Mr. Jacques Perron reports
THOMPSON CREEK REPORTS SIGNIFICANTLY IMPROVED THIRD QUARTER 2014 FINANCIAL RESULTS
Thompson Creek Metals Company Inc. has released its financial results for the three and nine months ended Sept. 30, 2014, prepared in accordance with United States generally accepted accounting principles. All dollar amounts are in U.S. dollars unless otherwise indicated.
Jacques Perron, chief executive officer of Thompson Creek, said: "We are pleased with our much improved financial performance for the quarter, as well as year to date. For the quarter, we had revenue of $229.3-million, cash flow from operations of $83.0-million, and operating income of $63.8-million. We ended the quarter with $266.6-million of cash, an increase of 23 per cent from the last quarter."
Highlights for the third quarter 2014
- Total cash and cash equivalents at Sept. 30, 2014, were $266.6-million, compared with $216.1-million at June 30, 2014, $202.7-million at March 31, 2014, and $233.9-million at Dec. 31, 2013.
- Cash generated by operating activities was $83.0-million in the third quarter of 2014 compared with $19.5-million in the third quarter of 2013.
- Consolidated revenues for the third quarter of 2014 were $229.3-million, up from $90.8-million for the third quarter of 2013, primarily as a result of copper and gold revenue of $100.7-million from Mt. Milligan mine. For the third quarter of 2014, the company made three shipments and sales of copper and gold concentrate.
- Sales volumes and average realized sales prices for copper and gold in the third quarter of 2014 were 16.5 million pounds of copper at an average realized price of $3.02 per pound and 57,974 ounces of gold at an average realized price of $952 per ounce. Molybdenum sales volumes in the third quarter of 2014 were 8.9 million pounds at an average realized price of $13.94 per pound compared with 8.3 million pounds at an average realized price of $10.30 per pound for the third quarter of 2013.
- Consolidated operating income for the third quarter of 2014 was $63.8-million compared with operating income of $4.5-million for the third quarter of 2013. The increase in consolidated operating income in the third quarter of 2014 was due primarily to increased operating income from the Thompson Creek mine (TC mine) and the addition of operating income from Mt. Milligan mine.
- Non-generally accepted accounting principles unit cash costs for copper and gold for the third quarter of 2014 were, on a byproduct basis, 77 cents per pound of copper, and, on a co-product basis, $1.80 per pound of copper and $477 per ounce of gold. The byproduct cash cost for copper for the third quarter of 2014 was positively impacted by increased gold ounces sold during the third quarter when compared with the second quarter of 2014; however, a decrease in average realized gold sales prices resulted in higher byproduct cash cost for copper for the third quarter, as compared with the second quarter.
- Net loss for the third quarter of 2014 was $11.1-million, or five cents per diluted share, compared with net income of $13.8-million, or six cents per diluted share, for the third quarter of 2013. The third quarter of 2014 and 2013 included non-cash foreign exchange losses of $60.3-million and foreign exchange gains of $24.2-million, respectively, primarily on intercompany notes.
- Non-GAAP adjusted net income for the third quarter of 2014 was $38.3-million, or 17 cents per diluted share, compared with non-GAAP adjusted net loss of $7.6-million, or four cents per diluted share, for the third quarter of 2013. Non-GAAP adjusted net income for the third quarter of 2014 and 2013 excluded foreign exchange losses and gains, net of their tax impacts, respectively.
- Copper and gold payable production during the third quarter of 2014 was 16.3 million pounds of copper and 60,366 ounces of gold.
- Molybdenum production for the third quarter of 2014 was 6.6 million pounds compared with 8.5 million pounds in the third quarter of 2013. Non-GAAP average molybdenum cash cost per pound produced for the third quarter of 2014 was $6.77 per pound compared with $5.93 per pound in the third quarter of 2013.
- Capital expenditures in the third quarter of 2014 were $21.9-million, comprising $20.5-million for Mt. Milligan mine, and $1.4-million of other capital costs for Endako mine, TC mine, the Langeloth facility and corporate combined, compared with $112.9-million in the third quarter of 2013.
- Total debt, including capital lease obligations, at Sept. 30, 2014, was $977.1-million, compared with $1,012.8-million at Dec. 31, 2013.
