TORONTO (miningweekly.com) – Vancouver-based Teck Cominco may consider selling an interest in its coal assets to a key customer or consortium of buyers, president and CEO Don Lindsay said on Tuesday.

Teck took on $9,8-billion in debt last year to help pay for its acquisition of Fording Canadian Coal Trust, and has indicated that asset sales will likely play a central role in raising the cash needed to refinance and repay the loans.

The company is in advanced talks to sell its remaining gold assets, and will consider “all options” as far as financing is concerned, Lindsay said.

However, he added, in no uncertain terms, that an equity issue was not part of the plan.

“Let me make this clear, we do not want to do an equity issue...at this stage there is no equity issue planned,” Lindsay said on a conference call.

The group has already suspended dividend payments, curtailed zinc and coal production, and slashed capital spending plans. Last month, Teck announced it will eliminate 1 000 employee and 400 contractor positions over the course of this year, to cut costs further.

With regard to the coal assets, there had been internal agreement from early in the Fording acquisition process that the group did not need to own 100% of the assets.

Key customers, including those from China, Japan, Brazil, South Korea and India, are “naturally” on the list of potential buyers, he said.

“It makes an awful lot of sense to take on one of these strategic partners.”

Commenting on the recent announcement by Rio Tinto that it would sell a stake in itself and some assets to China's Chinalco, Lindsay said that it represented “a fascinating transaction”.

Rio has a similar problem to Teck, after it saddled itself with about $39-billion in debt when it bought Canadian aluminium group Alcan in 2007.

Lindsay said that Teck's situation was not comparable to Rio Tinto's, but added that the concept of a strategic partner that is also a customer “might be appealing”.

“I think it is an interesting model,” he commented.

LOAN REFINANCING

Teck has begun negotiations with its lenders on refinancing what remains of the $5,8-billion bridging loan that it took on as part of the Fording acquisition, and has had “constructive” discussions so far, Lindsay said.

The bridging loan matures in October, but he declined to predict how long the talks might take, or what they could hinge on.

“It's complex and it takes time,” Lindsay said, when pressed by analysts for more details.

By the end of the fourth quarter, the group had repaid $460-million of the bridging facility, said CFO Ron Millos.

The remaining $4-billion of the Fording acquisition debt was in the form of a three year amortising term loan facility repayable in 11 equal quarterly instalments starting in April this year.

ASSET SALES

Meanwhile, the company has received indicative offers for its gold assets, and is in advanced negotiations with potential purchasers.

Last year, Teck agreed to sell its 60% share of the Lobo Marte gold prospect, in Chile, to Kinross gold, for $40-million in cash and $70-million in Kinross common shares.

The firm's remaining gold assets include a 40% interest in Sumitomo's Pogo mine, in Alaska, and a 50% interest in the Hemlo operations, in north-western Ontario, which it owns with Barrick Gold.

It also owns a 78,8% stake in the Morelos gold project, in Mexico, in which fellow Canadian Goldcorp holds the balance, and has some exploration interests in Turkey.

Shares in Teck, which posted a C$607-million loss for the fourth quarter after writedowns and price revisions, fell 10,8% on Tuesday, to C$4,39 apiece by 12:47 in Toronto.

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