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Thompson Creek Metals Company Inc. Message Board

ultraific3 592 posts  |  Last Activity: Aug 28, 2015 10:23 PM Member since: Oct 7, 2013
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  • Reply to

    Lots happening...

    by carlrich Aug 28, 2015 7:59 PM
    ultraific3 ultraific3 Aug 28, 2015 10:23 PM Flag

    The Codelco numbers are a mess. Codelco did 910k mt but that includes it's attributable share from El Abra and AA Sur. This is "total Codelco" and it was up 3.8%. See Cochilco. Internal output (830.7k mt vs. 787.6k mt) is up 5.5%, driven mostly by MHM (which was in ramp-up in first half 2014). MHM increases are camouflaging the ROT at Chuqui and R/T, as all three roll up under Cobre Norte. El Teniente was the strong division. It usually is, as it's the best run. Chuqui is starting it's decline. See Platt's recent on Codelco. Pizzaro admitted they have trouble ahead.

    [Codelco sees tough 2016: lower ore grades, copper at $2.50/lb]

    Excerpts:

    "Chile's Codelco is facing a sharp drop in copper grades at its aging mine operations in 2016 while the price of the red metal will likely remain stuck around $2.50/lb, CEO Nelson Pizarro said Friday."

    "It does not look like it will be a year to be smiling. Next year is going to be very tough," the executive said.

    While I don't agree w. Codelco's price forecast, I do know they are impacted by grades at Cobre Norte, and 2015 was the high water mark in output for at least the next 3-4 yrs.

    How do I know this? From their Dec 2014 presentation they gave at the Japan - Chile business conf.

    Regarding Grupo Mexico's Asarco:

    Thanks. Did not pick this up today.

    From the Tuscon / AZ Daily Star:

    "The company said the plant cutbacks will curtail the company’s production by about 67 million pounds per year or 17 percent of total production."

    "Asarco’s union employees have been working without a contract since June, after negotiations with the company reached an impasse and the union terminated the prior contract. The unions, led by the United Steelworkers, and the company both have filed pending complaints of unfair labor practices with the National Labor Relations Board."

    ====

    Grupo Mexico, Southern Copper's parent, owns the Asarco assets separate of SCCO, and is horrid w. labor relations. Maybe they strike !

    Sentiment: Strong Buy

  • Reply to

    Lots happening...

    by carlrich Aug 28, 2015 7:59 PM
    ultraific3 ultraific3 Aug 28, 2015 9:49 PM Flag

    The talks with the Codelco service worker contractor union collapsed today. Expect a resumption of fun, fun, fun. Maybe next time the Chilean military won't send in the storm troopers, guns ablaze. That was a big sticking point, apparently.

    Sentiment: Strong Buy

  • Reply to

    Re: Sentinel

    by carlrich Aug 28, 2015 2:32 PM
    ultraific3 ultraific3 Aug 28, 2015 5:53 PM Flag

    This is really just a release that Sentinel is done w. construction and commissioning, and as far as start-up of normalized operations, is more wishful thinking on the part of First Quantum.

    Construction is complete for a mine that has insufficient power to operate, and this being picked up as a story is First Quantum mention it to the press.

    Their latest guidance (updated for Q2), without consideration of power disruption, was 80k - 100k mt. However, it's questionable whether sufficient power will be available to allow them to run.

    Honestly, if they do get power in September, they'll be lucky to do 50k mt this yr., copper in concentrate.

    Sentiment: Strong Buy

  • Reply to

    At what price for copper...

    by carlrich Aug 28, 2015 12:22 PM
    ultraific3 ultraific3 Aug 28, 2015 1:28 PM Flag

    Copper shorts need to go away. Once that happens, price will move back up. Witness what happened from mid Jan to mid May. Price went from $2.47 to $2.92 over a four month period before the "coulds, mights, and maybes" of "China collapsing" became the predominate favored new story.

    As the year progresses, the supply (shortfall) story will catch more news, as the miners are not advantaged by pumping the "growth story" anymore.

    Sentiment: Strong Buy

  • Reply to

    At what price for copper...

    by carlrich Aug 28, 2015 12:22 PM
    ultraific3 ultraific3 Aug 28, 2015 1:22 PM Flag

    LME copper short interest is the highest since 2012.

    CME copper short interest was recently at record levels, and in a net short position.

    A month ago, SHFE was also at record levels, but a large portion of the recent surge in copper shorting on SHFE is believed to be a synthetic hedge for Chinese equities.

    All of this changes by the day, as evidenced by the COTR reports issued weekly.