SELECTED CONSOLIDATED FINANCIAL AND OPERATIONAL INFORMATION
(In millions of U.S. dollars, except per share, per pound and per ounce)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2014 2013 2014 2013
Revenues
Copper sales $ 45.7 $ - $ 140.3 $ -
Gold sales 55.0 - 133.5 -
Molybdenum sales 124.3 85.7 353.5 303.1
Tolling, calcining and other 4.3 5.1 11.4 14.2
Total revenues 229.3 90.8 638.7 317.3
Costs and expenses
Cost of sales
Operating expenses 133.4 66.9 395.2 212.6
Depreciation, depletion
and amortization 22.7 11.6 78.3 38.5
Total cost of sales 156.1 78.5 473.5 251.1
Total costs and expenses 165.5 86.3 504.5 278.5
Operating income 63.8 4.5 134.2 38.8
Other (income) expense 79.7 (13.5) 128.1 40.3
Income (loss) before income
and mining taxes (15.9) 18.0 6.1 (1.5)
Income and mining tax
(benefit) expense (4.8) 4.2 (5.3) 3.0
Net income (loss) $ (11.1) $ 13.8 $ 11.4 $ (4.5)
Net income (loss) per share
Basic $ (0.05) $ 0.08 $ 0.06 $ (0.03)
Diluted $ (0.05) $ 0.06 $ 0.05 $ (0.03)
Cash generated by (used in)
operating activities $ 83.0 $ 19.5 $ 149.9 $ 80.0
Adjusted non-GAAP measures
Adjusted net income (loss) $ 38.3 $ (7.6) $ 64.6 $ 24.2
Adjusted net income (loss) per
share -- basic $ 0.18 $ (0.04) $ 0.35 $ 0.14
Adjusted net income (loss) per
share -- diluted $ 0.17 $ (0.04) $ 0.29 $ 0.14
Copper
Payable production (000
lb) 16,267 1,058 46,545 1,058
Cash cost ($/payable lb
produced) byproduct $ 0.77 $ 11.77 $ 1.14 $ 11.77
Cash cost ($/payable lb
produced) co-product $ 1.80 $ 7.77 $ 2.00 $ 7.77
Payable production sold
(000 lb) 16,482 - 49,214 -
Average realized sales price
($/lb) $ 3.02 $ - $ 3.10 $ -
Gold
Payable production (oz) 60,366 1,997 136,639 1,997
Cash cost ($/payable oz
produced) co-product $ 477 $ 2,082 $ 530 $ 2,082
Payable production sold (oz) 57,974 - 133,831 -
Average realized sales price
($/oz) $ 952 $ - $ 1,002 $ -
Molybdenum
Mined production (000 lb) 6,560 8,536 21,928 22,751
Cash cost ($/lb produced) $ 6.77 $ 5.93 $ 6.23 $ 6.36
Molybdenum sold (000 lb)
TC mine and Endako mine
product 6,732 7,432 22,762 22,265
Purchased and processed
product 2,181 888 5,685 4,586
8,913 8,320 28,447 26,851
Average realized sales price
($/lb) $ 13.94 $ 10.30 $ 12.43 $ 11.29
The Mt. Milligan ramp-up continued to advance in the third quarter, with improved copper and gold recoveries of 83.1 per cent and 66.6 per cent, respectively. The company has been conducting a variety of tests to determine the impact of additional crushing to achieve, and potentially exceed, current design mill throughput of 60,000 tonnes per day. Further tests are expected to be performed through November utilizing various blends of crushed material in order to assist in determining the best course of action for throughput optimization. The company expects to make a final capital investment decision by year-end and announce its decision in January, 2015.
"We are pleased with our progress at Mt. Milligan and continue to track to our previously announced 2014 production and unit cost guidance," said Mr. Perron. "During the quarter, gold production increased to 60,366 ounces, up 63 per cent from the second quarter of 2014. We achieved unit costs for copper of 77 cents per pound on a byproduct basis and $1.80 per pound on a co-product basis. Unit cost for gold on a co-product basis was $477 per ounce. We continue to believe that the Mt. Milligan mine will consistently achieve approximately 80 per cent of the designed mill throughput of 60,000 tonnes per day by year-end."
