Thompson Creek Announces Second Quarter 2012 Financial Results and Agreement with Royal Gold to Sell an Additional 12.25% of Future Gold Production from Mt. Milligan
NYSE: TC
TSX: TCM
DENVER, CO, Aug. 9, 2012 /PRNewswire/ – Thompson Creek Metals Company Inc. (the
“Company”), a growing, diversified North American mining company, today
announced financial results for the three and six months ended June 30,
2012, prepared in accordance with United States generally accepted
accounting principles (“US GAAP”). All dollar amounts are in United
States (“US”) dollars unless otherwise indicated.
The Company also announced that it has entered into an amendment to its
gold stream agreement with Royal Gold, Inc. (“Royal Gold”) pursuant to
which it has agreed to sell Royal Gold an additional 12.25% of the
refined gold production from the Company’s Mt. Milligan copper-gold
mine for $200 million, plus $435 per ounce, or the prevailing market
rate, if lower than $435 per ounce, when the gold is delivered. Upon
the closing of this transaction, the Company will have agreed to sell
to Royal Gold a total of 52.25% of the refined gold production from the
Mt. Milligan project, and Royal Gold’s aggregate investment in the
project (including amounts previously funded and commitments for future
funding) will have increased to $781.5 million. The consummation of
this transaction is subject to the condition that the Company receives
final approval for an amendment to its senior secured revolving credit
agreement satisfactory to Royal Gold and approval of the Royal Gold
transaction by the lenders thereunder within 30 days of the date of the
Royal Gold amendment. The Company is currently in discussions with its
lenders to obtain these approvals.
“When we completed our financing transactions in May 2012, our funding
plan for the completion of Mt. Milligan assumed that we would be able
to access our existing financing sources,” said Mr. Loughrey, Chairman
and Chief Executive Officer of the Company. “Given the prolonged
worldwide economic volatility, the continued decline in molybdenum
prices, and short-term operational issues that we experienced in the
second quarter of this year, we had negative operating cash flow of
$20.4 million in the second quarter which caused us to re-evaluate our
current operating plan at the Endako mine and secure additional
financing for the construction of Mt. Milligan. The current economic
environment continues to be challenging, but we are optimistic that we
will successfully overcome these challenges over the next 12 months,
remain competitive, and complete the Mt. Milligan project,” added Mr.
Loughrey.
“We are very pleased with Royal Gold’s increased investment and
continued support in the advancement of our Mt. Milligan project,” Mr.
Loughrey added. “We believe that the terms of this transaction and its
timing make it the best alternative available to ensure that
construction continues to proceed in accordance with our development
plan. We believe that Mt. Milligan will transform our Company into a
diversified, base metals producer beginning late 2013 and significantly
strengthen our Company’s financial performance,” added Mr. Loughrey.
For the second quarter and first six months of 2012, the Company
realized operating losses of $18.4 million and $34.9 million,
respectively. The operating losses were primarily the result of
higher unit operating costs at both the Endako and Thompson Creek mines
primarily as a result of lower production volume which in turn led to
lower sales volumes, lower-of-cost or market product inventory
write-downs, lower average realized molybdenum prices compared to the
same period in 2011, and the Company’s share of commissioning and
start-up costs at the new Endako mill. Production and costs during the
second quarter of 2012 were negatively impacted primarily by lower than
anticipated ore grades and recovery at the Endako mine and the pit wall
slough at the Thompson Creek mine in May 2012. The average realized
molybdenum sales price for the second quarter and first six months of
2012 was $14.55 and $14.64 per pound, respectively, compared to $17.28
and $17.33 per pound for the same periods in 2011.
“We have undertaken a series of initiatives intended to increase
production and recovery rates and decrease costs in order to increase
revenue and cash flow in the third and fourth quarters of 2012,” said
Mr. Loughrey. “As a result of the low production in the first half of
2012, the Company’s share of 2012 production guidance for the Endako
mine has been revised downward, with the Thompson Creek mine expected
to meet the previous guidance. Our revised total 2012 estimated
production guidance is currently approximately 22.5 to 24.5 million
pounds of molybdenum at an average cash cost of approximately $9.25 to
$10.25 per pound,” added Mr. Loughrey.