    Reuters reports the LME shorts are nervous as the spreads for rolling over the contracts are unfavorable, and there is creeping tightness in physical stocks. Cancelled warrants are surging on LME copper stocks. That means the inventory is soon to move out of the LME system. This makes the physical market that much tighter. The LME warehouses in Asia are the ones witnessing sharply increasing cancelled warrants, as Chinese buyers of copper are taking advantage of LME cheap copper (cheaper to buy LME copper, pay to ship it to China vs. buying expensive copper in China). That LME spread is very favorable at the moment.

    Needless, the market is heavily shorted, and when this unwinds, it will be volatile.

    Imports into China are not half bad, notwithstanding some softness in Jan & Feb.
    From March to July, import numbers for copper (all forms) have been pretty solid. Those numbers will likely stay elevated since many Chinese smelters are throttling back, unable to find enough copper concentrate at a price they can make money on.

    FCX announces token cuts of 150mm lbs. (cuts for 2016, mind you) and the copper price zooms a dime on the day.

    World mine production is well over 40 billion lbs. annually.

    So FCX's 2016 cut from their North American operation represents a reduction of 0.375% (one pound for every 266 pounds produced in the world).

    That should show how tightly wound the copper market is, and how volatile it can be to any news that doesn't support the copper shorts "story".

    Sentiment: Strong Buy

  • ultraific3 ultraific3 Aug 28, 2015 12:54 PM Flag

    Very illiquid public market for those unsecured bonds. Your ADD flares up and your Ritalin stops working, you might have a panic attack and be forced to take 35 cents on the dollar for those bonds. You might want to hold to maturity there big guy......

    Sentiment: Strong Buy

  • Reply to

    Time for a big buyback.

    by txthunderss Aug 26, 2015 8:47 PM
    ultraific3 ultraific3 Aug 28, 2015 12:51 PM Flag

    Private:

    Don't expect them to reveal anything substantive regarding a "debt plan" at the next quarterly release.

    They are likely seeking to buy debt back in either open market purchase or negotiated deals w. institutions holding their notes.

    Announcement of any refinance deal would only make that effort more expensive.

    Don't you remember the "komono" comment Perron made in the last call.....?

    Sentiment: Strong Buy

  • Reply to

    FCX copper cuts

    by carlrich Aug 27, 2015 9:11 AM
    ultraific3 ultraific3 Aug 27, 2015 10:10 PM Flag

    Little over 1% supply growth for 2015 - based on what is known. About 200k mt growth YOY from 2014 on a worldwide basis.

    Regarding that 2015 expectation: I'm treating Zambia gently by only anticipating a net 5% YOY drop. This is net some additions from Lumwana, Lubambe, and YTD reported output from Sentinel offsetting damage the industry will feel in H2. The number will likely be more impactful. I did remove most of Sentinel's latest planned output, as First Quantum has indicated they plan to shut it down to honor the force majeure, transferring all power to Kansanshi. Zambia seems to have superceded what First Quantum said in an August 6th press release about Sentinel being fully restored, so that shutdown is likely back on. So all in, a safe 5% drop YOY from Zambia, vs. 2014. I suspect it will be worse than that, however, as even First Quantum's Kansanshi will struggle, as will Glencore's Mopani, Barrick's Lumwana. and Vendanta's Konkola u/g operations. So I suspect all these firms 'guidance' for Zambia is pretty much out-the-window, and their "wishful thinking" won't generate much needed electricity they need to stave off outright reductions in output from running mills and SX/EW operations at less than capacity.

    For 2016, I've got 3.7% world supply growth, allowing for a 750k mt unassigned supply disruption over what is specifically known for that period. This is mostly driven by grade, and grade is projected to fall 3-6% alone in Chile for 2016. Of the 150+ sizable copper mines in the world, it won't take much grade reduction from each aging mines to add up to 750k mt. Standard Chartered has 1mm as the hit to 2016 from grade reduction alone. Codelco's latest production plan has a loss of almost 100k mt YOY in '16, but I'm ignoring that, using the discounted Standard Chartered number instead. Really too soon to tell on 2016, but it won't be 5-6% growth, that is for sure.

    Sentiment: Strong Buy

  • Reply to

    FCX copper cuts

    by carlrich Aug 27, 2015 9:11 AM
    ultraific3 ultraific3 Aug 27, 2015 9:24 PM Flag

    You saw the latest report from ICSG, didn't you?

    It dates from August 20th, and is through May 2015.

    According to their math, they have Refined Balance at 4k MT surplus, and 49k MT surplus when they factor in Chinese bonded stock change. So in the grand scheme of things, ICSG says the market is essentially in balance at May 2015.

