Teck receives regulatory approval to sell coal-to-steel business

The proceeds will be used to reduce debt, finance copper production growth and return cash to shareholders.

Vancouver, British Columbia Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) (“Teck”) today announced that the sale of its remaining 77% stake in its steel mining company, Elk Valley Resources (“EVR”), to Glencore plc (“Glencore”) has received all necessary regulatory approvals.

The transaction is expected to close on July 11. Teck expects to receive total proceeds of approximately $6.9 billion (C$9.5 billion)1 from the sale of its 77% stake in EVR, excluding closing adjustments.

“We are pleased to achieve the complete separation of our metals and steel businesses to position Teck for its next phase of growth and responsible value creation,” said Sheila Murray, Chairwoman of the Board. “We are confident that our management team is executing the right strategy to maximize long-term value for shareholders and all stakeholders.”

“This transaction marks a new era for Teck as a company fully focused on delivering the metals that are essential to global growth and the energy transition,” said Jonathan Price, president and CEO. “As we move forward as a pure-play transformation metals company, we will grow our core portfolio of strong, cash-generating assets through the development of our near-term copper growth projects. The completion of this transaction will provide significant funding for our projects, giving Teck a path to increase copper production by another 30% as early as 2028.”

“This transaction will enable us to reduce debt and retain a significant amount of cash to fund our near-term growth in the metals business and maintain a resilient balance sheet, and will provide a significant cash return to our shareholders,” Price said.

Use of Proceeds Transaction
Subject to the closing of the transaction and in accordance with the Teck Capital Allocation Framework, Teck intends to use the proceeds from the sale of the coal business for steel production as follows:

1. Cash back to shareholders
   • Repurchase of up to $2.0 billion (C$2.75 billion) of Class B preferred voting shares.
   • Distribution of approximately $182 million (C$250 million) through the declaration of a qualified pidend of C$0.50 to be declared by the Board of Directors of Teck on both Class A common shares and Class B subordinate shares. The additional pidend is expected to be paid on September 27, 2024, to shareholders of record as of the close of business on September 13, 2024. This one-time additional pidend is in addition to the regular quarterly pidend of $0.125 per share, for an expected total qualified pidend payment of $0.625 per share.
   • The total announced cash return to shareholders from the sale of 100% of EVR shares was $2.6 billion (C$3.5 billion). ​
2. Debt reduction
   • Implementation of a $2.0 billion (C$2.75 billion) debt reduction program, including a separate tender offer announced today for the purchase of Teck’s outstanding public bonds in the aggregate principal amount of $1.25 billion.
3. Well-Funded, Value-Adding Growth for Copper
   • ​​ The 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 sanctions decisions expected in 2025. The current estimated capital cost to Teck for these projects is $3.3 billion to $3.6 billion (C$4.5 billion to C$4.9 billion)
4. Taxes and transaction costs
   • Taxes and transaction costs are estimated to amount to $750 million (C$1 billion).

Creating Value: Realizing Copper Growth
The completion of the sale of EVR positions Teck as a leading producer of metals for the energy transition, ready to leverage the value of its unmatched copper growth portfolio.

Teck operates a portfolio of high-quality, long-lived producing assets in stable and well-understood jurisdictions across the Americas. With the ramp-up of QB in 2024, Teck expects to double copper production to approximately 600,000 tonnes per year.

In parallel, Teck is applying a rigorous investment framework to its near-term copper pipeline, including QB debottlenecking, Highland Valley Copper Mine Life Extension, Zafranal Project and San Nicolas Project. These are relatively low-complexity projects with competitive capital intensities and are located in well-established mining jurisdictions with commitments as early as 2025. Longer term, Teck will pursue a number of significant brownfield and greenfield development options, including the Galore Creek Project in British Columbia and the potential expansion of Trail Operations to include an electric vehicle battery recycling facility.

This group of projects provides shareholders with the opportunity to continuously generate value, with significant long-term growth potential enabled by a stable balance sheet and disciplined capital allocation.

