TORONTO (miningweekly.com) – Molybdenum miner Thompson Creek Metals this week reported a surprise profit excluding special items of $13.8-million, or $0.08 a share, beating Wall Street analysts’ average expectation of a $0.02 loss a share for the second quarter ended June 30.

The company boosted molybdenum output 58% to 6.5-million pounds from 4.1-million pounds a year earlier, and managed to bring down its average cash costs by 49% to $7.46/lb, compared with $14.57/lb.

Its net loss of $19.2-million, or $0.11 a share, was, however, wider than the net loss of $14.8-million, or $0.09 a share, a year earlier and included $34.8-million in noncash foreign exchange losses on intercompany notes and an income and mining tax expense of $2-million, partially offset by operating income of $17.2-million.

Molybdenum sales increased 29% to 9.7-million pounds, compared with 7.5-million pounds, resulting in revenues rising 4% year-on-year to $112.7-million, compared with $109.6-million.

The company’s NYSE-listed shares on Thursday rose 4.18% in premarket trading to $2.99 apiece, after the company released its second-quarter results late on Wednesday.

Thompson Creek chairperson and CEO Kevin Loughrey told Mining Weekly Online the molybdenum market remained particularly soft, with very little spot activity taking place.

“The market is in a slight oversupply at present and I do not see a significant catalyst, such as improved demand from the steel-making industry, on the horizon,” he said in a telephonic interview.

At the Thompson Creek mine, in Idaho, molybdenum output increased 74% to 4.4-million pounds, at a cash cost of $5.33/lb, compared with 2.5-million pounds at a cash cost of $13.46/lb for the second quarter of 2012.

Production was favourably impacted by higher ore grades, which resulted in higher recovery and production, and cash costs were favourably impacted by the absence of stripping costs related to the next phase of mining. Lower-of-cost-or-market product inventory write-downs at the mine were nil in the period, compared with $6.6-million a year earlier.

At the Endako mine, in British Columbia (BC), in which the company has a 75% interest, Thompson Creek’s share of molybdenum output increased 34% to 2.1-million pounds at a cash cost of $11.93/lb produced, compared with 1.6-million pounds at a cash cost of $16.37/lb produced.

These improvements were mainly the result of the higher ore grades from the mined stockpile material and higher recoveries. Based on its 75% interest, the company recognised lower-of-cost-or-market product inventory write-downs at the Endako mine of $8.3-million in the period.

During the third quarter of 2012, in an effort to reduce costs at the Endako mine, the company suspended mining ore from the Denak West pit and had been processing stockpiled material. About one-third of the existing stockpiled material had been milled through to mid-2013 and the company had resumed mining ore in the Endako pit in May and in the Denak West pit in June, and was now processing two-thirds of material from fresh ore and one-third from stockpiled material.

In part as a result of mining fresh ore, for the month of July throughput averaged 51 000 t/d and recoveries averaged 75%. Management expected to continue optimising production at Endako and might undertake additional cost savings and other measures at Endako in response to molybdenum market conditions.

Loughrey pointed to the increased production at the company’s operating mines as being the primary means at the company’s disposal to reduce unit costs, and this trend was expected to continue at Endako as its throughput and recoveries improved.

Meanwhile, commissioning of significant mill equipment at the C$1.57-billion Mt Milligan gold/copper mine, in BC, was under way and progressing on schedule.

The primary crusher and conveyor had been commissioned, the coarse ore stockpile has been bedded, and the mine was positioned to deliver ore to the crusher. A phased start-up of the concentrator was expected to start early this month, with the first ore feed expected to take place by mid-August and concentrate production expected to start shortly thereafter. All the concentrator grinding and flotation circuits were expected to be operational in September.

"We are extremely pleased to report that the commissioning of the new mill is progressing and that start-up is expected within the next several days. Our employees and contractors have been working diligently to keep the project on schedule for a start-up this month and we are only days away from achieving this major milestone.

“Once start-up has commenced, we expect commercial production to begin in the fourth quarter of this year, followed by a twelve-month ramp up period to full design production and recovery,” Loughrey said.

He added that the company had enough sustaining capital to see the project through to commercial production and to complete the ramp up.

The company expected to produce between 27 500 lbs to 30 500 lbs of molybdenum in 2013 and 2014 at cash costs of between $6.50/lb and $7.50/lb.

The average spot price of molybdenum was hovering around $9.34/lb on Monday.

Capital spending to the end of the year would total between $475-million and 525-million, declining to between $55-million and 80-million in 2014.

Loughrey noted that while some exploration efforts were underway t the Thompson Creek mine, the company only expected to restart any substantial exploration efforts at its operations during 2014.

Further, Thompson Creek on Thursday announced the appointment of gold junior St Andrew Goldfields CEO Jacques Perron as its new CEO and director, effective no later than November 1. As of the first day of Perron’s appointment, Timothy Haddon, the company’s lead director, would succeed Loughrey as chairperson.