The mine is not worth much, if anything. Moly prices notwithstanding, phase 8 is the last phase and the ore grade is waning.
They are not going to strip phase 8, they know that just as soon as they are done they will be faced with a hugely expanded worldwide moly supply and moly prices will fall. They have not indicated that they have enough stockpile to last much of next year. Some posters on this board assert that, TC management says that is not the case. TC management has a fiduciary duty and officers can be liable for intentional misrepresentations. Message board posters can post whatever they like. The cost of production at Endako is over $11 per pound, Perron has mentioned at least twice that it is not likely that figure can be substantially reduced. TC only owns 75% of Endako production, the price of moly can easily slip to $11-$12 from here and Endako quickly becomes a break even or lose money proposition. They are happy with Mount Milligan that is true. Without it, they wouldn't have jobs!!
Not everyone agrees that moly supply will remain tight. Moly is enjoying a little price support right now. The expectations by many were that supply would have expanded by now. Consequently, many buyers were running down inventory in anticipation of lower prices. Much of new moly supply is delayed so there is a little squeeze on available product. But more moly is coming to market, that is certain. Most of the market expects it to happen, and TC management expects it will happen. That is why they will not spend 80MM to strip phase 8. Some on this board think otherwise. If one disagrees with the consensus view that moly supply is about to expand dramatically, then one has a different view of the issue: management is stupid, analysts are lying, conspiracy theory, the government, etc. etc.
There is little question that the company will survive, but where is the money for shareholders? It probably will take 10 years to get that .40/share and that is not without substantial risk. Ten years is half the mine life of Mount Milligan. There is no money from moly for at least the next couple years and probably much longer than that.
If TCM eliminated all 900MM of debt between now and 2019 they would increase EPS by about .40 per share. That .40 would make this a different company for sure. But really there is no chance that they will come up with 900MM during the next 5 years, especially since they will pay about 300MM in interest along the way.
The future of TCM is linked to reducing the debt and approximately $95MM annual interest payments. However, deleveraging will not be easy for TCM. See slide 5 in the recent presentation at the investors tab of the TCM website. The 3 outstanding bonds mature between 2017 and 2019, they pay an annual interest rate of between 7.375% and 12.5%. Current prices for all of the bonds are shown on the graph, you can see that all three bonds sell at approximately a 10% premium. That is, the bonds are currently worth 10% more than when they were issued. Consequently, if an investor were to buy one of the bonds today, the investor would receive an effective interest payment that is approximately 10% less than when the bonds were first issued. The market has determined that TCM is more creditworthy than is was a few years ago and is satisfied with a 10% lower interest rate. If these conditions prevail, then it might be reasonable to postulate that during the next 4-5 years, TCM will reduce its interest payments from about 95MM to 85MM per year. Some on this board have different ideas about how a refinancing will go. But when the bond market speaks, you will do well to listen.
Some of the valuations that are posted on this message board are absurd. There is no buyer for TCREEK or Endako. There is over 900MM in debt. Don't believe everything you read here.
A couple more months and TCREEK will be closed, TC only owns 75% of Endako production which currently has a cash cost over $11 per pound, and Mount Milligan will not reach nameplate capacity without another 50-60MM in capex. This company is not going anywhere quick.
8K are specifically intended to distribute information that could have a material impact on the stock price. Additional crushing capacity at Mount Milligan appears to meet that criteria.
Those piles of metals notwithstanding: the moly is not worth anything right now, half the gold has been sold, and the company is swimming in debt. This stock is not the same stock you became interested in. Model this company without moly and you see that it is fairly priced right here. If you believe that moly prices will move up and stay up then there is a case to be made for TC. However, the only people predicting higher moly prices are a couple posters on this board. Tread carefully.
When they announce 2015 earnings, it will be without free cash from molybdenum. That headline will not move the stock up, but rather it will provide yet another "buying opportunity". 3rd quarter earnings will be a huge beat YOY, maybe the share price will pop a little bit on that news and provide an exit opportunity.
This stock doesn't look like a good short candidate, but it doesn't look like a good long candidate either. What will move the price higher? MM ramp-up, you got that. Analysts upgrade-you got that too. Positive pieces in the main stream press-you got that too. Get rid of the short overhang-you got that too. The price doesn't move because there is too much debt for this company to make any money without moly. Now there is a theory, or conspiracy theory, or something, that suggests the recent moly price spike is going to continue. It will not, TCREEK will go on C & M, Endako will sell moly at the cost of production and you are left with MM to pay down and refinance the debt. This stock is dead money for the next couple years.
PBCT just borrowed $400MM for "general corporate purposes"--there is no specific plan for growth. The bonds pay 4%, until recently PBCT had free money in the company treasury. Management couldn't come up with a plan to invest much of the money so they used it to buy back shares and pay the dividend. If they couldn't put free money to work and earn a profit, what will they do with 4% money? This stock is dead money . Management should be fired.
As of 8/15 there are about 22MM shares short or about 10% of outstanding shares.
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...................