DBRS Releases Report on Teck Resources Limited

DBRS Limited (DBRS) has today released a report on Teck Resources Limited (Teck or the Company) that provides support to the recent change in trends to Negative from Stable and the confirmation of the Company’s Issuer Rating and Senior Unsecured Notes rating at BBB.

The Negative trends reflect the intersection of deteriorating operating cash flow, primarily due to sharply reduced coal and copper prices and Teck’s high level of capital expenditures, including a significant commitment to the Fort Hills oil sands project, which have led to a weakening of its credit metrics that may well continue into 2015/2016. Teck’s BBB rating reflects the Company’s solid business profile as one of the world’s leading producers of internationally traded steelmaking (metallurgical or coking) coal, a significant copper producer and the world’s third-largest zinc producer.

Teck’s currently weak credit metrics reflect the cyclical nature of its key products. However, in the event that coal and copper prices remain weak and credit metrics deteriorate further, or if the Company’s liquidity is strained, its ratings could be downgraded. Still, the trend could revert to Stable should there be a significant recovery of coking coal, copper and, to a lesser extent, zinc prices that result in one or more of the following: (1) restoration of sustained positive net free cash flow, (2) ongoing maintenance of a prudent level of debt in the Company’s capital structure, and (3) restoration of coverage metrics to levels more commensurate with a BBB rating level.

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Today’s report and the November 28, 2014, press release are available at www.dbrs.com or by contacting us at info@dbrs.com.