DBRS Assigns Provisional BBB Rating with Stable Trend to New Debt Issue of Teck Resources

DBRS has today assigned a provisional rating of BBB with Stable trend to the senior unsecured notes (the New Senior Unsecured Notes) to be issued by Teck Resources Limited (Teck or the Company) and will be guaranteed (the Guarantee) by Teck’s wholly-owned subsidiary Teck Metals Ltd. (Teck Metals or the Guarantor) and will rank pari passu with Teck's other senior unsecured debt. Teck intends to use the net proceeds, together with cash on hand, to fund the redemption of all of the approximately $530 million aggregate principal amount of its outstanding 9.75% senior notes due 2014 and a portion of the approximately $1,043 million aggregate principal amount of its outstanding 10.75% senior notes due 2019. DBRS views this transaction as a normal financing transaction intended to lower the interest rate of the Company’s outstanding debt obligations, manage the maturity profile of Teck’s debt and extend the average term of financing in place. Teck’s cost to effect the transaction is expected to have only a minor impact on the Company’s credit metrics.

The New Senior Unsecured Notes are being offered via an underwritten public offering in the United States pursuant to an effective shelf registration statement on Form F-9 filed with the U.S. Securities and Exchange Commission (SEC) and in Canada on a private placement basis.

The payment of principal, interest and premium, if any, on the New Senior Unsecured Notes will be fully and unconditionally guaranteed on an unsecured, senior basis by the Guarantor. Under certain conditions outlined in the supplemental prospectuses of the New Senior Unsecured Notes, the Guarantee will be terminated upon Teck’s request (without the consent of the trustee). Teck Metals’ principal assets are its 100% interest in Teck’s Trail, British Columbia, smelting and refining complex; a 59.4% indirect interest in Teck Coal Partnership; an 83.6% direct and indirect interest in the Highland Valley copper mine in British Columbia; and, indirectly, the Company’s interest in the Red Dog zinc mine in Alaska.

The New Senior Unsecured Notes and the Guarantee will be unsecured senior obligations and will rank equally with all of Teck’s other unsecured senior obligations and those of Teck Metals. The New Senior Unsecured Notes will be effectively subordinated to all indebtedness and other liabilities of Teck’s subsidiaries (other than Teck Metals, for so long as the Guarantee remains in effect), and the New Senior Unsecured Notes and the Guarantee will effectively be subordinated to all secured indebtedness and other secured liabilities of Teck and Teck Metals, in each case to the extent of the assets securing such indebtedness and other liabilities.

The New Senior Unsecured Notes will be redeemable in whole or in part, at the Company’s option, at any time and at specified prices. Upon a change of control (as defined), Teck will be required to make an offer to repurchase the New Senior Unsecured Notes at a price equal to 101% of their principal amount plus accrued and unpaid interest.

The provisional rating is based on Teck’s indenture dated May 8, 2009, and the Company’s draft Preliminary Prospectus Supplement, dated February 16, 2012, to its prospectus dated June 7, 2010, as well as Teck’s public security document filings, including its Q4 2011 report, 2010 Annual Information Form and its 2010 annual report, and other information provided by Teck to DBRS as of February 16, 2012. The assignment of final ratings is subject to receipt by DBRS of final documentation that is consistent with that which DBRS has already reviewed.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Mining Industry, which can be found on our website under Methodologies.