Coal rally, cost cuts help Teck Resources swing to profit

Canada's largest diversified miner, Teck Resources (TSX:TCK.B) (NYSE:TCK) logged Thursday better-then-expected quarterly revenue thanks mainly to a sustained rally in coking coal as well as the firm’s cost-cutting measures implemented in the three months to Sept. 30

Teck’s shares have climbed five-fold to a market value of $16.2-billion, the biggest year-to-date gain of any Canadian stock since 2009.

The Vancouver-based company, the best-performing Canadian stock in seven years, swung to a profit of Cdn$234 million ($174.9 million), or 40 cents per share in third quarter of the year, compared with a loss of Cdn$2.15 billion, or C$3.73 per share, in 2015.

The miner, with operations and projects in Canada, the US, Chile and Peru, has risen five-fold on the S&P/TSX Composite Index to a market value of $16.2-billion, the biggest year-to-date gain of any Canadian stock since 2009.

Teck’s bonds are also the best-performing debt on the Bank of America Merrill Lynch U.S. High Yield Index, returning 104%, according to Bloomberg TV.

Key to the company’s success has been the ongoing rally of coking coal prices, as it is the largest producer of the steel-making kind in North America. Only last week, the commodity reached $230 a tonne, up from $75 a tonne just a few months ago.

As a result, Teck has lifted its production forecast for the year. Now it expects to generate about 27-27.5 million tonnes, compared with its previous forecast of 26-27 million tonnes.

Since early 2015 the company has been implementing a series of cost-cutting measures, including placing projects in the back burner and the reduction of about 9% its global workforce, through a combination of layoffs and attrition.

Now that the company’s finances have improved, Teck said it expected unit costs to rise in the fourth quarter as it plans to hire more contractors and use higher-cost equipment to maximize production while the bonanza brought by skyrocketing met coal and zinc prices lasts.

The post Coal rally, cost cuts help Teck Resources swing to profit appeared first on MINING.com.

from MINING.com http://ift.tt/2e0jp1V