Teck Resources (TSX:TECK.B) and First Quantum Minerals (TSX:FM) are two of the biggest names in Canadian mining, both listed on the TSX and heavily involved in copper production. While these stocks share similarities, the approaches, financial health, and future prospects differ significantly. For investors eyeing the mining sector, the question remains: which one looks like the better buy today?
Teck stock
Teck Resources has been making strategic moves to focus on copper, a metal increasingly critical for the global energy transition. In 2024, the mining stock sold its steelmaking coal business for US$9 billion, freeing up capital to invest in its copper projects. This shift appears to be paying off. In its latest earnings report, Teck posted adjusted earnings per share of $0.45 for the fourth quarter of 2024, a significant jump from $0.04 the year before. Revenue reached $2.79 billion, reflecting strong copper production and favourable pricing. The mining stock’s quarterly revenue growth of 51.2% year over year highlights the strength of its repositioning strategy.
The future looks even brighter for Teck as it ramps up its copper production. The Quebrada Blanca Phase 2 project in Chile is a cornerstone of this growth. Once fully operational, it could push Teck’s annual copper production to between 490,000 and 565,000 tonnes by the end of 2025. The mining stock is also advancing other projects, including the Zafranal copper-gold project in Peru and the San Nicolás project in Mexico. Both projects are slated for sanction decisions in the latter half of 2025 and, if approved, could further cement Teck’s leadership in copper production.
Financially, Teck appears stable and well-positioned. The mining stock’s balance sheet shows $7.59 billion in cash and a manageable debt load of $9.96 billion, resulting in a debt-to-equity ratio of 36.78%. With a current ratio of 2.88, Teck has ample liquidity to fund its growth projects without compromising financial health. The mining stock also pays a modest dividend, yielding 0.86% annually, with a conservative payout ratio of 17.18%, suggesting room for future increases as earnings grow.
First Quantum
First Quantum Minerals, on the other hand, has faced more challenges. The mining stock hit a major roadblock when it suspended operations at its flagship Cobre Panamá mine in early 2024. Despite this setback, First Quantum demonstrated resilience in its fourth-quarter results. The mining stock reported a gross profit of $405 million and net earnings attributable to shareholders of $99 million, or $0.12 per share. While that represents a slight dip from the previous quarter, it’s impressive considering the operational hurdles the company faced.
Looking ahead, First Quantum is banking on its Kansanshi S3 Expansion project in Zambia. This is now 62% complete and on track for a mid-2025 finish. Once operational, it will significantly boost the mining stock’s copper production and cash flow. The company is also exploring partnerships to support its Zambian assets, a move that could further stabilize its operations. However, First Quantum’s higher debt load remains a concern. With a total debt of $7.78 billion and a debt-to-equity ratio of 65.37%, the company has less financial flexibility compared to Teck.
Foolish takeaway
Dividend investors might lean toward Teck. The company offers a stable payout, while First Quantum currently pays no dividend. Given the challenges at Cobre Panamá and the ongoing need for capital investment, First Quantum is unlikely to reinstate its dividend anytime soon. Furthermore, choosing between the two ultimately depends on an investor’s risk tolerance and outlook for the copper market. Teck offers stability, strong cash flow, and a clear growth path, making it a solid choice for conservative investors. First Quantum, while riskier due to its operational challenges and higher debt, offers significant upside if it can successfully complete its expansion projects and secure long-term partnerships.
For those seeking a lower-risk play with steady growth and dividends, Teck seems like the better bet. Investors willing to take on more risk for potentially higher returns might find First Quantum appealing, especially if copper prices continue to rise. Both mining stocks remain key players in the copper space, yet Teck’s strategic focus and financial stability give it a slight edge in the current market environment.
