Teck Resources Ltd (NYSE:TECK) shares are trading higher today as the company disclosed the sale of its full stake in the steelmaking coal business, Elk Valley Resources (EVR), for $9.0 billion yesterday.
The Canadian miner is selling the coal business’ 77% stake to Glencore PLC (OTC:GLNCY) for $6.9 billion in cash.
Related: Glencore’s Strategic Play: A Proposal to Acquire Teck Resources’ Steelmaking Coal Business
Also, Nippon Steel Corp (OTC:NISTF) has agreed to acquire a 20% interest in EVR in exchange for its current 2.5% interest in Elkview Operations plus $1.3 billion in cash payable at closing and $0.4 billion paid out of cash flows from EVR.
Teck will continue to operate the steelmaking coal business and retain all cash flows of around $1 billion from EVR till the closure of the Glencore transaction.
The Glencore transaction is expected to close in Q3 FY24, and the NSC deal is projected to close in Q1 FY24, subject to customary closing conditions.
Jonathan Price, TECK’s President and CEO, said, “This transaction will be a catalyst to re-focus Teck as a Canadian-based critical minerals champion with an extensive portfolio of copper growth projects, unlocking the full value potential of the company. This sale will ensure Teck is well-capitalized and able to realize value from our base metals business and deliver strong returns to our shareholders while maintaining a robust balance sheet.”
As of October 23, 2023, TECK’s liquidity stood at $7.0 billion, including $1.5 billion of cash.
Price Action: TECK shares are up 1.04% at $36.83 on the last check Tuesday.
Photo Via Company
