Friday, July 03, 2009

China and Commodities: Teck Sells 17% Stake to China Fund for C$1.74 Billion TCK, CZX.v, CDNX, TSX, FXI,

M&A is the name of the game: some people have a lot of money and others a lot of debt. First big money flow into big companies and then our Juniors will get their part: industry insiders know very well where resources are - follow the money, Smart one as usual.

Chinese are selling US Treasuries, establishing bilateral trading agreements based on Yuan and buying commodities. Next Industrial Revolution will demand a lot of new infrastructure to be build and decoupling will be the name of the game: West is full of Debts and East is full of ideas and desire to move forward. Two Trillion budget deficit in USA and Two Trillion in reserves in China are making any move amplified in geometrical progression. Arguably the best value is still to be found in Junior mining sector and Chinese companies are finding its way in this tiny markets as well, they know very well about resources games and ready to play them.
Tec Resources involved in a district where Canada Zinc Metals CZX.v has its Akie deposit:
"What is the district play: please refer to the company website and map above. Canada Zinc Metals's Akie holds 23.6 million tons of high grade Zinc, nearby J/V between TEC and Korea Zinc holds another 50 million tons. District play can mean 100 million tons with further discoveries and deals among these three players and now CZX.v has a strong backing strategic partner with deep pockets."

We are following Junior Miners and one of our Top Picks 2009 Canada Zinc Metals CZX.v just recently closed financing with Tongling Nonferrous Metals Group Holdings Co. Ltd., giving the Chinese company 13% as an initial stake in the company:

"Now we have some hints why Chinese Tongling is buying into Canada Zinc Metals CZX.v at market premium of 52% to its current market price of 0.28CAD. For us it is Junior Investment Cycle all over again. We have a chance to buy the second time into this story with help of Mr Market. Company today announced closing of its financing with Chinese Giant Tongling after receiving of all necessary approvals on both sides. Chinese are getting 13% in the company and CEO is talking about them as Strategic Investor. Chinese are talking about district play - confirming our ideas. Everything is very significant in this Deal to our decoupling theory and Chinese recovery: price they are ready to pay for the Non controlling stake in the company, Lukas Lundin still involved in the company with his stake, time of closing when Zinc is taking off from "End of The World" level."

July 3 (Bloomberg) -- Teck Resources Ltd., Canada's largest diversified mining company, sold a 17 percent stake to China's $200 billion fund sovereign wealth fund for C$1.74 billion ($1.5 billion) to reduce debt.
China Investment Corp., also known as CIC, will buy 101.3 million Class B subordinate voting shares for C$17.21 each, Vancouver-based Teck Resources said today in a statement. Teck said the deal will give CIC a 6.7 percent voting interest.
Teck has sold assets to reduce debt after adding $9.8 billion of loans last year to buy Fording Canadian Coal Trust, a producer of coal used in steelmaking. Teck last year sold more than half of its coking coal production to Japan and Korea and recently started selling to China, the world's largest steelmaker.
``For CIC, it represents the opportunity to participate in the inevitable upswing in commodities, and for Teck, CIC represents a long-term, patient investor that can also provide assistance in its largest market,'' Scotia Capital, a unit of Bank of Nova Scotia, said in an e-mailed statement. The transaction is CIC's ``first major investment'' in a Canadian company.
Teck rose C$2.51, or 14 percent, to C$21.01 at 12:46 p.m. in Toronto Stock Exchange trading. A close at that price would be the biggest daily gain since April 21. The shares have more than tripled this year.
Scotia Capital advised CIC on the transaction.
Coal Demand
Teck is betting that a ``strategic partnership'' with China may help the company win a larger share of the country's coking coal imports, which may rise to more than 20 million tons this year from 3.2 million tons last year, Chief Executive Officer Donald Lindsay said in a telephone interview.
``That's going to grow significantly in the coming years because they're building very large blast furnaces on their coast,'' Lindsay said. ``This could help us with our metallurgical coal sales in the long term.''
China is seeking access to raw materials for metals production, such as iron ore and coal. Wuhan Iron & Steel Group offered $400 million for part of Brazil iron-ore miner MMX Mineracao e Metalicos SA last month. Rio Tinto Group last month scrapped a $19.5 billion investment plan from its biggest shareholder Aluminum Corp. of China.
Teck said May 27 it was in talks to sell coking coal assets to Chinese companies to help it reduce debt and sold $4.2 billion of bonds on May 5 to refinance short-term obligations.
Teck in April said it sold about 5.6 million shares of Kinross Gold Corp. for proceeds of about $101 million and agreed to sell its stake in the gold production from Cia. Minera Carmen de Andacollo to raise about $270 million.
To contact the reporters on this story: Mark Herlihy in London at Rob Delaney in Toronto at;
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