NYSE: TC TSX: TCM, TCM.WT Frankfurt: A6R
TORONTO, May 8 /PRNewswire-FirstCall/ -
Overview (all in U.S. dollars):
- Molybdenum production recovered strongly to 5.6 million pounds in the
first quarter of 2008 from 3.4 million pounds in the fourth quarter
of 2007 as operations at both the Thompson Creek Mine and the Endako
Mine performed well. First-quarter production was also up from
5.4 million pounds in the first quarter of 2007.
- Average realized price on molybdenum sales was $32.69 per pound in
the first quarter, up from $31.08 per pound in the fourth quarter and
$24.87 per pound in the first quarter of 2007.
- Revenues were $254.8 million in the first quarter, compared with
$197.8 million in the fourth quarter and $267.9 million in the first
quarter of 2007.
- Net income in the first quarter was $46.8 million or $0.41 per basic
and $0.37 per diluted common share, compared with $28.9 million or
$0.25 per basic and $0.22 per diluted share in the fourth quarter and
$47.7 million or $0.46 per basic and $0.43 per diluted share in the
first quarter of 2007.
- Long-term debt incurred for the acquisition of Thompson Creek USA in
October 2006 was reduced by $16.7 million during the first quarter
and by $182.5 million since the acquisition. At March 31, 2008, the
principal outstanding on the First Lien Credit Facility was
$219.4 million and cash balances totaled $47.5 million.
- Since the acquisition of Thompson Creek USA, the Company has used
$343 million of cash to reduce acquisition debt and make payments to
the previous owner, including a contingent purchase price payment of
$100 million in January 2008.
- Outlook for molybdenum prices remains positive and the Company
continues to expect that molybdenum production from its existing
mines to increase from 16.3 million pounds in 2007 to between 23 and
24.5 million pounds in 2008 and in excess of 34 million pounds in
2009.
- The weighted-average cash operating expense related to sales recorded
in the quarter was $10.54 per pound in the first quarter of 2008,
compared with $11.51 per pound in the fourth quarter and $8.59 per
pound in the first quarter of 2007.
- The Company continues to expect 2008 cash operating expense for the
production of molybdenum oxide to be in the range of $6.00 to
$6.50 per pound at the Thompson Creek Mine and $9.50 to $10.25 per
pound at the Endako Mine.
Note: A conference call and webcast for analysts and investors is
scheduled for Friday, May 9, 2008 at 8:30 a.m. Eastern.
Thompson Creek Metals Company Inc. ("the Company"), one of the world's
largest publicly traded, pure molybdenum producers, today announced
financial results for the three months ended March 31, 2008 prepared in
accordance with Canadian generally accepted accounting principles. All
dollar amounts are in U.S. dollars unless otherwise indicated.
"Thompson Creek's operating mines performed well in the first quarter
of 2008 with molybdenum production increasing significantly from the fourth
quarter of 2007," said Kevin Loughrey, Chairman and Chief Executive
Officer. "Production volumes and unit costs in the first quarter were in
line with management's expectations."
Molybdenum production at the Thompson Creek Mine rose by 86% to 3.6
million pounds in the first quarter of 2008 from 1.9 million pounds in the
fourth quarter of 2007 as mining activity, as planned, moved into higher
grade areas of the ore body.
At the Endako Mine, where the shift to the Denak West Pit resulted in
higher grades and better recovery in the milling process, the Company's 75%
share of molybdenum production rose by 31% to 2 million pounds in the first
quarter of 2008 from 1.5 million pounds in the fourth quarter of 2007 when
mining activity was temporarily interrupted in the Endako Pit by a rock
slide. In addition to this increase in molybdenum oxide production, there
was a 0.3 million increase in molybdenum sulfide inventory at the Endako
Mine during the first quarter of 2008.
"With molybdenum production having recovered as expected at both mines,
the Company is on track to achieve its previously announced production
guidance of between 23 and 24.5 million pounds this year and at least 34
million pounds in 2009," Mr. Loughrey stated.
"The Company's financial performance as reflected in its quarterly
financial statements is affected by a lag between when a pound of
molybdenum is produced and when the same pound is recorded in the income
statement as being sold. This delays both revenue realization and the
booking of operating expenses. For the first quarter of 2008, the time lag
averaged about two months. As a result, a good portion of the Company's
sales and operating expenses recorded in the first quarter of 2008
reflected the lower production levels and higher per-pound expenses
experienced in the fourth quarter of 2007.
