underground mine and 2,500 tonne per day mill expected
to produce 350,000 to 500,000 ounces of gold per year over a 10 year mine
life. The mining methods are cut and fill and drift and fill. The mill
utilizes conventional milling, and gravity and carbon-in-pulp technology. The
gold from both the gravity and carbon-in-pulp circuits is produced as dore
bullion. Access to the site is provided by a new 50 mile all-season road from
the Richardson Highway north of Delta Junction to the property. The final
project capital cost is estimated at US$347 million.
Fort Hills Oil Sands
On November 30, 2005 we acquired a 15% limited partnership interest in Fort
Hills Energy LP (the "Fort Hills Partnership"), which owns the Fort Hills oil
sands project. The other limited partners are Petro-Canada, with a 55% limited
partnership interest and UTS Energy Corporation with a 30% interest. Relations
among the partners are governed by a limited partnership agreement and a
unanimous shareholder agreement pertaining to the governance of Fort Hills
Energy Corporation, the general partner of the Fort Hills Partnership, in
which the limited partners hold pro rata share interests. Pursuant to the
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 19
limited partnership agreement, we are required to contribute 34% (or $850
million) of the first $2.5 billion of project expenditures made after March 1,
2005. This amount includes the subscription price for our 15% interest. The
partners will fund further project expenditures in proportion to their
respective partnership interests.
The Fort Hills Project is a project to develop, mine, extract and sell the
recoverable bitumen found in certain oil sands deposits underlying Alberta Oil
Sands Lease No. 7598060T05 ("Lease 5"), Alberta Oils Sands Lease No.
7281020T52 ("Lease 52") and Alberta Oil Sands Lease No. 7400120008 (("Lease
8"), collectively, the "Leases"). The Leases are located approximately 90
kilometres north of Fort McMurray, Alberta. The Leases cover a contiguous area
of approximately 18,700 hectares on the east bank of the Athabasca River. The
current terms of Lease 5 and Lease 52 continue indefinitely, provided the mine
development plan approved by Alberta Energy is met. The development plan,
initially submitted by TrueNorth Energy L.P. ("TrueNorth"), a predecessor to
the Fort Hills Partnership, was amended in 2005 to provide for a commitment to
construct a mine with a capacity of 100,000 barrels per day of bitumen by
2011. The development plan includes certain other interim milestones. Lease 8,
which is not subject to the Development Plan, covers approximately 2,286
hectares and its primary term continues to 2015.
In February 2006 the Fort Hills Partnership acquired two additional oil sands
leases, Alberta Oil Sands Lease Nos. 437 and 438 for $60 million. These leases
cover approximately 5,250 hectares contiguous to the Leases. Integration of
these additional leases and Lease 8 into the project will be subject to full
regulatory review.
An affiliate of Petro-Canada acts as contract operator of the project pursuant
to an operating services contract. The contract operator has exclusive
authority to operate the project, subject to the oversight of a management
committee on which each of the shareholders of the general partner is
represented. Certain fundamental decisions concerning the project require
super-majority approval of the Management Committee. The Partnership Agreement
contemplates that the contract operator will market 100% of project production
on behalf of the partnership for a minimum initial period of 4 years after
first commercial production of bitumen. Subject to certain exceptions, limited
partners have a right of first refusal in the event of a transfer of another's
limited partnership interest.
The partners have approved a 2006 project budget of $260 million (not
including the $60 million of lease acquisition costs described above). Work
during 2006 will consist primarily of engineering and design work with a view
to arriving at an initial cost estimate for the project by the end of 2006.
The current project development plan contemplates phased development of an
integrated project using conventional truck and shovel mining, an extraction
plant to extract bitumen from oil sands at the mine site, and an upgrader
producing marketable synthetic crude oil to be constructed in Sturgeon County
near Edmonton, Alberta. Specific process technology selection is ongoing.
GLJ Petroleum Consultants ("GLJ"), an independent reserves evaluator, has
prepared for Teck Cominco an estimate of contingent synthetic crude oil
resources of the Fort Hills project in accordance with the standards set out
in the Canadian Oil and Gas Evaluation Handbook. GLJ has made a best estimate
of the contingent resource for the project (on a 100% basis) as at December
31, 2005, of 3.0 billion barrels of synthetic crude oil, with a low estimate
of 2.0 billion barrels and a high estimate of 4.0 billion barrels. This
corresponds to a best, low and high estimate of contingent recoverable bitumen
resources for the project (on a 100% basis) of 3.5 billion barrels, 2.4
billion barrels and 4.6 billion barrels, respectively. A "resource" for oil
and gas reporting purposes is different than a mineral resource. See "Risk
Factors - Reserve and Resource Estimates."
GLJ's low estimate of the contingent resource for the project is based on
portions of the mine plan for the project submitted by TrueNorth. The high
estimate recognizes a 50% increase in the amount of bitumen feed to the
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 20
extraction plant under a potential revised mine planning basis. The 50%
increase is based on a notional change in the ratio of total volume of
material moved to bitumen in place (TV:BIP) component of current regulatory
operating criteria from 12:1 to 16:1. The resource estimate for the project is
highly sensitive to the assumed TV:BIP ratio.
GLJ's contingent resource estimates are of potentially recoverable volumes
from the Fort Hills project under reasonable economic and operating
conditions. Reserves have not yet been assigned to the project primarily due
to the early stage of design of the mine and development plan. The contingent
resource estimates assume that the project will include an upgrader that will
produce a marketable synthetic oil product and will enable selection of an
extraction process that results in higher secondary extraction recoveries than
proposed in the previous, TrueNorth, plan. The estimates exceed the recoveries
anticipated within the next 50 years from an initial 100,000 BBL/D phase of
development, and therefore would support further expansions. The range of
estimates reflects uncertainties in the bitumen in place, pit limits
determination, extraction recoveries, and upgrading yields. An actual pit
limits determination will consider economics as well as physical constraints
unique to the Fort Hills project.
The average diluted bitumen grade associated with the ore volumes is estimated
to be in the order of 11 percent by weight.
An updated mine plan for the project is being prepared, and the partners
anticipate releasing a revised resource estimate later in 2006, reflecting the
results of that mine plan. The revised mine plan will require revisions to
existing regulatory approvals. Assuming satisfactory progress on engineering
and design, it is contemplated that probable reserves may be assigned to the
project as at December 31, 2006.
EXPLORATION
In 2005, we spent $70 million on exploration. Approximately 64% of
expenditures were dedicated to exploration for gold and copper and the balance
on base metal, polymetallic and diamond projects. Of the total expenditures,
approximately 16% was spent in Canada, 14% in the United States, and 27% in
Australia, with the remaining expenditures incurred mostly in Brazil, Mexico,
Chile and Peru.
