Mar 13, 2008 Thompson Creek Announces 2007 Financial Results View Complete News Release in PDF Overview (all in U.S. dollars):
Thompson Creek Metals Company Inc. ("the Company"), one of the world's largest publicly traded, pure molybdenum producers, today announced financial results for the year ended December 31, 2007 prepared in accordance with Canadian generally accepted accounting principles. All dollar amounts are in U.S. dollars unless otherwise indicated. "Thompson Creek achieved significant financial success in 2007 despite experiencing lower molybdenum production at both of our operating mines in the second half of the year," said Kevin Loughrey, Chairman and Chief Executive Officer. "The production difficulties stemming from a rock slide at the Endako Mine and the processing of a low-grade stockpile at the Thompson Creek Mine are now behind us. At the Thompson Creek Mine, where we began mining Phase 6 ore in the fourth quarter of 2007, the ore grade has risen as expected and molybdenum production currently is on track to achieve the guidance that we previously announced for 2008. "Mining operations are also going well and on track to achieve forecasted production levels at the Endako Mine, where we have experienced good grades and recoveries from the ore that we have been mining from the Denak West Pit since the beginning of the year," Mr. Loughrey stated. "With molybdenum prices showing continued strength, we believe that the best is still to come for Thompson Creek shareholders. The Company is well-positioned to deliver substantial gains in earnings and shareholder value this year and beyond, especially due to our internal growth plans. "Molybdenum production from our existing mines is expected to more than double from the 16.3 million pounds recorded in 2007 to at least 34 million pounds in 2009 due to higher ore grades at the Thompson Creek Mine. The Company is considering a possible mill expansion at the Endako Mine and the development of the Davidson Deposit. Both of these expansion projects could add to production starting in 2010. They currently are under review and decisions will be announced in the coming months. "An important benefit for our shareholders from rising production is the impact on per-pound production costs, which for the overall company are expected to be lower this year than they were in 2007 and lower still in 2009," Mr. Loughrey added. "During 2007, the reported mineral resources, mineral reserves and mine life increased substantially due to a re-evaluation of our existing mining properties using the assumption of $10 per pound for the long-term price for molybdenum. At the Thompson Creek Mine, additional drilling in 2008 is expected to lead to a second revision of the estimates for reserves and mine life." Financial Results Thompson Creek's revenues totaled $197.8 million in the fourth quarter and $914.4 million in 2007. The average realized price on the Company's molybdenum sales was $31.08 per pound in the fourth quarter and $28.77 per pound for the year. In 2006, revenues for the fourth quarter and the full year were $150.8 million -- primarily from sales of molybdenum in the 67 days following the acquisition of Thompson Creek Metals Company USA (formerly known as Thompson Creek Metals Company) on October 26, 2006. The average realized price for molybdenum sales in 2006 was $25.74 per pound. Prior to October 26, 2006, no revenues were earned by the Company as it was in the development stage. After the deduction of operating, selling, marketing, depreciation, depletion and accretion costs, the Company generated earnings from mining and processing operations totaling $47.9 million in the fourth quarter and $301 million in 2007, compared with $5.7 million in both the fourth quarter and full year 2006. Net income for the fourth quarter of 2007 was $28.9 million or $0.25 per basic and $0.22 per diluted share, compared with a net loss of $12.5 million or $0.14 per basic and diluted share in the fourth quarter of 2006. The per-share figures are based on a weighted-average number of shares outstanding of 113,290,000 (basic) and 130,982,000 (diluted) in the fourth quarter of 2007 and 86,885,000 (basic and diluted) a year earlier. At March 13, 2008 there were 113,484,000 shares outstanding. Net income in 2007 was $157.3 million or $1.43 per basic and $1.24 per diluted share, compared with a net loss of $20.6 million or $0.36 per basic and diluted share a year earlier. The per-share figures are based on a weighted-average number of shares outstanding of 110,195,000 (basic) and 126,599,000 (diluted) in 2007 and 57,688,000 (basic and diluted) a year earlier. Net income and earnings