Mr. Jacques Perron reports
THOMPSON CREEK REPORTS SIGNIFICANTLY IMPROVED 2014 FINANCIAL RESULTS REVENUE OF $807 MILLION, UP 86%, OPERATING CASH FLOW OF $185 MILLION, UP 313% AND CASH BALANCE OF $266 MILLION, UP 14%
Thompson Creek Metals Company Inc. has released its financial results for the three months and year ended Dec. 31, 2014, prepared in accordance with United States generally accepted accounting principles. All dollar amounts are in United States dollars unless otherwise indicated.
"We achieved very good operational and financial performance in 2014 and ended the year with a strong cash position," said Jacques Perron, president and chief executive officer of Thompson Creek. "We are pleased to have met our 2014 copper and total molybdenum production guidance, and are particularly pleased with our 2014 copper cash costs of $1.15 per pound on a byproduct basis, which we expect to be lower in 2015."
Highlights for 2014
- Total cash and cash equivalents at Dec. 31, 2014, were $265.6-million compared with $233.9-million at Dec. 31, 2013. Total debt, including capital lease obligations, at Dec. 31, 2014, was $944.7-million, compared with $1.0-billion at Dec. 31, 2013.
- Cash generated by operating activities was $184.8-million in 2014 compared with $44.8-million in 2013.
- Mount Milligan mine achieved commercial production, defined as operation of the mill at 60-per-cent design capacity mill throughput for 30 days, and has been cash flow positive since the second quarter of 2014. In 2014, the company made 12 shipments of concentrate from Mount Milligan mine and recognized 12 sales.
- Consolidated revenues for 2014 were $806.7-million compared with $434.4-million in 2013. Copper and gold sales contributed $350.7-million in revenue in 2014 compared with $14.3-million in 2013. Molybdenum sales for 2014 were $441.2-million compared with $400.8-million in 2013.
- Sales volumes and average realized sales prices for copper and gold for 2014 were 64.7 million pounds of copper at an average realized price of $3.02 per pound and 172,741 ounces of gold at an average realized price of $1,002 per ounce, as compared with 2.8 million pounds of copper at an average realized price of $3.29 per pound and 5,541 ounces of gold at an average realized price of $1,006 per ounce for 2013. Molybdenum sales volumes in 2014 were 36.6 million pounds at an average realized price of $12.06 per pound compared with 36.5 million pounds at an average realized price of $10.97 per pound for 2013.
- Consolidated operating income for 2014 was $36.1-million compared with an operating loss of $175.3-million for 2013. Consolidated operating income for 2014 and 2013 was impacted by non-cash asset impairments of $104.8-million and $194.9-million, respectively, and non-cash lower-of-cost-or-market product inventory writedowns of $25.5-million and $57.8-million, respectively.
- Net loss for 2014 was $124.2-million, or 64 cents per share, compared with a net loss of $215.0-million, or $1.26 per share, for 2013. The net loss for 2014 and 2013 included non-cash foreign exchange losses of $99.8-million and $70.8-million, respectively, primarily on intercompany notes.
- Non-generally accepted accounting principles adjusted net income per pound of copper produced for 2014 was $54.6-million, or 25 cents per diluted share, compared with a non-GAAP adjusted net loss for 2013 of $5.0-million, or three cents per share. Non-GAAP adjusted net income excludes the non-cash impact of asset impairment losses and foreign exchange losses, net of the related tax impacts.
- Payable production at Mount Milligan mine for 2014 was 64.6 million pounds of copper and 177,606 ounces of gold, compared with 2013 payable production of 10.4 million pounds of copper and 19,879 ounces of gold.
- Non-GAAP unit cash cost per pound of copper produced for 2014 was, on a byproduct basis, $1.15 per pound, and, on a co-product basis, $1.97 per pound of copper and $525 per ounce of gold. Non-GAAP unit cash costs in 2013 were, on a byproduct basis, $7.76 per pound, and, on a co-product basis, $5.40 per pound of copper and $1,468 per ounce of gold.
- Molybdenum production for 2014 was 26.3 million pounds compared with 29.9 million pounds in 2013.
