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Friday, 3rd February 2006 (4094 views)

Mining and metals outfit Teck Cominco is considering selling gold assets or spinning them off to form a new business.

The Canada-based company recognises that gold earnings and gold cash flow would receive a better multiple in the share price if they were consolidated in a discrete entity.

Teck chief executive Don Lindsay talked of forming "a standalone entity – either as part of another gold company or part of a public entity managed and controlled by Teck".

Gold prices have reached a 25-year high, and in this climate the company wants to take advantage of the lofty multiples that the precious metal can trade at.

Teck's gold business includes the Alaskan Pogo mine, which is expected to produce around 400,000 ounces of gold annually when it begins full commercial production later this year.

The company reported record net earnings of $510 million in the fourth quarter.

The results "reflected the company's earnings power in a favourable commodity price environment," said Mr. Lindsay.

"The company's balance sheet at year end was the strongest ever with cash balances of $3.1 billion," he added.

 

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