Mr. Jacques Perron reports
THOMPSON CREEK REPORTS THIRD QUARTER 2015 CASH BALANCE OF $217 MILLION AND NON-GAAP UNIT CASH COST ON A BY-PRODUCT BASIS OF NEGATIVE $0.16 PER POUND OF COPPER PRODUCED
Thompson Creek Metals Company Inc. has released its financial results for the three and nine months ended Sept. 30, 2015, prepared in accordance with United States generally accepted accounting principles. All dollar amounts are in U.S. dollars, unless otherwise indicated.
Thompson Creek ended the quarter with a strong cash position of $217-million and achieved non-GAAP unit cash cost, on a byproduct basis, net of gold credits, of negative 16 cents per pound of copper produced. The company has lowered its 2015 unit cash cost guidance on a byproduct basis from between 70 cents and 90 cents to between 55 cents and 75 cents per pound of copper produced.
During the quarter, the company completed significant maintenance at the Langeloth facility on time and on budget. The scheduled maintenance, which occurs every few years, allows the company to continue providing tolling services and to upgrade purchased molybdenum concentrates for sale in the metallurgical and chemical markets. In 2015, the molybdenum business is expected to generate positive cash flow before capital expenditures of approximately $21-million to $23-million, net of care and maintenance costs at the Thompson Creek and Endako molybdenum mines, enabling the company to maintain the optionality of its molybdenum business.
"First and foremost, we once again significantly improved our safety performance from one year ago, which is directly attributable to the hard work and commitment of all of our employees," said Jacques Perron, president and chief executive officer of Thompson Creek. "We continue to focus on operational improvements at Mount Milligan mine and our efforts have been rewarded by our excellent unit cash cost performance year to date. We are pleased to report that we successfully completed the installation of the second SAG discharge screen deck on Oct. 26 and that the commissioning of the new configuration was completed at the end of October, with both screen decks operating as expected. Since restarting operations following the mill shutdown, we have been experiencing gradual improvements in throughput. Other than the permanent secondary crushing plant, all major modifications required to achieve our objectives have now been successfully completed, and we are confident that throughput will continue to increase through the remainder of the year."
The company also announced that it has engaged Moelis & Company and BMO Capital Markets to assist the board in evaluating strategic and financial alternatives available to the company, including debt refinancing and restructuring, new capital transactions, and asset sales.
Highlights for the third quarter 2015:
- Total cash and cash equivalents at Sept. 30, 2015, were $217.1-million, which included $19.0-million in tax refunds received during the quarter, compared with $265.6-million at Dec. 31, 2014. Total debt, including capital lease obligations, at Sept. 30, 2015, was $891.5-million, compared with $944.7-million at Dec. 31, 2014.
- Cash generated by operating activities was $38.5-million in the third quarter of 2015 compared with cash generated by operating activities of $83.0-million in the third quarter of 2014.
- Consolidated revenues for the third quarter of 2015 were $141.7-million compared with $229.3-million in the third quarter of 2014. Copper and gold sales contributed $113.0-million in revenue in the third quarter of 2015 compared with $100.7-million in the third quarter of 2014. Molybdenum sales were $23.0-million for the third quarter of 2015 compared with $124.3-million in the third quarter of 2014. During the third quarter of 2015, the company completed five shipments of copper and gold concentrate, and recorded five sales compared with three shipments and three sales in the third quarter of 2014.
- Payable production at Mount Milligan mine for the third quarter of 2015 was 16.4 million pounds of copper and 53,791 ounces of gold, compared with payable production of 16.3 million pounds of copper and 60,366 ounces of gold for the third quarter of 2014.
- Sales volumes and average realized sales prices for copper and gold for the third quarter of 2015 were 24.4 million pounds of copper at an average realized price of $2.09 per pound and 75,451 ounces of gold at an average realized price of $926 per ounce, as compared with 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 for the third quarter of 2014. Molybdenum sales volumes in the third quarter of 2015, which consisted of the sale of molybdenum inventory produced at the company's mines in 2014 and molybdenum sourced from third parties, were 2.9 million pounds at an average realized price of $7.86 per pound compared with 8.9 million pounds at an average realized price of $13.94 per pound for the third quarter of 2014.