- Non-GAAP average molybdenum cash cost per pound produced for 2014 was $6.91 per pound compared with $6.49 per pound in 2013.
- Open-market bond repurchases from December, 2014, through the first week of January, 2015, resulted in the principal retirement of $32.9-million of the outstanding principal amount of the company's unsecured bonds, reducing future interest payments by approximately $13.3-million. Total cash used through Dec. 31, 2014, for this program was $23.4-million, with total cash used for the program through the first week of January, 2015, of $30.4-million. These bond repurchases in December, 2014, and January, 2015, combined with the execution of the tMEDS exchange offer in the second quarter of 2014, have reduced the company's outstanding principal debt by $43.8-million and extinguished future interest payments by $14.1-million.
- Capital expenditures in 2014 were $82.1-million, comprising $77.0-million for the Mount Milligan mine (including payment of approximately $21.0-million related to 2013 accruals related to construction and development) and $5.1-million of other capital costs for Endako mine, TC mine, the Langeloth facility and corporate combined, compared with $428.9-million in 2013.
SELECTED CONSOLIDATED FINANCIAL AND OPERATIONAL INFORMATION
(In millions of U.S. dollars, except per share, per pound and per ounce)
Three months ended Dec. 31, Year ended Dec. 31,
2014 2013 2014 2013
Revenues
Copper sales $ 38.1 $ 8.7 $ 178.4 $ 8.7
Gold sales 38.8 5.6 172.3 5.6
Molybdenum sales 87.7 97.7 441.2 400.8
Tolling, calcining and other 3.4 5.1 14.8 19.3
Total revenues 168.0 117.1 806.7 434.4
Costs and expenses
Cost of sales
Operating expenses 128.6 115.6 523.8 328.2
Depreciation, depletion and amortization 21.6 13.4 99.9 51.9
Total cost of sales 150.2 129.0 623.7 380.1
Total costs and expenses 266.1 331.2 770.6 609.7
Operating income (loss) (98.1) (214.1) 36.1 (175.3)
Other (income) expense 53.9 62.8 182.0 103.1
Income (loss) before income and mining taxes (152.0) (276.9) (145.9) (278.4)
Income and mining tax (benefit) expense (16.4) (66.4) (21.7) (63.4)
Net income (loss) (135.6) (210.5) (124.2) (215.0)
Net income (loss) per share
Basic (0.63) (1.24) (0.64) (1.26)
Diluted (0.63) (1.24) (0.64) (1.26)
Cash generated by (used in) operating activities 34.9 (35.2) 184.8 44.8
Adjusted non-GAAP measures
Adjusted net income (loss) (10.0) (29.3) 54.6 (5.0)
Adjusted net income (loss) per share -- basic (0.05) (0.17) 0.28 (0.03)
Adjusted net income (loss) per share -- diluted (0.05) (0.17) 0.25 (0.03)
Operational statistics
Copper
Payable production (000 lb) 18,024 9,350 64,569 10,362
Cash cost ($/payable lb produced) -- byproduct $ 1.16 $ 7.33 $ 1.15 $ 7.76
Cash cost ($/payable lb produced) -- co-product $ 1.88 $ 5.19 $ 1.97 $ 5.40
Payable production sold (000 lb) 15,478 2,801 64,692 2,801
Average realized sales price ($/lb) $ 2.75 $ 3.29 $ 3.02 $ 3.29
Gold
Payable production (oz) 40,967 17,952 177,606 19,879
Cash cost ($/payable oz produced) -- co-product $ 506 $ 1,385 $ 525 $ 1,468
Payable production sold (oz) 38,910 5,541 172,741 5,541
Average realized sales price ($/oz) $ 1,003 $ 1,006 $ 1,002 $ 1,006
Molybdenum
Mined production (000 lb) 4,328 7,194 26,256 29,945
Cash cost ($/lb produced) $ 10.34 $ 6.91 $ 6.91 $ 6.49
Molybdenum sold (000 lb)
TC mine and Endako mine product 5,756 9,202 28,518 31,467
Purchased and processed product 2,376 468 8,061 5,054
8,132 9,670 36,579 36,521
Average realized sales price ($/lb) $ 10.79 $ 10.11 $ 12.06 $ 10.97
"The fourth quarter brought challenges to the mining industry, including our business, with falling copper and molybdenum prices. Although TC mine and Endako mine are not currently in operation, we expect to generate sufficient revenue from the conversion of third party material at our Langeloth facility and sales of inventory from our molybdenum mines to have positive cash flow from our molybdenum business in 2015," said Mr. Perron.