    ICSG had supply growth at 3.6% thru YTD May (2015) vs. same period in 2014. That seems a bit high, but should come down in H2 on lower grade from Escondida, and smoothing out of MHM YOY output data makes itself felt in the numbers.

    Another metals prognostication outfit in the space (World Bureau of Metal Statistics - WBMS) has June 2015 YTD in a surplus.

    These guys have been getting mentioned a lot in various media (Bloomturd, SMM) recently as they tend to overshoot their estimates (mostly on scrap conversion into refined metal, it appears), and that fits the "theme" (story) that some outfits like Bloomburd and SMM have seemingly been peddling this year (oversupplied copper market).

    WBMS had fully year copper markets for 2011, 2013 and 2014 in surplus (2011: +244k mt, 2013: +105k mt. and 2014: +283k mt) in surplus. For 2012, these guys said the deficit was only -106k mt.

    By contrast, ICSG had deficits in 2011, 2013, and 2014 of -166k mt. -584k mt, and -349k mt. with 2012 being in surplus at +313k mt.

    Polar opposite positions.

    WBMS usually has their numbers for periods prepared with 6 weeks after the close of a period, and does not make revisions. This reporting is probably too fast for something as large and expansive as the world copper market, so I suspect there are lots of raw estimates in their data.

    ICSG takes their sweet time (about 10 weeks) and makes revisions to prior data for up to two-three years afterward, for a period previously reported on.

    Whose right? I suspect ICSG is since exchange/bonded inventories have come down from prior periods, and they would not do that unless demand exceeded supply.

    Sentiment: Strong Buy

  • Reply to

    Time for a big buyback.

    by txthunderss Aug 26, 2015 8:47 PM
    ultraific3 ultraific3 Aug 27, 2015 8:36 PM Flag

    Sure they do.

    If you think they spend $81mm on capex this year (cash), you're smoking dope.

    If TC does spend $81mm for capex in 2015 using cash, the management of this company is smoking dope.

    Sentiment: Strong Buy

  • Reply to

    Copper Prices

    by brianchesnutt Aug 20, 2015 11:13 PM
    ultraific3 ultraific3 Aug 27, 2015 5:31 PM Flag

    Market kicked them in the head a couple more times since their 7/28 disclosure that they would wait to announce cuts concurrent w. Q3 release.

    Market was impatient, and Jim Bob and Richard filled their diapers so they decided it was time to act, and not wait. Glad for that.

    However, they need to announce more cuts.

    Whether such are real cuts or just clarifications on growth projects (namely Cerro Verde), doesn't matter.

    But more is needed from them to dispel this "expected supply growth fever" that the copper market is gripped by.

    Various bank idiots (analysts) are STILL predicting 5-6% supply growth for 2015.

    This is what happens when bank commodity analysts use too much cocaine: They predict 5-6% copper mine production growth.

    These jokers have done this (overshot w. ludicrous expectations of supply growth estimates) every year since 2012, only to have to take them down as the year progresses.

    The real number for 2015 supply growth is down around 1%, 1.5% tops.

    Sentiment: Strong Buy

  • Speculators betting on lower LME copper prices, beware
    Thu Aug 27, 2015 6:08am EDT
    Reuters
    LONDON | By Pratima Desai

    Excerpts:

    "We need to see how things settle down post the knee-jerk reaction to the rate cuts", said Leon Westgate, analyst at Standard Bank. "Nevertheless, nearby copper spreads remain tight ... helping to deter fresh shorts."

    The spread between copper on the LME and Shanghai Futures Exchange, adjusted for China's value-added tax and shipping costs and known as the arb, at the moment favors the LME, where prices are lower, due to the recent devaluation of the yuan.

    "The import arb is wide open and warrant cancellations in Asia have risen," said Vivienne Lloyd, analyst at Macquarie.

    The discount for the three-month copper stands at more than $130 a tonne, compared with a premium earlier in August. At one point this week it rose above $150.

    Stocks of copper in LME-approved warehouses stand at around 369,000 tonnes, with about 14 percent of that earmarked for delivery and known as canceled warrants.

    Stronger demand from China is also expected to reinforce a tighter LME market.

    The highest canceled warrants, between 31 and 40 percent of stocks at around 43,000 tonnes, are in South Korea. In Malaysia the number is around 20 percent of around 101,000 tonnes.

    Traders expect most of that metal to show up in China.