- Consolidated operating income for the third quarter of 2015 was $10.5-million compared with $63.8-million for the third quarter of 2014. The quarter-over-quarter decline in operating income was primarily due to a decrease in molybdenum sales, partially offset by an increase in gold sales. Consolidated operating income for the third quarter of 2015 was also impacted by $3.5-million of costs related to idle molybdenum mining operations.
- Net loss for the third quarter of 2015 was $60.9-million, or 28 cents per diluted share, compared with a net loss of $11.1-million, or five cents per diluted share, for the third quarter of 2014. The net loss for the third quarter of 2015 and 2014 included primarily unrealized non-cash foreign exchange losses of $68.8-million and $60.3-million, respectively, primarily on intercompany notes.
- Non-GAAP adjusted net loss for the third quarter of 2015 was $5.0-million, or two cents per diluted share, compared with non-GAAP adjusted net income for the same period of 2014 of $38.3-million, or 17 cents per diluted share.
- Non-GAAP unit cash cost per pound of copper produced for the third quarter of 2015 was, on a byproduct basis, net of gold credits, negative 16 cents per pound and, on a co-product basis, $1.66 per pound of copper and $527 per ounce of gold. Non-GAAP unit cash costs in the third quarter of 2014 were, on a byproduct basis, 77 cents per pound and, on a co-product basis, $1.80 per pound of copper and $477 per ounce of gold.
- Capital expenditures for the third quarter of 2015 were $24.9-million, composed of $21.9-million for Mount Milligan mine, and $3.0-million for the Langeloth facility, Endako mine and corporate combined, compared with $21.9-million for the third quarter of 2014.
SUMMARY OF QUARTERLY RESULTS
(In millions of U.S. dollars, except per share, per pound and per ounce)
Sept. 30, June 30, March 31, Dec. 31, Sept. 30,
2015 2015 2015 2014 2014
Revenues $141.7 $134.1 $123.0 $168.0 $229.3
Operating income (loss) 10.5 12.1 5.2 (98.1) 63.8
Net (loss) income (60.9) 0.3 (87.2) (135.6) (11.1)
Loss per share
Basic (0.28) 0.00 (0.41) (0.63) (0.05)
Diluted (0.28) 0.00 (0.41) (0.63) (0.05)
Cash generated by (used in) operating activities 38.5 23.9 (5.3) 34.9 83.0
Adjusted net (loss) income (5.0) (13.5) (14.2) (10.0) 38.3
Adjusted net (loss) income per share
Basic (0.02) (0.06) (0.07) (0.05) 0.18
Diluted (0.02) (0.06) (0.07) (0.05) 0.17
Copper
Payable production (000 lb) 16,363 20,159 15,405 18,024 16,267
Cash cost ($/payable lb produced) -- byproduct (0.16) 0.48 1.12 1.16 0.77
Cash cost ($/payable lb produced) -- co-product 1.66 1.55 1.64 1.88 1.80
Copper sold (000 lb) 24,427 21,195 14,791 15,478 16,482
Average realized sales price ($/lb) 2.09 2.63 2.47 2.75 3.02
Gold
Payable production (oz) 53,791 59,917 46,119 40,967 60,366
Cash cost ($/payable oz produced) -- co-product 527 434 498 506 477
Gold sold (oz) 75,451 57,920 36,750 38,910 57,974
Average realized sales price ($/oz) 926 975 986 1,003 952
Molybdenum
Mined molybdenum production (000 lb) - - - 4,328 6,560
Cash cost ($/lb produced) - - - 10.34 6.77
Molybdenum sold (000 lb)
TC mine and Endako mine product 592 576 2,552 5,756 6,732
Purchased and processed product 2,342 1,679 1,733 2,376 2,181
2,934 2,255 4,285 8,132 8,913
Average realized sales price ($/lb) 7.86 9.23 10.00 10.79 13.94
Updated guidance
The company has updated its 2015 guidance as of Nov. 9, 2015, to reflect revisions to the ranges for: payable production and cash costs for its copper and gold business; and care and maintenance, and stripping costs and cash flow from operations for its molybdenum business. These ranges have been updated based on actual operational performance and costs through Sept. 30, 2015, and management's expectations for the remainder of 2015.
