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Teck to spin off steelmaking coal business to shareholders

Kitco News

(Kitco News) - Teck Resources (TSX: TECK.A and TECK.B, NYSE: TECK) announced today the reorganization of its business to separate Teck into two independent, publicly-listed companies: Teck Metals Corp. and Elk Valley Resources Ltd. ("EVR").

The company said that the separation is structured as a spin-off of Teck's steelmaking coal business by way of a distribution of EVR common shares to Teck shareholders.

Teck noted that as part of the separation, the company will change its name to Teck Metals Corp. and continue to be listed on the Toronto and New York stock exchanges, adding that EVR has applied to have its common shares listed on the TSX.

The company said that the separation will create two world-class resource companies and "provide investors with choice for allocating investment between two businesses with different commodity fundamentals and value propositions."

According to a press release, Teck Metals will be growth-oriented, with premier, low-cost base metals production, a top-tier copper development portfolio and a disciplined capital returns policy.

"EVR will be a high-margin Canadian steelmaking coal producer, focused on long-term cash generation and providing cash returns to shareholders, with significant equity value accretion potential. Both companies will remain committed to strong environmental and social performance," it added.

"This transformative transaction creates two strong, sustainable, world-class mining companies committed to responsibly providing essential resources the world needs," said CEO Jonathan Price. "Both Teck Metals and EVR have high-quality operating assets and strong financial foundations, with talented and dedicated employees, committed to ensuring safe and responsible operations."

"The transaction simplifies the portfolio of each company, allowing for strategic and financial focus and the ability to pursue tailored capital allocation strategies. It provides investors with choice in response to the evolving investment landscape, and establishes a pathway to full financial separation of the two companies over time," he added.

Importantly, the company said that Teck Metals will retain a substantial interest in steelmaking coal cash flows through a transition period in the form of an 87.5% interest in a gross revenue royalty and preferred shares of EVR.

Teck also noted it has reached agreement with its steelmaking coal joint venture partners and major customers, Nippon Steel Corporation ("NSC") and POSCO, to exchange their minority interests in the Elkview and Greenhills operations for interests in EVR.

"As a result, EVR will own 100% of its steelmaking coal operations. NSC's exchange of its Elkview interest and its $1.025 billion cash investment will give it a 10% interest in EVR common shares and the transition capital structure. POSCO will receive a 2.5% interest in EVR common shares and the transition capital structure," the company said.

Teck says achieved a number of financial performance records in 2022, posts adjusted profit of C$4.9B

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