"While cash operating expenses per pound improved in the first quarter
of 2008 from the preceding quarter, the time lag meant the decline in
per-pound expenses was not in the same proportion as the sharp recovery in
production," Mr. Loughrey added.
"Another factor adding to the Company's overall expenses during the
first quarter was the relatively high proportion of third-party molybdenum
sales whereby the Company buys molybdenum concentrate and roasts it for
resale to customers. The Company increased such third-party sales, which
generate a very small gross margin over costs, as an offset to the lower
fourth-quarter production from our mines. Of the total 7.7 million pounds
of molybdenum recorded as sold by the Company in its 2008 first quarter
financial statements, 3.6 million pounds were high-cost third-party sales,
while only 4.1 million pounds were from the Company's own mines, despite
the fact that actual molybdenum production during the quarter from our
mines was significantly higher at 5.6 million pounds.
"During the second quarter, we expect an additional decline in overall
per-pound expenses, with a consequent positive impact on bottom-line
results, as the proportion of high-cost third-party sales is reduced and as
the Company's higher molybdenum production and resulting lower production
costs are fully reflected in our quarterly financial results," Mr. Loughrey
stated.
Financial Results
The Company's revenues were $254.8 million in the first quarter of
2008, compared with $197.8 million in the fourth quarter of 2007 and $267.9
million in the first quarter of 2007. The decline in revenues from the
first quarter of 2007 reflected a 27% decline in total sales volumes to 7.7
million pounds in the latest quarter from 10.5 million pounds a year
earlier. Much of the decline is due to changes in product inventory levels,
which increased during the first quarter of 2008 compared to a reduction in
product inventory during the first quarter of 2007.
The decline in sales volume was offset to a degree by a rise in
molybdenum prices. The average realized price on the Company's molybdenum
sales was $32.69 per pound in the first quarter, up from $31.08 per pound
in the fourth quarter and $24.87 per pound in the first quarter of 2007.
After the deduction of operating, selling, marketing, depreciation,
depletion and accretion costs, the Company generated income from mining and
processing operations totaling $77.3 million in the first quarter of 2008,
compared with $47.9 million in the fourth quarter of 2007 and $88.1 million
in the first quarter of 2007.
Net income in the first quarter was $46.8 million or $0.41 per basic
and $0.37 per diluted common share, compared with $28.9 million or $0.25
per basic and $0.22 per diluted share in the fourth quarter and $47.7
million or $0.46 per basic and $0.43 per diluted share in the first quarter
of 2007. The per-share figures are based on a weighted-average number of
shares outstanding of 113,457,000 (basic) and 127,674,000 (diluted) in the
first quarter of 2008, 113,290,000 (basic) and 130,982,000 (diluted) in the
fourth quarter of 2007 and 103,249,000 (basic) and 110,275,000 (diluted) in
the first quarter of 2007. At May 8, 2008 there were 113,983,000 shares
outstanding.
Net income and earnings from mining and processing operations in the
first quarter of 2007 were negatively affected by the inclusion in
operating expenses of a non-cash acquisition expense related to the
inventory portion of the purchase price adjustment associated with the
Company's purchase of Thompson Creek USA in October 2006. This non-cash
expense amounted to $29.6 million in the first quarter of 2007.
Cash flow from operating activities was $63.4 million in the first
quarter of 2008, compared with $45.7 million in the fourth quarter of 2007
and $105 million in the first quarter of 2007.
Cash balances were $47.5 million at March 31, 2008, compared with
$113.7 million at December 31, 2007.
During the first quarter of 2008, Thompson Creek made payments to
reduce its First Lien Credit Facility by $16.7 million to $219.4 million at
March 31, 2008.
Since the acquisition of Thompson Creek USA in October 2006, the
Company has used $343 million of cash to reduce acquisition debt by $182.5
million and to pay the former owner $61.5 million in December 2006 for
certain receivables acquired on the acquisition date and $100 million in
January 2008 as part of a contingent purchase price payment linked to the
performance of the molybdenum price. If the average price for molybdenum
exceeds $15 per pound in 2009, a final $25 million will be owed to the
former owner in January 2010.
