$TECK Resources

[Andrew Stepner]

From Einhorn/Greenlight, I just got long Teck Resources.

Full Sohn Conference pitch deck is here from 2021: https://www.greenlightcapital.com/d/?T6B6ZL

They like them for their new copper mine. "At around 5x expected earnings – with the new mine coming online and a possible split-off – we believe this is an exciting opportunity"

Albeit copper is down to $3.85 from $4.50 when they pitched it.

And here are the notes I have:

2. 8/1/22 Q2 2022 Greenlight Letter
1. "Finally, Teck Resources (TECK). The shares ended the quarter at $30.57. This is about 85% of book value and less than 4x consensus earnings. The company recently began buying back its shares. When the CEO was asked on the April 27th quarterly call what the plans were for playing his “really strong hand of cards here,” he responded with, “I’d like to buy the whole company back myself.”"
2. https://seekingalpha.com/article/4531683-greenlight-capital-q2-2022-letter
3. 4/19/22 Q1 2022 Greenlight Letter
1. "The largest winners were Rheinmetall (Germany: RHM), Teck Resources (TECK) and CONSOL Energy (CEIX). …The war dramatically changed the outlook for European defense spending, which caused RHM to surge from €83.06 to €190.20 during the quarter. TECK (up 42%) and CEIX (up 66%) both advanced following surges in metallurgical and thermal coal prices, respectively"
2. [~5th largest holding]
3. https://d2gr5kl7dt2z3t.cloudfront.net/blog/wp-content/uploads/2022/04/22073147/Greenlight_2_watermark_2-1.pdf
4. 1/26/22 Q4 2021 Greenlight Letter
1. "Teck Resources (TECK)… Our primary investment thesis revolves around TECK’s copper assets, including a new mine that is scheduled to begin production in the second half of 2022. However, TECK’s bigger current business is mining metallurgical coal. Met coal prices started climbing in the middle of 2021 and really took off later in the year. The result is that 2021 EPS expectations, which began the year at $1.67, rose to $3.49 at the end of September and sat at $4.50 at year end. Next year’s estimate is now $5.52, which we believe is likely to be exceeded by a good amount. Further, it appears that TECK’s management is evaluating the possibility of splitting the met coal business from the “green metals” business, which would likely unlock substantial shareholder value as certain investors are sensitive to exposure to coal. At around 5x expected earnings – with the new

mine coming online and a possible split-off – we believe this is an exciting opportunity heading into 2022.

2. https://seekingalpha.com/article/4483208-greenlight-capital-q4-2021-letter
3. https://drive.google.com/file/d/1Nb2a7A-4S588IJtN5UVTb2Q_urhCnaNX/view

5. 10/20/21 Greenlight Letter Q3 21:
1. [~5th largest holding]
2. https://static.seekingalpha.com/uploads/sa_presentations/230/75230/original.pdf
6. 7/26/21 Greenlight letter:
1. Copper (and other basic materials)
   
2. The last boom in mining ended badly in 2009. The result is that mining companies have been loath to develop new mines over the last decade. The current development pipeline of new copper mines is down 60% from what it was in 2008. While a few mines are set to come online in 2022 and 2023, by mid-decade, supply is expected to start shrinking. It takes about 8 to 10 years to develop a copper mine.
3. Meanwhile, the electrification of the automobile industry and expansion of green energy will create substantial new demand for copper. Prices are up some already, but it is difficult to see why they won’t be much higher a few years from now.
4. We own Teck Resources (TECK), which is one of the few copper miners that are poised to expand to take advantage of this dynamic as it has a new mine coming on-line in 2022.
5. TECK trades at 7x this year’s consensus earnings estimates that obviously don’t include contribution from the pending new mine. We presented this thesis more fully at this year’s Sohn Conference. (3 -  You can see the full presentation here: https://www.greenlightcapital.com/d/?T6B6ZL
7. [No mention for a while]
8. 8/4/20 Greenlight letter:
1. "We added a new medium-sized long in Teck Resources (TECK), which should

benefit from base metal price increases"

2. https://valuewalkpremium.com/wp-content/uploads/2020/08/Qlet2020-02-1.pdf

Stepner