Teck takes out Aur

On July 3, Teck Cominco and Aur Resources announced that Teck Cominco will make a C$4.1 billion cash and share offer to acquire all of the outstanding shares of Aur Resources. Teck Cominco President and CEO, Donald R. Lindsay, said: “The acquisition of Aur Resources will immediately increase our cash flow and add substantially to our long term growth in copper production. We are pleased to re-establish our operating presence in Chile and believe that this transaction will create significant value for Teck Cominco shareholders.”

The acquisition of Aur will enhance Teck Cominco’s copper production and reserves. Annual copper production will grow immediately by over 91,000 t – an approximate 43% increase and by 2010 it is expected to have increased by some 155,000 t, or 72% over 2007 pre-transaction level. Copper reserves and resources will increase by around 6.8 Mt or 136%, of which 3.63 Mt are in reserves.

Dr. Norman B. Keevil, Teck Cominco’s Chairman, said: “This transaction is consistent with Teck’s continuing strategy of balance in building the company. It will add both current copper production and new copper operations under development, and the increase in our copper interests will help to balance our existing strength in zinc and coal”

Teck Cominco and Aur have entered into a support agreement which provides for, among other things, a non-solicitation covenant on the part of Aur, subject to customary “fiduciary out” provisions that entitle Aur to consider and accept a superior proposal, a right in favour of Teck Cominco to match any superior proposal and the payment to Teck Cominco of a termination payment of C$140 million if the acquisition is not completed as a result of the superior proposal.

The Board of Directors of Aur, after consultation with its financial and legal advisors, has unanimously approved entering into the support agreement and recommends that Aur shareholders tender to Teck Cominco’s offer. CIBC World Markets, acting as financial advisor to Aur, has provided an opinion that such offer is fair, from a financial point of view, to Aur shareholders. Aur’s legal advisors are Heenan Blaikie LLP.

Full details of the offer will be included in a formal offer and takeover bid circular to be mailed to Aur shareholders in accordance with applicable securities laws. Teck Cominco expects to mail the takeover bid documents to Aur shareholders on or before July 18. The offer will be open for acceptance for at least 35 days following the date of the mailing. The offer will be subject to the usual conditions including receipt of all necessary regulatory approvals, absence of material adverse changes and acceptance of the offer by Aur shareholders owning not less than 66 2/3% of the Aur shares on a fully diluted basis. Once the 66 2/3% acceptance level is met, Teck Cominco intends to take steps to acquire all the outstanding Aur shares. Teck Cominco intends to promptly make the necessary regulatory filings in respect of the offer with the appropriate authorities. Teck Cominco expects the offer to receive regulatory approval in the normal course. Teck Cominco’s financial advisors are Merrill Lynch Canada. Its legal advisors are Lang Michener LLP in Canada and Paul, Weiss, Rifkind, Wharton & Garrison LLP in the USA.