from mining and processing operations in both years were negatively affected by the inclusion in operating expenses of a non-cash acquisition expense related to the inventory portion of the purchase price adjustment associated with the Company's purchase of Thompson Creek USA in October 2006. This non-cash expense amounted to $68.9 million in the fourth quarter of 2006 and $31.0 million in 2007. Cash flow from operating activities was $45.7 million in the fourth quarter and $182.6 million in 2007, compared with $85.2 million in the fourth quarter and $75.4 million in the full year 2006. Cash balances were $113.7 million at December 31, 2007, compared with $98.1 million at December 31, 2006. During the fourth quarter of 2007, Thompson Creek made payments to reduce its First Lien Credit Facility by $16.7 million to $236.1 million at December 31, 2007. During 2007, the Company reduced debt by a total $165.8 million, including a payment of $61.9 million to fully discharge its Second Lien Credit Facility. Since the acquisition of Thompson Creek USA in October 2006, the Company has used $327 million of cash to reduce acquisition debt and to pay the former owner $61.5 million in December 2006 for certain receivables acquired on the acquisition date and $100 million in January 2008 as part of a contingent purchase price payment linked to the performance of the molybdenum price. If the average price for molybdenum exceeds $15 per pound in 2009, a final $25 million will be owed to the former owner in January 2010. The Company's mines produced 3.4 million pounds of molybdenum in the fourth quarter of 2007 and 16.3 million pounds in 2007. The weighted-average cash operating expense was $11.51 per pound in the fourth quarter and $8.39 per pound for 2007. The production amounts for the fourth quarter and full year 2007 reflect molybdenum produced at the Thompson Creek and Endako mines but do not include molybdenum purchased from third parties, roasted and sold by the Company. The Thompson Creek Mine produced 1.9 million pounds in the fourth quarter and a total of 9.2 million pounds in 2007. Sales of Thompson Creek Mine molybdenum totaled 1.4 million pounds in the fourth quarter and 12.1 million pounds in 2007. The average cash operating expense was $14.18 per pound for the fourth quarter and $8.35 per pound for 2007. The Company's 75% share of Endako Mine's production was 1.5 million pounds in the fourth quarter and a total of 7.1 million pounds in 2007. Sales of Endako Mine molybdenum totaled 1.7 million pounds in the fourth quarter and 7.4 million pounds in 2007. The average cash operating expense was $9.25 per pound for the fourth quarter and $8.45 per pound for 2007. Cash operating expenses represent operating expenses less non-cash items including inventory purchase price adjustments and stripping costs deferred in the reporting period. Cash operating expenses and cash operating expenses per pound are considered a key measure by Thompson Creek in evaluating the Company's operating performance. Cash operating expenses are not a measure of financial performance, nor does it have a standardized meaning prescribed by generally accepted accounting principles ("GAAP") and may not be comparable to similar measures presented by other companies. Outlook The molybdenum price on world markets is the single most important variable affecting the cash flow and profitability of Thompson Creek. Management expects that molybdenum prices will remain strong in the near term. Molybdenum production of between 16.5 and 17.0 million pounds at a cost of between $6.00 and $6.50 per pound is expected from the Thompson Creek Mine in 2008. The Company's 75% share of the Endako Mine production is expected to be between 6.5 and 7.5 million pounds at a cost of between $9.50 and $10.25 per pound. This production profile and the strong current market price for molybdenum are expected to allow the Company to meet its cash requirements for operations, capital expenditures, and debt payments during 2008. Mineral ore reserves were recalculated and increased at both operating mines during 2007 using a long-term price of $10.00 per pound for molybdenum sales. Proven and probable reserve estimates were revised at the Endako Mine and the mine life, using current milling rates, was extended to 27 years. The Thompson Creek Mine's proven and probable mineral reserve estimates were also revised and the mine plan was extended to 10 years. Thompson Creek Mine continues to work on development drilling and reserve analysis and will complete the second stage of its reserve study in 2008. A feasibility study that examined the expansion of the Endako mill was also