Financial Overview:
-- Revenuefor the second quarter of 2012 was $113.5 million,
compared to $190.9 million in the second quarter of 2011.
Revenue for the first six months of 2012 was $227.1 million,
compared to $397.6 million for the same period in 2011. Sales
volumes for the second quarter of 2012 were 7.5 million pounds,
compared to 10.8 million pounds in the second quarter of 2011.
Sales volumes for the first six months of 2012 were 15.0
million pounds, compared to 22.4 million pounds for the same
period in 2011. The averaged realized molybdenum sales price
for the second quarter of 2012 was $14.55 per pound, compared
to $17.28 per pound for the second quarter of 2011. The
averaged realized molybdenum sales price for the first six
months of 2012 was $14.64 per pound, compared to $17.33 for the
same period in 2011.
-- Foreign Exchange Lossfor the second quarter of 2012 was $7.9
million (of which $3.7 million was an unrealized loss),
compared to a foreign exchange gain of $2.4 million for the
second quarter of 2011. Foreign exchange lossfor the first six
months of 2012 was $1.3 million (of which $2.1 million was an
unrealized loss), compared to a foreign exchange gain of $2.1
million for the same period in 2011.
-- Net Lossfor the second quarter of 2012 was $14.8 million, or
$0.09 per basic and diluted share, compared to net income of
$116.8 million, or $0.70 per basic and $0.68 per diluted share
for the second quarter of 2011. Net loss for the second
quarter of 2012 included a non-cash unrealized gain on common
share purchase warrants of $1.9 million, or $0.01 per basic and
diluted share. Net income for the second quarter of 2011
included a non-cash unrealized gain on common share purchase
warrants of $60.4 million, or $0.36 per basic and $0.35 per
diluted share.
Net loss for the first six months of 2012 was $13.7 million, or
$0.08 per basic and diluted share, compared to net income of
$245.7 million, or $1.48 per basic and $1.41 per diluted share
for the same period in 2011. Net loss for the first six months
of 2012 included a non-cash unrealized gain on common share
purchase warrants of $1.8 million, or $0.01 per basic and
diluted share. Net income for the first six months of 2011
included a non-cash unrealized gain on common share purchase
warrants of $126.4 million, or $0.76 per basic and $0.72 per
diluted share.
-- Non-GAAP Adjusted Net Loss for the second quarter of 2012
(excluding the non-cash unrealized gain on the warrants) was
$16.7 million, or $0.10 per basic and diluted share, compared
to adjusted net income of $56.4 million, or $0.34 per basic and
$0.33 per diluted share for the second quarter of 2011.
Non-GAAP adjusted net loss for the first six months of 2012
(excluding the non-cash unrealized gain on the warrants) was
$15.5 million, or $0.09 per basic and diluted share, compared
to adjusted net income of $119.3 million, or $0.72 per basic
and $0.68 per diluted share for the same period in 2011.
-- Mined Molybdenum Production for the second quarter of 2012 was
4.1 million pounds, compared to 10.0 million pounds in the
second quarter of 2011. Molybdenum produced for the first six
months of 2012 was 8.5 million pounds, compared to 20.3 million
pounds for the same period in 2011.
-- Non-GAAP Average Cash Cost Per Pound Produced for the second
quarter of 2012 was $14.57 per pound, compared to $5.74 per
pound for the second quarter of 2011. Non-GAAP average cash
cost per pound produced for the first six months of 2012 was
$13.73 per pound, compared to $5.54 per pound for the same
period of 2011.
-- Operating Cash Usedfor the second quarter of 2012 was $20.4
million, compared to operating cash generated of $53.6 million
in the second quarter of 2011. Operating cash used for the
first six months of 2012 was $17.3 million, compared to
operating cash generated of $130.2 million for the same period
in 2011.
