There's nothing like a near-death experience to make you appreciate life's bounty.
After seeing its corporate life flash before its eyes in a maelstrom of excessive debt and crashing commodity prices, Teck Resources
Furthering a triumphant return, Teck earned $564 million in the third quarter, surpassing the prior-year result by nearly 13% on a per-share basis. Although the $9.8 billion in debt incurred to consolidate ownership of the Elk Valley coal project nearly dealt a fatal blow to Teck, noteworthy strength in global metallurgical coal demand has brought prices roaring back to life in a way that relieves the strain of Teck's remaining burden. While prices remain well below their 2008 highs, the increased volumes associated with Teck's full ownership of Elk Valley helped to feed a 24% increase in consolidated revenue.
Also contributing to the relative windfall was a spate of positive pricing adjustments to copper and zinc sales booked earlier in the year.
As coal giant Peabody Energy
This demand environment is great news for Teck, since Elk Valley, located in British Columbia, is positioned far more favorably than Appalachia as a trade route to China. In its third-quarter release, Teck stressed the importance of railroad rate agreements secured with competing haulers Canadian National Railway
Thanks to a timely $1.5 billion investment by China's sovereign wealth fund, Teck Resources finally seems to have that debt burden under some control. In addition to the $3.7 billion in debt that the company has managed to repay since the Elk Valley consolidation, a further $1.3 billion in debt relief has resulted from the U.S. dollar's dubious retreat. Still, considering that there's substantial debt of approximately $8 billion remaining on Teck's books, Fools are reminded not to throw caution to the wind.
Over at CAPS, 1,200 members have rated four-star pick Teck Resources Limited an outperform. Whether you think Teck will sink or swim, please come and share your thoughts and counsel with our community of talented investors. CAPS is free and fun!