Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK)
(“Teck”) today announced that the sale of its remaining 77%
interest in the steelmaking coal business, Elk Valley Resources
(“EVR”), to Glencore plc (“Glencore”) has now received all
necessary regulatory approvals.
The transaction is now expected to close on July 11. Teck
expects to receive total cash proceeds of US$6.9 billion (CAD $9.5
billion)1 from the sale of the 77% interest in EVR, excluding
closing adjustments.
“We are pleased that we will achieve a complete separation of
the metals and steelmaking coal businesses to position Teck for its
next phase of growth and responsible value creation,” said Sheila
Murray, Chair of the Board. “We are confident that our leadership
team is executing the right strategy to maximize long-term value
for shareholders and all stakeholders.”
“This transaction marks a new era for Teck as a company focused
entirely on providing metals that are essential to global
development and the energy transition,” said Jonathan Price,
President and CEO. “Moving forward as a pure-play energy transition
metals company, we will build on our core portfolio of strong,
cash-generating assets through development of our near-term copper
growth projects. Completion of this transaction will provide
substantial funding for our projects, giving Teck a pathway to
increase copper production by a further 30% as early as 2028.”
“This transaction will enable us to reduce debt and retain
significant cash to fund our near-term metals growth and maintain a
resilient balance sheet, while also providing a significant return
of cash to our shareholders,” said Price.
Note:
1. All USD to CAD figures calculated
at an exchange rate of 1.37.
Transaction Use of ProceedsSubject to closing
of the transaction and consistent with Teck’s Capital Allocation
Framework, Teck intends to allocate proceeds from the sale of the
steelmaking coal business as follows:
1. Cash Return to
Shareholders
- Repurchase of up to US$2.0 billion (CAD$2.75 billion) of Class
B subordinate voting shares.
- Distribution of approximately US$182 million (CAD$250 million)
through the declaration of an eligible dividend of CAD$0.50, to be
declared by Teck’s Board of Directors on both the Class A common
and Class B subordinate shares. The supplemental dividend is
expected be paid on September 27, 2024, to shareholders of record
at the close of business on September 13, 2024. This one-time
supplemental dividend is in addition to the regular base quarterly
dividend of $0.125 per share, for an expected total eligible
dividend payable of $0.625 per share.
- Total announced cash return to shareholders from the 100% sale
of EVR of US$2.6 billion (CAD$3.5 billion).
2. Debt Reduction
- Execute a debt reduction program of up to US$2.0 billion
(CAD$2.75 billion), including the cash tender offer separately
announced today to purchase US$1.25 billion aggregate principal
amount of Teck’s outstanding public notes.
3. Well-Funded, Value-Accretive
Copper Growth
- Remaining proceeds, net of taxes and transaction costs, will be
retained to fund near-term copper growth. Teck will continue to
advance its near-term copper projects, including the Highland
Valley Copper Mine Life Extension, Zafranal Project, San Nicolas
Project and QB debottlenecking, with the first sanction decisions
expected in 2025. The current estimated capital cost attributable
to Teck for these projects is US$3.3 –$3.6 billion (CAD $4.5–$4.9
billion).
4. Taxes and Transaction
Costs
- Estimated US$750 million (CAD$1.0 billion) to pay taxes and
transaction costs.
Value Creation: Executing on Copper Growth The
completion of the sale of EVR positions Teck as an industry-leading
energy transition metals producer, poised to unlock the value of
its unrivalled copper growth portfolio.
Teck operates a premium portfolio of long-life, high-quality
producing assets in stable and well-understood jurisdictions in the
Americas. With the ramp up of QB in 2024, Teck expects to double
its copper production to approximately 600,000 tonnes/year.
In parallel, Teck is employing a rigorous investment framework
in executing on its near-term copper pipeline, including QB
debottlenecking, the Highland Valley Copper Mine Life Extension,
Zafranal Project and San Nicolas Project. These are relatively
low-complexity projects, with competitive capital intensities and
located in well-established mining jurisdictions, with sanctioning
as early as 2025. Longer-term, Teck will progress a suite of
meaningful brownfield and greenfield development options, including
the Galore Creek project in B.C. and the potential expansion of
Trail Operations to include an electric vehicle battery recycling
facility.
This diverse pipeline of projects provides an ongoing value
creation opportunity for shareholders with significant long-term
growth potential, enabled by a resilient balance sheet and
disciplined capital allocation.