    =============
    The Chinese are starting to pick off cheap copper. Expect imports into China to rise.
    Eventually, someone will yell "FIRE!!!!!!!" in that crowded theater filled with copper shorts.

    Sentiment: Strong Buy

  • Reply to

    Like the sector but getting to much weight in TC

    by larrry46 Aug 27, 2015 11:28 AM
    ultraific3 ultraific3 Aug 27, 2015 4:33 PM Flag

    Chucky needs a good slapping......

    Sentiment: Strong Buy

  • Reply to

    FCX copper cuts

    by carlrich Aug 27, 2015 9:11 AM
    ultraific3 ultraific3 Aug 27, 2015 4:28 PM Flag

    Carl,

    Today's math on 2015 supply growth down to 198k MT, as I plugged in lowered YOY growth for Grasberg, based on their latest...

    This is about 1.06% supply growth from 2014. Far cry from the 5-6% some of the bank idiots are predicting.

    As it stands, if only using 75% of the avg. supply disruption factor of 1mm. mt (typically what analysts use, or claim they use in their annual supply forecasts), or 750k MT for 2016, total net growth for 2016 is only 3.72%.

    Have not heard anyone major talking about output increases from Q2 releases (which all surfaced about a month ago), and if anything, the difficulties the industry experiences have only worsened since various of the larger players in the industry reported Q2 production. Case in point, Zambia's conditions on the ground certainly haven't improved in the past month, and all the majors operating there will see lower H2 output vs. H1.

    So I don't forecast a 2015 tidal wave of copper. I can put my surfboard back into the rafters of the garage.

    Sentiment: Strong Buy

  • Reply to

    Balance Sheets

    by switch_1995 Aug 26, 2015 4:42 PM
    ultraific3 ultraific3 Aug 27, 2015 4:13 PM Flag

    China needs to start up a refinancing program available to SOE( and private companies) where a lot of this high cost debt of state-owned enterprises is replaced w. lower cost debt. This is a multi-year project for them, but the rates of interest that SOE and private enterprises pay on borrowing in the 2-5 yr range is crazy high. Create pension fund pools, issuing debt to non-gov't parties. Giant bond mutual funds. Aussies did it more than a decade ago.

    That would be a good place for the Chinese to start some decent blocking & tackling, and improve profits for industry. Would help support stock prices if so much wasn't going out the door for interest costs.

    Sentiment: Strong Buy

  • Reply to

    Time for a big buyback.

    by txthunderss Aug 26, 2015 8:47 PM
    ultraific3 ultraific3 Aug 27, 2015 3:59 PM Flag

    Ace in the hole, to make effort to prevent delisting.

    Couple days of big orders, in something illiquid as TC trades, will move it up. Tie that w. some good news released prior, who knows what the stock might do.

    Sentiment: Strong Buy

  • Reply to

    FCX copper cuts

    by carlrich Aug 27, 2015 9:11 AM
    ultraific3 ultraific3 Aug 27, 2015 3:54 PM Flag

    I suspected they would be more aggressive w. NA operations, which may still come. This (thus far) was on the lighter side.

    They might better 'illuminate' what Cerro Verde expansion does next year so that might be the next "cut" announcement (for 2016).

    They've been pumping out a lot of capacity "noise" (see slide 10) on that op but no hard / fast expectation on what really happens in 2016 w. it.

    It will be in ramp-up next year, and it obviously won't operate at capacity in 2016. They need to start shinning light on that fact of science, as most of their disclosures on that expansion project keep reiterating "capacity, capacity, capacity".

    The grades are falling at Cerro Verde so if they say the mill can add 600mm lbs. copper output annually, given the grade decline, what's the real number?

    The existing Cerro Verde operation performance (for them) in 2015 has been poor, as they've run grades of 0.45% (H1-2015) vs. 0.58% (H2-2014), resulting in 158mm lbs. production in H1-2015 vs. 366mm lbs. in H1-2014. Existing mill operations are probably being disrupted by ongoing construction activities as the mill thru-put at CV is down H1 vs. H1, as well.

    At YE2014, avg. PP reserve grade for mill designated material at Cerro Verde was 0.37%. Right now, their running mid-40's. In 2014, the avg. grade was 0.54%. From 2010-2013, grades at CV mill were 0.60% to 0.66%.

    So they've been high-grading CV for a number of years, and that is causing overall reserve grades to fall.

    In the future, the CV mill expansion will be two steps forward, but the revision to the avg. mill designated reserve grade will be one step backward.

    Thus, FCX propaganda about the new CV mill expansion adding 600mm lbs. copper annually, that's more noise I suspect, than reality. Once it's full ramped up in 2017, the added boost will quickly prove to be less, since they'll be burning up the sulfide deposit at CV at 3x the rate previously.

