TORONTO (miningweekly.com) – Molybdenum mining specialist Thompson Creek Metals this week reported a slight decrease in first-quarter profit as low molybdenum prices impacted on the company’s finances, despite a significant surge in molybdenum production and sales, and lower production costs.
The company's New York-listed shares surged 17.69% on news that its $1.5-billion Mt Milligan copper/gold mine in British Columbia was on schedule.
Net income totalled $900 000 or nil per diluted share, down 18% when compared with the $1.1-million or $0.01 a share reported in the same quarter a year earlier. Adjusted income for the period was $900 000 or $0.01 a share. Wall Street analysts had, on average, expected an adjusted loss of $0.01 a share on revenue of $108.47-million.
Revenue for the quarter declined by 4% to $108.7-million, compared with $113.6-million in the same quarter a year previously.
The total sales of molybdenum increased by 18.5% to 8.8-million pounds, compared with 7.4-million pounds a year earlier. However, the realised price of molybdenum continued to decline steadily, losing 19.5% year-on-year to $11.87/lb, compared with the realised sales price of $14.47/lb in the first quarter of 2012.
“The molybdenum market is struggling to get legs. Molybdenum does well when the world economy is growing,” Thompson Creek CEO Kevin Loughry told Mining Weekly Online in a telephonic interview from Denver, Colorado.
The company’s molybdenum production increased 74% to 7.7-million pounds, up from 4.4-million pounds a year earlier as both the Thompson Creek mine, in Idaho, and the Endako mine, in BC recorded surging production and higher grades.
The average costs of molybdenum production decreased by 54% to $5.91/lb, compared with $12.95/lb in the same quarter a year earlier.
Loughry said it was currently hard to see a dramatic catalyst that would result in increased molydenum prices soon; however, there had been some small yet meaningful signs in the US and Asian automotive and aeronautic industries that could signal demand increases on the way.
At the Thompson Creek mine, molybdenum production for the quarter was 5.9-million pounds at a cash cost of $4.18/lb produced, compared with 3.4-million pounds at a cash cost of $10.34/lb produced for the first quarter of 2012. These improvements were mainly the result of the planned pit sequencing and mining in a higher-grade section of the mine during the first quarter.
At the Endako mine, the company's 75% share of molybdenum production for the first quarter was 1.8-million pounds at a cash cost of $11.75/lb produced, compared with one-million pounds at a cash cost of $21.87/lb produced for the first quarter of 2012. These improvements were mainly the result of the suspension of waste stripping activities and processing of stockpiled ore beginning in the third quarter of 2012, together with lower production in the first quarter of 2012 related to the start-up of the new mill.
Loughrey noted the company was planning to move back into ore mining at the Endako mine sooner than planned, as production increased.
Although production from Endako was significantly improved year-on-year, production was negatively impacted owing to winter tailings pond management issues, which Thompson Creek said would not be able to happen again.
Meanwhile, construction of the $1.5-billion Mt Milligan mine was progressing apace, with the overall project completion estimated to be at 89% as at the end of March. The company said the project remained on schedule, with commissioning and start-up expected to start in August and commercial production of copper and gold expected in the fourth quarter.
The company’s NYSE-listed stock closed at C$3.81 on Thursday.