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Analyst Blog

As per a media release, Teck Resources Limited’s(TCK - Free Report) wholly owned subsidiary, Teck Australia Pty Ltd (“Teck”), implemented its right of first refusal to acquire the 49% interest held by Rox Resources Limited in the Reward zinc-lead project.

Summary of the Deal

Per the deal, Teck Resources will be paying up to $15.86 million in stock and cash to acquire Rox Resources’ stake in the Reward project, located in the northern region of Australia. However, if Teck decides to pay the full consideration in cash, then the aggregate purchase price will come to $15.09 million.

The deal is subject to customary closing conditions. Post its completion, Teck will hold a 100% interest in the Reward project.

TECK RESOURCES Price

 

Benefits of the Transaction

Given that Teck is the world’s third-largest producer of zinc, the stake purchase will allow the company to focus on its core markets, and create new growth and value opportunities.

The Reward Zinc Project

The Reward project is located in one of the world’s richest zinc-lead regions, which contains approximately 20% of the world’s total zinc reserves.

The project includes the Teena deposit with an Inferred Mineral Resource of 58 million tons grading 12.7% Zn+Pb, (11.1% Zn, 1.6% Pb), and the Myrtle deposit with an Inferred and Indicated Mineral Resource of 44 million tons grading 5.0% Zn+Pb (4.1% Zn, 1.0% Pb).

Zacks Rank & Key Picks

Teck Resources currently sports a Zacks Rank #1 (Strong Buy). Some other equally ranked stocks in the same space include BHP Billiton Limited (BHP - Free Report) , Rio Tinto plc (RIO - Free Report) and Cameco Corporation (CCJ - Free Report) .

BHP Billiton carries a Zacks Rank #1 stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The stock has witnessed an increase of 52.6% and 19.0% in the Zacks Consensus Estimate for earnings for 2016 and 2017, respectively, over the last 60 days.

RIOTinto, another Zacks Rank #1 stock, has witnessed an increase of 2.3% and 7.8% in the Zacks Consensus Estimate for earnings for 2016 and 2017, respectively, over the last seven days.

Cameco carries a Zacks Rank #2. The company has witnessed an increase of 13.6% and 6.8% in the Zacks Consensus Estimate for earnings for 2016 and 2017, respectively, over the last seven days.

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