The Company's mines produced 5.6 million pounds of molybdenum in the
first quarter of 2008, up from 3.4 million pounds in the fourth quarter of
2007 and 5.4 million pounds in the first quarter of 2007. The Thompson
Creek Mine produced 3.6 million pounds in the first quarter of 2008,
compared with 1.9 million pounds in the fourth quarter of 2007 and 3.8
million pounds in the first quarter of 2007. The Company's 75% share of
Endako Mine's production was 2 million pounds in the first quarter of 2008,
compared with 1.5 million pounds in both the fourth quarter and first
quarter of 2007. In addition to this increase in molybdenum oxide
production, there was a 0.3 million increase in molybdenum sulfide
inventory at the Endako Mine during the first quarter of 2008.
The production amounts reflect molybdenum produced at the Thompson
Creek and Endako mines but do not include molybdenum purchased from third
parties, roasted and sold by the Company.
The weighted-average cash operating expense for molybdenum from the
Company's mines that was sold during the period was $10.54 per pound in the
first quarter of 2008, compared with $11.51 per pound in the fourth quarter
of 2007 and $8.59 per pound in the first quarter of 2007. At the Thompson
Creek Mine, the average cash operating expense related to sales was $11.33
per pound in the first quarter of 2008, compared with $14.18 per pound in
the fourth quarter of 2007 and $8.85 per pound in the first quarter of
2007. The Endako Mine's average cash operating expense related to sales was
$9.41 per pound in the first quarter of 2008, compared with $9.25 per pound
in the fourth quarter of 2007 and $7.88 per pound in the first quarter of
2007.
Cash operating expenses represent operating expenses less non-cash
items including inventory purchase price adjustments and stripping costs
deferred in the reporting period. Cash operating expenses and cash
operating expenses per pound are considered a key measure by Thompson Creek
in evaluating the Company's operating performance. Cash operating expenses
are not a measure of financial performance, nor does it have a standardized
meaning prescribed by generally accepted accounting principles ("GAAP") and
may not be comparable to similar measures presented by other companies.
Outlook
Molybdenum prices have averaged over $30 per pound in 2008 and
management expects that molybdenum prices will remain strong in the near
term.
Overall, production volumes and costs were on target for the first
quarter of 2008 and the Company expects to meet its previously announced
annual planned production volumes and costs for 2008 as follows:
Molybdenum Oxide
production production cost
(lbs in millions) ($/lb)
Thompson Creek Mine 16.5 to 17.0 $6.00 to $6.50
Endako Mine (Thompson Creek's share) 6.5 to 7.5 $9.50 to $10.25
As expected, the reduced fourth quarter 2007 output limited product
from the mines available for sale in the first quarter of 2008. The
operating expenses in the last quarter of 2007 were also high and many of
these costs remained in inventory at year end and flowed into operating
expenses in the 2008 first quarter. Volumes of material sold from the
Thompson Creek Mine are planned to increase during the remainder of the
year and unit operating expenses are expected to decline with the increased
volume as mine site costs are relatively fixed.
With production from the mines expected to increase during the balance
of 2008 primarily due to higher ore grades and recoveries, purchases of
molybdenum from third parties for roasting at Langeloth and resale are
expected to decline. Purchased material is high cost relative to mined
material as it is bought at near market prices. The cost of sales will drop
significantly with lower volumes of purchased material in the sales mix.
Sales generated from the planned production and anticipated strong
market prices for molybdenum are expected to allow the Company to meet its
cash requirements for operations, capital expenditures (including all
Endako expansion expenditures and potential Davidson expenditures) and
scheduled debt payments during 2008.
A feasibility study that examined the expansion of the Endako mill and
mine production was completed in 2007. The Company and the other joint
venture participant reviewed the study and approved the expansion project
during the first quarter of 2008. The Company's share of expansion capital
expenditures is expected to be C$280 million over the period 2008 to 2010.
The expansion is expected to increase the Company's share of Endako
molybdenum production to over 12 million pounds per year when full
production begins in 2010.
Mineral ore reserves were recalculated and increased at both operating
mines during 2007 using a long-term price of $10.00 per pound for
molybdenum sales. During 2008, the Company will continue at the Thompson
Creek Mine to work on development drilling and reserve analysis necessary
to complete the second stage of its mineral reserve study. The Company also
plans to conduct exploration drilling on the Endako Mine property outside
of the existing pits.
The results for the Davidson Project feasibility study were announced
on April 2, 2008. The development has an estimated capital cost of C$109
million. The Company expects to make a decision on this project in 2008.
