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Thompson Creek Metals Company Inc. Message Board

  • dragon_legal_department dragon_legal_department Feb 20, 2014 10:53 AM Flag

    What are the most important points we need to hear on this CC to make it a good call?

    1) We ended up with more cash in the bank at year end than analysts predicted.

    2) Mt Milligan ramp up is on target, including throughput, recovery and ore grades all being with expected parameters, with no major issues current or expected.

    (On a related note, there will be a "statement of commercial production" expected in Q1. I would actually be okay with March or April, if the recovery rates are good.)

    3) OpEx Costs for Mt Milligan will be significantly lower than the "old" Mt Milligan OpEx number of $280 million/year. (It would be a plus if TC's overall SG&A costs were to come down as well.)

    4) Guidance (better than analysts expected last year) for 2014 is given on the call.
    (Some color into 2015 would be a plus.)

    5) TC made more money than expected on moly ops in 2013, and expect that to continue in 2014.

    I am much more concerned with the above items, and on TC's subsequent guidance on cash flow this year than 2013 or Q-4 earnings per share, or indeed anything else.

    If TC hits on the above items, while it may not cause a pop in stock, it should cause some analysts to revise their negative outlook and that will make the stock rise going forward.
    At least. that's the plan, if the global economy, the Fed, the Chinese and metal prices all cooperate to some extent....

    That's my wish list, feel free to add if you want....

    Sentiment: Strong Buy

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    • Dragon, you said that the 12/31/13 actual cash on hand was higher than expected. I think you are correct but I dont remember what the expectation was for cash... what was that amount?

      • 1 Reply to privatesurfing12
      • Private, the EOY cash balance was never mentioned in any presentation I can remember, but doing the math using Kevin's numbers the expectation was about $165 million, give or take.
        As you know, Jacques gave no updates or guidance on projected numbers on the Q-3 call, and that, coupled with the perceived "delay" of Mt Milligan's (statement of) Commercial Production led some analysts to "freak out"....

        Instead they ended up with about $233 million, and they should end 2014 north of that number, making them nicely cash flow positive for the year. (How far north, of course, is a big question!).
        But remember, no one was predicting 2014 would be cash flow positive at the end of last year.

        If TC shows they can hit the top range of their guidance and if metal prices cooperate, that popping sound you hear will be a number of overly uptight analysts releasing their tightly clenched sphincters just enough to pop out a report turd or two containing an upgrade for TC, lol.

        Sentiment: Strong Buy

    • dragon_legal_department dragon_legal_department Feb 25, 2014 9:41 PM Flag

      PART ONE:

      Sorry this post took so long - was out of town for a few days.
      Wanted to give my impressions on the CC. I won't go into specifics, everyone can look those up - I'm just looking at the overall impression.
      I'll give this one a "B".
      Why? Well, mostly because the last half dozen or so calls have been lousy.
      Perron's first one was a "C", and ONLY because I gave the benefit of the doubt on that one, his first one.
      Lot of "D"s and "F"s in the preceding calls going back to the beginning of 2012, as most of you well know.

      So what did he do to earn his "B"?

      1) We ended up with more cash in the bank at year end than analysts predicted.
      A+ / one of the best things about this call - shut down all the BK talk with this nugget.

      2) Mt Milligan ramp up is on target, including throughput, recovery and ore grades all being with expected parameters, with no major issues current or expected.
      B / Ore grade recovery is higher throughput was very good - and no major issues - some minor adjustments but nothing big. One thing I want more clarity on is it appeared that they downgraded the actual projected ore grades by one percentage - just being conservative or an actual adjustment - not sure. Gold was expected to be more difficult to ramp up the recovery rates (and it is)

      3) OpEx Costs for Mt Milligan will be significantly lower than the "old" Mt Milligan OpEx number of $280 million/year. (It would be a plus if TC's overall SG&A costs were to come down as well.)
      B- / I expected slightly better numbers here. SG&A projected expenses look to be under control. MT Milligan OpEx came in about 5 to 10% higher than expected. Again not sure how much Perron is sandbagging here. (Some might say "conservative").

      4) Guidance (better than analysts expected last year) for 2014 is given on the call.
      (Some color into 2015 would be a plus.)
      B+ / Much better than any analyst (ex BAML) predicted for 2014. This takes most if not all the financial risk away.

      CONTINUED BELOW

      Sentiment: Strong Buy

      • 1 Reply to dragon_legal_department
      • dragon_legal_department dragon_legal_department Feb 25, 2014 9:57 PM Flag

        PART TWO:

        4) (Continued) The only reason I'n not giving an A here as I feel that the C&M (talk, decision, what have you) on the TC mine, while good in the sense it allowed a nice write off in 2013 (which I'm sure Perron wanted to push off on the previous regime) it also generated some confusion an uncertainty.
        We will need to wait until TC hears back from the BLM on it's pending proposals in Q2 (and possibly later) to learn more how this will play out.
        What we know for sure.
        That the TC mine is the lowest cost moly producer - it would make zero sense to close that mine and keep Endako open without some new, material information about Endako's cost structure or ore grade.
        TC is in the process on permitting it's namesake mine for the future.
        These writedowns and writeoffs make a lot of sense from an accounting point.
        We don't know the whole story just yet, and TC is playing it close to the vest.
        The TC mine will produce cash flow this year, and may have enough stockpile left for some of 2015 at the current rate of sales.