Exploration is carried out through sole funding and joint ventures with major
and junior exploration companies. Exploration is focused on areas in proximity
to our existing operations or development projects in regions which we
consider to have high potential for discovery. Planned expenditures for 2006
are approximately $70 million, excluding mine exploration, with approximately
47% and 30% of planned expenditures on exploration for copper and gold,
respectively.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 21
MINERAL RESERVES AND RESOURCES
Mineral Reserves at December 31, 2005
MINERAL RESERVES (1)
- ---------------------------------------------------------------------------------------------------------------
Proven Probable Total
tonnes grade tonnes grade tonnes grade Teck Cominco
(000's) (g/t)(2) (000's) (g/t) (000's) (g/t) Interest (%)
- ---------------------------------------------------------------------------------------------------------------
GOLD Williams 50
Underground 3,310 5.45 670 5.05 3,980 5.38
Open-pit 8,380 1.78 5,340 1.87 13,720 1.82
David Bell 1,130 10.97 -- -- 1,130 10.97 50
Pogo -- -- 7,000 16.12 7,000 16.12 40
- ---------------------------------------------------------------------------------------------------------------
tonnes grade tonnes grade tonnes grade
(000's) (%) (000's) (%) (000's) (%)
- ---------------------------------------------------------------------------------------------------------------
COPPER Antamina 76,000 1.12 374,000 1.19 450,000 1.18 22.5
Highland Valley 260,200 0.43 58,500 0.44 318,700 0.43 97.5
ZINC Antamina 76,000 1.40 374,000 0.84 450,000 0.93 22.5
Red Dog 19,500 20.5 52,700 16.7 72,200 17.7 100
Pend Oreille 4,300 7.1 400 6.4 4,700 7.0 100
LEAD Red Dog 19,500 5.7 52,700 4.3 72,200 4.7 100
Pend Oreille 4,300 1.3 400 0.5 4,700 1.2 100
MOLYBDENUM Antamina 76,000 0.029 374,000 0.031 450,000 0.030 22.5
Highland Valley 260,200 0.008 58,500 0.007 318,700 0.008 97.5
- ---------------------------------------------------------------------------------------------------------------
COAL(3) Fording River 127,000 112,000 239,000 39.0(4)
Elkview 198,000 48,000 246,000 37.1
Greenhills 81,000 19,000 100,000 31.2
Coal Mountain 25,000 1,000 26,000 39.0
Line Creek 17,000 -- 17,000 39.0
Cardinal River 35,000 23,000 58,000 39.0
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 22
Mineral Resources at December 31, 2005
MINERAL RESOURCES (1)
Measured Indicated Inferred
tonnes grade tonnes grade tonnes grade Teck Cominco
(000's) (g/t)(2) (000's) (g/t) (000's) (g/t) Interest (%)
- ---------------------------------------------------------------------------------------------------------------
GOLD Williams 50
Underground 840 5.91 1,000 6.70 4,790 5.14
Open-pit 360 2.33 420 2.04 330 1.63
David Bell 50
Underground 290 9.20 -- -- -- --
Open-pit -- -- 680 3.77 -- --
Pogo -- -- 770 8.92 1,230 16.90 40
Lobo-Marte -- -- -- -- -- -- 60
Lobo -- -- 64,210 1.79 5,660 1.70
Marte -- -- 33,470 1.58 3,590 1.35
Morelos -- -- -- -- 30,650 3.27 78.8
Kudz Ze Kayah -- -- 11,300 1.30 1,500 2.00 100
- -------------------------------------------------------------------------------------------------------------------
tonnes grade tonnes grade tonnes grade
(000's) (%) (000's) (%) (000's) (%)
- -------------------------------------------------------------------------------------------------------------------
COPPER Antamina 35,000 0.53 25,000 0.44 42,000 0.84 22.5
Highland Valley -- -- 151,900 0.37 -- -- 97.5
San Nicolas 1,880 0.73 78,080 1.34 7,020 1.28 79
Kudz Ze Kayah -- -- 11,300 0.90 1,500 0.14 100
ZINC Antamina 35,000 0.39 25,000 0.26 42,000 0.59 22.5
Red Dog -- -- 7,700 18.8 30,200 15.5 100
San Nicolas 1,880 3.6 78,080 1.8 7,020 1.4 79
Pend Oreille -- -- -- -- 2,300 6.7 100
Lennard Shelf 1,400 8.8 1,400 8.1 300 8.2 50
Kudz Ze Kayah -- -- 11,300 5.9 1,500 6.4 100
Sa Dena Hes -- -- 2,190 10.4 -- -- 50
LEAD Red Dog -- -- 7,700 5.3 30,200 4.5 100
Pend Oreille -- -- -- -- 2,300 1.3 100
Lennard Shelf 1,400 2.2 1,400 1.8 300 1.7 50
Kudz Ze Kayah -- -- 11,300 1.5 1,500 3.1 100
Sa Dena Hes -- -- 2,190 2.6 -- -- 50
MOLYBDENUM Antamina 35,000 0.033 25,000 0.026 42,000 0.021 22.5
Highland Valley -- -- 151,900 0.005 -- -- 97.5
TITANIUM White Earth(5) -- -- 428,000 11 1,031,000 10 100
- -------------------------------------------------------------------------------------------------------------------
COAL(3) Fording River 462,000 194,000 2,721,000 39.0(4)
Elkview 1,317,000 308,000 181,000 37.1
Greenhills 5,000 299,000 649,000 31.2
Coal Mountain 66,000 41,000 24,000 39.0
Line Creek 65,000 177,000 119,000 39.0
Cardinal River 2,000 9,000 4,000 39.0
Other(6) 213,000 274,000 473,000 39.0
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 23
- ------------------------------------------------------------------------------
NOTES TO MINERAL RESERVES AND RESOURCES TABLES
(1) Mineral reserves and resources are mine and property totals and are not
limited to Teck Cominco's interest.
(2) g/t = grams per tonne.
(3) Coal reserves expressed as tonnes of clean coal.
(4) Representing a 39% direct interest in Elk Valley Coal Partnership. Does
not include 5.4% indirect interest through Canadian Coal Trust.
(5) Grade reported as %TiO2.
(6) Other refers to the aggregated measured, indicated and inferred resources
associated with five undeveloped or non-properties. Tonnages represent
Elk Valley Coal Partnership's interest in these properties.
- ------------------------------------------------------------------------------
STANDARD
Proven and Probable Mineral Reserves and Measured, Indicated and Inferred
Mineral Resources have been estimated in accordance with the definitions of
these terms adopted by the Canadian Institute of Mining, Metallurgy and
Petroleum in November, 2004 and incorporated in National Instrument 43-101,
"Standards of Disclosure for Mineral Projects", by Canadian securities
regulatory authorities. Estimates of coal reserves and resources have been
prepared and classified using guidance from GSC Paper 88-21. Classification
terminology conforms with NI 43-101. Mineral Resources are reported separately
from, and do not include that portion of the Mineral Resources that is
classified as Mineral Reserves. That portion of Mineral Resource which is not
classified as Mineral Reserve does not have demonstrated economic value.
METHODOLOGIES AND ASSUMPTIONS
Mineral reserve and resource estimates are based on various assumptions
relating to operating matters, including with respect to production costs,
mining and processing recoveries, mining dilution, cutoff values or grades, as
well as assumptions relating to long term commodity prices and in some cases,
exchange rates. Cost estimates are based on feasibility study estimates or
operating history.
Methodologies used in reserve and resource estimates vary from property to
property depending on the style of mineralization, geology and other factors.
Geostatistical methods appropriate to the style of mineralization have been
used in the estimation of reserves at the company's material base metal
properties.
Assumed metal prices vary from property to property for a number of reasons.
The company has interests in a number of joint ventures, for which assumed
metal prices are a joint venture decision. In certain cases, assumed metal
prices are historical assumptions made at the time of the relevant reserve and
resource estimates. At operations with shorter remaining lives, assumed metal
prices may be more closely based on short term metal price expectations.
GOLD PROPERTIES
Mineral reserves at Williams and David Bell have been estimated on the basis
of an assumed gold price of US$425/oz and mineral resources have been
estimated based on an assumed gold price of US$450/oz. An increasing
proportion of reserves at Williams are within the C Zone, where mineralization
is diffuse and irregular. Reserve estimates in this and other zones contain
provisions for dilution and mining losses, but experience with Alimak mining
in this zone is limited. Underground mineral reserves would be increased by
about 7% at an evaluation price of US $475/oz.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 24
Mineral reserves at Pogo have been estimated on the basis of US$300/oz, which
was the assumed price of gold used at the time of the feasibility study. At
the current gold price, some additional mineralization on the fringes of the
orebody may become economic, but this will not materially increase the
reserves. Production will commence in early 2006, which will afford the access
to enable further definition of the orebody. Mineral resources at Pogo and
Morelos have been estimated using an assumed gold price of US$400/oz while
those at Lobo-Marte have been estimated on the basis of an assumed gold price
of US$360/oz.
HIGHLAND VALLEY COPPER
Copper mineral reserves at Highland Valley Copper are estimated on the basis
of an assumed copper price of US$0.92/lb. Mineral resources are estimated on
an assumed price of US$1.16/lb. Reserves in the Valley Pit were increased by
the addition of 174.3 million tonnes of mineralization which will be accessed
by expanding the pit to the east. Nine million tonnes of reserves have been
added at Highmont, of which 6 million tonnes is expected to be mined in 2006.
ANTAMINA
Mineral reserves at Antamina have been estimated using an assumed copper price
of US$0.95/lb and US$0.50/lb for zinc. Ore at Antamina comprises two general
types: copper ores, from which copper and molybdenum concentrates may be
produced, and copper zinc ores, from which copper and zinc concentrates are
produced. These ore types have not been segregated for reporting purposes. In
2005, the results of extensive drill campaigns of 2003 and 2004 were assessed
and a new ultimate pit designed. This additional drilling substantially
confirmed the prior estimates of reserves and improved the accuracy of mine
design and production forecasts. Mineralization of interest occurs beyond the
current pit limit and to the south of the current pit. In the past, proven
reserves included stockpiled material which was expected to be processed later
in the life of the operation. Weathering of this material may have impaired
its metallurgical characteristics, thus this material has been reclassified as
a Measured Mineral Resource.
RED DOG
At Red Dog, reserves in the main pit have been updated by the addition of
information gained during mining and adjusted for production. Mineral reserves
and mineral resources mineable by open pit have been estimated at an assumed
zinc price of US$0.55/lb zinc. Underground inferred resources at Red Dog,
extraction of which is expected to take place more than 25 years in the
future, have been estimated on the basis of an assumed zinc price of
US$0.70/lb.
PEND OREILLE
Experience gained in mining over the past year, particularly along the margins
of the orebody, has resulted in a reduction in Reserves beyond normal
depletion due to mining. Mineral reserves and resources at Pend Oreille have
been estimated using an assumed zinc price of US$0.45/lb which was the price
used in the feasibility. Higher metal prices will not result in significant
increases in reserves and resources, since the boundaries of the orebody are
geological features. Exploration in the nearby Washington Rock zone has shown
that it will not be possible to mine some of the mineralization for
geotechnical reasons and the resource estimate in that zone has been reduced
by 1 million tonnes.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 25
COAL PROPERTIES
Coal reserves are coal quantities that are anticipated to be mineable, based
on feasibility studies, utilizing existing technology, under prevailing
economic conditions and which have no legal impediments to mining. The coking
coal price assumed in reserve determination is between US$39 to US$43 per
tonne FOB (free on board) at Roberts Bank terminal. Coal reserves are reported
in metric tonnes of clean coal after mining and processing losses but
including coal used in plant operations.
OTHER RESOURCES
Mineral resources at Sa Dena Hes, Kudz Ze Kayah, San Nicolas and Lennard Shelf
are based on assumed prices between US$0.45 and US$0.60/lb for zinc and, in
the case of San Nicolas, US$0.90/lb for copper.
RISKS AND UNCERTAINTIES
Mineral reserves and mineral resources are estimates of the size and grade of
the deposits based on the assumptions and the parameters currently available.
