A few geniuses on this board would have you believe that they have a cost basis of $1.72 and so they are up 70% on Thompson Creek. However, the market is up 250% over the last few years and most mere mortals have a TC cost basis well over $1.72. In general, TC has been a disappointment to many. But, as soon as moly prices go up, and MM runs over nameplate throughput with no more capex, copper prices rise, or after the 950MM is paid back or refinanced, and management figures out a new stripping plan, or someone buys the whole company for $8/share, or oil drilling or war causes a spike in moly demand, or evil short sellers get trimmed or stupid analysts finally upgrade.....................or...................
1.5 bill build outout, 950mm debtdebt, 90mm interest. A little money the last two quarters and then next couple quarters will go quickly on 80mm stripling and 50mm crushing. In the end a lot of mining can happen and no money is made.
Meant to say the MM build out ended up costing 1.5 bill leaving 90Mm in interest.
If the money is constantly allocated to capital projects then the money does not accrue to profit. Stocks are a claim on present and future profit. Without profits the shares will continue to langish. So far TC is a 600MM company with 1.5B in debt and annual interest payments of 90 MM. It makes sense to spend only after careful study.
It is not about mining. It is about making money. TC hasn't made any for the past few years and more CAPEX prevents them from making any money for the next few years as well. I am comfortable with TC management trying to come up with a better idea.
Perron telegraphed the potential need for additional crushing capacity in the Q1 call. Reread or listen to the call if you get a chance. In the Q2 call we hear in a more substantial way, and with the implication, but not the expectation, that additional crushing might get the mine over nameplate capacity. MM through-put has plateaued, there is discussion about how some of the ore is really harder than might have been expected, conversations about blasting patterns, ore blending etc. All this prepares the market to hear that additional crushing capacity is probably required to meet nameplate capacity. There goes another chunk of capex and that is mining. I am stupid, Perron is sandbagging, analysts are both lazy and stupid. But Thompson Creek Metals is going to spend another 50MM on Mount Milligan.
Investors need to remember that Henderson is closing in just eight years.......I didn't even put that in my calculations. Thanks for the tip.
You are correct, moly growth is anticipated to be 4% annually for the next few years. But going forward supply/demand numbers are against primary moly miners.
Scratch 10MM pounds from Mercator but add 50MM pounds from Sierra Gorda. TCREEK cannot strip phase 8 (either part) when they know that the supply of moly is about to expand 50MM pounds, the entire moly market is only about 550MM pounds. It doesn't matter that Sierra Production is about a year behind schedule, it doesn't matter that moly production from that mine will drop precipitously after the first few years. The impact of that supply is imminent, and TC management does well to consider its impact on moly prices in the coming few years. As well, moly is a common second stream metal in copper mines. Copper mines are being built out all over the world and that second stream moly will also come to market. It doesn't matter if much of that moly goes to China or Japan. Any moly going to those countries will satisfy demand from those countries. TC made a little extra money on this recent spike in moly prices and that is a good thing. But betting the house on a primary moly mine with waning reserve grade, in the face of expanding supply, is a bad move. There is no conspiracy here, only facts. When one refuses to believe the facts, everything appears to be a nonsensical mystery. A conspiracy theory emerges to fill the void.
You can be sure that Sierra Gorda will impact the world moly markets all by itself. In a market of about 550MM pounds, Sierra Gorda is expected to produce 50MM pounds all by itself. Some on this board are excited that production is delayed about a year. They also seem excited that moly production as SG drops precipitously after the first 4-5 years. But those points are moot to stripping TC. SG will be in production before TC could ever finish stripping and 4 or 5 years is a long time to wait for that new supply to subside. Additional supply will come on line from other copper miners as well. Moly is a common second stream metal. There is no future in moly over the near-middle term. If you like TC, you like it for Mount Milligan and you believe that they will successfully reduce the debt over the next few years. Debt reduction will greatly increase free cash and fall right to the bottom line.
"Total cash cost, as determined on a co-product accounting basis, for Q2 2014 was $2.43 per pound of total copper produced and $12.66 per pound of molybdenum produced as compared to $2.75 per pound of copper produced and $10.46 per pound of molybdenum produced in Q2 2013." Do you know what caused the 20% jump in the cash cost of molybdenum while their cash cost for copper fell by 10% YOY?
China has not demonstrated that the export quotas that China applies to various forms of rare earths, tungsten and molybdenum by virtue of the series of measures at issue are justified ... " the document's conclusion said. (Reuters)
I don't know for sure how much stockpile there is but have you ever seen a 50,000 ton pile? Even a pile that big is huge and takes a tremendous amount of fuel, machinery and labor to create. Stockpiling is handling material twice and mining plans try to avoid it. The mining operation is geared to throughput. Stockpiles occur during maintainence shut downs, in anticipation of mining shutdowns, realigments and the occasional overage. For those reasons my model does not anticipate much, if any, real money from TCREEK moly. Endako will produce moly but I am with the consensus opinion that new moly supply will outstrip demand and prices will settle back close to the cost of production at Endako.
There are no earnings from moly during 2015. You probably make .20 to .30 per share from Milligan. That's it.
I have traded this stock a few times for small profit. sold some this morning, for small profit. I still hold some, not sure what I will do next but it seems that there is nothing immediately evident that pushes this stock price up.
Many of the shares were used to cover short positions. Then those shares were held or found their way onto the market. One day there were about 48MM shares in a vault at TC and could not be purchased. The next day those 48MM shares were available for purchase in the marketplace. It seems reasonable that most investors had modeled TC earnings with the post T-med share count, so in that way there was little or no dilution. But I agree with you, there was an undetermined dilutive effect. After the conversion, a common stock buyer could negotiate a price with a larger number of sellers who were holding a larger number of shares. In a scenario with larger supply it is easier to negotiate an attractive price. just-matt and a few others are having a hard time understanding the supply/demand dynamic and do not speak for all of us.
Current moly prices would justify continued moly stipping. However, consensus estimates predict a moly supply surplus coming to market. If that occurs, the price of moly weakens. TC could find itself out of cash, losing money on moly and with maturing debt. It is too big of a risk to take, they could lose control of the whole company. Management has a fiduciary duty to shareholders not to lose the company to creditors.