Teck Resources TECK has entered into an option and joint venture agreement with Grid Metals Corp. to explore and develop the Mawka nickel project in southeastern Manitoba, Canada.  Per the deal, TECK has the option to acquire up to 70% interest in the project in two stages.

For this, Teck Resources will have to make a total cash payment of CAD$1.6 million ($1.12 million) and fund a total of CAD$15.7 million ($11.02 million) in expenditures. This will be made in different stages by TECK through 2025-2031.

TECK-Grid to Explore Nickel, Copper & Other Metals at Makwa

The focus of the TECK & Grid Metals agreement will be the discovery of a Tier 1 magmatic nickel-copper-PGM-cobalt deposit at Makwa. The agreement is subject to approval by the TSX Venture Exchange.

The Makwa project is one of two copper-nickel-PGM properties owned by Grid Metals. The project boasts excellent infrastructure, including year-round road access, local hydro-electric power and proximity to major rail and trucking routes.

The Makwa project includes two past-producing nickel sulfide mines, three pit-constrained nickel sulfide resources and numerous high-grade nickel and copper-rich magmatic sulfide surface showings.

Details of the Deal Between Teck Resources & Grid Metals

Per Grid Metals’ latest report, the open pit resources at Makwa comprised 14.2 million tons in the indicated category with 0.48% nickel, 0.11% copper, 0.02% cobalt, 0.37 gram per ton of palladium (Pt) and 0.10 gram per Pt. This translates to 0.75% nickel equivalent.

The First Option can be exercised by TECK over four years till May 31, 2028. Teck Resources will have to make a firm commitment of CAD$0.4 million (or minimum cash payment) on or before Jan. 31, 2025. Thereafter it will have to make cash payments of CAD$0.1 million by Jan. 31, 2026, and another CAD$0.1 million by Jan. 31, 2027.  In addition, TECK will incur an aggregate of CAD$5.7 million in exploration expenditures over the 2025-2028 period.

Upon the completion of these payments, the company will own 51% of the Makwa project and Grid Metals the remaining 49%. After this, Teck Resources can exercise the second option to raise its stake by 19% in the project.  This can be made by incurring CAD$10 million in exploration expenditures over a period of three years (ending May 31, 2031). Teck Resources will have to make a payment of $1 million in cash or by the subscription for Grid shares priced at a 25% premium.

TECK Stock’s Price Performance

The company’s shares have gained 6.5% in the past year against the industry’s 15.4% decline.

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TECK’s Zacks Rank & Stocks to Consider

Teck Resources currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, DuPont de Nemours, Inc. DD and Axalta Coating Systems AXTA.

CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.1%. The consensus estimate for the company’s current fiscal-year earnings is pegged at $6.74 per share, indicating a year-over-year rise of 42%. Its shares have surged 167% in the past year. Carpenter Technology currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for DD’s current-year earnings is pegged at $3.88 per share, indicating a year-over-year rise of 11.5%. DD, which currently carries a Zacks Rank #2 (Buy), beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 12.9%. The company's shares have gained 13.9% in the past year.

Axalta Coating Systems has an average trailing four-quarter earnings surprise of 11.86%. The Zacks Consensus Estimate for AXTA’s 2024 earnings is pegged at $2.15 per share. The estimate indicates year-over-year growth of 37%. AXTA’s shares have gained 13.9% in the last year. AXTA currently carries a Zacks Rank of 2.

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