These assumptions and parameters are subject to a number of risks and
uncertainties, including, but not limited to, future changes in metals prices
and/or production costs, differences in size and grade and recovery rates from
those expected, and changes in project parameters due to changes in production
plans. There are no known environmental, permitting, legal, title, taxation,
sociopolitical, marketing or other relevant issues that would materially
affect the mineral reserves or resources.
QUALIFIED PERSONS
Estimates of the mineral reserves and resources for the company's material
properties have been prepared under the general supervision of William P.
Armstrong, P.Eng., who is a former employee of Teck Cominco. Mineral reserve
and resource estimates for Antamina have been prepared under the supervision
of Dan Gurtler, AIMM, who is an employee of Compania Minera Antamina. Messrs.
Armstrong and Gurtler are Qualified Persons for the purposes of National
Instrument 43-101. Estimates of reserves and resources at Elkview, Fording
River, Greenhills, Coal Mountain, Line Creek and Cardinal River were prepared
under the general supervision of Colin McKenny, P. Geol., an employee of Elk
Valley Coal Partnership, who is the Qualified Person for the purposes of
National Instrument 43-101.
SAFETY AND ENVIRONMENTAL PROTECTION
Our current and future operations, including development activities and
commencement of production on our properties or areas in which we have an
interest, are subject to laws and regulations in Canada and elsewhere
governing occupational health, waste disposal, protection and remediation of
the environment, reclamation, mine safety, management of toxic substances and
similar matters. Compliance with these laws and regulations affects the costs
of and can affect the schedule for planning, designing, drilling, developing,
constructing, operating and closing the Company's mines, refineries and other
facilities.
Whether in Canada or abroad, we attempt to apply technically proven and
economically feasible measures to protect the environment throughout
exploration, mining, processing and closure. Although we believe that our
operations and facilities are currently in substantial compliance in all
material respects with all existing laws, regulations and permits, there can
be no assurance that additional significant costs will not be incurred to
comply with current and future regulations or that liabilities associated with
non-compliance will not occur.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 26
Safety performance is a key priority for us. Safety statistics are collected
from each operation monthly. Targets for safety performance are set each year
and are used in determining management compensation. Safety incidents are
investigated and finding reports are shared across our business to assist in
the prevention of recurrence of the incident.
For accounting purposes, current costs associated with permit compliance are
treated as normal operating costs necessary to maintain operations on an
ongoing basis. In addition, amounts are accrued in our accounts to provide for
certain future reclamation, site restoration and other closure costs.
Financial guarantees of various forms are posted, if required, with various
governmental authorities as security to cover estimated reclamation
obligations. Our provisions for future reclamation and site restoration are
based on known requirements. It is not currently possible to estimate the
impact on operating results, if any, of future legislative or regulatory
developments.
We conduct regular environmental and safety and health audits. The overall
objective of our audits is to identify environment, health and safety risks,
assess regulatory compliance and conformance with applicable laws and assess
conformance with appropriate environment, health and safety management systems
and good management practices.
All of our mining operations have closure and reclamation plans in place and
these undergo regular updates. The reclamation programs are guided by land
capability assessments, which integrate several factors in the reclamation
approach including biological diversity, establishment of sustainable
vegetation, diversity of physical landforms and requirements for wildlife
habitat. In addition to reclamation of operating mines, certain idle and
closed mines are under continuous care and maintenance as well as progressive
closure. Our Charter of Corporate Responsibility and Code of Business,
Environmental and Health & Safety Practices require that sites be reclaimed in
an appropriate manner. We manage a number of decommissioned mine sites in
Canada and conduct regular inspections to verify the success of reclamation
activities.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 27
SOCIAL AND ENVIRONMENTAL POLICIES
We have adopted and implemented social and environmental policies that are
fundamental to our operations. Our operating practices are governed by the
principles set out in our Charter of Corporate Responsibility (the "Charter")
and Code of Business, Environmental and Health & Safety Practices (the
"Code"). The Charter sets out corporate commitments related to ethical
business conduct, providing a workplace free of discrimination, open and fair
dealings with all stakeholders, and support for sustainable development.
The Code sets out specific requirements in areas related to (i) legal
compliance and ethical business conduct, (ii) prohibition of discriminatory
conduct and commitment to job selection on the basis of merit and ability,
(iii) striving to identify, control and promote safety and health performance,
(iv) sound environmental conduct and continuous improvement in performance,
(v) regular auditing of environmental, health, safety and emergency
preparedness, (vi) continual improvement of environmental, health and safety
management systems, (vii) closure and reclamation planning as a component of
all development projects, (viii) the safe use, reuse and recycling of
products, (ix) support for research on environmental, health and safety
performance, (x) fostering dialogue with stakeholders and respect for the
rights, interests, and aspirations of indigenous people, and (xi) supporting
local communities and their development.
In addition to the Charter and Code, we have adopted a Health and Safety
Policy, a Health and Safety Guide for Exploration, and a Code of Ethics. We
have taken steps to implement the Charter, Code and policies through adoption
of Environmental, Health and Safety Management Standards, which provide
direction to all operations and auditable criteria against which the standards
are measured.
We set objectives in these areas for improvement on an annual basis and these
are used to determine specific objectives for corporate and operational groups
within our organization. Overall responsibility for achievement of objectives
rests with senior personnel. Our Environmental, Health and Safety Committee of
the Board, which reports to the Board of Directors and our Corporate
Environment and Risk Management Committee and our Product Stewardship
Committee, which are comprised of members of senior management, provide
oversight in these areas.
We measure our performance on an ongoing and comprehensive basis. Internal
monthly and quarterly environmental reporting tracks performance indicators
including compliance with permits, environmental monitoring, health and safety
performance, materials inputs and outputs, community concerns expressed and
actions taken in response, and amount of reclaimed land. We report publicly on
our performance through our Sustainability Report and website.
HUMAN RESOURCES
As at December 31, 2005 there were 7,103 employees (2004 - 6,710 employees)
working at the various operations we managed. Collective bargaining agreements
covering unionized employees at our various operations are as follows:
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 28
EXPIRY DATE OF COLLECTIVE AGREEMENT
---------------------------------------------------------------------
Trail May 31, 2008
David Bell October 31, 2007
Quintette December 31, 2004(1)
Antamina July 24, 2006
Highland Valley Copper September 30, 2006
Elkview October 31, 2005
Coal Mountain December 31, 2009
Line Creek May 31, 2009
Fording River April 30, 2006
Cardinal River June 30, 2007
Red Dog See Note(2)
=====================================================================
(1) The collective agreements at Bullmoose and Quintette cover the
remaining bargaining unit employees working at these locations all
of which are closed and in the process of being reclaimed.
(2) A union was recently certified at Red Dog. Bargaining has commenced
and is underway.
FOREIGN OPERATIONS
The Red Dog mine and the Pogo mine located in Alaska, U.S.A., the Pend Oreille
project in Washington State and the Antamina mine located in Peru, are our
significant assets located outside of Canada. We hold our 22.5% interest
directly in Antamina directly through our equity interest in the operating
company for the mine, CMA. We hold a 100% interest in the Red Dog mine,
subject to the royalty in favour of NANA described under the heading
"Individual Operations - Zinc - Red Dog" above. The Red Dog mine, Pend Oreille
and the Antamina mine accounted for 28% of our 2005 consolidated revenue and,
together with Pogo, represented approximately 30% of our total assets as at
December 31, 2005.
We also have interests in various exploration and development projects in
various foreign countries, with significant activities in the United States,
Mexico, Peru, Chile, Brazil, Australia, Turkey and Namibia. We currently have
foreign exploration offices in all of the foregoing countries.
See "Risk Factors"- Foreign Activities" for further information on the risks
associated with these foreign properties.
COMPETITIVE CONDITIONS
Our business is to sell base metals, metal concentrates, by-product metals and
concentrate, metallurgical coal and gold at prices determined by world markets
over which we have no influence or control. These markets are cyclical. Our
competitive position is determined by our costs compared to those of other
producers throughout the world, and by our ability to maintain our financial
integrity through metal and coal price cycles and currency fluctuations. Costs
are governed principally by the location, grade and nature of ore bodies and
mineral deposits, the location of our metal refining facility and its cost of
power and, as well, by operating and management skill.
Over the long term, our competitive position is determined by our ability to
locate, acquire and develop economic ore bodies and replace current
production. In this regard, we also compete with other mining companies for
mineral properties, for joint venture agreements and for the acquisition of
investments in other mining companies.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 29
RISK FACTORS
Before making an investment decision, you should carefully consider the risks
and uncertainties described below as well as the other information contained
and incorporated by reference in this Annual Information Form. These risks and
uncertainties are not the only ones facing us. Additional risks and
uncertainties not presently known to us or that we currently consider
immaterial may also impair our business operations. If any of such risks
actually occur, our business, prospects, financial condition, cash flows and
operating results could be materially harmed.
RISKS INHERENT IN THE MINING AND METALS BUSINESS
The business of exploring for minerals is inherently risky. Few properties
that are explored are ultimately developed into producing mines.
Mineral properties are often non-productive for reasons that cannot be
anticipated in advance. Even after the commencement of mining operations, such
operations may be subject to risks and hazards, including environmental
hazards, industrial accidents, unusual or unexpected geological formations,
unanticipated metallurgical difficulties, ground control problems and
flooding. The Trail metallurgical operations, concentrate mills and coal
preparation plants are also subject to risks of process upsets and equipment
malfunctions. Equipment and supplies may from time to time be unavailable on a
timely basis. The occurrence of any of the foregoing could result in damage to
or destruction of mineral properties or production facilities, personal
injuries, environmental damage, delays or interruption of production,
increases in production costs, monetary losses, legal liability and adverse
governmental action.
