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Teck (TECK) Produces First Copper at QB2, Rejects Glencore Offer
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Teck Resources Ltd (TECK - Free Report) announced that its Quebrada Blanca Phase 2 Project ("QB2") produced its first bulk copper concentrate. Also, in another separate development, TECK has rejected an unsolicited takeover offer from Glencore plc (GLNCY - Free Report) . These back-to-back announcements led to a 19.6% rise in its share price on Apr 4.
Glencore proposed to acquire TECK and then split into two businesses, exposing Teck shareholders to thermal coal and oil trading. However, TECK’s board of directors unanimously rejected the proposal. Glencore’s offer was for an all-share acquisition of Teck, offering 7.78 Glencore shares for each Teck Class B subordinate voting share and 12.73 Glencore shares for each Teck Class A common share. Glencore’s plan after acquiring Teck was to create two businesses, which would expose Teck shareholders to thermal coal and oil trading.
Even though the offer represented a 20% premium to TECK, its board confirmed that it is not contemplating a sale of the company at this time and the offer carries a high degree of execution and timing risk.
Update on QB2
The first copper concentrate production is a milestone advancement of the QB2 project toward full production in 2023. Since 2012, Teck has been interacting with the regional communities in the QB2 project area and working together to bring tangible benefits for the duration of the project.
Teck owns an indirect 60% stake in Compaa Minera Teck Quebrada Blanca SA ("QBSA"), the owner of QB2. Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation (SSUMY - Free Report) own an indirect 30% stake in QBSA.
QB2 uses modern sustainability practices, such as the first significant use of desalinated seawater for mining in Chile's Tarapacá Region. Moreover, an agreement is in place for QB2 to use AES Andes as its sole source of renewable energy starting in 2025.
QB2 is one of the world's largest undeveloped copper resources, with an initial mine life of 27 years, utilizing only about 18% of the 2022 reserves and resource tonnage. The project has the potential for future expansion.
When fully operational, QB2 will nearly double Teck's consolidated copper production. The company expects this operation to produce 285,000-315,000 tons of copper annually in 2024-2026.
Teck’s 2023 copper production guidance remains unchanged. Copper production is anticipated to be 390,000-445,000 tons for 2023. In the fourth quarter of 2022, the Copper segment’s net sales declined 18.5% year over year to CAD$753 ($554 million) million. The segment’s gross profit was CAD$248 million ($182 million) in the reported quarter, down 44% from the year-ago quarter on lower average realized copper price and lower sales volumes.
Price Performance
Image Source: Zacks Investment Research
The company’s shares have gained 6.6% in the past year against the industry’s 26.1% decline.
Zacks Rank & Another Stock to Consider
Teck Resources currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Olympic Steel’s fiscal 2023 earnings per share is pegged at $3.50. Earnings estimates have moved 61% north in the past 60 days. ZEUS has a trailing four-quarter earnings surprise of 26.2%, on average. Its shares have gained 43.8% in the past year.
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Teck (TECK) Produces First Copper at QB2, Rejects Glencore Offer
Teck Resources Ltd (TECK - Free Report) announced that its Quebrada Blanca Phase 2 Project ("QB2") produced its first bulk copper concentrate. Also, in another separate development, TECK has rejected an unsolicited takeover offer from Glencore plc (GLNCY - Free Report) . These back-to-back announcements led to a 19.6% rise in its share price on Apr 4.
Glencore proposed to acquire TECK and then split into two businesses, exposing Teck shareholders to thermal coal and oil trading. However, TECK’s board of directors unanimously rejected the proposal. Glencore’s offer was for an all-share acquisition of Teck, offering 7.78 Glencore shares for each Teck Class B subordinate voting share and 12.73 Glencore shares for each Teck Class A common share. Glencore’s plan after acquiring Teck was to create two businesses, which would expose Teck shareholders to thermal coal and oil trading.
Even though the offer represented a 20% premium to TECK, its board confirmed that it is not contemplating a sale of the company at this time and the offer carries a high degree of execution and timing risk.
Update on QB2
The first copper concentrate production is a milestone advancement of the QB2 project toward full production in 2023. Since 2012, Teck has been interacting with the regional communities in the QB2 project area and working together to bring tangible benefits for the duration of the project.
Teck owns an indirect 60% stake in Compaa Minera Teck Quebrada Blanca SA ("QBSA"), the owner of QB2. Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation (SSUMY - Free Report) own an indirect 30% stake in QBSA.
QB2 uses modern sustainability practices, such as the first significant use of desalinated seawater for mining in Chile's Tarapacá Region. Moreover, an agreement is in place for QB2 to use AES Andes as its sole source of renewable energy starting in 2025.
QB2 is one of the world's largest undeveloped copper resources, with an initial mine life of 27 years, utilizing only about 18% of the 2022 reserves and resource tonnage. The project has the potential for future expansion.
When fully operational, QB2 will nearly double Teck's consolidated copper production. The company expects this operation to produce 285,000-315,000 tons of copper annually in 2024-2026.
Teck’s 2023 copper production guidance remains unchanged. Copper production is anticipated to be 390,000-445,000 tons for 2023. In the fourth quarter of 2022, the Copper segment’s net sales declined 18.5% year over year to CAD$753 ($554 million) million. The segment’s gross profit was CAD$248 million ($182 million) in the reported quarter, down 44% from the year-ago quarter on lower average realized copper price and lower sales volumes.
Price Performance
Image Source: Zacks Investment Research
The company’s shares have gained 6.6% in the past year against the industry’s 26.1% decline.
Zacks Rank & Another Stock to Consider
Teck Resources currently carries a Zacks Rank #3 (Hold).
One better-ranked stock in the basic materials space is Olympic Steel (ZEUS - Free Report) . ZEUS currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Olympic Steel’s fiscal 2023 earnings per share is pegged at $3.50. Earnings estimates have moved 61% north in the past 60 days. ZEUS has a trailing four-quarter earnings surprise of 26.2%, on average. Its shares have gained 43.8% in the past year.