10:28 AM EDT, 07/08/2024 (MT Newswires) -- Teck Resources (TECK-B.TO) keeps its Outperform rating and $92 price target after securing regulatory approval for the sale of its coal business, RBC Capital Markets said in a Friday note.

"We expect a positive reaction from Teck shares to the approval of the coal sale which came earlier than the guided September timing, while the use of proceeds is in line with management commentary," the bank added.

Under the terms, Teck will receive the final US$6.9B payment from Glencore on July 11 while launching a US$2 billion share buyback and declaring a US$182 million special dividend.

RBC added that Teck plans to use the proceeds to reduce debt by US$2.0 billion and fund copper growth projects.

The bank noted Teck also announced Q2 coal sales of 6.4Mt which is at the high end of their 6.0-6.4Mt guidance and above RBC's estimate of 6.2Mt, while realized pricing of $237/t compares to its estimate of $232/t.

"We view the share buyback as a positive catalyst for the shares and together with the ramp-up at QB and other copper growth projects supports our positive thesis for Teck," RBC said.

On copper growth, RBC said a successful ramp-up of the QB mine in Chile can double Teck's copper production to roughly 600kt by 2025. Other near-term copper projects include: the mine life extension at Highland Valley in BC, Zafranal in Peru, San Nicolas in Mexico, and QB de-bottlenecking. Teck noted the first sanctioning decision could come in 2025 and the current capital estimate for these projects is U$3.3-3.6B.

Teck's Class B Subordinate Voting Shares were down 1.7% at last look to $67.49 on the TSX. The Class A shares were down less.