Our property, business interruption and liability insurance may not provide
sufficient coverage for losses related to these or other hazards. Insurance
against certain risks, including certain liabilities for environmental
pollution, may not be available to us or to other companies within the
industry. In addition, our insurance coverage may not continue to be available
at economically feasible premiums, or at all. Any such event could have a
material adverse affect on our business.
Over 4,500 of our approximately 7,100 employees are employed under collective
bargaining agreements. The collective bargaining agreement at our Elkview mine
has expired and the collective agreements at the Fording River, Antamina and
Highland Valley mines are scheduled to expire in April, 2006, July, 2006 and
September, 2006, respectively. We are negotiating a collective agreement at
the Red Dog mine. We could be subject to labour unrest or other labour
disturbances as a result of the failure of these negotiations, or at our other
operations, which could, while ongoing, have a material adverse effect on our
business.
COMMODITY PRICE FLUCTUATIONS AND HEDGING
The results of our operations are significantly affected by the market price
of base metals, specialty metals, metallurgical coal and gold which are
cyclical and subject to substantial price fluctuations. Our earnings are
particularly sensitive to changes in the market price of zinc and
metallurgical coal. Market prices can be affected by numerous factors beyond
our control, including levels of supply and demand for a broad range of
industrial products, substitution of new or different products in critical
applications for our existing products, expectations with respect to the rate
of inflation, the relative strength of the US dollar and of certain other
currencies, interest rates, global or regional political or economic crises
and sales of gold and base metals by holders in response to such factors. If
prices should decline below our cash costs of production and remain at such
levels for any sustained period, we could determine that it is not
economically feasible to continue commercial production at any or all of our
mines.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 30
Although our general policy is not to hedge our mineral production, from time
to time we may undertake hedging programs in specific circumstances, with an
intention to reduce the risk of a commodity's market price while optimizing
upside participation, to maintain adequate cash flows and profitability to
contribute to the long-term viability of our business. There are, however,
risks associated with hedging programs including, (among other things), an
increase in the world price of the commodity, an increase in gold lease rates
(in the case of gold hedging), an increase in interest rates, rising operating
costs, counter-party risks and production interruption events. Prices of
diesel and electricity also fluctuate and these fluctuations affect the costs
of production at various operations.
We do not hedge our exposure to changes in the price of metallurgical coal.
RISKS ASSOCIATED WITH FORT HILLS
The Fort Hills project is at an early stage of development. Petro-Canada, as
project operator, in consultation with UTS and us, will be responsible for
further definition of the scope and parameters of the project and its design
and development. There can be no assurance that the development or
construction activities will commence in accordance with current expectations
or at all. Construction and development of the project is subject to numerous
risks, including, without limitation:
o risks resulting from the fact that the Fort Hills oil sands project is at
an early stage of development and therefore is subject to development and
construction risks, including the risk of cost overruns and delays in
construction, and technical and other problems;
o risks associated with delays in obtaining, or conditions imposed by,
regulatory approvals;
o risks associated with obtaining amendments to existing regulatory
approvals and additional regulatory approvals which will be required;
o risks of significant fluctuation in prevailing prices for oil, other
petroleum products and natural gas, which may affect the profitability of
the project;
o risks resulting from the fact that we will be a minority partner in the
Fort Hills Partnership and major decisions with respect to project design
and construction may be made without our consent;
o risks associated with litigation, including an existing appeal in respect
of an application for a judicial review of the scoping decision of the
Minister of Fisheries and Oceans regarding an application for an
authorization under the FISHERIES ACT for the Fort Hills project; and
o risks resulting from dependence on third parties for services and
utilities for the project.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 31
COMPETITION FOR MINING PROPERTIES
Because the life of a mine is limited by its ore reserves, we are continually
seeking to replace and expand our reserves through the exploration of our
existing properties as well as through acquisitions of interests in new
properties or of interests in companies which own such properties. We
encounter strong competition from other mining companies in connection with
the acquisition of properties. This competition may increase the cost of
acquiring suitable properties, should such properties become available to us.
COMPETITION IN PRODUCT MARKETS
The mining industry in general is intensely competitive and even if commercial
quantities of mineral resources are developed, a profitable market may not
exist for sale of such minerals. We must sell base metals, metal concentrates,
by-product metals and concentrate, metallurgical coal and gold at prices
determined by world markets over which we have no influence or control. Our
competitive position is determined by our costs in comparison to those of
other producers in the world. If our costs increase due to our locations,
grade and nature of ore bodies, or our operating and management skills, our
revenues may be affected. We have to compete with larger companies that have
greater assets and financial and human resources than we do, and which may be
able to sustain larger losses than us to develop or continue business.
FUTURE MARKET ACCESS
Access to our markets may be subject to ongoing interruptions and trade
barriers due to policies and tariffs of individual countries, and the actions
of certain interest groups to restrict the import of certain commodities.
Although there are currently no significant trade barriers existing or
impending of which we are aware that do, or could, materially affect our
access to certain markets, there can be no assurance that our access to these
markets will not be restricted in the future.
RESERVE AND RESOURCE ESTIMATES
Disclosed reserve estimates should not be interpreted as assurances of mine
life or of the profitability of current or future operations. We estimate our
mineral reserves in accordance with the requirements of the applicable
Canadian securities regulatory authorities and established mining standards.
Estimates of reserves and resources for oil and gas reporting purposes are not
comparable to mineral reserve and resource estimates.
The SEC does not permit mining companies in their filings with the SEC to
disclose estimates other than mineral reserves. However, because we prepare
this Annual Information Form in accordance with Canadian disclosure
requirements, we incorporate estimates of mineral resources. Mineral resources
are concentrations or occurrences of minerals that are judged to have
reasonable prospects for economic extraction, but for which the economics of
extraction cannot be assessed, whether because of insufficiency of geological
information or lack of feasibility analysis, or for which economic extraction
cannot be justified at the time of reporting. Consequently, mineral resources
are of a higher risk and are less likely to be accurately estimated or
recovered than mineral reserves.
Our mineral reserves and resources are estimated by persons who are employees
of the respective operating company for each of our operations under the
supervision of our employees. These individuals are not "independent" for
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 32
purposes of applicable securities legislation. We do not use outside sources
to verify mineral reserves or resources except at the initial feasibility
stage.
The mineral and oil and gas reserve and resource figures incorporated in this
Annual Information Form are estimates based on the interpretation of limited
sampling and subjective judgments regarding the grade, continuity and
existence of mineralization, as well as the application of economic
assumptions, including assumptions as to operating costs, foreign exchange
rates and future commodity prices. The sampling, interpretations or
assumptions underlying any reserve or resource estimate may be incorrect, and
the impact on mineral reserves or resources may be material. In addition,
short term operating factors relating to the mineral reserves, such as the
need for orderly development of ore bodies or the processing of new or
different ores, may cause reserve estimates to be modified or operations to be
unprofitable in any particular fiscal period.
There can be no assurance that the indicated amount of minerals will be
recovered or that they will be recovered at the prices assumed for purposes of
estimating reserves.
CURRENCY FLUCTUATIONS
Our operating results and cash flow are affected by changes in the Canadian
dollar exchange rate relative to the currencies of other countries. Exchange
rate movements can have a significant impact on results as a significant
portion of our operating costs are incurred in Canadian and other currencies
and most revenues are earned in US dollars. To reduce the exposure to currency
fluctuations, we enter into limited foreign exchange contracts from time to
time, but such hedges do not eliminate the potential that such fluctuations
may have an adverse effect on us. In addition, foreign exchange contracts
expose us to the risk of default by the counterparties to such contracts,
which could have a material adverse effect on our business.
INTEREST RATE RISK
Our exposure to changes in interest rates results from investing and borrowing
activities undertaken to manage our liquidity and capital requirements. We
have incurred indebtedness that bears interest at fixed and floating rates,
and we have entered into interest rate swap agreements to effectively convert
some fixed rate exposure to floating rate exposure. There can be no assurance
that we will not be materially adversely affected by interest rate changes in
the future. In addition, our use of interest rate swaps exposes us to the risk
of default by the counterparties to such arrangements. Any such default could
have a material adverse effect on our business.
ENVIRONMENT
Environmental legislation affects nearly all aspects of our operations.
Compliance with environmental legislation can require significant expenditures
and failure to comply with environmental legislation may result in the
imposition of fines and penalties, the temporary or permanent suspension of
operations, clean up costs arising out of contaminated properties, damages and
the loss of important permits. Exposure to these liabilities arises not only
from our existing operations, but from operations that have been closed or
sold to third parties. Our historical operations have generated significant
environmental contamination. There can be no assurances that we will at all
times be in compliance with all environmental regulations or that steps to
achieve compliance would not materially adversely affect our business.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 33
Environmental laws and regulations are evolving in all jurisdictions where we
have activities. We are not able to determine the specific impact that future
changes in environmental laws and regulations may have on our operations and
activities, and our resulting financial position; however, we anticipate that
capital expenditures and operating expenses will increase in the future as a
result of the implementation of new and increasingly stringent environment
regulation. Further changes in environmental laws, new information on existing
environmental conditions or other events, including legal proceedings based
upon such conditions or an inability to obtain necessary permits, could
require increased financial reserves or compliance expenditures or otherwise
have a material adverse effect on us. Changes in environmental legislation
could also have a material adverse effect on product demand, product quality
and methods of production and distribution.
