THOMPSON CREEK ANNOUNCES FIRST-QUARTER 2010
Overview (all in U.S. dollars):
� Thompson Creek achieved excellent operational performance in the first quarter of 2010 as production achieved a quarterly record level of 8.3 million pounds and average production costs were reduced to $5.36 per pound. The price of molybdenum rose significantly during the quarter and, as is always the case, the price the Company received for its product lagged the market price by several weeks. Sales revenues were also limited by the previously announced buildup of inventory related to the scheduled maintenance shutdown of the Langeloth roasting facility.
� First-quarter 2010 net income was $1.1 million or $0.01 per basic and diluted share, including a non-cash charge of $24.5 million related to the previously a nnounced requirement under US GAAP to account for the Company�s outstanding common stock purchase warrants as a derivative liability, with changes in the fair market value recorded in net income.
� Non-GAAP adjusted net income in the first quarter (excluding the non-cash charge on the warrants) was $25.6 million or $0.18 per basic and $0.17 per diluted share.
� Cash flow from operations totaled $25.6 million in the first quarter of 2010.
� Total cash, cash equivalents and short-term investments at March 31, 2010 were $523.6 million. Total debt was $11.4 million.
� The Company reaffirmed previous estimates for 2010 for molybdenum production of 29 to 32 million pounds, sales of molybdenum produced at the Company�s mines of 27 to 30 million pounds, cash cost per pound produced of $6 to $7 per pound, and capital expenditures of approximately $298 million, including $209 million for its 75% share of the Endako expansion project.
Note: A conference call and webcast for analysts and investors is scheduled for Thursday, May 6, 2010 at 8:00 a.m. Eastern
TORONTO, ON - May 5, 2010 - TSX:TCM / NYSE:TC - Thompson Creek Metals Company Inc. (�Company�), one of the world�s largest publicly traded, pure molybdenum producers, today announced financial results for the three months ended March 31, 2010 prepared in accordance with United States generally accepted accounting principles (�US GAAP�). All dollar amounts are in United States (�US�) dollars unless otherwise indicated.
�Thompson Creek achieved excellent operational performance in the first quarter of 2010 and the Company is on track to achieve its production and cost guidance for the year,� said Kevin Loughrey, Chairman and Chief Executive Officer.
�During the first quarter of 2010, the Company produced 8.3 million pounds of molybdenum, a quarterly record, and cash cost per pound produced was $5.36 per pound, which was below our guidance of $6 to $7 per pound for the full year.
�Reflecting the recovery in the world economy and the steel industry in particular, the Company�s average realized price on molybdenum sales for the first quarter of 2010 has risen by 43% from the same quarter a year earlier. A continuation of the economic recovery can be expected to yield a positive trend for molybdenum prices and an improving financial performance for the Company over the medium term,� Mr. Loughrey said.
The Company�s financial performance for the first quarter of 2010 as reflected in its financial statements was affected by a lag between when a pound of molybdenum is produced and when the same pound is recorded in the income statement as being sold. For the first quarter of 2010, the time lag averaged about two months. As a result, a good portion of the Company�s sales revenues and operating expenses from its mines recorded in the first quarter of 2010 reflected the lower production levels and higher per-pound cash costs experienced in the fourth quarter of 2009.
Another important factor affecting first-quarter financial performance was the Company�s decision, as previously disclosed, to build inventory during the first four months of 2010 in order to supply customers during the scheduled five-week maintenance shutdown of the Langeloth Metallurgical Facility, which commenced April 26, 2010. As a result, as inventory from the Company�s mines increased by approximately 1.5 million pounds during the first quarter of 2010, sales volumes did not keep pace with the rise in mine production.
Additionally, contract sales typically trail the market price by one month and this was the main reason why the Company�s average realized sales price of $14.50 per pound for the first quarter of 2010 was below the average Platts Metals Week published price for molybdenum oxide for the first quarter of 2010.
The Company�s financial performance was also adversely affected by the previously disclosed requirement under US GAAP to account for the Company�s outstanding common stock purchase warrants as a derivative liability, with changes in the fair market value recorded in net income (loss). During the first quarter of 2010, the value of the outstanding warrants (and the Company�s reported derivative liability) gained by $24.5 million, resulting in a non-cash charge of the same amount. However, excluding the non-cash charges related to the warrants, the Company�s adjusted net income was $25.6 million, up from $9 million a year earlier.
First-Quarter Financial Results
The Company�s revenues rose by 62% to $127.8 million in the first quarter of 2010 from $78.8 million a year earlier primarily due to a 43% increase in the average realized price for molybdenum products to $14.50 per pound from $10.14 per pound.
After the deduction of operating, selling, marketing, general and administrative, exploration, depreciation, depletion, amortization and accretion costs, the Company generated operating income totaling $31.1 million in the first quarter, up from $1.7 million a year earlier.
First-quarter net income was $1.1 million or $0.01 per basic and diluted share, compared with $8.7 million or $0.07 per basic and diluted share in the first quarter of 2009.