-- Capital Costs incurred for the first six months of 2012 were
$405.1 million, comprised of $348.1 million for the development
of Mt. Milligan, $45.3 million for the mill expansion project
at the Endako mine (75% share) and $11.7 million of other
capital costs for the Thompson Creek and Endako mines, the
Langeloth facility and corporate combined. The capital costs
for the first six months of 2012 included increases in amounts
accrued of $20.2 million and non-cash capital lease activity of
$3.7 million; therefore, cash used for capital expenditures for
the six months was $381.2 million.
-- Total Cash and Cash Equivalents as of June 30, 2012 were $409.5
million, compared to $294.5 million as of December 31, 2011.
In May 2012, the Company completed the sale of 12.5% unsecured
notes with net proceeds received in the offering of $193.1
million and also completed a public offering of 8,800,000
tangible equity units ("tMEDS") with net proceeds received in
the offering of $212.3 million. Total debt as of June 30,
2012, including capital lease obligations, was $611.1 million,
compared to $374.9 million as of December 31, 2011.
Selected Consolidated Financial and Operational Information
(US$ in millions, except per share and per pound amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
(unaudited)
Financial
Revenues
Molybdenum sales $ 109.6 $ 186.2 $ 219.2 $ 388.6
Tolling, calcining and
other 3.9 4.7 7.9 9.0
Total revenues 113.5 190.9 227.1 397.6
Costs and expenses
Operating expenses 107.8 91.7 210.2 189.7
Depreciation, depletion
and amortization 14.3 17.6 31.1 36.0
Total costs of sales 122.1 109.3 241.3 225.7
Selling and marketing 1.6 2.5 3.1 4.9
Accretion expense 0.6 0.4 1.1 0.9
General and administrative 7.0 6.4 15.1 14.3
Exploration 0.6 3.2 1.4 6.8
Total costs and expenses 131.9 121.8 262.0 252.6
Operating (loss) income (18.4 ) 69.1 (34.9 ) 145.0
Other expense (income) 7.2 (62.3 ) 1.7 (127.3 )
(Loss) income before income
and mining and taxes (25.6 ) 131.4 (36.6 ) 272.3
Income and mining taxes
(benefit) expense (10.8 ) 14.6 (22.9 ) 26.6
Net (loss) income $ (14.8 ) $ 116.8 $ (13.7 ) $ 245.7
Net (loss) income per share
Basic $ (0.09 ) $ 0.70 $ (0.08 ) $ 1.48
Diluted $ (0.09 ) $ 0.68 $ (0.08 ) $ 1.41
Cash (used) generated by
operating activities $ (20.4 ) $ 53.6 $ (17.3 ) $ 130.2
Adjusted non-GAAP Measures:
(1)
Adjusted net (loss) income
(1) $ (16.7 ) $ 56.4 $ (15.5 ) $ 119.3
Adjusted net (loss) income
per share - basic (1) $ (0.10 ) $ 0.34 $ (0.09 ) $ 0.72
Adjusted net (loss) income
per share - diluted (1) $ (0.10 ) $ 0.33 $ (0.09 ) $ 0.68
Operational Statistics
Mined molybdenum production
(000's lb) (2) 4,119 10,010 8,543 20,339
Cash cost ($/lb produced)
(3) $ 14.57 $ 5.74 $ 13.73 $ 5.54
Molybdenum sold (000's lb):
Thompson Creek and Endako
Mine product 4,506 8,952 9,377 19,012
Purchased and processed
product 3,028 1,824 5,595 3,404
7,534 10,776 14,972 22,416
Average realized sales price
($/lb) (1) $ 14.55 $ 17.28 $ 14.64 $ 17.33
_________________________
(1) See "Non-GAAP Financial Measures" for the definition and
reconciliation of these non-GAAP measures.
(2) Mined production pounds reflected are molybdenum oxide and
high performance molybdenum disulfide ("HPM") from
the Company's share of production from the mines; excludes
molybdenum processed from purchased product.
