TORONTO (miningweekly.com) – Molybdenum-producer Thompson Creek Metals has cut its spending plans and will postpone a mine expansion, after a “sharp” decline in prices, the company said on Friday.

The firm will halt the expansion of its 75%-owned Endako mine, in British Columbia, and now only expects total capital expenditures of $69-million in 2009, compared with earlier estimates of $300-million.

Thompson Creek, which also mines molybdenum from the Thompson Creek mine, in Idaho, estimates it will have cash balances of approximately $225-million on December 31, plus an available undrawn $35-million revolving bank credit facility.

"This initiative to conserve cash, leaves Thompson Creek with a strong cash position and minimal debt of $18,1-million in equipment loans and puts the company in an excellent position to weather the downturn in worldwide economic activity,” said chairperson and CEO Kevin Loughrey.

The company maintained its production forecasts of between 25-million and 26-million pounds for 2008 and 31,5-million to 34-million pounds of molybdenum in 2009.

“However, the company can adjust its 2009 production plans promptly if market conditions worsen,” Thompson Creek cautioned.

The firm may be required to record impairments against goodwill and potentially against other assets, if market conditions remain weak.

Molybdenum, which traded on the spot market above $30/lb earlier this year, fell off sharply in October, and has dropped to around $10/lb, as global demand for steel feels the effects of recessionary concerns.

The Endako suspension is the second project deferral announced by Thompson Creek in as many months, after the company said on November 7 it had postponed the development of its C$109-million Davidson underground mine in Canada.

“While work on the Endako expansion project will be suspended, we will leave the project in a position to start up again when the molybdenum market improves,” Loughrey said.

Molybdenum is used to strengthen high-end stainless steel, in steel pipes and drills, and other extreme high- or low-temperature applications, as well as to prevent corrosion.

Thompson Creek shares fell 1,1% on Friday, to C$3,41 apiece by 16:10 in Toronto.

For an up-to-date list of companies that have announced cutbacks as a result of the financial crisis and commodity-price declines click here.

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