* Upgrades shares to “buy” from “neutral” * Raises price target to C$9 from C$5 (In U.S. dollars, unless noted)
TORONTO, March 25 (Reuters) - UBS Investment Research upgraded shares of Teck Cominco TCKb.TO and boosted its 12-month price target on the company on Wednesday, helping drive its shares up sharply for the third-straight day.
Teck, Canada’s largest base metal miners, was up 10.2 percent at mid-morning, helped by signs that 2009 coal prices may be stronger than previously thought and by metal prices — particularly copper — that have gained recently on optimism for an economic recovery.
Teck shares were up 69 Canadian cents at C$7.47 on the Toronto Stock Exchange. The stock has doubled in value in the past three weeks.
UBS upgraded the shares to “buy” from “neutral” and boosted its target to C$9 from C$5, based on expectations that 2009 hard coking coal prices will be $129 a tonne, down from around $300 a tonne last year, but ahead of previous UBS expectations of $85 a tonne.
Teck is trying to pay down and refinance a $5.8 billion bridge loan taken on last year to pay for Fording Canadian Coal Trust, which the miner agreed to buy last summer when coal prices were near their peak.
Stronger coal prices will both boost Teck’s ability to use cash to pay down the debt and make it easier for the firm to sell off a minority stake in its coal assets to raise funds.
Teck has been fielding offers from several companies for a stake in the coal assets. It has also sold some of its gold assets and has said it is in discussions to sell the rest. It could also part with its stake in the Fort Hills oil sands project.
“Even with the higher hard coking coal forecast, we believe that Teck will be challenged to meet its debt obligation without changes to operations, asset sales and/or other financing,” UBS analyst Brian MacArthur said in a note.
Copper prices have climbed about 15 percent so far in March, while zinc is up about 12 percent. Teck produces both metals.
$1=$1.22 Canadian Reporting by Cameron French; editing by Rob Wilson