A friend provided an updated research report from CIBC World Markets (portion copied below) and the last few paragraphs outlined the benfits of new technology, some of the cost savings, ability to lower the risk profile, etc which, if similarly applied to Schaft Creek, could improve our value. Just thought I would share.

A Site Visit To HVC And Neptune - September 08, 2013

Site Visit To HVC And Neptune

We had an opportunity to visit Teck’s (TCK.B-SO) operations at Highland Valley Copper and receive an update on the coal business followed by a tour of the Neptune port facilities in British Columbia on September 4-5. The HVC mine showed well, reflecting the company’s experienced and stable workforce; our outlook for HVC has remained unchanged. Teck’s coal business appears well positioned to meet 2013 guidance for both production and cost. Overall, the trip served to largely reaffirm our existing estimates and we have made no substantive changes to our numbers.

HVC Optimization Project

Some elements of the HVC operation have been in service since the 1960s and to address the rising maintenance requirements of the existing plant, Teck initiated a $550 million mill optimization project in 2011. We see this as a revitalization project that, in conjunction with the ability to extend the mine life, would serve to improve the availability and reliability of the operation until the end of HVC’s planned mine life in 2027. The largest components of the optimization project include new flotation and pebble crushing plants and a retrofit of the existing control systems.

As of today, the mill optimization project remains on-schedule for completion by the end of 2013. The construction is 68% complete with the steel structure & major equipment in place and the new pebble crusher now connected with the rest of the milling circuit. The mill project is anticipated to provide a modest boost to mill throughput rates, rising to ~135,000 tpd from the current 120,000 tpd and given the ability to create longer flotation cell retention times, recoveries should improve by ~1-2% from the current average of ~85%. To match the increased mill requirements, the mine is expected to increase throughput & production in Q4 as previously announced.

Overall, we found that the expectations for the project continue to closely match those detailed in the recently issued technical report. Upon completion of the optimization project (expected late 2014), HVC is expected to benefit from the application of current process technology that would lower the risk profile and minimize downtime, and reduce sustaining capital going forward. Milling throughput and copper recoveries are expected to increase by ~10% and ~2% respectively, while unit operating costs are expected to decrease by ~5%. These improvements are meaningful given the operation’s lower grade nature.

In addition to mill optimization, the mine expects to carry out the “Mine-2-Mill” initiative in 2013 with the objective of increasing mill throughput by 7% (on top of the benefits from the mill optimization project). This is not currently factored into our estimates. The focus of this initiative is on the use of high energy blasting to reduce ore grinding requirements (thereby alleviating this bottleneck), and improving truck and shovel productivities. The company is targeted to achieve $30M ongoing cost reductions after implementation of these measures. We would note that in 2015 major pushback programs are planned for the Valley, Highmont and Lornex pits, consequently strip ratios (and costs) should track above average in this medium term timeframe.

We expect HVC to remain an important component of Teck’s copper production base for the foreseeable future contributing on average 150kt of copper (out of a company wide total of ~400kt) at cash costs of $1.50/lb over the next 5-years.

CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8