Teck Resources (TSE:TCK.B) (NYSE:TCK) denied a Bloomberg report late Monday that it has been in talks with Chilean copper miner Antofagasta (LON:ANTO) regarding a possible merger.
"Teck reports that it is not in discussions with Antofagasta in relation to any form of transaction, and there are no other corporate developments that justify any significant movement in its share price," said the company in a brief statement released after market close yesterday.
Shares of the base metals miner moved up sharply after Bloomberg reported the companies had held early stage talks, citing unidentified sources. The stock closed up $1.98 or 11 percent at $19.45 on the Toronto Stock Exchange Monday.
Dundee Capital Markets also released a research note on Teck yesterday, saying the company could make a run at HudBay Minerals (TSE:HBM) (NYSE:HBM), but suggested that buying the Zaldivar mine from Barrick Gold (TSE:ABX) (NYSE:ABX) would be a better option.
Stock market speculation has recently centred around Teck possibly looking to acquire HudBay in an effort to grow its copper/zinc business while lowering Teck’s exposure to metallurgical coal, all the while maintaining Teck’s investment grade status for its debt, Dundee Capital said in its research note to investors on Monday.
While the HudBay acquisition option is attractive and is accretive to earnings and cash flow, “it is less attractive in our view compared to Teck acquiring the Zaldivar mine from Barrick," wrote analyst David Charles.
Although the Zaldivar acquisition option is neutral on earnings accretion and offers a little less commodity diversification, it has significant free cash flow potential while reducing debt/debt+equity metrics, Dundee said.
“Buying Zaldivar would also fit into a Buy>Build approach to growth. This view is key in maintaining Teck’s investment grade status on its debt, which would be the dominant criteria in a transaction.”
Teck is one of Canada's largest mining companies with a diversified portfolio of mines. It has copper operations in Chile, Peru, British Columbia and Newfoundland. The company is also one of the world's largest producers of zinc and a major producer of steel-making coal.