Post says analyst doubts Teck can maintain its dividend
Teck Resources Ltd (C:TCK)
Shares Issued 566,785,249
Last Close TCK.B 1/15/2015 $13.56
Friday January 16 2015 - In the News
The Financial Post reports in its Friday edition it was only a month ago that Teck Resources said it was "committed" to paying its $510-million dividend. The Post's Peter Koven, writing in Trading Desk, says, however, given the subsequent drop in copper prices to a low of $2.51 (U.S) a pound, Deutsche Bank analyst Jorge Beristain thinks Teck's balance sheet looks exposed. If prices remain at the current levels, Mr. Beristain said both Teck and Freeport-McMoRan are likely to slash dividends and capital spending. That still will not be enough to offset low prices, meaning equity raises could be the "next possible step" for each of these miners. "We find significant balance sheet risk emerging should spot copper prices hold," Mr. Beristain said in a note. He also thinks their investment-grade credit ratings would be at risk as well. Freeport has plenty of room to cut spending on the oil and gas side. Mr. Beristain figures Teck has less flexibility, having committed to spend about $700-million (U.S) a year on the Fort Hills oil-sands project over the next three years. Project operator Suncor recently cut its capital spending budget by $1-billion, but said it still plans to move full speed ahead at Fort Hills.
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