Mr. Jonathan Price reports

TECK ANNOUNCES FULL SALE OF STEELMAKING COAL BUSINESS

Teck Resources Ltd. has agreed to sell its entire interest in its steelmaking coal business, Elk Valley Resources (EVR), through a sale of a majority stake to Glencore PLC for an implied enterprise value of $9-billion (U.S.) and a sale of a minority stake to Nippon Steel Corp. (NSC).

Highlights:

• Sale of majority stake to Glencore at implied enterprise value of $9-billion (U.S.) on a 100-per-cent basis;
• Minority sale to Nippon Steel;
• Proceeds will be used to strengthen Teck's balance sheet, return cash to shareholders and ensure Teck is well positioned to realize value from its copper growth portfolio;
• Teck to retain all steelmaking coal cash flows until expected closing in third quarter of 2024;
• Glencore to establish Canadian head office for the steelmaking coal business in Vancouver, maintain jobs and, increase investment in the business and local communities.

"This transaction will be a catalyst to refocus Teck as a Canadian-based critical minerals champion with an extensive portfolio of copper growth projects, unlocking the full value potential of the company," said Jonathan Price, president and chief executive officer of Teck. "This sale will ensure Teck is well capitalized and able to realize value from our base metals business and deliver strong returns to our shareholders while maintaining a robust balance sheet. Glencore has made strong commitments that will create new benefits for Canada and the Elk Valley and ensure responsible stewardship of the steelmaking coal operations for the long term."

"The board undertook a comprehensive process to identify a separation transaction that is in the best interests of the company," said Sheila Murray, chair of the board of Teck. "This transaction unlocks significant value for Teck and its shareholders while also supporting continued responsible operation of the steelmaking coal assets for the long term."

"This sale sets the stage for Teck for continued growth as a major Canadian-based producer of copper and other future-oriented metals while preserving the jobs and operations of the coal mines in the Elk Valley," said Dr. Norman B. Keevil, chairman emeritus of Teck. "This company was built on a foundation of sound geoscience and engineering excellence, with a record of successful mine-building second to none. That is the same foundation we see for Teck's future. It's time to get on with it."

Transaction overview

The sale of Teck's steelmaking coal business at the implied enterprise value of $9-billion (U.S.) on a 100-per-cent basis achieves a simple and complete separation of steelmaking coal from base metals.

Glencore has agreed to acquire 77 per cent of EVR for $6.9-billion (U.S.) in cash, payable to Teck at closing of the Glencore transaction, subject to customary closing adjustments.

NSC has agreed to acquire a 20-per-cent interest in EVR in exchange for its current 2.5-per-cent interest in the Elkview operations plus $1.3-billion (U.S.) in cash, payable to Teck at closing of the NSC transaction, and $400-million paid out of cash flows from EVR. NSC will also enter into a long-term steelmaking coal offtake rights arrangement at market terms, continuing NSC's long-standing commercial arrangement for the purchase of steelmaking coal from the Elk Valley. POSCO has advised Teck it intends to exchange its current 2.5-per-cent interest in the Elkview operations and its 20-per-cent interest in the Greenhills joint venture for a 3-per-cent interest in EVR. At closing of the Glencore transaction, Glencore will acquire from Teck any remaining receivable payable to Teck by EVR.

Teck will continue to operate the steelmaking coal business and will retain all cash flows from EVR until closing of the Glencore transaction, estimated to be $1-billion (U.S.). Following the closing of that transaction, Teck will have no further financial interest in EVR.

Closing of the Glencore transaction is subject to customary conditions, including receipt of approvals under the Investment Canada Act and competition approvals in several jurisdictions, and is expected to occur in the third quarter of 2024. The NSC transaction is also subject to customary conditions, including receipt of certain competition approvals, and is expected to close in the first quarter of 2024. These transactions are not interconditional.

Use of proceeds

Proceeds from these transactions will help ensure Teck is well capitalized to maintain investment-grade credit metrics and to unlock the full potential of its base metal business. Uses of proceeds are expected to include improving Teck's net leverage through debt reduction, the retention of additional cash on the balance sheet and the payment of transaction-related taxes, which are estimated to be approximately $750-million (U.S.). Teck's board will determine the appropriate amount and form of a significant cash return to shareholders following closing of these transactions.