        5) TC made more money than expected on moly ops in 2013, and expect that to continue in 2014.
        B+ / They made a lot more in 2013. They will make money this year too. 2015 is less certain at the current time due to the moly market, TC expanded stage 8 permitting, and decisions on C&M that will be finalized, or not, over the next 3-6 quarters....

        So, costs look good, maybe not as good as expected - but we shall see. The jury is still out.
        Cash flow looks very good. If they hit their cash flow numbers and metal pricing stays range bound, they should be able to pay off a lot of debt and refi the rest at much more favorable terms before the end of 2016. Moly is up in the air, but nothing that is totally unexpected. It's a game - and we need to see how the pieces all move on the board.

        We need this type of execution to continue, and TC needs to hit or exceed benchmarks for the next few calls to build trust back up with the financial world.

        Sentiment: Strong Buy

    • Forgot to mention I'm looking for TC Mine ore stockpile numbers too.

      Want to see build there.

      It will be convenient to have going into 2015 to bridge time & production before they get the final EIS.

      Sentiment: Strong Buy

    • Perron's been pretty conservative with public statements, so I am not certain how much detail we are going to get on guidance. Additionally, any specific guidance we do get (hopefully lower expected operating at MM) will almost certainly be low-balled. Long-term these are good things for TC's rep among investors--under promise and over deliver, but it's going to hurt any bounce we get from CC. Just my two cents.

      Sentiment: Buy

      • 1 Reply to papageorgio304
      • I'm not expecting a bounce per se, from this CC.
        More of a gradual build from here (due to some forthcoming analysts revisions after this call, and the next one). (Don't be surprised if a couple of these guys try and "quietly" sneak in their revisions without any fanfare. They are basically going to have admit they were completely wrong.) The market will pick up on them though.

        Also don't be surprised by a fair amount of volatility over the next couple of months. People who are looking at earnings won't get the value proposition here (at least not right away).
        Bigger investors might.
        Analysts targets will be revised (up) and likely have a wide spread.
        There should be some interesting news on the TC mine soon enough.
        Metal prices will continue to bounce around.
        And there are some huge bets placed on certain options too, both on the call and on the put sides...
        Lots of people with vested interests.
        Hang on, it should be a rather exciting ride.

        Sentiment: Strong Buy

    • Drive-bys will take it down early on likely Q4 loss per share [I'm seeing (.12) vs. consensus (.07) - all driven by LCM hit at MM on Q4 ramp-up production and revenue miss]. Both points, at this juncture, are drivel in that MM LCM hit won't be recurring (shouldn't be) and revenue miss was discretionary (decide not to ship concentrate vs. someone actually not having a customer for it). Needless, soundbite stock traders will probably beat it up at first sight, until the message(s) begin to permeate. Then the monkeys will barrel back in. Liquidity more important.

      Sentiment: Strong Buy

    • Some info on what they plan to do with the Moly mines would be helpful. Even if they can only say "above $12 we plan to do this, below $12 we plan to do that."

      • 3 Replies to logicaldeduction
      • See the thread on the Ni 43-101. Most of this information needs to be pieced together. TC is not showing their hand at this time. Perron seems adept at playing these games.

        Sentiment: Strong Buy

      • dragon_legal_department dragon_legal_department Feb 20, 2014 11:54 AM Flag

        I agree it would be helpful. But don't expect anything but the usual "we'll evaluate whether or not to put TC on C&M at a later time" blah blah blah.
        They gain no advantage by being transparent at this point. In fact, you could argue the complete opposite. Obfuscating puts them in a stronger position with Soljitz, suppliers, unions, basically everyone at this point. Especially people that have not done much due diligence on the TC mine itself.
        I was surprised Perron will still being so adamant about the possibility of putting TC on C&M at the CIBC conference, but he has everything to gain by using that rhetoric at this point, at little to no long term downside to the company...(well obviously a little short term downside to PPS, but he's more concerned with cash flow now than the stock price, as he should be. Take care of one and the other will take care of itself).

        Sentiment: Strong Buy

      • Only the standard propaganda that's been mentioned will be repeated on this point. Real news won't happen until Q2, however, they will have good insight on the regulatory status of TC by 3/21. Honestly, they already know what's in it, but the DEIS has not been released to the public yet.

        Sentiment: Strong Buy

 
TC
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