In addition to these capital projects, the Company has planned capital
expenditures for its ongoing operating activities and expects capital
expenditures for 2008 will exceed a $15 million limit specified in the
Company's current debt agreements. The Company is considering alternatives
to address this limitation, including seeking a waiver from the current
lenders or new debt or equity financing.
Additional information on the Company's financial position is available
in Thompson Creek's Financial Statements and Management's Discussion and
Analysis for the year ended March 31, 2008, which will be filed with SEDAR
(http://www.sedar.com) and posted on the Company's website
(http://www.thompsoncreekmetals.com).
Conference call and webcast
Thompson Creek will hold a conference call for analysts and investors
to discuss its first quarter 2008 financial results on Friday, May 9, 2008
at 8:30 a.m. (Eastern).
Kevin Loughrey, Chairman and Chief Executive Officer, and Derek Price,
Chief Financial Officer, will be available to answer questions during the
call.
To participate in the call, please dial 416-644-3421 or 1-800-595-8550
about five minutes prior to the start of the call.
A live audio webcast of the conference call will be available at
http://www.newswire.ca and http://www.thompsoncreekmetals.com.
An archived recording of the call will be available at 416-640-1917 or
1-877-289-8525 (Passcode 21270179 followed by the number sign) from 10:30
a.m. on May 9 to 11:59 p.m. on May 16. An archived recording of the webcast
will also be available at Thompson Creek's website.
About Thompson Creek Metals Company Inc.
Thompson Creek Metals Company Inc. is one of the largest publicly
traded, pure molybdenum producers in the world. The Company owns the
Thompson Creek open-pit molybdenum mine and mill in Idaho, a 75% share of
the Endako open-pit mine, mill and roasting facility in northern British
Columbia, and a metallurgical roasting facility in Langeloth, Pennsylvania.
Thompson Creek is also developing the Davidson Deposit, a high-grade
underground molybdenum project near Smithers, B.C. The Company has
approximately 800 employees. Its principal executive office is in Denver,
Colorado, and it has other executive offices in Toronto, Ontario and
Vancouver, British Columbia. More information is available at
http://www.thompsoncreekmetals.com.
Cautionary Note Regarding Forward-Looking Statements
----------------------------------------------------
This news release contains "forward-looking information" within the
meaning of the United States Private Securities Litigation Reform Act of
1995 and applicable Canadian securities legislation which may include, but
is not limited to, statements with respect to the timing and amount of
estimated future production. Often, but not always, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", or "believes" or variations (including negative
variations) of such words and phrases, or state that certain actions,
events or results "may", "could", "would", "might" or "will" be taken,
occur or be achieved. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of Thompson Creek and/or its subsidiaries to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such factors
include those factors discussed in the section entitled "Risk Factors" in
Thompson Creek's current annual information form which is available on
SEDAR at http://www.sedar.com and is incorporated in its Annual Report on Form
40-F filed with the United States Securities and Exchange Commission which
is available at http://www.sec.gov. Although Thompson Creek has attempted to
identify important factors that could cause actual actions, events or
results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or
results to differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date of this
news release and Thompson Creek does not undertake to update any such
forward-looking statements, except in accordance with applicable securities
laws. There can be no assurance that forward-looking statements will prove
to be accurate, as actual results and future events could differ materially
from those anticipated in such statements. Accordingly, readers are
cautioned not to place undue reliance on forward-looking statements.
Readers should refer to Thompson Creek's current annual information
form which is available on SEDAR at http://www.sedar.com and is incorporated in
its Annual Report on Form 40-F filed with the SEC which is available at
http://www.sec.gov and subsequent continuous disclosure documents available at
http://www.sedar.com and http://www.sec.gov for further information on mineral reserves
and mineral resources, which is subject to the qualifications and notes set
forth therein.
