I think you miss the point though that they shouldn't just be buying to 'imply' something to the market or give a tell of confidence, they should be buying because they like to.make tons of money being smart capitalistd and if they know the coMpany will survive (they know better than anyone) they should see it as a chance to make the killing of a lifetime.
I.n the grand scheme with billions in the ground is $650m net debt that huge of an obstacle? I would think they'll have refi opportunities considering how low cost they are.
Btw, yes they are not the highest grade, last investor presentation they were average in the 30s, but grade is just one factor of value. Grade and depth usually determine average mining cost which is the ultimate determinant of profitability . You want highest grade, shallow material for greatest value (lowest cost). For example you could have high grade but deep metal and it will cost a ton on average to bring product forth. Or you could have poor grade but very shallow depth and be pretty profitable. TC is a highly desirable asset. Grades are pretty decent and depth is shallow and easily accessible with excellent byproduct therefore driving a very low cost copper operation that can print money in a good environment for decades. Survive and get past debt hurdle and when commodities come roaring back this can be a great turnaround story. We all forget TC moly too. In a good moly market someday that mine is a big cash cow. Where does the permitting stand on that? Of course at $2 copper and $6 moly all bets are off, but not just for tc but just about everyone. Consider that gibralters cost is $2.40/lb versus sub a dollar MM.
Just like moly Ultra? See thats the problem, we can all say $2 copper silly, until we wake up and its $1.50. The price can tank and,stay low for a long time and drive a lot of people broke in.any industry.
Regardless of grade the key is production cost. MM being one of the lowest cost producers in the world is what matters. Its about profits and the only things that matters are costs and market price. TC can really only have a say in one of them
They have an outstanding very low cost mine in MM and a very good one in TC. Its not as if they sell a fad product that may go bust or for which the price of may never recover. We are talking essential minerals in copper and moly. I think we all know that the price of these things will rise in the future and Thompson Creek is a big option on them. The only question is can they make it? Does anyone here really have an idea of whether the market will bear debt refi opprtunities in the next two years? It would seem like with them being such a low cost producer at MM that they would find babks willing to work with them considering even at depressed metals prices they can likely cover their debt service.
I like the proactive nature and welcome the move. But didn't the first quarter end with $238mm on hand with $27mm from the shipment coming in any day? So it was in reality $265mm in the bank. After a $35mm bond repurchase is $211 in bank really a cash build of $10mm or a burn of $19mm? Unless they again missed getting paid on a 2nd quarter shipment that they will receive in July.
gatr have you modeled TC and if so based on current metals prices, are they breakeven after paying debt interest or are they likely to burn at these metals prices (and how much per year). Much thanks in advance. If anyone else is modeling these numbers let us know what it looks like.
I agree it's probably worth a buck or two under immediately price conditions of gold, copper and moly. However, with just a significant rise in any one of the metals and it could easily be worth five fold that based on the leverage that they have as a low cost producer. I think the debt overhang makes investors hesitant to play that option on metals prices though because they worry about solvency in the shorter term before the inevitability that those metals prices will rise in the future creating huge cash flow and profits. Hence the question from the analyst regarding who do you want to buy you. The enterprise is a slam dunk to a larger, better capitalized firm who can swallow the debt and crank out copper at .5-$1 all in costs when the resource appears to be growing scarcer.
Per email from Pam:
Thank you for your email. Effective July 1, 2015, a blackout commenced pursuant to which insiders are prohibited from purchasing or selling Thompson Creek common stock or other securities of the Company. We expect the blackout to be lifted on or about August 10.
Arnold you have no idea what you are talking about. Of course I have factored the streaming deal with Royal into any buyout scenario. Any company making an offer on TC would have to honor the Royal deal. But those numbers are factored in. Plain and simple, on a by-product basis (including the Royal deal), TC is a sub $1 copper producer. Long-term if copper is $3, $4 + if a better capitalized firm came along ,just retiring the debt alone would increase profits by $90mm. At $3 copper on 90mm lbs a year production they would be bringing in $200mm in gross profits on a by-product basis on copper. Combined with the debt savings you are quickly looking at a company with over $1 EPS. PLus all of those other benefits of the moly mines the roasting facility, development properties, . I think we all know MtM has more than 25 years,. The copper and gold on their property there probably could go double that eventually in the future when they get to digging around more. The problem is the debt, TC just doesnt have the pockets to retire it so the high interest is choking profits and sahreholder equitty. We all know in due time copper will be north of $3, gold will be higher, moly will have another day in the sun of $15, $20. Someone with deep pockets and time on their side could make a killing on this company in the beautiful wilds of BC.
-getting mtm up to prime capacity
-mine higher grades for now to window dress and increase cash
-cut expenses to the bone
-pound the pavement with their banking partners and other partners to orchestrate refi plans
Beyond that its about the price of cu au and moly. Eventually.they will rise.
Im still.surprised someone doesn't come in.and offer them $4. For $1.5bb youd be getting the lowest cost/largest au cu mines in Canada, a low cost moly mine, a roasting facility of which there are few on earth, and some other properties. Paying off the debt alone adds $90mm to the bottom line. That's a 6% return on your investment just in interest savings alone, plus all that upside potential at some point on the other side of this depressed metals market. Why not?
On 80mm lbs of Cu at todays prices and considering production costs of $1 on a by product basis, throw in C&M and general expenses, $90mm interest, plus some Langeloth revenue (say $20mm), I still have them slightly cashflow positive.
At nameplate production and under $1 lb all in costs its worth more than that considering no water, political, labor issues etc. Even at $2.15 billion, considering the cash and debg it puts the value at about $7 per share.
I agree somewhat, but if things were that solid they'd be buying. This price drop tells us one thing, this production report is not going to be good. Those in the know are reflecting that.
You are right but wouldn't significant insider buying be a vote of confidence that they are confident they can deliver on what you say is important? No buying means they don't even believe they can pull it off. Its an indirect way of saying things are not good.
Not really calling you out. I think you generally have some sound input. But you were confident even arrogant moly was underpriced at $10, so whats it look like at $5? No doubt moly is dead for years and perron did the did the right thing.