What follows is an excerpt from Canaccord Genuity’s Morning Coffee newsletter.
Teck Resources Ltd. (
TSX: T.TCK.A,
Stock Forum) (
TSK: T.TCK.B,
Stock Forum) (
NYSE: TCK,
Stock Forum) announced that the TSX has accepted the company’s intention to make a normal course issuer bid (NCIB) to purchase up to 20 million Class B shares during a period from June 28, 2013, to June 27, 2014.
That represents 3.53% of the company’s outstanding Class B shares. The NCIB follows on the heels of hard coking coal benchmark pricing for Q3/13 being set between BHP Billiton Mitsubishi Alliance and Nippon Steel yesterday.
The new coking coal price came in at $145 per tonne, which was down 16% quarter over quarter.
A Bay Street analyst commented that Teck, in his view, still deserves to trade at a premium to many of its peers, due to the strong annualized dividend yield of 4%; steady and diversified near-term production profile and robust cost structure; and the fact that most of its intrinsic value is attributed to producing assets in generally mining friendly jurisdictions.
The analyst also commented that the lack of near-term met coal demand growth visibility that is overhanging the market is underpinned by slower global steel demand growth, while sizeable met coal supply growth potential continues to be sitting on the sidelines, particularly in Australia, where producers are working to regain market share and are enjoying a 12% softening of the AUD YTD.
On Thursday Teck’s Class B common shares rose 2.2% to $22.24, leaving the company with a market cap of $12.6 billion, based on 567.8 million shares outstanding. The 52-week range is $38.13 and $21.22.