Share Repurchase DetailThe share repurchase is
to be completed under the normal course issuer bid (“NCIB”),
subject to market conditions and receipt of applicable regulatory
approvals in connection with the renewal of the NCIB in November
2024. Any repurchases following November 21, 2024, depend on
regulatory approval of a renewed NCIB. The company will determine
the timing of any purchases and may repurchase fewer or a greater
number of shares, subject to market conditions, the requirements of
the issuer bid program, and applicable securities laws.
AdvisorsBarclays Capital Canada Inc., Ardea
Partners LP, TD Securities Inc., and CIBC World Markets Inc. served
as financial advisors to Teck. Stikeman Elliott LLP and Paul,
Weiss, Rifkind, Wharton & Garrison LLP served as legal
advisors, and Felesky Flynn LLP served as legal tax advisor.
BMO Capital Markets, Goldman Sachs & Co. LLC, and Origin
Merchant Partners served as financial advisors to the Special
Committee and Blake, Cassels & Graydon LLP and Sullivan &
Cromwell LLP served as legal advisors to the Special Committee.
Forward Looking StatementsThis news release
contains certain forward-looking information and forward-looking
statements as defined in applicable securities laws (collectively
referred to as forward-looking statements). 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 “continue”, “estimate”, “expect”,
“may”, “will”, “potential”, 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 news release.
These forward-looking statements include, but are not limited
to, statements relating to the expected closing of the transaction,
the timing of closing of the transaction; Teck’s business and
assets and its strategy going forward, including with respect to
future and ongoing project development; the expected use of
proceeds, including the timing and format of any cash returns to
shareholders; the anticipated benefits of the transaction; our
ability to satisfy the conditions of closing; and other statements
that are not historical facts.
Although we believe that the forward-looking statements in this
news release are based on information and assumptions that are
current, reasonable and complete, these statements are by their
nature subject to a number of factors that could cause actual
results to differ materially from management’s expectations and
plans as set forth in such forward-looking statements, including,
without limitation, the following factors, many of which are beyond
our control and the effects of which can be difficult to predict:
the possibility that the transaction does not close when expected
or at all because of the occurrence of any event, change or other
circumstances that could give rise to the right of one or both of
the parties to terminate the transaction; the possibility that the
anticipated benefits from the transaction are not realized in the
time frame anticipated or at all as a result of changes in general
economic and market conditions, including credit, market, currency,
operational, commodity, liquidity and funding risks generally and
relating specifically to the transaction; laws and regulations and
their enforcement; the possibility that the business of Teck may
not perform as expected or in a manner consistent with historical
performance; reputational risks and the reaction of Teck’s
customers, suppliers and employees to the transaction; the
possibility that the transaction may be more expensive to complete
than anticipated, including as a result of unexpected factors or
events; material adverse changes in economic and industry
conditions; general competitive, economic, political and market
conditions; and other risks inherent to our business and/or factors
beyond Teck’s control which could have a material adverse effect on
Teck or the ability to consummate the transaction or alter the
currently expected use of proceeds from the transaction.
Inherent in forward-looking statements are risks and
uncertainties beyond our ability to predict or control. Further
information concerning risks, assumptions and uncertainties
associated with these forward- looking statements and our business
can be found in our most recent Annual Information Form filed under
our profile on SEDAR+ (www.sedarplus.ca) and on EDGAR (www.sec.gov)
under cover of Form 40-F, as well as subsequent filings that can
also be found under our profile. We assume no obligation to update
forward-looking statements except as required under securities
laws.
About TeckTeck is a leading Canadian resource
company focused on responsibly providing metals essential to
economic development and the energy transition. Teck has a
portfolio of world-class copper and zinc operations across North
and South America and an industry-leading copper growth pipeline.
We are focused on creating value by advancing responsible growth
and ensuring resilience built on a foundation of stakeholder trust.
Headquartered in Vancouver, Canada, Teck’s shares are listed on the
Toronto Stock Exchange under the symbols TECK.A and TECK.B and the
New York Stock Exchange under the symbol TECK. Learn more about
Teck at www.teck.com or follow @TeckResources.
Investor Contact:Fraser PhillipsSenior Vice
President, Investor Relations & Strategic
Analysis604.699.4621fraser.phillips@teck.com
Media Contact:Dale SteevesDirector, Stakeholder
Relations236.987.7405 dale.steeves@teck.com