Consolidated Balance Sheets
(US dollars in millions - Unaudited)
March 31 December 31
2008 2007
Assets
Current assets
Cash and cash equivalents $ 47.5 $ 113.7
Accounts receivable 122.7 84.1
Product inventory 114.3 131.3
Material and supplies inventory 37.4 32.9
Prepaid expense and other current assets 4.5 4.6
Income and mining taxes recoverable - 13.4
----------- -----------
326.4 380.0
Other assets 2.0 2.4
Restricted cash 12.4 10.0
Reclamation deposits 26.9 26.8
Property, plant and equipment 554.1 566.8
Goodwill 121.9 123.7
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$ 1,043.7 $ 1,109.7
----------- -----------
----------- -----------
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 80.3 $ 60.4
Acquisition cost payable - 100.0
Income and mining taxes payable 1.6 -
Current portion of long-term debt 67.8 67.2
Future income and mining taxes 6.8 6.4
----------- -----------
156.5 234.0
Long-term debt 152.9 170.2
Contractual sales obligations 9.2 9.7
Severance and other liabilities 21.6 20.3
Asset retirement obligations 27.1 26.4
Future income and mining taxes 150.8 161.5
----------- -----------
518.1 622.1
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Shareholders' Equity
Common shares 268.7 268.1
Common share warrants 35.0 35.0
Contributed surplus 28.4 26.5
Retained earnings 176.5 129.8
Accumulated other comprehensive income 17.0 28.2
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525.6 487.6
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$ 1,043.7 $ 1,109.7
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Consolidated Statements of Income
(US dollars in millions, except per share amounts - Unaudited)
Three months ended
--------------------------
March 31 March 31
2008 2007
Revenues
Molybdenum sales $ 250.2 $ 260.7
Tolling and calcining 4.6 7.2
----------- -----------
254.8 267.9
----------- -----------
Cost of sales
Operating expenses 166.6 161.7
Selling and marketing 2.5 1.6
Depreciation, depletion and amortization 7.7 16.1
Accretion 0.7 0.4
----------- -----------
177.5 179.8
----------- -----------
Income from mining and processing 77.3 88.1
Other (income) expenses
General and administrative 3.4 3.1
Exploration and development 1.0 1.9
Interest and finance fees 6.7 17.9
Stock-based compensation 1.7 2.6
Interest income (0.8) (1.9)
Other (0.7) (0.5)
----------- -----------
11.3 23.1
----------- -----------
Income before income and mining taxes 66.0 65.0
Income and mining taxes (recoverable)
Current 25.5 37.8
Future (6.3) (20.5)
----------- -----------
19.2 17.3
----------- -----------
Net income $ 46.8 $ 47.7
----------- -----------
----------- -----------
Net income per share
Basic $ 0.41 $ 0.46
----------- -----------
----------- -----------
Diluted $ 0.37 $ 0.43
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Consolidated Statements of Cash Flows
(US dollars in millions - Unaudited)
Three months ended
--------------------------
March 31 March 31
2008 2007
Operating Activities
Net income $ 46.8 $ 47.7
Items not affecting cash:
Depreciation, depletion and amortization 7.7 16.1
Accretion 0.7 0.4
Amortization of finance fees 0.6 4.8
Stock-based compensation 1.7 2.6
Future income and mining taxes (6.3) (20.5)
Unrealized loss on derivative instruments 1.0 6.5
Change in non-cash working capital 11.2 47.4
----------- -----------
Cash generated by operating activities 63.4 105.0
----------- -----------
Investing Activities
Property, plant and equipment (8.1) (2.6)
Deferred stripping costs (2.8) (6.9)
Restricted cash (2.4) (0.7)
Reclamation deposit (0.2) (0.2)
Acquisition cost (100.0) -
----------- -----------
Cash used in investing activities (113.5) (10.4)
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Financing Activities
Proceeds from issuance of common shares 0.4 5.2
Repayment of long-term debt (17.4) (83.2)
Proceeds from revolving facility 22.5 -
Repayment of revolving facility (22.5) -
----------- -----------
Cash used in financing activities (17.0) (78.0)
----------- -----------
Effect of exchange rate changes on cash 0.9 (0.2)
----------- -----------
(Decrease) increase in cash and
cash equivalents (66.2) 16.4
Cash and cash equivalents, beginning of period 113.7 98.1
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Cash and cash equivalents, end of period $ 47.5 $ 114.5
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SOURCE Thompson Creek Metals Company Inc.
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CONTACT:
Wayne Cheveldayoff, Director of Investor
Relations, Thompson Creek Metals Company Inc., Tel: (416)
860-1438, Toll free: 1-800-827-0992, wcheveldayoff@tcrk.com; Dan
Symons, Renmark Financial Communications Inc., Tel.: (514)
939-3989, dsymons@renmarkfinancial.com
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