Don Lindsay, CEO of Teck ResourcesLAURA LEYSHON/The Globe and Mail
Canada's largest base metals miner Teck Resources Ltd. is keeping an eye out for possible acquisitions but expects considerable growth from its current properties, chief executive officer Don Lindsay said Friday.
"So far the acquisitions just haven't been appealing for us to make a move," Mr. Lindsay told analysts, a day after Teck reported that its adjusted quarterly profit was $663-million, beating expectations.
"We know that at the end of five years we will have substantially more copper production per share, substantially more coal production per share, we'll have oilsands in production and that looks like a pretty good base strategy."
"Acquisitions need to be measured against that."
During the 2006 to 2008 period of consolidation in the global mining industry, Teck Resources made several acquisitions. When credit became hard to get following the collapse or near failure of several major U.S. financial firms, Teck was forced to sell assets to reduce its debt load to a manageable level.
Higher prices for steelmaking coal and copper helped Teck Resources post a big increase in second-quarter profits.
Reporting after markets closed on Thursday, the Vancouver-based miner said earnings attributable to shareholders were $756-million, or $1.28 per share, compared with $283-million or 48 cents per share in the same 2010 quarter.
Adjusted quarterly profit was $663-million, or $1.12 per share, compared with $347-million, or 59 cents per share, in the second quarter of 2010.
Revenue in the three months ended June 30 was $2.8-billion, up from $2.2-billion.
Teck was expected to earn $1.02 per share in adjusted earnings on $2.68-billion of revenues in the second quarter, according to analysts surveyed by Thomson Reuters.
"The very strong quarter is a reflection of the strong fundamentals of our business, particularly the higher prices for both coal and copper," Mr. Lindsay said during the conference call.
BMO Capital Markets analyst Meredith Bandy said Teck's profit and earnings per share were well above expectations.
"Relative to BMO Research's estimates, Teck beat on higher-than-expected margins for coking coal, better copper price realizations and lower corporate costs," Bandy said in a research note.
Capital expenditures are now at $1.4-billion, down from the company's previous guidance of $1.5-billion, she noted.
"Teck remains a diversified way to play coal (with copper), maintaining an 'outperform' rating and $60 target," Ms. Bandy said of Teck's potential share price.
Teck had earlier reduced its coal production guidance for the second quarter and said unit mining costs would be greater as a result of higher labour and other expenses. It said coal sales should be at the low end of its previously announced guidance range of 5.5 million to six million tonnes.
The company also said it was reducing production guidance as a result of the March 11 earthquake and tsunami in Japan. Some customers had deferred shipments due to reduced steel production requirements, it said.
Teck is a diversified resource company involved in copper, coal, zinc and energy. It has mines in Canada, the U.S., Chile and Peru.
The company also holds a 20 per cent stake in the undeveloped Fort Hills oilsands project north of Fort McMurray, Alta.