completed in 2007. The study indicated there are potential significant returns on an investment of this nature. The Company and the other joint venture participant are reviewing the study and a decision is expected in 2008. In addition to the extended mine life at the current operating mines, development of the Davidson Project continues. The Davidson deposit is Canada's largest undeveloped molybdenum deposit. A feasibility study examining mining 2,000 tonnes of high-grade ore per day from the deposit and the shipping of this ore to the Endako mill for processing is being prepared by consultants. The Company expects to make a decision on the project in 2008. Sensitivity Analysis The effect of a $1-per-pound change in the average price of molybdenum on 2008 net income and diluted earnings per share, based on the Company's plan, is approximately $15.3 million and $0.12 respectively. The effect of a $0.01 change in the average Canadian/US exchange rate on 2008 net income and diluted earnings per share, based on the Company's plan, is approximately $1 million and $0.01 respectively. Additional information on the Company's financial position is available in Thompson Creek's Financial Statements and Management's Discussion and Analysis for the year ended December 31, 2007, which will be filed with SEDAR (www.sedar.com) and posted on the Company's website (www.thompsoncreekmetals.com). Conference call and webcast Thompson Creek will hold a conference call for analysts and investors to discuss its 2007 financial results on Friday, March 14, 2008 at 10 a.m. (Eastern). Kevin Loughrey, Chairman and Chief Executive Officer, and Derek Price, Chief Financial Officer, will be available to answer questions during the call. To participate in the call, please dial 416-644-3416 or 1-800-732-9307 about five minutes prior to the start of the call. A live audio webcast of the conference call will be available at www.newswire.ca and www.thompsoncreekmetals.com. An archived recording of the call will be available at 416-640-1917 or 1-877-289-8525 (Passcode 21262412 followed by the number sign) from 12:00 p.m. on March 14 to 11:59 p.m. on March 21. An archived recording of the webcast will also be available at Thompson Creek's website. About Thompson Creek Metals Company Inc. Thompson Creek Metals Company Inc. is one of the largest publicly traded, pure molybdenum producers in the world. The Company owns the Thompson Creek open-pit molybdenum mine and mill in Idaho, a 75% share of the Endako open-pit mine, mill and roasting facility in northern British Columbia, and a metallurgical roasting facility in Langeloth, Pennsylvania. Thompson Creek is also developing the Davidson Deposit, a high-grade underground molybdenum project near Smithers, B.C. The Company has approximately 800 employees. Its principal executive office is in Denver, Colorado, and it has other executive offices in Toronto, Ontario and Vancouver, British Columbia. More information is available at www.thompsoncreekmetals.com. Cautionary Note Regarding Forward-Looking Statements This news release contains "forward-looking information" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation which may include, but is not limited to, statements with respect to the timing and amount of estimated future production. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Thompson Creek and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include those factors discussed in the section entitled "Risk Factors" in Thompson Creek's annual information form for the year ended December 31, 2006 and dated March 26, 2007 which is available on SEDAR at www.sedar.com and is incorporated in its Registration Statement on Form 40-F filed with the United States Securities and Exchange Commission on October 30, 2007 which is available at www.sec.gov. Although Thompson Creek has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this news release and Thompson Creek does not undertake to update any such forward-looking statements, except in accordance with applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. Readers should refer to Thompson Creek's annual information form for the year ended December 31, 2006 and dated March 26, 2007 which is available on SEDAR at www.sedar.com and is incorporated in its Registration Statement on Form 40-F filed with the SEC on October 30, 2007 which is available at www.sec.gov and subsequent continuous disclosure documents available at www.sedar.com and www.sec.gov for further information on mineral reserves and mineral resources, which is subject to the qualifications and notes set forth therein. View complete news release in PDF | |
Email List
News Releases