Teck Cominco to Reorganise Divisions and Change Name

Teck Cominco, which won final approvals this week for its acquisition of Fording Canadian Coal Trust, said Wednesday it will reorganise its mining business into five units and change its name next year.

However, the company's shares fell hard as base metals prices sold off, and after a Canadian bank downgraded the shares due to concerns about higher costs in its oil sands holdings and Fording's steep $14bn price tag.

The company will become Teck Resources Ltd, following a vote at next year's annual meeting. For branding purposes, the company will be known simply as Teck, it said in a statement.

Its business will be reorganised into separate divisions for copper, metallurgical coal, zinc, gold, and energy.

"The new structure is designed to improve the company's competitiveness by increasing Teck's ability to analyze and act on available opportunities in each commodity segment," the statement said.

The announcement came as Vancouver, British Columbia-based Teck shifts to bigger offices, and puts up a revamped website that was active on Wednesday.

Once known as primarily a zinc producer, Teck has moved to align its revenue more closely with copper and coal through the Fording takeover and last year's acquisition of copper miner Aur Resources.

It has also entered Canada's rich energy sector, mainly through its 20% stake in the Fort Hills oil sands project in Alberta, and envisions drawing billions in revenue from the business one day.

Stick with gold development

The company also signaled it will stay in the gold business, at least as an early stage explorer and developer.

Teck currently owns stakes in two operating mines and several projects, but has said it wants to restructure the assets - including possible sales, off-take agreements, or joint ventures - to unlock value it has said is not reflected in its share price.

Gold companies typically trade at a higher valuation than base metals producers.

Teck spokesman Greg Waller said that plan is still in the works for operating assets, adding that the company would continue to explore for gold and develop assets.

"We think there's great opportunity to create value in gold, and we can do that as an exploration and mining company by exploring for and taking through to various stages of development, and then possibility crystallising that value in the marketplace at the right time," Waller said.

However, Teck's shares dropped 7.6% to C$27.91, among the worst performing Toronto-listed materials shares after BMO Capital Markets cut the stock to "underperform" from "market perform" and hacked its 12-month target price to C$30 from C$45 .

In a note, analyst Tony Robson cited the high price paid for Fording - $9.8bn of which is being borrowed - and costs for the Fort Hills project that have ballooned by 50%, according to estimates released in September.

"Due to the downgrade in value post Fording, BMO recommends that investors look to other diversified resource companies with better relative value and growth opportunities," Robson said.

Weak copper and zinc prices also weighed on base metals miners during the session.

by Cameron French.