The table presents updated guidance for fiscal year 2015 as of Nov. 9, 2015, and for comparison purposes, the guidance management
previously provided in the company's Form 10-Q for the three months ended June 30, 2015.
UPDATED GUIDANCE
Year ended Dec. 31, 2015 Year ended Dec. 31, 2015
(Estimated) (updated) (Estimated) (previous)
Mount Milligan mine copper and gold
Concentrate production (000 dry tonnes) 140-150 140-160
Copper payable production (000 lb) 70,000-80,000 70,000-90,000
Gold payable production (000 oz) 210-220 200-220
Unit cash cost -- byproduct ($/payable
lb copper produced) $0.55-$0.75 $0.70-$0.90
Molybdenum business -- cash inflow
(outflow) ($M)
Continuing molybdenum operations -- Langeloth $6-$10 $6-$10
Suspended molybdenum operations
TC mine
Care and maintenance ($8-$9) ($7-$10)
Phase 8 stripping ($3-$4) ($4-$5)
Sale of inventory $32-$34 $32-$34
Endako mine (75% share)
Temporary suspension, care and maintenance,
and severance costs ($16-$18) ($17-$19)
Sale of inventory $10-$11 $10-$11
Total cash flow from molybdenum operations $21-$23 $20-$21
Capital expenditures ($M)
Mount Milligan operations $22 plus or minus 10% $22 plus or minus 10%
Mount Milligan tailings dam $24 plus or minus 10% $24 plus or minus 10%
Mount Milligan secondary crusher
engineering and site preparation $15 plus or minus 10% $15 plus or minus 10%
Mount Milligan vendor claims settlement $13 $13
Langeloth and other $7 plus or minus 10% $7 plus or minus 10%
Total capital expenditures $81 plus or minus 10% $81 plus or minus 10%
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In millions of U.S. dollars, except per share)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2015 2014 2015 2014
Revenues
Copper sales $ 43.5 $ 45.7 $ 125.0 $ 140.3
Gold sales 69.5 55.0 161.8 133.5
Molybdenum sales 23.0 124.3 86.7 353.5
Tolling, calcining and other 5.7 4.3 25.3 11.4
Total revenues 141.7 229.3 398.8 638.7
Costs and expenses
Cost of sales
Operating expenses 88.5 133.4 246.8 395.2
Depreciation, depletion and amortization 30.9 22.7 77.7 78.3
Total cost of sales 119.4 156.1 324.5 473.5
Selling and marketing 3.1 3.1 8.3 10.8
Accretion expense 0.6 0.9 1.8 2.7
General and administrative 4.6 5.1 15.1 16.9
Exploration - 0.3 0.1 0.6
Costs for idle mining operations 3.5 - 21.2 -
Total costs and expenses 131.2 165.5 371.0 504.5
Operating income 10.5 63.8 27.8 134.2
Other expense
Loss on foreign exchange 68.8 60.3 140.1 64.5
Interest and finance fees 21.3 22.5 66.2 69.4
Loss from debt extinguishment - - 2.8 0.5
Interest income - - (0.1) (0.2)
Other (1.7) (3.1) (4.8) (6.1)
Total other expense 88.4 79.7 204.2 128.1
(Loss) income before income and mining taxes (77.9) (15.9) (176.4) 6.1
Total income and mining tax benefit (17.0) (4.8) (28.6) (5.3)
Net (loss) income (60.9) (11.1) (147.8) 11.4
Comprehensive (loss)
Foreign currency translation (71.2) (58.2) (150.6) (61.8)
Total other comprehensive (loss) (71.2) (58.2) (150.6) (61.8)
Total comprehensive (loss) (132.1) (69.3) (298.4) (50.4)
Net (loss) income per share
Basic (0.28) (0.05) (0.68) 0.06
Diluted (0.28) (0.05) (0.68) 0.06We seek Safe Harbor.
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