(3) Weighted-average of Thompson Creek mine and Endako mine (75%
share) cash costs (mining, milling, mine site
administration, roasting and packaging) for molybdenum oxide
and HPM produced in the period, including all stripping
costs. Cash cost excludes: the effect of purchase price
adjustments, the effects of changes in inventory, corporate
allocations, stock-based compensation, other non-cash employee
benefits, depreciation, depletion, amortization and
accretion, and commissioning and start-up costs for the Endako
mill. The cash cost for the Thompson Creek mine,
which only produces molybdenum sulfide and HPM on site,
includes an estimated molybdenum loss (sulfide to oxide),
an allocation of roasting and packaging costs from the
Langeloth facility, and transportation costs from the Thompson
Creek mine to the Langeloth facility. See "Non-GAAP Financial
Measures" for additional information.
Summary of Quarterly Results
(US$ in millions, except per share and per pound amounts – unaudited)
Jun 30 Mar 31 Dec 31 Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
2012 2012 2011 2011 2011 2011 2010 2010
Financial
Revenues $ 113.5 $ 113.6 $ 116.7 $ 154.8 $ 190.9 $ 206.7 $ 156.8 $ 161.8
Operating ) )
(loss)
income $ (18.4 ) $ (16.5 $ (18.1 $ 22.4 $ 69.1 $ 75.9 $ 47.4 $ 45.6
Net (loss) )
income $ (14.8 ) $ 1.1 $ 0.8 $ 45.6 $ 116.8 $ 128.9 $ (45.0 $ 31.1
(Loss)
income per
share:
- basic $ (0.09 ) $ 0.01 $ - $ 0.27 $ 0.70 $ 0.78 $ (0.28 ) $ 0.22
- diluted $ (0.09 ) $ 0.01 $ - $ 0.27 $ 0.68 $ 0.73 $ (0.28 ) $ 0.22
Cash (used)
generated by
operating
activities $ (20.4 ) $ 3.1 $ 21.1 $ 51.4 $ 53.6 $ 76.6 $ 31.6 $ 59.0
Adjusted
non-GAAP
Measures:(1)
Adjusted net
(loss)
income (1) $ (16.7 ) $ 1.2 $ - $ 3.6 $ 56.4 $ 62.9 $ 34.4 $ 51.6
Adjusted net
(loss)
income per
share: (1)
- basic
(1) $ (0.10 ) $ 0.01 $ - $ 0.02 $ 0.34 $ 0.38 $ 0.22 $ 0.37
- diluted
(1) $ (0.10 ) $ 0.01 $ - $ 0.02 $ 0.33 $ 0.36 $ 0.20 $ 0.36
Operational
Statistics
Mined 10,010 7,958
molybdenum
production
(000's lb) 4,119 4,424 4,310 3,696 10,329 9,316
Cash cost
($/lb
produced)
(1) $ 14.57 $ 12.95 $ 12.69 $ 15.62 $ 5.74 $ 5.37 $ 5.81 $ 6.24
Molybdenum
sold (000's
lb):
Thompson 8,952 7,750
Creek and
Endako
Mine product 4,506 4,871 5,368 7,426 10,060 7,574
Purchased 1,824 2,513
and
processed
product 3,028 2,567 2,650 2,191 1,580 1,896
7,534 7,438 8,018 9,617 10,776 11,640 9,470 10,263
Average
realized
sales price
($/lb) (1) $ 14.55 $ 14.74 $ 14.08 $ 15.64 $ 17.28 $ 17.39 $ 16.05 $ 15.30
______________________
(1) See "Non-GAAP Financial Measures" for the definition and
reconciliation of these non-GAAP measures.
Thompson Creek Mine
The Company believes that the impact of the pit wall slough on total
production from the Thompson Creek mine for full year 2012 will not be
material, as the Company is mining higher-grade ore in the second half
of the year at Thompson Creek mine to address the second quarter
shortfall in production. The Company ceased mining in the area of the
slough, developed a new access road to other areas of the mine shortly
after the slough occurred, and continued mining in the areas not
impacted by the slough. The Company has revised its Thompson Creek mine
plan accordingly for the remainder of 2012.