ABORIGINAL TITLE CLAIMS
Recent Canadian jurisprudence requires governments to consult with aboriginal
peoples with respect to grants of mineral rights and the issuance or amendment
of project authorizations. This may affect our ability to acquire within a
reasonable time frame effective mineral titles in some parts of Canada,
particularly British Columbia, in which aboriginal title is claimed. The risk
of unforeseen aboriginal title claims also exists in foreign jurisdictions and
also could affect existing operations as well as development projects and
future acquisitions. These legal requirements may affect our ability to expand
or transfer existing operations or to develop new projects.
FOREIGN ACTIVITIES
Our business operates in a number of foreign countries where there are added
risks and uncertainties due to the different economic, cultural and political
environments. Some of these risks include nationalization and expropriation,
social unrest and political instability, uncertainties in perfecting mineral
titles, trade barriers and exchange controls and material changes in taxation.
Further, developing country status or an unfavorable political climate may
make it difficult for us to obtain financing for projects in some countries.
LEGAL PROCEEDINGS
The nature of our business subjects us to numerous regulatory investigations,
claims, lawsuits and other proceedings in the ordinary course of our business.
The results of these legal proceedings cannot be predicted with certainty.
There can be no assurances that these matters will not have a material adverse
effect on our business.
DIVIDENDS
Our Class A common shares and Class B subordinate voting shares rank equally
as to the payment of dividends. We may not pay dividends on the Class A common
shares and Class B subordinate voting shares unless all dividends on any
preferred shares outstanding have been paid to date. Dividends of $0.20 per
share were paid in 2003 on both the Class A common shares and the Class B
subordinate voting shares. In November 2004, we announced that we were
increasing the semi-annual dividend payable to shareholders of record on
December 31, 2004 from $0.10 to $0.20, bringing the total annual dividend for
2004 to $0.30 per share. In April 2005, the semi-annual dividend rate was
further increased to $0.40 per share. In December 2005, we deferred payment of
the semi-annual dividend payable to shareholders of record on December 15,
2005 until January 3, 2006, in light of proposed changes to the Canadian
federal tax treatment of dividends. Our dividend policy currently contemplates
the declaration of two semi-annual $0.40 per share dividends in 2006.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 34
DESCRIPTION OF CAPITAL STRUCTURE
GENERAL DESCRIPTION OF CAPITAL STRUCTURE
The Company is authorized to issue an unlimited number of Class A common
shares and Class B subordinate voting shares and an unlimited number of
preference shares, issuable in series.
Class A common shares carry the right to 100 votes per share. Class B
subordinate voting shares carry the right to one vote per share. Each Class A
common share is convertible, at the option of the holder, into one Class B
subordinate voting share. In all other respects, the Class A common shares and
Class B subordinate voting shares rank equally.
The attributes of the Class B subordinate voting shares contain so called
"coattail provisions" which provide that, in the event that an offer (an
"Exclusionary Offer") to purchase Class A common shares which is required to
be made to all or substantially all holders thereof, is not made concurrently
with an offer to purchase Class B subordinate voting shares on identical
terms, then each Class B subordinate voting share will be convertible into one
Class A common share. The Class B subordinate voting shares will not be
convertible in the event that an Exclusionary Offer is not accepted by holders
of a majority of the Class A common shares (excluding those shares held by the
person making the Exclusionary Offer). If an offer to purchase Class A common
shares does not, under applicable securities legislation or the requirements
of any stock exchange having jurisdiction, constitute a "take-over bid" or is
otherwise exempt from any requirement that such offer be made to all or
substantially all holders of Class A common shares, the coattail provisions
will not apply.
The voting rights attached to Class B subordinate voting shares represent
29.85% of the aggregate voting rights attached to the Class A common shares
and Class B subordinate voting shares.
In November 2003, the Company issued 790,000 Series 1 and 550,000 Series 2
preference shares to replace certain preference shares issued by Teck Cominco
Metals. These shares entitle the holders to receive dividends and redemptions
based upon a rate of return index governed by world prices for lead and
silver. The rate of return index to date has been insufficient to trigger any
dividend or redemption. These shares will expire in March 2006 without any
dividends or redemptions.
RATINGS
The following table sets forth the current ratings that we have received from
rating agencies in respect of our outstanding securities.
DOMINION BOARD RATING
MOODY'S STANDARD & POOR'S SERVICE
Senior Unsecured/Long-term Rating Baa2 BBB BBB (high)
Exchangeable Debentures due -- -- BBB (high)
April 30, 2024
Debentures exchangeable for common Baa3 -- BBB (high)m
shares of Inco Limited
Trend/Outlook Positive Stable Stable
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 35
Credit ratings are intended to provide investors with an independent measure
of the credit quality of an issue of securities and are indicators of the
likelihood of payment and of the capacity and willingness of a company to meet
its financial commitment on an obligation in accordance with the terms of the
obligation. A description of the rating categories of each of the rating
agencies in the table above is set out below.
Credit ratings are not recommendations to purchase, hold or sell securities
and do not address the market price or suitability of a specific security for
a particular investor. Credit ratings may not reflect the potential impact of
all risks on the value of securities. In addition, real or anticipated changes
in the rating assigned to a security will generally affect the market value of
that security. We cannot assure you that a rating will remain in effect for
any given period of time or that a rating will not be revised or withdrawn
entirely by a rating agency in the future.
MOODY'S INVESTOR SERVICES (MOODY'S)
Moody's long-term credit ratings are on a rating scale that ranges from Aaa to
C, which represents the range from highest to lowest quality of securities
rated. Moody's Baa3 rating assigned to our senior unsecured debt instruments
is the fourth highest rating of nine rating categories. Obligations rated
"Baa" are considered medium-grade and as such may possess certain speculative
characteristics. Moody's appends numerical modifiers from 1 to 3 to its
long-term debt ratings, which indicates where the obligation ranks within its
ranking category, with 1 being the highest. Moody's has also assigned a
positive outlook to the rating, which is its assessment regarding the likely
direction of the rating over the medium-term.
STANDARD & POOR'S (S&P)
S&P's long-term credit ratings are on a rating scale that ranges from AAA to
D, which represents the range from highest to lowest quality of securities
rated. S&P's BBB rating assigned to our senior unsecured debt instruments is
the fourth highest rating of 10 major rating categories. A "BBB" rating
indicates that the obligor's capacity to meet its financial commitment is
adequate, but that the obligation is somewhat more susceptible to adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories. S&P uses "+" or "-" designations to indicate the
relative standing of securities within a particular rating category. S&P has
also assigned a stable outlook to the rating, which is its assessment
regarding the potential direction of the rating over the immediate to
long-term.
DOMINION BOND RATING SERVICE (DBRS)
DBRS's long-term credit ratings are on a rating scale that ranges from AAA to
D, which represents the range from highest to lowest quality of securities
rated. DBRS's BBB (high) rating assigned to our senior unsecured debt and BBB
(high)m to the exchangeable debentures is the fourth highest of the 10 rating
categories for long-term debt. Debt securities rated "BBB" are of adequate
credit quality and protection of interest and principal is considered
acceptable, but the obligor is fairly susceptible to adverse changes in
financial and economic changes, or there may be other adverse conditions
present which reduce the strength of the obligor. A reference to "high" or
"low" reflects the relative strength within the rating category. A reference
to "m" reflects that the potential for volatility due to market risk factors
greatly exceeds what would be considered normal. DBRS has also assigned a
stable outlook to the ratings, which helps give investors an understanding of
DBRS's opinion regarding the outlook for the ratings.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 36
MARKET FOR SECURITIES
TRADING PRICE AND VOLUME
Our Class A common shares and Class B subordinate voting shares are listed on
The Toronto Stock Exchange. The following tables set out the monthly price
ranges and volumes traded during 2005 for the Class A common shares and Class
B subordinate voting shares.
