Kinross share sales nets US$101M for Teck

Reuters Published: Wednesday, April 08, 2009

TORONTO -- Teck Cominco said on Wednesday it sold the 5.6 million shares of Kinross Gold that Teck acquired when it sold Kinross its 60% share of the Lobo-Marte gold property in Chile.

Teck, which has been selling assets and cutting costs to pay down debt it took on last year to buy Fording Canadian Coal Trust, will pocket about US$101-million for the shares, bringing its gross proceeds on the sale of Lobo Marte to about US$141-million, it said.

Teck, whose already-surging shares pushed higher on news of the sale, will record a pre-tax gain of US$171-million on sale of Lobo Marte and the shares, of which US$160-million will be recorded in the first quarter, it said.

It said it sold the shares for US$18. Kinross was trading at US$15.20 on the New York Stock Exchange, but was above US$18 late last month.

Teck took on US$9.8-billion in debt to buy Fording, US$5.8-billion of which was a bridge loan that is due in October.

The company had hoped to pay down most of the loan through cash flow and tax savings, but the plunge in copper, coal, and zinc prices has forced Teck to begin a fire sale of assets to get the loan down to a level it can renegotiate.

Teck has said it will sell its gold assets and it is taking bids on a minority stake in its Elk Valley coal business, which it took full control of when it bought Fording. Also on the table is Teck's 20% stake in the Fort Hills oil sands project.

The company's shares were up 8.2% at $8.64 on the Toronto Stock Exchange.

© Thomson Reuters 2009