Non-GAAP adjusted net income (excluding non-cash charges related to the Company�s warrants) was $25.6 million or $0.18 per basic and $0.17 per diluted share in the first quarter of 2010 versus $9 million or $0.07 per basic and diluted share a year earlier. The non-GAAP adjusted net income excludes non-cash charges related to the Company�s warrants of $24.5 million in the first quarter of 2010 and $0.3 million a year earlier.
The non-cash unrealized charges on common stock purchase warrants were the result of a previously disclosed requirement under US GAAP to account for the Company�s outstanding common stock purchase warrants as a derivative liability, with changes in the fair market value recorded in net income (loss), beginning January 1, 2009. The change to being classified as a derivative liability (from being classified as equity) was because the exercise price of the warrants is denominated in Canadian dollars instead of the Company�s functional currency (US dollars). The Company notes that up until the expiration date of the 24.5 million warrants (exercisable at C$9 per share until October 23, 2011), only one of two scenarios will occur. One is that the warrants are exercis ed and the Company receives cash, which would amount to approximately C$220 million if all of the warrants are exercised. The second is that the warrants expire unexercised and no cash proceeds are received. The Company does not have an obligation related to the recorded fair value that would require a cash payment, other than minor administrative expenses related to the exercise of warrants.
The Company�s mines produced 8.3 million pounds of molybdenum in the first quarter versus 6.1 million pounds in the first quarter of 2009. The Thompson Creek Mine produced 6.3 million pounds, up from 4.4 million pounds a year earlier, while the Company�s 75% share of the Endako Mine�s production was 2.0 million, up from 1.7 million pounds a year earlier.
The weighted-average cash cost per pound produced (including all stripping costs) was $5.36 per pound in the first quarter, down from $5.93 per pound in the first quarter of 2009. At the Thompson Creek Mine, cash cost per pound produced in the first quarter was $4.74 per pound, down from $5.83 per pound a year earlier. The Endako Mine�s cash cost per pound produced was $7.26 per pound, compared with $6.17 per pound in the same quarter a year earlier.
Selected Consolidated Financial and Operational Information
(US$ in millions except per share and per pound amounts )
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Conference call and webcast
Thompson Creek will hold a conference call for analysts and investors to discuss its first-quarter 2010 financial results on Thursday, May 6, 2010 at 8:00 a.m. (Eastern). Kevin Loughrey, Chairman and Chief Executive Officer, and Pamela Saxton, Chief Financial Officer, will be available to answer questions during the call.
To participate in the call, please dial 647-427-7450 or 1-888-231-8191 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 416-849-0833 or 1-800-642-1687 (Access code 53551188 followed by the number sign) from 11:00 a.m. on May 6 to 11:59 p.m. on May 13. An archived recording of the webcast will also be available onThompson 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 metallurgical roasting facility in Langeloth, Pennsylvania and a 75% share of the Endako open-pit mine, mill and roasting facility in northern British Columbia. Thompson Creek is evaluating the Mount Emmons Deposit, a high-grade underground molybdenum deposit near Crested Butte, Colorado. Thompson Creek has an option to acquire up to 75% of the property. The Company is continuing to pursue permitting of the Davidson Deposit, a high-grade underground molybdenum deposit near Smithers, B.C. The Company has approximately 750 employees. Its principal executive office is in D enver, Colorado, and it also has an office in Toronto, Ontario. More information is available at www.thompsoncreekmetals.com.
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Cautionary Note Regarding Forward Looking Information
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 future financial or operating performance of the Company, its subsidiaries and its projects, the future price of molybdenum, currency fluctuations, energy price fluctuations, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims a nd limitations of insurance coverage. 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 the Company 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, among others, risks related to general business, economic, competitive, political and social uncertainties including the current global recessionary ec onomic conditions, the associated low molybdenum prices and the levels of disruption and continuing illiquidity in the credit markets; risks related to foreign currency fluctuations; risks related to the volatility of the Company�s share price; changes in environmental regulation; the actual results of current exploration activities; actual results of reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; possible variations of ore grade or recovery rates; impurities and toxic substances in the mined material, failure of plant, equipment or processes to operate as anticipated; the age of the Langeloth Facility; structural integrity and old equipment at the Endako Mine; accidents, labor disputes and other risks of the mining industry; access to skilled labor; relations with employees; dependence upon key management personnel and executives; political instability, insurrection or war; disruption of transporta tion services; increased transportation costs and delays in obtaining governmental permits and approvals, or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled ��Risk Factors�� in the current Annual Report on Form 10-K, as amended, and subsequent documents filed on EDGAR at www.sec.gov and on SEDAR at www.sedar.com. Although the Company 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 the Company disclaims any obligation to update any forward-looking statements, whether as a result of new informati on, future events or results or otherwise. 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, the reader is cautioned not to place undue reliance on forward-looking statements.
Readers should refer to Thompson Creek�s current Annual Report on Form 10-K, as amended, which is available on SEDAR at www.sedar.com and EDGAR at www.sec.gov and other continuous disclosure documents available at www.sedar.com and www.sec.gov for further information on ore reserves and mineralized material, which is subject to the qualifications and notes set forth therein.