Teck remains committed to its current capital allocation framework that balances returns to shareholders with growth in copper while maintaining a strong balance sheet.

Benefits to Canada

These transactions support Teck's growth as a Canadian-based, global critical mineral champion while ensuring continued socially and environmentally responsible steelmaking coal operations and enhanced benefits for Canada, British Columbia, and the employees, communities and indigenous peoples of the Elk Valley.

As a pure play base metal company, Teck expects to drive new economic opportunities and job creation as it increases production across the base metal portfolio, including the HVC2040 project to extend the life of Highland Valley, Canada's largest copper mine, and the Galore Creek project in British Columbia. Teck is also evaluating an expansion of Trail operations to include an electric vehicle battery recycling facility. Teck will continue to support junior Canadian mining and exploration companies, invest in research and innovation related to mining and processing, and help advance the Canadian critical mineral strategy, along with Canada's decarbonization and nature conservation goals.

To support enhanced benefits to the Elk Valley, British Columbia and Canada, Glencore has made commitments that will ensure, among other things, that:

• EVR will continue to operate in Canada through both a Vancouver head office and regional offices in Calgary, Alta., and Sparwood, B.C., including completing the construction of a new Sparwood office.
• EVR will maintain significant employment levels in Canada with no net reduction in the number of employees in the business in Canada as a result of the transaction.
• EVR will increase capital expenditures in Canada such that they will amount to over $2-billion (excluding deferred stripping) over three years.
• EVR will increase research and development activities in Canada to at least $150-million over three years, including on innovation in relation to water quality treatment technologies -- a 50-per-cent increase over current levels.
• EVR will increase its contributions to Canadian sponsorship, community and charitable programs.
• EVR will participate as a major financing partner up to $15-million for the proposed renal/oncology addition to the East Kootenay Regional Hospital in Cranbrook.
• EVR will have a goal to become a nature-positive business by conserving or rehabilitating at least three hectares for every one hectare affected by its mining activities going forward.
• EVR will develop and implement a climate transition strategy, which will include medium-term Scope 1 and Scope 2 emission reduction targets, a long-term goal of net zero in respect of Scope 1 and Scope 2 emissions by 2050, as well as a commitment to work with partners toward an ambition to achieve net-zero Scope 3 emissions by 2050.
• EVR will honour the existing agreements between EVR and indigenous nations and will work with local indigenous nations to identify opportunities to increase participation in benefits from the activities of EVR.

Advisers

Barclays Capital Canada Inc., Ardea Partners LP, TD Securities Inc. and CIBC World Markets Inc. are serving as financial advisers to Teck. Stikeman Elliott LLP and Paul Weiss Rifkind Wharton & Garrison LLP are acting as legal advisers and Felesky Flynn LLP is acting as legal tax adviser.

BMO Capital Markets, Goldman Sachs & Co. LLC and Origin Merchant Partners are serving as financial advisers to the special committee and Blake Cassels & Graydon LLP and Sullivan & Cromwell LLP are acting as legal advisers to the special committee. The special committee received opinions from each of BMO Capital Markets and Origin Merchant Partners to the effect that, as of the date of each such opinion and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by Teck pursuant to the transactions is fair, from a financial point of view, to Teck.

Investor conference call and information date:   Tuesday, Nov. 14, 2023

Time:   5 a.m. to 5:40 a.m. PT/8 a.m. to 8:40 a.m. ET

Dial-in information for investor and analyst question-and-answer session

The dial-in numbers are 416-915-3239 or 1-800-319-4610 for a live operator; and please quote Teck Resources to join the call.

An archive of the webcast will be available on Teck's website within 24 hours.

Additional information, including the accompanying presentation, will be available on Teck's website.

About Teck Resources Ltd.

As one of Canada's leading mining companies, Teck is committed to responsible mining and mineral development with major business units focused on copper, zinc, and steelmaking coal. Copper, zinc and high-quality steelmaking coal are required for the transition to a low-carbon world. Headquartered in Vancouver, Canada, Teck's shares are listed on the Toronto Stock Exchange under the symbols TECK.A and TECK.B and on the New York Stock Exchange under the symbol TECK.

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