CLASS A COMMON (SOURCE: BLOOMBERG)
MONTH HIGH LOW LAST TRADING VOLUME
January $38.00 $33.23 $37.84 50,704
February $47.50 $38.00 $47.25 104,575
March $48.45 $40.99 $44.69 76,085
April $46.56 $38.40 $41.40 45,946
May $42.54 $35.25 $41.00 31,903
June $46.00 $40.45 $41.95 48,674
July $49.50 $41.95 $47.12 71,677
August $50.00 $45.70 $46.50 54,112
September $61.30 $47.15 $60.43 76,935
October $65.48 $48.50 $57.00 56,547
November $60.00 $54.50 $57.50 23,848
December $67.65 $58.00 $65.00 35,041
CLASS B SUBORDINATE VOTING (SOURCE: BLOOMBERG)
MONTH HIGH LOW LAST TRADING VOLUME
January $37.80 $32.55 $37.50 21,150,737
February $47.14 $37.55 $47.14 25,974,782
March $48.00 $40.25 $44.85 26,613,730
April $46.37 $38.45 $40.65 25,978,519
May $42.20 $35.63 $40.80 21,051,802
June $45.54 $39.78 $41.34 22,289,970
July $48.69 $41.60 $46.82 15,688,109
August $49.67 $44.93 $46.24 15,788,038
September $54.95 $46.45 $52.15 20,131,797
October $54.10 $46.21 $49.76 18,868,383
November $54.45 $49.01 $53.55 19,226,925
December $63.60 $54.11 $62.05 16,157,820
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 37
DIRECTORS AND OFFICERS
DIRECTORS
- ------------------------------------- -------------------------------------------------------------- ------------------
NAME, PROVINCE/STATE AND COUNTRY OFFICE HELD WITH COMPANY AND PRINCIPAL OCCUPATIONS WITHIN
OF RESIDENCE PREVIOUS FIVE YEARS DIRECTOR SINCE
- ------------------------------------- -------------------------------------------------------------- ------------------
J. Brian Aune (1)(3)(4)(5) Chairman of St. James Financial Corp., 1990 to September February 1995
WESTMOUNT, QUEBEC, CANADA 2005 and President of Alderprise Inc. (private investment
companies)
- ------------------------------------- -------------------------------------------------------------- ------------------
Lloyd I. Barber (3)(4)(6) President Emeritus, University of Regina September 2001
REGINA, SASKATCHEWAN, CANADA
- ------------------------------------- -------------------------------------------------------------- ------------------
Jalynn H. Bennett (2) President, Jalynn H. Bennett and Associates Ltd. (consulting June 2005
TORONTO, ONTARIO, CANADA firm)
- ------------------------------------- -------------------------------------------------------------- ------------------
Hugh J. Bolton (2) Chairman, Epcor Utilities Inc., (electrical utility), and September 2001
EDMONTON, ALBERTA, CANADA Lead Director of Matrikon Inc. (industrial IT company), from
2000 to present
- ------------------------------------- -------------------------------------------------------------- ------------------
Masayuki Hisatsune ((6)) Director and Vice President, Sumitomo Metal Mining America February 2002
VANCOUVER, BRITISH COLUMBIA, CANADA Inc. (mining company) from December 2001 to present; General
Manager, Administration Department, Mineral Resources
Division, Sumitomo Metal Mining Co. from 2000 to 2001
- ------------------------------------- -------------------------------------------------------------- ------------------
Norman B. Keevil (1) Chairman of the Company; Chief Executive Officer of the July 1963
WEST VANCOUVER, BRITISH COLUMBIA, Company prior to July 25, 2001
CANADA
- ------------------------------------- -------------------------------------------------------------- ------------------
Norman B. Keevil III (6) Chief Operating Officer and Vice President of Engineering, April 1997
VICTORIA, BRITISH COLUMBIA, CANADA Triton Logging Inc. (underwater harvesting company) from
2004 to present; prior thereto President and Chief Executive
Officer, Pyramid Automation Ltd.(manufacturers of special
purpose automation equipment)
- ------------------------------------- -------------------------------------------------------------- ------------------
Donald R. Lindsay((1)) President of the Company from January 2005 to present; February 2005
VANCOUVER, BRITISH COLUMBIA, CANADA appointed CEO of the Company in April, 2005; President of
CIBC World Markets Inc. (investment banking), from 2001 to
2004
- ------------------------------------- -------------------------------------------------------------- ------------------
Takuro Mochihara (1) Managing Executive Officer, Non-Ferrous Metal Division, September 2000
TOKYO, JAPAN Sumitomo Metal Mining Co. Ltd. (mining company)
- ------------------------------------- -------------------------------------------------------------- ------------------
Warren S. R. Seyffert (6) Counsel at Lang Michener (law firm) August 1989
TORONTO, ONTARIO, CANADA
- ------------------------------------- -------------------------------------------------------------- ------------------
Keith E. Steeves (2)((4)) Corporate Director October 1981
RICHMOND, BRITISH COLUMBIA, CANADA
- ------------------------------------- -------------------------------------------------------------- ------------------
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 38
- ------------------------------------- -------------------------------------------------------------- ------------------
NAME, PROVINCE/STATE AND COUNTRY OFFICE HELD WITH COMPANY AND PRINCIPAL OCCUPATIONS WITHIN
OF RESIDENCE PREVIOUS FIVE YEARS DIRECTOR SINCE
- ------------------------------------- -------------------------------------------------------------- ------------------
Chris M.T. Thompson(1)(2)(5)(6) Corporate Director; Chief Executive Officer and Chairman of June 2003
DENVER, COLORADO, the Board of Gold Fields Ltd. (gold mining) from 1998 to
UNITED STATES November, 2002. Chairman of the Board of Gold Fields Ltd.
(gold mining) to November, 2005
- ------------------------------------- -------------------------------------------------------------- ------------------
David A. Thompson ((4)) Chief Executive Officer of the Company July 25, 2001 to October 1980
WEST VANCOUVER, BRITISH COLUMBIA, April 27, 2005; prior thereto Deputy Chairman of the Company
CANADA June 8, 2000 to April 27, 2005; President and Chief
Executive Officer of Cominco Ltd. until July 2001
- ------------------------------------- -------------------------------------------------------------- ------------------
Robert J. Wright (1) (2)(3) (5)
TORONTO, ONTARIO, CANADA Deputy Chairman and Lead Director of the Company May 1994
===================================== ============================================================== ==================
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Pension Committee
(5) Member of the Corporate Governance and Nominating Committee
(6) Member of the Environment, Health & Safety Committee
Each of the directors is elected to hold office until the annual meeting to be
held on April 26, 2006 or until a successor is duly elected or appointed.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 39
OFFICERS
- -------------------------------------- -----------------------------------------------------------------------------
NAME, PROVINCE/STATE AND COUNTRY OF OFFICE HELD WITH COMPANY AND PRINCIPAL OCCUPATIONS WITHIN
RESIDENCE PREVIOUS FIVE YEARS
- -------------------------------------- -----------------------------------------------------------------------------
Norman B. Keevil Chairman of the Company; Chief Executive Officer of the Company prior to
WEST VANCOUVER, BRITISH COLUMBIA July 25, 2001
CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Robert J. Wright Deputy Chairman and Lead Director of the Company
TORONTO, ONTARIO, CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Donald R. Lindsay President of the Company from January 2005 to present; appointed CEO of the
VANCOUVER, BRITISH COLUMBIA, CANADA Company in April, 2005; prior thereto President, CIBC World Markets Inc.
- -------------------------------------- -----------------------------------------------------------------------------
Ronald A. Vance Senior Vice President, Corporate Development of the Company since January
EVERGREEN, COLORADO, USA 1, 2006; previously Managing Director and Senior Advisor, Rothschild Inc.
- -------------------------------------- -----------------------------------------------------------------------------
Douglas H. Horswill Senior Vice President, Environment and Corporate Affairs; previously Vice
WEST VANCOUVER, BRITISH COLUMBIA, President, Environment & Corporate Affairs of Cominco Ltd.
CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Michael P. Lipkewich Senior Vice President, Mining
WEST VANCOUVER, BRITISH COLUMBIA,
CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Ronald A. Millos Senior Vice President, Finance and Chief Financial Officer of the Company
VANCOUVER, BRITISH COLUMBIA, CANADA since October 3, 2005; previously Vice President and Chief Financial
Officer of the Fording Canadian Coal Trust, Fording LP (formerly known as
Fording Inc.) and Elk Valley Coal Corporation since June 1, 2003; Vice
President, Corporate Finance of the Company since September 2001 and prior
thereto Vice President, Finance and Chief Financial Officer of Cominco Ltd.
- -------------------------------------- -----------------------------------------------------------------------------
Michael J. Allan Vice President, Engineering
NORTH VANCOUVER, BRITISH COLUMBIA,
CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Fred S. Daley Vice President, Exploration
DELTA, BRITISH COLUMBIA, CANADA
- -------------------------------------- -----------------------------------------------------------------------------
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 40
- -------------------------------------- -----------------------------------------------------------------------------
NAME, PROVINCE/STATE AND COUNTRY OF OFFICE HELD WITH COMPANY AND PRINCIPAL OCCUPATIONS WITHIN
RESIDENCE PREVIOUS FIVE YEARS
- -------------------------------------- -----------------------------------------------------------------------------
Michel P. Filion Vice President, Environment, Health and Safety since June 2005; previously
SURREY, BRITISH COLUMBIA, CANADA Vice President, Environment
- -------------------------------------- -----------------------------------------------------------------------------
Gary M. Jones Vice President, Business Development
BURNABY, BRITISH COLUMBIA, CANADA
- -------------------------------------- -----------------------------------------------------------------------------
G. Leonard Manuel Vice President and General Counsel; previously General Counsel and
WEST VANCOUVER, BRITISH COLUMBIA, Secretary of Cominco Ltd. CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Peter C. Rozee Senior Vice President, Commercial Affairs since October 1, 2005; Vice
WEST VANCOUVER, BRITISH COLUMBIA, President, Commercial and Legal Affairs since March 2001; prior thereto
CANADA Vice President, General Counsel and Secretary, Inmet Mining Corporation
- -------------------------------------- -----------------------------------------------------------------------------
James A. Utley Vice President, Human Resources, previously Vice President, Human Resources
WEST VANCOUVER, BRITISH COLUMBIA, of Cominco Ltd.
CANADA
- -------------------------------------- -----------------------------------------------------------------------------
John F.H. Thompson Vice President, Technology since January 1, 2006; previously Chief
VANCOUVER, BRITISH COLUMBIA, CANADA Geoscientist of the Company
- -------------------------------------- -----------------------------------------------------------------------------
Michael E. Agg Vice President, Refining and Metal Sales since December 1, 2005; previously
TRAIL, BRITISH COLUMBIA, CANADA General Manager, Trail Operations from 2003 to 2005, and General Manager of
Cajamarquilla from 1998 to 2003.
