Teck Resources Goes From Dud to Darling as Coal Makes a Comeback – by Danielle Bochove (Bloomberg News – May 3, 2016)


Shares of Teck Resources Ltd. have almost tripled this year, making the Canadian company the best-performing global miner amid the rebound in commodity prices and a projected fivefold improvement in earnings.

The price of Teck’s three main products have surged, with metallurgical coal leading and zinc a close second. Until recently, copper had lagged the pack but gains last week have narrowed the gap. Last year, 37 percent of the Vancouver-based miner’s revenue came from met coal, which is used to make steel, 34 percent from zinc and 29 percent from copper.

The renewed vigor of the three commodities has led to a surge in positive sentiment toward the company from analysts and investors. Analysts covering Teck boosted their estimates for the company’s second-quarter results by more than fivefold on average this year, data compiled by Bloomberg show, the biggest increase in the 98-company Bloomberg World Mining Index.

Analysts were encouraged further last week by the release of Teck’s first-quarter earnings. The company reported adjusted profit of 3 cents a share, beating the average of 19 estimates for a loss of 3 cents.

Zinc was a key driver, contributing 58 percent to Teck’s gross profit, Joseph Gallucci, an analyst at Dundee Capital Markets, said in a research note. “The reality is that there is no large cap pure zinc play in the market, but Teck is as close as you can get.”

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