Elk Valley Coal is the world’s second largest producer of seaborne hard coking coal. Elk Valley Coal produces primarily high quality hard coking coal from its six operating mines in British Columbia and Alberta, Canada, which it sells to steel mills mainly in Asia and Europe in addition to North and South America. Teck is the managing partner of Elk Valley Coal and owns a 52% effective interest in the partnership through its 40% direct interest in the partnership and its 19.9% interest in Fording units.

The independent Fording Trustees have unanimously approved the transaction and have received an opinion from RBC Capital Markets to the effect that the transaction is fair, from a financial point of view, to Fording unitholders other than Teck and its affiliates. National Bank Financial Inc. has performed an independent valuation of Fording in compliance with National Instrument 61-101.

Teck’s CEO, Don Lindsay said: “This is a very important transaction for Teck, Fording and Elk Valley Coal. Fording unitholders are receiving a significant premium to the Fording unit price during a time when comparable coal companies have declined substantially from their highs. In addition, our detailed knowledge of the assets and the coking coal markets means that the ownership transition and integration will be seamless. For Teck, the transaction is expected to be immediately and strongly accretive to both earnings and cash flow. Based on expectations that the rate of growth in demand for metallurgical coal, especially the high quality coking coal that Elk Valley Coal produces, will continue to outpace relatively constrained growth in supply, we believe that the outlook for this business is strong. We look forward to having Fording unitholders become Teck shareholders and believe they will benefit greatly from ongoing exposure not only to the metallurgical coal business but the outstanding long term value represented by our diversified portfolio of assets.”

Following Teck’s purchase of the Fording assets, Fording will distribute US$82 in cash and 0.245 of a Teck Cominco Class B subordinate voting share per Fording unit to Fording unitholders and their units will be redeemed. On closing, Teck will assume any residual liabilities for Fording. Fording will not pay distributions prior to closing of the transaction. Substantially all of Fording’s value is attributable to its principal asset, a royalty paid by its subsidiary, Fording LP, based on cash received from the Elk Valley Coal Partnership. The balance of Fording’s value is attributable to its direct interest in Fording LP, which holds a 60% interest in the Elk Valley Coal Partnership. The price paid by Teck for the royalty will be treated as a Canadian Development Expense for tax purposes, fully deductible against Teck’s taxable Canadian income using the 30% declining balance method.