- -------------------------------------- -----------------------------------------------------------------------------
Andrew A. Stonkus Vice President, Concentrate Marketing of the Company since December 1,
OAKVILLE, ONTARIO, CANADA 2005; previously General Manager, Concentrate Marketing from 2000 to 2005
- -------------------------------------- -----------------------------------------------------------------------------
Robert G. Scott Vice President, Base Metal Mining since January, 2006; previously General
COLDSTREAM, BRITISH COLUMBIA, CANADA Manager of Red Dog from 2003 to 2005; prior thereto General Manager/Mine
Manager of Quintette
- -------------------------------------- -----------------------------------------------------------------------------
Lawrence A. Mackwood Treasurer
WEST VANCOUVER, BRITISH COLUMBIA,
CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Howard C. Chu Controller
VANCOUVER, BRITISH COLUMBIA, CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Karen L. Dunfee Corporate Secretary
RICHMOND, BRITISH COLUMBIA, CANADA
- -------------------------------------- -----------------------------------------------------------------------------
Anthony A. Zoobkoff Senior Counsel and Assistant Secretary; previously Senior Counsel and
NORTH VANCOUVER, BRITISH COLUMBIA, Assistant Secretary of Cominco Ltd.
CANADA
====================================== =============================================================================
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 41
AUDIT COMMITTEE INFORMATION
MANDATE OF AUDIT COMMITTEE
The full text of our Audit Committee's mandate is included as Schedule A to
this Annual Information Form.
COMPOSITION OF THE AUDIT COMMITTEE
Our Audit Committee consists of five members. All of the members of the
Committee are independent and financially literate. The relevant education and
experience of each Audit Committee member is outlined below:
JALYNN H. BENNETT
Ms. Bennett is a graduate of the University of Toronto where she specialized
in economics. She is the President of a consulting firm in strategic planning
and organizational development. She is a past Commissioner of the Ontario
Securities Commission and was a member of the Toronto Stock Exchange Joint
Committee on Corporate Governance (the Saucier Committee).
HUGH J. BOLTON, FCA
Mr. Bolton is a chartered accountant and a graduate of the University of
Alberta (BA Economics). Mr. Bolton was managing partner of Coopers & Lybrand
Canada from 1984 to 1990 and its Chairman and CEO from 1991 to 1998. He is
presently a Chairman of Epcor Utilities Inc., Lead Director of Matrikon Inc.
and a director of the Toronto Dominion Bank, Canadian National Railway Company
and Westjet Airlines Ltd.
KEITH E STEEVES, FCA
Mr. Steeves received his Chartered Accountant certification in 1963 in Alberta
and in 1964 in British Columbia. Mr. Steeves was Senior Vice President,
Finance and Administration at Bethlehem Copper Corporation until 1981 and an
officer of Teck Corporation from 1981 to 1996.
CHRIS M. THOMPSON
Mr. Thompson is a graduate of Rhodes University, SA (BA Law and Economics) and
Bradford University, UK (MSc). Mr. Thompson was Chairman of the Board of and
CEO of Gold Fields from 1998 to 2002 and is currently its Non-Executive
Chairman.
ROBERT J. WRIGHT, Q.C.
Mr. Wright is a graduate of Trinity College, University of Toronto (B.A.) and
Osgoode Hall Law School (LL.B.). He was a partner with Lang Michener from 1964
to 1989 and Chairman of the Ontario Securities Commission from 1989 to 1993.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 42
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted policies and procedures with respect to the
pre-approval of audit and permitted non-audit services to be provided by
PricewaterhouseCoopers LLP. All non-audit services are pre-approved by the
Committee prior to commencement. In addition, the Committee has prohibited the
use of the external auditors for the following non-audit services:
o bookkeeping or other services related to the accounting records or
financial statements;
o financial information systems design and implementation;
o appraisal or valuation services, fairness opinions or
contribution-in-kind reports;
o actuarial services;
o internal audit outsourcing services;
o management functions or human resources functions;
o broker or dealer, investment advisor, or investment banking
services;
o legal services;
o expert services unrelated to the audit; and
o all other non-audit services unless there is a strong financial or
other reason for external auditors to provide those services.
EXTERNAL AUDITOR SERVICE FEES
For the years ended December 31, 2005 and 2004, the Company paid the external
auditors $2,028,000 and $2,215,000 respectively as detailed below:
---------------- --------------
Year Ended Year Ended
2005 ($000) 2004 ($000)
---------------- --------------
Audit Services(1) 1,369 1,620
Audit Related Fees(2) 330 302
Tax Fees(3) 146 256
All Other Fees(4) 183 37
NOTES
(1) Includes services that are provided by the Company's independent auditor
in connection with statutory and regulatory filings.
(2) Includes assurance and related services by the independent auditor that
are related to the performance of the audit, principally for quarterly
reviews, pension plan audits and prospectuses.
(3) In 2005 fees are for international tax services and advice provided to
foreign offices.
(4) In 2005 fees are principally for Sarbanes Oxley related services.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 43
OWNERSHIP BY DIRECTORS AND OFFICERS
The directors and executive officers as a group beneficially own directly or
indirectly or exercise control or direction over the following shares issued
by the Company:
- --------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED OR OVER WHICH AS A % OF THE TOTAL
CONTROL OR DIRECTION IS EXERCISED OUTSTANDING OF THE CLASS
- --------------------------------------------------------------------------------------------------------------------
Class A common shares 209,440 4.5%
Class B subordinate voting shares 958,277 0.48%
====================================================================================================================
In addition, one of our directors is a trustee of a trust which holds shares
carrying 98% of the votes attached to outstanding shares of Keevil Holding
Corporation and is a director of Keevil Holding Corporation. Keevil Holding
Corporation holds 51% of the voting shares of Temagami Mining Company Limited
("Temagami") which holds 2,150,000 Class A common shares, representing 46% of
the shares of this class. Three of our directors are directors of Temagami.
LEGAL PROCEEDINGS
The disclosure with respect to legal proceedings at pages 22-23 of our
Management's Discussion and Analysis for the year ended December 31, 2005 is
incorporated herein by reference. This document is available on SEDAR at
www.sedar.com.
TRANSFER AGENTS AND REGISTRARS
CIBC Mellon Trust Company is the transfer agent and registrar for the Class A
common and Class B subordinate voting shares and maintains registers in
Vancouver, British Columbia and Toronto, Ontario.
MATERIAL CONTRACTS
The following is the only contract entered into by the Company since January
1, 2002 which is material and not entered into in the ordinary course of
business:
o Partnership Agreement dated February 28, 2003, as amended, between
the Company, Fording, Quintette, Elk Valley Coal and Teck-Bullmoose
Coal Inc., providing for the formation and operation of Elk Valley
Coal.
INTERESTS OF EXPERTS
PricewaterhouseCoopers LLP, Chartered Accountants, are the Company's auditors
and have prepared an opinion with respect to the Company's consolidated
financial statements as at and for the year ended December 31, 2005.
William P. Armstrong, P.Eng, and Dan Gurtler, AIMM, and Colin McKenny,
P.Geol., have acted as Qualified Persons in connection with the estimates of
mineral reserves and resources presented in this Annual Information Form. Mr.
Armstrong is a former employee of the Company. Mr. McKenny is an employee of
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 44
Elk Valley Coal Partnership, of which the Company is the managing partner. Mr.
Gurtler is an employee of Compania Minera Antamina S.A., in which the Company
holds a 22.5% share interest. GLJ Petroleum Consultants Ltd. has acted as an
independent reserves evaluator in connection with our interest in the Fort
Hills oil sands project. Messrs. Armstrong, Gurtler, McKenny hold
beneficially, directly or indirectly, less than 1% of any class of the
Company's securities.
ADDITIONAL INFORMATION
(1) Additional information relating to the Company may be found on SEDAR at
www.sedar.com.
(2) Additional information, including directors' and officers' remuneration
and indebtedness to our business, principal holders of the Company's
securities, options to purchase securities and interests of insiders in
material transactions is contained in the Management Proxy Circular to be
issued for our Annual Meeting of Shareholders to be held on April 26,
2006. Additional financial information is also provided in our
comparative financial statements and Management's Discussion and Analysis
for the year ended December 31, 2005. Copies of these documents are
available upon request from our Corporate Secretary.
(3) Unless otherwise stated information contained herein is as at March 1,
2006.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page 45
SCHEDULE A
AUDIT COMMITTEE MANDATE
PURPOSE OF THE COMMITTEE
The purpose of the Audit Committee (the "Committee") of the Board of Directors
(the "Board") of Teck Cominco Limited is to provide an open avenue of
communication between management, the external auditor, the internal auditors
and the Board and to assist the Board in its oversight of the:
o integrity, adequacy and timeliness of the company's financial
reporting and disclosure practices;
o processes for identifying and managing the principal financial risks
of the company and the company's internal control systems that
ensures fair, complete and accurate financial reporting;
o company's compliance with legal and regulatory requirements related
to financial reporting;
o accounting principles and policies used by management in determining
significant estimates,
o antifraud programs and controls, including management's
identification of fraud risks and implementation of antifraud
measures,
o mechanisms for employees to report concerns about accounting
policies and financial reporting,
o engagement, independence and performance of the company's external
auditor; and
o audit plan, programs and results of internal audits and Sarbanes
Oxley and Bill 198 internal controls compliance testing performed by
the company's internal audit department.
The Committee shall also perform any other activities consistent with this
Charter, the company's by-laws and governing laws as the Committee or Board
deems necessary or appropriate.