New Endako Mill and Mine Plan.
As a result of the lower production and higher costs at the Endako mine
due to lower than expected recovery rates at the new mill and ore grade
at the mine, the Company has undertaken a series of initiatives
intended to increase production and recovery rates and decrease costs.
Primary among these initiatives is the decision to cease mining new
material at the Endako mine and to process stockpiled ore beginning in
the third quarter of 2012 through the spring of 2013. The Company had
previously planned to mill this material over the course of the current
17-year mine plan. The Company will target stockpiled material to
process based on its assessment of grade. The Company expects the
revised operating plan will lower the Endako mine’s average cash costs
per pound during the third and fourth quarters of 2012, as compared to
the first and second quarters of 2012.
The Company has also convened a team consisting of outside experts and
internal technical specialists with the goal of achieving designed
recovery as soon as possible. This team is currently addressing
various areas, including, among others, a recalibration of the major
instruments in the mill, working on the reagent mix in the flotation
tanks, metallurgical balance work, and additional mill and maintenance
staff training. The Company has also ceased mining at the bottom of the
Denak West pit where it encountered lower-than-expected ore grades. The
Company expects that mining operations will resume in the spring of
2013, with planned mining in the Endako pit and the walls of the Denak
West pit.
Mt. Milligan Copper-Gold Mine
During the three and six months ended June 30, 2012, the Company made
cash capital expenditures of C$164.3 ($163.3) million and C$305.2
($304.1) million, respectively and, including accruals, incurred
C$185.1 ($183.3) million and C$350.1 ($348.1) million of capital
expenditures for the Mt. Milligan project for the same period,
excluding capitalized interest and debt issuance costs of C$17.3
($17.2) million, respectively. Capital expenditures were primarily
related to the ongoing construction of the tailing storage facility,
plant site earthworks, cement works, steel erection, construction camp
costs, mining equipment and engineering design costs. Since inception
of the project C$756.8 million has been spent on a cash basis through
June 30, 2012, including approximately C$40.9 million spent prior to
the acquisition of Terrane Metals Corp. (“Terrane”), a wholly-owned
subsidiary of the Company.
As of June 30, 2012, the Engineering, Procurement and Construction
Management joint venture (“EPCM”) progress is 99% complete for project
engineering, 94% complete for procurement, 51% complete for
construction, and overall progress is at 69%. The Mt. Milligan
copper-gold project remains on schedule, with commissioning and
start-up expected to commence in the third quarter of 2013, and
commercial production of copper and gold expected in the fourth quarter
of 2013. The Company currently estimates an aggregate of approximately
C$1.4 to C$1.5 billion to construct and develop the Mt. Milligan
copper-gold mine, of which approximately C$635 to C$765 million of cash
expenditures remain to be spent as of June 30, 2012.
On June 29, 2012, Terrane entered into two copper concentrate sales
agreements whereby Terrane, among other things, agreed to sell 55% of
the copper-gold-silver concentrate produced at Mt. Milligan during 2013
and 2014 and approximately 80,000 dry metric tons in each of the two
quarters thereafter. Payment for the concentrate will be based on the
agreed copper, gold and silver content of the parcels delivered less
smelting and refining charges and certain other deductions, if
applicable.
Liquidity and Capital Resources
The Company’s ability to fund the completion of the Mt. Milligan
project, satisfy working capital needs and make scheduled debt payments
depends on the Company’s future operating performance and cash flow,
average realized molybdenum prices, and its ability to access current
funding sources including the revolving credit facility, equipment
lease financing and future payments pursuant to the gold stream
arrangement with Royal Gold. As a result of operating losses in the
second quarter of 2012, anticipated continued volatility in molybdenum
prices, and revised estimated production and cash cost guidance for the
Endako mine, the Company has determined that additional financing is
required to complete the Mt. Milligan project. The Company’s ability
to access its existing funding sources depends on its compliance with
certain financial covenants, including maintaining a ratio of
consolidated secured total debt to consolidated EBITDA of 3.00 to 1.00
or less. While as of June 30, 2012 the Company was in compliance with
the financial covenants, given the recent operating results and the
negative impacts to cash flow, it is anticipated that the Company will
be in breach of the consolidated secured total debt to consolidated
EBITDA ratio as of September 30, 2012.
