TORONTO (miningweekly.com) – Molybdenum prices are firming nicely, underpinned by demand from Europe, the US, China and the rest of Asia, Thompson Creek Metals CEO Kevin Loughery said on Thursday.

“We think the general momentum of the market place is good, all of our customers, or the vast majority of them, are more optimistic about where they are headed,” he said in an interview.

“We see steel utilisation rates increasing, we see our sales to virtually all geographic areas increasing, so we are optimistic.”

Thompson Creek mines molybdenum - used to strengthen steel - from its 75%-owned Endako mine in British Columbia and the Thompson Creek mine, in Idaho, and also operates a metallurgical facility in Pennsylvania.

The company also expects to make a decision on how to develop its Davidson development project, also in British Columbia, before the end of this year, Loughrey told Mining Weekly Online.

Prices for molybdenum have rollercoastered from levels around $32/lb in the third quarter of 2008, down to as low as $8/lb in April last year, up to $18/lb around mid-year and then back again to $10/lb in the second half.

Since then, helped by rising steel demand and recovering economies, prices have recovered back to above $17/lb.

The most recent recovery has been more “a slow and steady rise”, Loughrey commented. “Which might be more healthy than a more robust one.”

Molybdenum inventory levels are low, both at Thompson Creek's customers as well as other producers, he said, although China remains an unknown as far as potential stocks are concerned.

PROJECTS

Thompson Creek is on schedule with a mill expansion project at its Endako operation, and is also working on economic analysis studies for potential scenarios at the firm's Davidson project, in British Columbia.

The C$109-million Davidson project was originally planned as a simple mining operation, an adit and small loadout facility, with the idea that ore would be trucked 200 km to the Endako mine for processing.

However, the project was put on hold after the financial crisis hit and moly prices fell, and Thompson Creek has used the delay to study the potential for a larger operation with a full-scale mine and infrastructure.

Economic analyses for both options should be completed later this year, and the company expects to make a decision by year-end, he said.

ACQUISITIONS

Thompson Creek has been saying for some time that it plans to use its strong balance sheet to pursue acquisitions, and Loughrey said on Thursday that the firm is still “very busy” assessing opportunities.

The company will look at potential targets in North America,  South America – especially Chile and Peru - and Australia, and will consider both copper and molybdenum assets, he said.

Thompson Creek ended the first quarter with ended the first quarter with cash, cash equivalents and short-term investments of $523,6-million and total debt of just $11,4-million.

Analysts have queried when the company will decide it has looked for long enough at acquisitions, and decide rather to return some cash to shareholders.

But Loughrey said he still believes there are opportunities to be had.

The firm's strong balance sheet also means it could take on debt to cover a more sizeable acquisition, he said.

“And of course there are those sellers out there that would like Thompson Creek stock,” he said on a conference call earlier in the day.

“So we try to keep our powder dry on all fronts.”

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