Teck Resources receives regulatory approval for steelmaking coal business sale

Teck Resources announced that the sale of its remaining 77% interest in the steelmaking coal business, Elk Valley Resources, or EVR, to 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 $6.9B from the sale of the 77% interest in EVR, excluding closing adjustments. Subject 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: cash return to shareholders. Repurchase of up to $2B of Class B subordinate voting shares. Distribution of approximately $182M through the declaration of an eligible dividend of C$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 to shareholders of record at the close of business on September 13. 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 $2.6B. The company expects to execute a debt reduction program of up to $2B, including the cash tender offer separately announced to purchase $1.25B aggregate principal amount of Teck’s outstanding public notes. 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 $3.3B-$3.6B. Estimated $750M to pay taxes and transaction costs. The share repurchase is to be completed under the normal course issuer bid, or NCIB, subject to market conditions and receipt of applicable regulatory approvals in connection with the renewal of the NCIB in November. Any repurchases following November 21, 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.