The Thompson Creek mine in Idaho
Dual-listed Centerra Gold is considering restarting its Thomson Creek mine, in Idaho, as a supply squeeze has sparked a rally in the price of molybdenum – a metal that is used to help toughen steel.
The molybdenum price has more than doubled in recent months, driven by a series of supply disruptions and growing demand from the renewables and military sectors. The price surged from about $15/lb in August 2022 to $38/lb in early February 2023, creating a positive price environment for molybdenum miners.
Centerra plans to issue a prefeasibility study on the Thompson Creek mine in the third quarter of the year, the company said last week.
The mine and concentrator were placed on care and maintenance in December 2014 when the mining and processing of Phase 7 ore was completed.
Besides the Thomspon Creek mine, Centerra also owns 75% of the Endako molybdenum mine, in British Columbia, and the Langeloth facility, in Pennsylvania. The Endako mine remains on care and maintenance.
The company will spend between $30-million and $35-million on care and maintenance at the two molybdenum mines this year. For the Thompson Creek mine, 2023 expenditures are expected to be about $18-million to $20-million, including $9-million to $10-million of care and maintenance costs and $9-million to $10-million of costs associated with project advancement including early site works, project de-risking activities such as geotechnical drilling and additional engineering costs as the company continues to assess a potential restart of the mine.
Centerra reports that it has streamlined operations at the Langeloth facility to operate with lower inventory levels on hand. The recent run-up in the molybdenum prices in excess of $30/lb results in additional cash outflow being required to purchase and maintain the same inventory levels, while finished molybdenum products will also ultimately be sold at these higher prices. If molybdenum prices remain elevated above 2022 levels, this would result in increased working capital requirements at the Langeloth facility in 2023, with the expected additional investment in working capital being about $15-million at a molybdenum price of $20/lb and $45-million at a molybdenum price of $30/lb.