Metal companies have always found British Columbia more lucrative than exotic locations that we often associate such companies with. Blessed with vast amounts of copper, zinc and coal, the Pacific state has seen dramatic investments in mining and energy sectors. Companies that are active in British Columbia are likely to see immense growth in revenue and profits in the coming years. British Colombia based Teck Resources (TCK) plans to spend $685 million at two of its metal operations in BC. The company will spend $210 million on an electronic waste recycling facility at Trail, British Columbia, and $475 million to modernize its 40-year old Highland Valley copper mine.
Teck's decision to spend more than half a billion on facilities located in British Colombia speaks a ton about the promises the region has for investors. While many mining companies find it difficult and exorbitantly expensive to treat chemical and electronic wastes, they often refuse to invest money in state of the art facilities, which can prove to be profitable and environmentally friendly in the long run. It is no secret that mining companies often face huge fines that are slapped on them, often running into several millions, when surrounding land, water or air is polluted or contaminated.
An investment of $210 will save Teck from future fines and lawsuits with regard to waste disposal and waste treatment methods. Secondly, the plan to modernize its 40-year old Highland Valley copper mill is a very wise decision. Copper is one of the most stable metals in the market and in spite of market fluctuations, the metal will continue to be in demand. The mine's life is expected to extend after modernization. These two steps alone can help Teck to compete with other mining and metal companies operating in British Colombia, which too have been very busy lately.
Chieftain Metals (OTC:CFTMF), whose Tulsequah Resources is known for its zinc, copper, lead, gold and silver deposits, is entering into a collaboration with China CAMC Engineering. CAMCE will now hold 30% of stake at the facility in northwestern British Columbia. Chieftain will continue to own the remaining 70%. The contract will entail engineering, procurement and construction responsibilities that will be jointly shared between Chieftain and CAMCE. CAMCE has a huge business in China, and being one of the growing economies in the world, Chinese companies like CAMCE are often seen as a great asset to work with. Predictably, the collaboration involves CAMCE helping Chieftain to procure senior long-term debts. In fact, 70% of the funds required for Chieftain's Tulsequah project will now come from Chinese financial institutions. In the long run, Chieftain may be able to better handle its facilities and take care of its financial condition thanks to the new collaboration.
Goldcorp (GG), based in Vancouver, British Columbia, announced that it would make cash dividend payments of $0.045 per share on December 21. Those who purchased Goldcorp shares before the ex-dividend date of December 11, 2012, will be eligible to receive payments. Goldcorp's current stock price is $37, with a dividend yield of 1.47%. The company's 5 mines in Canada, have been hugely successful and it has continued to mine elsewhere in the world, most notably in Chile, South America. The company is also one of the fastest-growing and lowest-cost senior gold producers, according to its own statement on its website. What sets Goldcorp apart from other mining companies is that it holds a major portion of its business in Canada, which is one of the most stable countries in the world to do business. Secondly, Goldcorp chooses countries that are stable and investment-friendly, like Chile, when doing business abroad.
Imperial Metals (OTCPK:IPMLF) expanded its Mount Polley open-pit copper-gold mine in 2012 and developed its Red Chris copper-gold facility, both located in British Columbia. The company also spent $4.35 million on exploration and diamond drilling at Mount Polley. The company's copper and gold estimates for 2012 have been significantly higher than 2010 and 2012 estimates. The optimism is mainly because of favorable business conditions in British Columbia. Thompson Creek Metals (TC) closed a $350 million financing, which bore an interest of 9.75% due in 2017. The company's Mount Milligan project in British Columbia is expected to be complete in 2013. This can help the company to stabilize further in terms of returns. Though there have been fluctuations in the company's market prices, it is doing reasonably well when it comes to its own mines in Canada.
Teck currently trades at $35 and has a market cap of $20 billion. With an enterprise value of $24 billion, Teck is one of the most valuable companies based in British Columbia. With huge investments being made right at home, Teck is obviously looking to stabilize its operations and safeguard itself against any lawsuits coming from environmental organizations. Teck has a price-to-sales ratio of 1.91 and a price-to-book ratio of 1.13. It certainly can do much better than what it is doing right now, and this is why the company decided to spend more than a billion in investments across British Columbia.
However, Teck's profit margin of 12.31% and an operating margin of 30% are very impressive, and investors can safely purchase its shares, if they are looking for long-term gains. The company's revenue is currently $11 billion and its total cash is $4 billion. With a total debt of almost $8 billion, the company may have to assure its investors how it is going to clear its liabilities. Teck also has an operating cash flow of $3 billion and a levered free cash flow of almost a billion. While I wouldn't say Teck is financially in an enviable position, its decision to invest $685 million in British Columbia is certainly a wise one, which will reflect positively in the market.