Share buyback details
The share repurchases are expected to be completed pursuant to the issuer’s standard offering offer (the “NCIB”), subject to market conditions and the receipt of applicable regulatory approvals in connection with the renewal of the NCIB in November 2024. Any repurchases after November 21, 2024 are subject to regulatory approval of the renewed NCIB. The Company will determine the timing of any purchases and may repurchase a greater or lesser number of shares, subject to market conditions, the requirements of the issuer’s offering program and applicable securities laws.

Advisors
Barclays Capital Canada Inc., Ardea Partners LP, TD Securities Inc. and CIBC World Markets Inc. served as financial advisors to Teck. Stikeman Elliott LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisors, and Felesky Flynn LLP served as legal tax advisor.

BMO Capital Markets, Goldman Sachs & Co. LLC and Origin Merchant Partners served as financial advisors to the Special Committee, and Blake, Cassels & Graydon LLP and Sullivan & Cromwell LLP served as legal advisors to the Special Committee.

Forward-looking statements
This press release contains certain forward-looking information and forward-looking statements as defined in applicable securities laws (collectively referred to as forward-looking statements). These statements relate to future events or our future results. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “continue,” “estimate,” “expect,” “may,” “will,” “potential” and similar expressions is intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These statements speak only as of the date of this press release.

Forward-looking statements include, but are not limited to, statements regarding the expected closing of the transaction, the timing of the closing; Teck’s business and assets and its strategy for the future, including with respect to future and ongoing project development; the expected use of proceeds, including the timing and format of any cash returns to stockholders; the anticipated benefits of the transaction; our ability to satisfy the closing conditions; and other statements that are not historical facts.

Although we believe that the forward-looking statements contained in this press release are based on current, reasonable and complete information and assumptions, by their nature they are subject to a number of factors that could cause actual results to differ materially from management’s expectations and plans set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond our control and whose effects may be difficult to predict: the possibility that the transaction will not close on the expected date or at all due to the occurrence of an event, change or other circumstance that could give one or both parties the right to terminate the transaction; the possibility that the anticipated benefits of the transaction will not be realized within the expected timeframe or at all as a result of changes in general economic and market conditions, including credit, market, currency, operational, commodity, liquidity and financing risks generally and those related to the transaction specifically; laws and regulations and their enforcement; the possibility that Teck’s business may not perform as expected or in a manner consistent with historical results; reputational risk and the reaction of Teck’s customers, suppliers and employees to the transaction; the possibility that the transaction may be more expensive than anticipated, including as a result of unexpected factors or events; material adverse changes in economic and industry conditions; general competitive, economic, political and market conditions; and other risks inherent in our business and/or factors beyond Teck’s control that could have a material adverse effect on Teck or its ability to consummate the transaction or change the currently expected use of the proceeds from the transaction.

Forward-looking statements involve risks and uncertainties that are beyond our ability to predict or control. Further information regarding the risks, assumptions and uncertainties associated with these forward-looking statements and our business can be found in our most recent Annual Information Form filed on our profile on SEDAR+ (www.sedarplus.ca) and on EDGAR (www.sec.gov) on Form 40-F, and in subsequent filings that can also be found on our profile. We assume no obligation to update forward-looking statements, except as required by securities laws.

About Teck
Teck is a leading Canadian resources company committed to responsibly supplying the metals essential to economic growth and the energy transition. Teck has a portfolio of world-class copper and zinc operations in North and South America and an industry-leading copper growth pipeline. We focus on creating value by promoting responsible growth and delivering resilience built on a foundation of stakeholder trust. Headquartered in Vancouver, Canada, Teck shares are traded on the Toronto Stock Exchange under the symbols TECK.A and TECK.B and on the New York Stock Exchange under the symbol TECK. Learn more about Teck at www.teck.com or follow @ResourcesTeck.

Contact for investors:
Fraser Phillips
Senior Vice President, Investor Relations and Strategic Analysis
604.699.4621
[email protected]

Contact with the media:
Dale Steeves
Stakeholder Relations Director
236.987.7405
[email protected]

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