The Company is currently in discussions with the lenders under its
revolving credit facility to waive this financial covenant and amend
the Credit Agreement to include additional new covenants. The Company
expects that any amendment to the Credit Agreement would be conditioned
on the Company’s ability to supplement its existing liquidity. To this
end, on August 8, 2012, the Company entered into the new agreement with
Royal Gold described above. The consummation of the Royal Gold
transaction is subject to the condition that the Company receives final
approval for an amendment to its senior secured revolving credit
agreement satisfactory to Royal Gold and approval of the Royal Gold
transaction by the lenders thereunder within 30 days of the date of the
Royal Gold amendment. The Company is currently in negotiations with
its lenders to obtain these approvals.
There is no assurance that these transactions with the revolving credit
facility lenders and Royal Gold will be completed or will provide
sufficient liquidity to meet the Company’s ongoing needs. Therefore,
the Company is also exploring other alternatives to supplement its
liquidity, including sales of assets, the issuance of additional debt
or equity securities, and project finance transactions.
Updated 2012 and 2013 Guidance
Total production and cash cost guidance for 2012 has been revised and is
currently expected to be approximately 22.5 – 24.5 million pounds of
molybdenum at an average cash cost of approximately $9.25 – $10.25 per
pound. For 2013, production and cash cost guidance has been revised
and is currently expected to be approximately 28.0 – 32.5 million
pounds of molybdenum at an average cash cost of approximately $7.25 -
$8.50 per pound. Given the series of initiatives discussed previously
which are intended to increase production and decrease costs, the
production in the second half of 2012 is expected to be 14.0 to 16.0
million pounds of molybdenum at an average cash cost of approximately
$6.75 to $8.00 per pound, with the Thompson Creek mine for the second
half at 10.0 to 11.0 million pounds of molybdenum at an average cash
cost of $6.00 to $7.00 per pound and the Company’s share of Endako
production of 4 to 5 million pounds of molybdenum at an average cash
cost of $8.50 to $10.75 per pound. For the full year guidance for the
Thompson Creek mine, production is expected to be on the low end of the
range and cash cost per pound on the high end of the range.
Additionally, waste stripping activities at the Thompson Creek mine are
expected to continue through 2012 and 2013.
Six Months
Ended Years Ended December 31,
June 30, 2012 2012 2013
Estimated,
including YTD
Actual 2012 Estimated
Molybdenum Production
(000's lb):(1)
Thompson Creek Mine 16,000 - 19,000 -
5,966 17,000 22,000
Endako Mine (75% 9,000 -
Share) 2,577 6,500 - 7,500 10,500
Total molybdenum 22,500 - 28,000 -
production (000's lb) 8,543 24,500 32,500
Total sales of
molybdenum produced 22,500 - 28,000 -
(000's lb) 9,377 24,500 32,500
Cash cost ($/lb
produced):(2)
Thompson Creek Mine $ 11.67 $ 7.50 - 8.50 $ 6.00 - 7.00
Endako Mine 18.51 12.00 - 13.75 9.25 - 10.75
Total cash cost ($/lb $ $
produced) 13.73 $ 9.25 - 10.25 7.25 - 8.50
Capital Expenditures
(in millions):
Mt. Milligan (3),
(4), (5) $ 304.1 $ 750 - 825 $ 190 - 245
Endako mill
expansion (3),(4) 73.6 78 -
Thompson Creek and
Endako mines,
Langeloth & other 8.7 35 - 40 15 - 20
Total capital $ $
expenditures 386.4 $ 863 - 943 205 - 265
(1) Mined production pounds reflected are molybdenum oxide and HPM
from the Company's share of production from the mines; excludes
molybdenum processed from purchased product.