The Committee shall consist of at least three directors. Members of the
Committee and the Chairman shall be appointed by the Board and may be removed
by the Board in its discretion. All members of the Committee shall be
independent directors and have sufficient financial literacy, which means the
ability to read and understand a balance sheet, income statement, cash flow
statement and the notes attached thereto, to enable them to discharge their
responsibilities in accordance with applicable laws and/or requirements of the
various stock exchanges on which the company's securities trade and in
accordance with National Investment Instrument 52-110. At least one member of
the Committee shall have accounting or related financial management expertise
that allows that member to read and understand financial statements and the
related notes attached thereto in accordance with generally accepted
accounting principles ("GAAP").
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page A-1
The Committee's role is one of oversight. Management is responsible for
preparing the company's financial statements and other financial information
and for the fair presentation of the information set forth in the financial
statements in accordance with GAAP. Management is also responsible for
establishing, documenting and reviewing systems of internal control and for
maintaining the appropriate accounting and financial reporting principles and
policies designed to assure compliance with accounting standards and all
applicable laws and regulations.
The external auditor's responsibility is to audit the company's financial
statements and provide its opinion, based on its audit conducted in accordance
with generally accepted auditing standards, that the financial statements
present fairly, in all material respects, the financial position, results of
operations and cash flows of the company in accordance with GAAP.
The Committee is directly responsible for the appointment, compensation,
evaluation, termination and oversight of the work of the external auditor and
oversees the resolution of any disagreements between management and the
external auditor regarding financial reporting. The external auditor shall
report directly to the Committee, as they are accountable to the Board as
representatives of the company's shareholders. As such, it is not the duty or
responsibility of the Committee or any of its members to plan or conduct any
type of audit or accounting review or procedure.
AUTHORITY AND RESPONSIBILITIES
In performing its oversight responsibilities, the Committee shall:
1. Review and assess the adequacy of this Charter and recommend any proposed
changes to the Board for approval at least once per year.
2. Review the appointments of the company's Chief Financial Officer and any
other key financial executives involved in the financial reporting
process.
3. Review with management, the external auditor and the director of
compliance and internal audit the adequacy and effectiveness of the
company's systems of internal control, the remediation status of any
reported or significant internal control deficiencies identified during
annual compliance testing as required under Sarbanes Oxley and Bill 198
legislation and the adequacy and timeliness of its financial reporting
processes.
4. Review with management and the external auditor the annual audited
financial statements, the unaudited quarterly financial statements, the
management discussion and analysis reports, annual and interim earnings
press releases and other financial reporting documents, including the CEO
and CFO quarterly certifications, prior to their public disclosure,
filing or distribution of these documents. Such review includes financial
matters required to be reported under applicable legal or regulatory
requirements.
5. Ensure that adequate procedures are in place for the review of the
company's public disclosure of financial information extracted or derived
from the company's financial statements, other than the public disclosure
referred to in the immediately preceding item, and periodically assess
the adequacy of these procedures.
6. Review with management and the external auditor and approve earnings news
releases and other financial information and earnings guidance
disclosures contained in such news releases prior to their release.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page A-2
7. Where appropriate and prior to release, review with management and
approve any other news releases that contain significant financial
information that has not previously been released to the public.
8. Review the company's financial reporting and accounting standards and
principles and significant changes in such standards or principles or in
their application, including key accounting decisions affecting the
financial statements, alternatives thereto and the rationale for
decisions made.
9. Review the quality and appropriateness, not just the acceptability, of
the accounting policies and the clarity of financial information and
disclosure practices adopted by the company, including consideration of
the external auditors' judgments about the quality and appropriateness of
the company's accounting policies. This review shall include discussions
with the external auditor without the presence of management.
10. Review with management, the external auditor and the director of
compliance and internal audit significant related party transactions and
potential conflicts of interest.
11. Recommend to the Board and shareholders (a) the external auditor to be
nominated to examine the company's accounts and financial statements and
prepare and issue an auditor's report on them or perform other audit,
review or attest services for the company and (b) the compensation of the
external auditor. The Committee has the responsibility to approve all
audit engagement terms and fees. The Committee shall pre-approve all
audit, non-audit and assurance services provided to the company and its
subsidiary entities by the external auditor, but the Chairman or his
appointee may be delegated the responsibility to approve these services
where the fee is not significant. The pre-approval of such services by
any member to whom authority has been delegated must be reported to the
Committee at its first scheduled meeting following such pre-approval.
12. Review with management and the external auditor and approve the annual
audit plan and results of and any problems or difficulties encountered
during any external audits and management's responses thereto.
13. Receive the reports of the external auditor on completion of the
quarterly reviews and the annual audit.
14. Monitor the independence of the external auditors by reviewing all
relationships between the independent auditor and the company and all
audit, non-audit and assurance work performed for the company by the
independent auditor on at least an a quarterly basis. The Committee will
receive an annual written confirmation of independence from the external
auditor
15. Review and approve the company's hiring policies regarding partners,
employees and former partners and employees of the present and former
external auditor of the company.
16. Review and approve the functions of the company's internal audit
department, including:
o its mandate, authority and organizational reporting lines;
o its annual and longer term internal audit plans, budgets and
staffing;
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page A-3
o its performance; and
o the appointment, reassignment or replacement of the director of
compliance and internal audit.
This review will include discussions with the director of compliance
and internal audit without the presence of management or the external
auditor.
17. Review with senior financial management, the external auditor, the
director of compliance and internal audit, and such others as the
Committee deems appropriate, the results of internal audits, internal
control compliance testing audits and any problems or difficulties
encountered during the audits.
18. Review the company's procedures and establish procedures for the
Committee for the:
o receipt, retention and resolution of complaints regarding
accounting, internal accounting controls, financial disclosure or
auditing matters; and
o confidential, anonymous submission by employees regarding
questionable accounting, auditing or financial reporting and
disclosure matters or violations of the Company's Code of Ethics or
Standard of Business Practices.
19. Conduct or authorize investigations into any matter that the Committee
believes is within the scope of its responsibilities. The Committee has
the authority to (a) retain independent counsel, accountants or other
advisors to assist it in the conduct of its investigation, at the expense
of the company, and (b) set and pay the compensation of any advisors
retained by it.
20. The Committee shall report its recommendations and findings to the Board
after each meeting and shall conduct and present to the Board an annual
performance evaluation of the effectiveness of the Committee.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page A-4
SCHEDULE B
REPORT ON RESERVES DATA
BY
INDEPENDENT QUALIFIED RESERVES
EVALUATOR OR AUDITOR
To the board of directors Teck Cominco Ltd. (the "Company"):
We have prepared an evaluation of the Company's reserves data, which consist
of a best estimate of working interest contingent resources as at December 31,
2005.
The reserves data are the responsibility of the Company's management. Our
responsibility is to express an opinion on the reserves data, based on our
evaluation.
We carried out our evaluation in accordance with standards set out in the
Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") prepared
jointly by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and
the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society).
GLJ believes the best estimate of contingent resources associated with the
Company's 15 percent interest in the proposed Fort Hills oil sands project as
at December 31, 2005 is 0.45 billion barrels of synthetic crude oil.
Contingent resources are the portions of volumes remaining to be recovered
from a known accumulation that have not been classified as reserves. Resources
are further classified according to the degree of certainty associated with
the estimate as low estimate, best estimate or high estimate. Further data
acquisition and evaluation are required to confirm the planning basis before
reserves will be assigned to the Company.
We have no responsibility to update this evaluation for events and
circumstances occurring after the preparation date.
As the reserves data are based on judgements regarding future events, actual
results will vary and the variations may be material.
GLJ PETROLEUM CONSULTANTS LTD. Dated March 1, 2006
Calgary, Alberta,
Canada
(Signed) James H. Willmon, P. Eng.
VP Corporate Evaluations
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page B-1
SCHEDULE C
REPORT OF MANAGEMENT AND DIRECTORS
ON DECEMBER 2005
OIL AND GAS DISCLOSURE
Management of Teck Cominco Limited (the "Corporation") is responsible for the
preparation and disclosure of information with respect to the Corporation's
oil and gas activities in accordance with securities regulatory requirements.
An independent qualified reserves evaluator has evaluated the resources data
associated with the Fort Hills oil sands project and has concluded that the
best estimate of contingent resources associated with the Corporation's 15%
interest in the project is 0.45 billion barrels of synthetic crude oil. The
report of the independent qualified reserves evaluator has been filed with
securities regulatory authorities.
A committee of the board of directors of the Corporation composed of a
majority of independent directors has
(a) reviewed the Corporation's procedures for providing information to the
independent qualified reserves evaluator;
(b) met with the independent qualified reserves evaluator to determine
whether any restrictions affected the ability of the independent
qualified reserves evaluator to report without reservations; and
(c) reviewed the resources data with management and the independent qualified
reserves evaluator.
The same committee of the board of directors has reviewed the Corporation's
procedures for assembling and reporting other information associated with oil
and gas activities and has reviewed that information with management. The
board of directors has, on the recommendation of the committee, approved
(a) the content and filing with securities regulatory authorities of the
resources data and other oil and gas information;
(b) the filing of the report of the independent qualified reserves evaluator;
and
(c) the content and filing of this report.
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page C-1
Because the resources data are based on judgements regarding future events,
actual results will vary and the variations may be material.
Dated March 1, 2006.
/s/ Donald R. Lindsay /s/ Chris Thompson
- -------------------------------- ---------------------------------
Donald R. Lindsay Chris Thompson
President and Chief Executive Officer Director
/s/ Ronald A. Millos /s/ David Thompson
- -------------------------------- ---------------------------------
Ronald A. Millos David Thompson
Senior Vice President, Finance Director
and Chief Financial Officer
TECK COMINCO LIMITED - 2005 ANNUAL INFORMATION FORM Page C-2