VANCOUVER – Teck Resources (NYSE:) Limited (TSX:TECK.A and TECK.B, NYSE:TECK) announced its intention to repurchase up to 40 million Class B subordinate voting shares, initiating a normal course issuer bid starting November 22, 2024, and concluding a year later on November 21, 2025. This share buyback program, approved by the Toronto Stock Exchange, could potentially target approximately 7.9% of the outstanding Class B shares or 8.0% of the public float as of November 8, 2024.
The mining giant, headquartered in Vancouver, British Columbia, will conduct the repurchases through the Toronto Stock Exchange, the New York Stock Exchange, and other eligible alternative trading systems in Canada and the United States, as well as through private agreements or block purchases in line with regulatory allowances. The company has stated that purchases will be made at market prices or at a discount through private agreements where permitted.
Teck Resources has set a daily purchase limit on the Toronto Stock Exchange to 25% of the average daily trading volume for the six months ending October 31, 2024, which equates to 296,920 Class B Shares. However, the company may also engage in repurchases under an automatic securities repurchase plan during blackout periods.
The decision to undertake this buyback reflects Teck’s belief that the market price of its Class B Shares may not always correspond to their underlying value, and that the repurchase program could enhance shareholder value by reducing the number of shares outstanding at favorable prices. All shares acquired through this program will be cancelled.
During the previous buyback cycle, which will end on November 21, 2024, Teck has already repurchased 18,062,775 Class B Shares at an average price of $62.75.
Teck Resources is a prominent Canadian resource company engaged in providing essential metals for economic development and the energy transition, with operations throughout North and South America and a strong pipeline for growth.
This share repurchase announcement is based on a press release statement from Teck Resources Limited.
In other recent news, Teck Resources has undergone a strategic shift towards energy transition metals, as revealed in its Third Quarter 2024 Earnings Call. The company posted a record shareholder return of $720 million for Q3 and reduced its debt by US$1.5 billion. Record copper production and the completion of the QB2 project were also highlighted, with plans to increase copper production by year-end. Adjusted EBITDA more than doubled year-over-year, driven by robust copper and zinc prices.
UBS has recently downgraded Teck Resources’ stock from Buy to Neutral, reflecting the company’s operational challenges and lack of visible progress on near-term growth projects. Despite this, UBS noted that Teck Resources’ ongoing share buy-back program could help limit the stock’s downside.
The company, now a pure play energy transition metals firm after selling its steelmaking coal interests, has a net cash position of US$1.8 billion and plans for continued share buybacks at approximately $400 million per quarter into Q4 and 2025. It has narrowed its 2024 copper production guidance to 420,000–455,000 tonnes and is progressing near-term copper projects for potential sanctioning in 2025. However, lower expected high-grade ore production has led to reduced copper production guidance, and increased unit costs are anticipated for 2025.
InvestingPro Insights
Teck Resources’ recent announcement of a share buyback program aligns with the company’s ongoing strategy to enhance shareholder value. According to InvestingPro data, Teck’s market capitalization stands at $23.83 billion USD, reflecting its significant presence in the mining sector.
The company’s financial health appears robust, with an InvestingPro Tip noting that “Liquid assets exceed short term obligations.” This strong liquidity position likely supports Teck’s confidence in initiating the share repurchase program. Additionally, the tip that “Management has been aggressively buying back shares” further underscores the company’s commitment to this strategy.
Teck’s revenue growth is particularly noteworthy, with InvestingPro data showing a substantial 114.29% increase in the last twelve months as of Q3 2024. This impressive growth may be contributing to the company’s ability to return value to shareholders through buybacks while maintaining operational investments.
The InvestingPro Tip highlighting that Teck “Has maintained dividend payments for 15 consecutive years” demonstrates the company’s long-term commitment to shareholder returns. With a current dividend yield of 1.61%, Teck offers a combination of income and potential capital appreciation through its buyback program.
Investors seeking a deeper understanding of Teck Resources’ financial position and growth prospects can access additional insights through InvestingPro, which offers 10 more tips for this stock.
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