Just weeks after an attempt by one state-run Chinese company to score a stake in Rio Tinto
China's sovereign wealth fund -- China Investment Corporation (CIC) -- will purchase a 17% stake in heavily indebted miner Teck Resources
For Teck, the move goes a long way toward rescuing the company from the ravages of acute debt distress. Combined with the $1.4 billion raised through sales of gold assets and a one-third stake in the Waneta Dam in British Columbia, the miner will now have little trouble meeting the October payment of $1.9 billion. As CEO Don Lindsay points out, the stake also builds strategic ties with "a very deep-pocketed investor who would potentially participate in future development projects."
As long as this equity sale proceeds, I am delighted to finally reaffirm Teck Resources' long-term viability as a major player in global resource mining. In its epic quest for liquidity, the company continues to pursue the sale of a minority stake (about 20%) of coal operations. Frankly, I am surprised at the lack of movement on this front. The merger of Alpha Natural Resources
Given Teck's limited negotiating stance, I suspect that a Foolish bargain remains up for grabs ... not unlike the bargain Arch Coal
Until Teck executes the sale of a coal stake, it's too early to declare the company out of the woods, but with a timely liquidity injection from a promising new partner, Fools can finally scope a clearing ahead.
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Fool contributor Christopher Barker is the commodore of copper and the Colonel Klink of zinc. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Anglo American, Arch Coal, and BHP Billiton. The Motley Fool's disclosure policy will never sell itself to anyone.