    Grade decline will, thus, accelerate faster

    Sentiment: Strong Buy

  • Reply to

    FCX copper cuts

    by carlrich Aug 27, 2015 9:11 AM
    ultraific3 ultraific3 Aug 27, 2015 3:25 PM Flag

    Carl,

    FCX has estimated 2016 and 2017 copper output from Grasberg at 1.5 billion and 1.3 billion lbs. since at least March [YE 2014 data releases].

    Go look at their latest presentation from the Q2 CC. Slide 33.

    These are consistent w. earlier #'s released in conjunction w. release of their 2014 10-K and YE 2014 data on their Indo ops. I have this built into my supply analysis by yr.

    As for what's going on, Grasberg open pit (OP) is in the terminal phase of it's life. They stop mining from it in 2017, and go 100% u/g at that point.

    So they are at the bottom, where the higher grades sit.

    That being said..

    Can they live up to 1.5bb and 1.3bb output in 2016 and 2017?

    Maybe.

    They have to hit on all cylinders. No screws ups. No slides.

    Mill rates have to increase, substantially.
    They have not operated at that level of capacity since 2010.

    The only years in the past decade where they did that level of copper output were as follows:
    2010 - 1.33 billion lbs. copper (avg. grade 0.85% / 230k tpd on mill / 149.8k tpd from Grasberg OP)
    2009 - 1.641 billion lbs. copper (avg. grade 0.98% / 238k tpd on mill / 166.3k tpd from Grasberg OP)
    2005 - 1.689 billion lbs. copper (avg. grade 1.13% / 216.3k tpd on mill / 100% from Grasberg OP)

    All other years (2008, 2007, 2006) ranged from 1.1bb to 1.3bb on grades of 0.83% to 0.85%).

    Output from 2011-2014 were all well under 1.bb lbs. output annually.

    The overall Grasberg mill sources about 50-65% of ore from Grasberg OP, and the rest from lower grade Deep Ore Zone (u/g).

    The pit is deeper now than it was in 2009-2010. Slows hauling from pit.

    Grasberg PP reserve grades remaining stand at 0.96% w. 174mm tonnes left, and DOZ PP reserve grades 0.54% remaining stand at 146mm tonnes left.

    DOZ outlives Grasberg OP (which goes down in 2017).

    Blended at 2/3's Grasberg, 1/3 DOZ, I don't think they have the avg. grade since pulling from OP at rates of 150k tpd will be tough work.

    I think they are short.

    Sentiment: Strong Buy

  • Reply to

    FCX copper cuts

    by carlrich Aug 27, 2015 9:11 AM
    ultraific3 ultraific3 Aug 27, 2015 2:43 PM Flag

    I'm getting tired of low prices. Copper prices are certainly not reflective of supply/demand fundamentals right now. It's time for much higher prices. Need the copper shorts to run for the exits all at once now.

    Sentiment: Strong Buy

  • Reply to

    FCX copper cuts

    by carlrich Aug 27, 2015 9:11 AM
    ultraific3 ultraific3 Aug 27, 2015 2:37 PM Flag

    In the last CC, they lowered sales at Grasberg for 2015 to an expectation of 860mm lbs.

    In their YE 2014 sales guidance for 2015, they had penciled in 960mm lbs. for Grasberg, up from 664mm lbs. of sales in 2014. In 2014, Grasberg produced 651mm lbs.

    So now the 2015 sales guidance is 835mm lbs. I doubt they produce much beyond this, since they looked to be coming up short on output after two quarters of 2015 reported, presuming of course, that sales = production.

    In this recent release, they mention the following:

    "PT-FI’s concentrate shipments are proceeding normally following receipt of its export license from Indonesian government authorities on July 29, 2015. During the third quarter, milling operations have been impacted by a reduction in process water available under current El Nino conditions, resulting in a reduction in PT-FI’s annual copper sales volumes for 2015 of approximately 25 million pounds from the July 23, 2015 estimate of 860 million pounds."

    Grasberg is in mountainous jungle where is rains almost everyday. So blaming El Nino is creative, I suppose.

    Needless, I had penciled in my supply analysis, a bump in 2015 YOY output for Grasberg 140k MT. Looks like I get to take that down by 62k MT.

    FCX didn't go BIG, but every little bit helps.
    Now a few of the other majors need to step back into the confession booth....

    Sentiment: Strong Buy

TC
0.4989+0.0689(+16.02%)Aug 28 4:00 PMEDT