"Our focus for Mount Milligan mine in 2015 is to achieve mill throughput of 60,000 tonnes per day by year-end, which we think is doable with the temporary crushing circuit currently in place. By completing the detailed engineering for the permanent secondary crusher in 2015, we will be well positioned to commence construction once market conditions improve and we feel it is appropriate to make the capital investment. We believe that our payable copper and gold production will significantly increase in 2015 and that we will achieve cash costs of 60 cents to 85 cents per pound of copper on a byproduct basis, making Mount Milligan one of the lowest-cost copper producers in the world on a byproduct basis."
Current guidance
The table presents the company's guidance for the full year 2015.
2015 GUIDANCE
Year ended Dec. 31, 2015 (estimated)
Mount Milligan mine copper and gold
Concentrate production (000 dry tonnes) 170-190
Copper payable production (000 lb) 90,000-100,000
Gold payable production (000 oz) 220-240
Unit cash cost -- byproduct ($/payable lb copper produced) $0.60-$0.85
Molybdenum business -- cash inflow (outflow) ($M)
Ongoing molybdenum operations -- Langeloth $10-$15
Suspended molybdenum operations
TC mine
Care and maintenance ($6-$8)
Phase 8 stripping ($8-$10)
Sale of inventory ($8/lb-$9/lb oxide price) $25-$28
Endako mine (75-per-cent share)
Temporary suspension ($5-$8)
Sale of inventory ($8/lb-$9/lb oxide price) $9-$10
Total cash flow from Molybdenum operations $25-$27
Capital expenditures ($M)
Mount Milligan operations $22 plus or minus 10 per cent
Mount Milligan tailings dam $24 plus or minus 10 per cent
Mount Milligan secondary crusher engineering $15 plus or minus 10 per cent
Langeloth and other $7 plus or minus 10 per cent
Total capital expenditures $68 plus or minus 10 per cent
CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)
(In millions of U.S. dollars, except per share)
Year ended Dec. 31,
2014 2013
Revenues
Copper sales $ 178.4 $ 8.7
Gold sales 172.3 5.6
Molybdenum sales 441.2 400.8
Tolling, calcining and other 14.8 19.3
Total revenues 806.7 434.4
Costs and expenses
Cost of sales
Operating expenses 523.8 328.2
Depreciation, depletion and amortization 99.9 51.9
Total cost of sales 623.7 380.1
Selling and marketing 14.1 9.3
Accretion expense 3.6 2.4
Asset impairments 104.8 194.9
General and administrative 23.5 21.6
Exploration 0.9 1.4
Total costs and expenses 770.6 609.7
Operating income (loss) 36.1 (175.3)
Other (income) expense
Goodwill impairment - -
Start-up costs - 10.3
Change in fair value of common
stock purchase warrants - -
(Gain) loss on foreign exchange 99.8 70.8
Interest and finance fees 92.3 24.1
(Gain) loss from debt extinguishment (1.6) -
Interest (income) expense (0.4) (1.0)
Other (8.1) (1.1)
Total other (income) expense 182.0 103.1
Income (loss) before income and
mining taxes (145.9) (278.4)
Income and mining tax expense
(benefit)
Current income and mining tax
expense (benefit) 15.4 13.9
Deferred income and mining tax
expense (benefit) (37.1) (77.3)
Total income and mining tax
expense (benefit) (21.7) (63.4)
Net income (loss) (124.2) (215.0)
Comprehensive income (loss)
Postretirement benefit, net of tax (0.4) (0.200)
Foreign currency translation (107.2) (88.4)
Total other comprehensive income (loss) (107.6) (88.6)
Total comprehensive income (loss) (231.8) (303.6)
Net income (loss) per share
Basic (0.64) (1.26)
Diluted (0.64) (1.26)We seek Safe Harbor.
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