TC has a bright future - shorts, you won't like this
When Mt Milligan is completed, the company will be roughly $600 to $650 million dollars in debt after cash is subtracted, according to their current budget. In addition to this, they have diluted shares with TMEDS and sold off portions of gold to Royal Gold. All of that is factored in below. Shorts, if you want, please close your browser now... this gets ugly for you.
Here's the deal:
At current prices, in their recent investor outlook, TC stated that using current valuations, Mt Milligan will have earnings of $265MM/year for the first 6 years. This is after all operating costs. On top of this, they still have their moly mines, which can pump out a lot of moly if the market rebounds. Their cash costs for 2013 and 2014 are going to be around $7 per lb, with 60 million pounds produced in total over the two years. If molybdenum averages $15/lb over thos 2 years, that means a profit of $480 million dollars. If you combine that with Mt Milligan, you're looking at profits of $1.01 billion dollars over 2 years.
STOP. Take a bit of time to breathe it in shorts - I know, it sucks. So realistically, by the end of 2015 at the latest, TC could have all of its debt entirely paid off. Remember, TC's debt will only be $600-650 million, plus interest as it accumulates (maybe adding $150 million more at most over 2 years). So even if you factor in extra costs, or lower prices, the $1 billion will still easily cover their debt. Calculate it any way you want, with moly prices staying at $11, or gold dropping, etc. TC will still end up with their debt all paid off.
This is why I am invested in TC. Because I believe very strongly that by the end of 2015, TC will be:
1) A company with no debt
2) A company with an EPS over $2 per share
3) A company with over $2 billion dollars in cash
Now, shorts like to talk hyperbole. Here is a short's typical argument:
"TC has sold everything off. They sold off all their gold. They took out debt. Then more debt. Then they took out TMEDS!!! Diluted all the shares. Now they take out another $350MM. TC is done. No money left for anyone but the banks... Royal Gold gets rich, but shareholders lose out"
Yep, that about sums up the short argument. But it's false, for a lot of reasons. Why? Because everything the shorts listed above only causes the share price to DROP. But what would the share price have been before all these cuts? Ah, good question. See, before any of these cuts happened, before TC went over budget, and before they sold off more gold, TC would easily have been worth $25 to $30 per share when it was done.
But management went ahead and screwed it all up. So does that mean the company goes bankrupt? Nah. All it means is that TC will no longer be a $30 per share company, at least not anytime soon. But it could be a $10, or $15 company. No problem. This is where shorts seem to "fall short" (pun intended) and their logic runs out. They are unable to comprehend that all this debt and gold sold off has only lowered TC's future share price from maybe $30 to $15 as mentioned.
So TC will then be hoarding $400 to $500 million dollars in cash per year. By the end of this decade, TC could very well be a debt free company with $2 billion dollars in cash on its books, and properties like Berg (and possibly future aquisitions) just waiting to be developed. Plus this time they will have the experience to get the job done.
This is why I am a strong buyer of TC, because it is incredibly overvalued at this point. There are no conclusions I can come to which cause TC to be valued at $3 a share - none. By 2020, I believe TC will not only be debt free, but that it will have over $2 billion dollars in cash and investments, waiting to be spent on a new project such as Berg. This company has a ton of potential and will continue growing and diversifying.
Once investors catch on to everything I have just said, this puppy will soar. Why do you think Kevin Douglas, the guy worth almost a billion dollars, decided to invest $30 million dollars in this company? He owns 5% of TC now. He only invests in companies that are guaranteed to go up 3x. And why to do you think that Deutsche Bank owns $12 million dollars in shares? Must all be fools.
The future is definitely exciting for this soon-to-be diversified mining company. I plan to be an investor for a long time.
I have decided to liquidate three fourths of my holdings on Monday. The numbers do not add up. The shorts are in control. The tmeds and the loans are costing the stock holders to much. The only people making out are the insiders with fat pay. Mr. dtime is correct this is looking like a ponzi stock.