The company's molybdenum operations contributed $124.3-million to total revenue in the third quarter, primarily as a result of a higher average realized sales price of $13.94 per pound, up 35.3 per cent from $10.30 per pound in the third quarter of 2013. At TC mine, mining of phase 7 ore was completed in August and the company expects to process stockpiled ore through the remainder of this year. Thereafter, the mine will be placed on care and maintenance. However, while in care and maintenance, the company intends to conduct limited stripping operations for the next phase of mining. "This limited stripping plan will enable us to maintain the optionality of the mine with a reduced work force, while continuing to evaluate viable alternatives for the next stage of mining.
"We remain focused on operating our mines safely and efficiently, managing our capital and balance sheet prudently, and building value for our shareholders."
Current guidance
The table presents the company's current full year 2014 guidance.
FULL YEAR 2014 GUIDANCE
Year ended Year ended
Dec. 31, Dec. 31,
2014 2014
(estimated) (estimated)
(updated) (previous)
Mt. Milligan copper and gold
Concentrate production (000 dry tonnes) 125-140 125-140
Copper payable production (000 lb) 65,000-75,000 65,000-75,000
Gold payable production (000 oz) 185-195 165-175
Unit cash cost -- byproduct ($/payable lb
copper produced) $1.00-$1.50 1.55-1.70
Molybdenum
Production (000 lb)
TC mine 15,000-17,000 14,000-16,000
Endako mine (75% share) 9,000-10,000 10,000-12,000
Total molybdenum production (000 lb) 24,000-27,000 24,000-28,000
Cash cost ($/lb produced)
TC mine $4.50-$5.25 4.75-5.75
Endako mine $10.50-$12.00 9.00-10.50
Total molybdenum cash cost ($/lb produced) $6.75-$7.75 6.50-7.75
Capital expenditures ($M)
Mt. Milligan permanent operations residence 25 +/- 10% 20 +/- 10%
Mt. Milligan operations 35 +/- 10% 30 +/- 10%
TC mine, Endako mine, Langeloth and other 5 +/- 10% 10 +/- 10%
Total capital expenditures 65 +/- 10% 60 +/- 10%
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE INCOME
(In millions of U.S. dollars, except per share)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2014 2013 2014 2013
Revenues
Copper sales $ 45.7 $ - $ 140.3 $ -
Gold sales 55.0 - 133.5 -
Molybdenum sales 124.3 85.7 353.5 303.1
Tolling, calcining and other 4.3 5.1 11.4 14.2
Total revenues 229.3 90.8 638.7 317.3
Costs and expenses
Cost of sales
Operating expenses 133.4 66.9 395.2 212.6
Depreciation, depletion and
amortization 22.7 11.6 78.3 38.5
Total cost of sales 156.1 78.5 473.5 251.1
Selling and marketing 3.1 1.4 10.8 6.4
Accretion expense 0.9 0.6 2.7 2.0
General and administrative 5.1 5.1 16.9 17.7
Exploration 0.3 0.7 0.6 1.3
Total costs and expenses 165.5 86.3 504.5 278.5
Operating income 63.8 4.5 134.2 38.8
Other (income) expense
Start-up costs - 10.2 - 10.3
(Gains) losses on foreign
exchange, net 60.3 (24.2) 64.5 30.0
Interest and finance fees 22.5 0.7 69.4 0.9
Interest income - (0.4) (0.2) (0.9)
Loss from debt extinguishment - - 0.5 -
Other (3.1) 0.2 (6.1) -
Total other (income) expense 79.7 (13.5) 128.1 40.3
Income (loss) before income and
mining taxes (15.9) 18.0 6.1 (1.5)
Total income and mining tax
expense (benefit) (4.8) 4.2 (5.3) 3.0
Net income (loss) $ (11.1) $ 13.8 $ 11.4 $ (4.5)
Comprehensive income (loss)
Foreign currency translation (58.2) 29.4 (61.8) (44.5)
Total other comprehensive
income (loss) (58.2) 29.4 (61.8) (44.5)
Total comprehensive income
(loss) $ (69.3) $ 43.2 $ (50.4) $ (49.0)
Net income (loss) per share
Basic $ (0.05) $ 0.08 $ 0.06 $ (0.03)
Diluted $ (0.05) $ 0.06 $ 0.05 $ (0.03)
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