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Vancouver, B.C. - Teck Resources Limited announced today that Sumitomo Metal Mining and Sumitomo Corporation have agreed to acquire a 30% indirect interest in Compañia Minera Teck Quebrada Blanca S.A., which owns the Quebrada Blanca Phase 2 project. The Teck board has also approved the QB2 project for full construction, with first production targeted for the second half of 2021.
The consideration payable by SMM and SC consists of:
• US$1.2 billion contribution for a 30% indirect interest in QBSA
• US$50 million to Teck upon QB2 achieving optimized target mill throughput of 154ktpd by December 31, 2025, subject to adjustment
• Contingent contribution of 12% of the incremental NPV of a major expansion project ("QB3") upon approval of construction, subject to adjustment
"QB2 is one of the world's premier undeveloped copper assets and this transaction further confirms the value of the project," said Don Lindsay, President and CEO of Teck. "This partnership significantly derisks Teck's investment in the project, enhances our project economics and preserves our ability to continue to return capital to shareholders and reduce bonds currently outstanding."
The combination of proceeds from the transaction and proposed project financing reduces Teck's share of equity contributions toward the un-escalated US$4.739 billion1 estimated capital cost of the QB2 project to US$693 million2 with Teck's first contributions not required until late 2020. In light of the significant reduction in QB2 funding required from Teck due to the transaction proceeds and Teck's reduced project interest, the Teck Board will consider an additional return of capital to shareholders following closing of the transaction.
"QB2 will be a long life, low-cost operation with major expansion potential, including the option to double production or more, to become a top five global copper producer," said Lindsay. "The copper growth from QB2 will, over time, help to balance our portfolio so that the contribution of our copper business could be similar to our world-class steelmaking coal business."
Added Lindsay: "We are delighted to have Sumitomo Metal Mining and Sumitomo Corporation as partners and we look forward to building on our long and productive history of working together."