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

DBRS has today assigned a provisional rating of BBB with a Stable trend to the senior unsecured notes (the New Senior Unsecured Notes) to be issued by Teck Resources Limited (Teck or the Company) and to be guaranteed (the Guarantee) by Teck’s wholly owned subsidiary Teck Metals Ltd. (Teck Metals or the Guarantor). The New Senior Unsecured Notes will be unsecured senior obligations of Teck and will rank equally with its other senior unsecured obligations. The Guarantee will be an unsecured senior obligation of Teck Metals, ranking equally with its other senior unsecured obligations. Teck intends to use the net proceeds of the New Senior Unsecured Notes, along with cash on hand, to fund the redemption or repayment of various outstanding indebtedness, with any remainder to be used for general corporate purposes.

DBRS views this transaction as a normal financing transaction intended to lower the interest rate of the Company’s outstanding debt obligations, to manage the maturity profile of Teck’s debt and to extend the average term of financing in place. Teck’s cost to effect the transaction is expected to have only a minor negative 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 prospectus 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 include: a 100% interest in Teck’s Trail, a smelting and refining complex in British Columbia; 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, ranking equally with all of Teck’s other unsecured senior obligations and those of Teck Metals, respectively. 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, respectively, and in each case to the extent of the assets securing such indebtedness and other liabilities.

The provisional rating is based on Teck’s indenture dated August 17, 2010, and related supplementary indentures, the Company’s debt prospectus dated July 6, 2012, and the draft Preliminary Prospectus Supplement dated July 30, 2012, to its prospectus dated July 6, 2012, as well as Teck’s public security document filings, including its Q2 2012 report, 2011 Annual Information Form, and its 2011 annual report, along with other information provided by Teck to DBRS as of July 30, 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.