(2) Weighted-average of Thompson Creek mine and Endako mine (75%
share) cash costs (mining, milling, mine site administration,
roasting, and packaging) for molybdenum oxide and HPM produced in
the period, including all stripping costs. Cash cost excludes:
the effect of purchase price adjustments, the effects of changes
in inventory, corporate allocations, stock-based compensation,
other non-cash employee benefits, depreciation, depletion,
amortization and accretion, and commissioning and start-up costs
for
the Endako mill. The cash cost for the Thompson Creek mine, which
only produces molybdenum sulfide and HPM on site, includes
an estimated molybdenum loss (sulfide to oxide), an allocation of
roasting and packaging costs from the Langeloth facility, and
transportation costs from the Thompson Creek mine to the Langeloth
facility. See "Non-GAAP Financial Measures" for additional
information.
(3) Excludes capitalized interest and debt issuance costs of $18.3
million and excludes changes in accruals of $20.2 million for the
six
months ended June 30, 2012. The 2012 estimate includes the
Company's share of start-up and commissioning costs.
(4) Canadian to US foreign exchange rate for 2012 and 2013 assumed at
parity (C$1.00 = US$1.00).
(5) Includes non-cash capital lease activity.
Non-GAAP Financial Measures
In addition to the consolidated financial statements presented in
accordance with US GAAP, the Company uses the following non-GAAP
financial measures of its financial performance in this press release:
adjusted net income, adjusted net income per share (basic and diluted),
cash cost per pound produced, weighted average cash cost per pound
produced and average realized sales price per pound sold. These are
considered key measures by management in evaluating the Company’s
performance. These measures do not have standard meanings prescribed
by US GAAP and may not be comparable to similar measures presented by
other companies. The Company believes these measures provide useful
supplemental information to investors in order for them to evaluate the
Company’s financial performance using the same measures as management.
The Company believes that the use of these measures affords investors
greater transparency in assessing the Company’s financial performance.
Non-GAAP financial measures should not be considered in isolation from,
as a substitute for, or superior to, measures of financial performance
prepared in accordance with US GAAP. The presentation of these
measures may be different from non-GAAP financial measures used by
other companies. In addition, these non-GAAP measures have limitations
in that they do not reflect all of the amounts associated with the
results of operations as determined in accordance with US GAAP.
Adjusted Net Income (Loss), Adjusted Net Income (Loss) Per Share — Basic
and Diluted
Adjusted net income (loss) represents the net income prepared in
accordance with US GAAP, adjusted for significant non-cash items. For
the second quarter and first six months of 2012, there were no
significant non-cash items. For the second quarter and first six
months of 2011, the significant non-cash items were the non-cash gains
on the fair value adjustment related to the Company’s previously
outstanding common stock purchase warrants.
Adjusted net income (loss) per share (basic and diluted) is calculated
using adjusted earnings, as defined above, divided by the weighted
average basic and weighted average diluted shares outstanding during
the period, as determined in accordance with US GAAP.
The following tables reconcile net (loss) income presented in accordance
with US GAAP to the non-GAAP financial measures of adjusted net (loss)
income and adjusted net (loss) income per share (basic and diluted),
for the three and six months ended June 30, 2012 and 2011:
For the Three Months Ended June 30, 2012 (unaudited — US$ in millions except shares and per share amounts)
Weighted Average Weighted Average
Basic Shares Diluted Shares
Net (Loss) Shares Shares
Income (000's) $/share (000's) $/share
Net (loss) ) $ (0.09 )
income $ (14.8 ) 168,168 $ (0.09 168,168
Add (Deduct):
Unrealized
(gain) loss on
common stock
purchase
warrants (1.9 ) 168,168 (0.01 ) 168,168 (0.01 )
Non-GAAP ) $ (0.10 )
adjusted net
(loss) income $ (16.7 ) 168,168 $ (0.10 168,168
For the Three Months Ended June 30, 2011 (unaudited — US$ in millions except shares and per share amounts)
Weighted Average Weighted Average
Basic Shares Diluted Shares
Shares Shares
Net Income (000's) $/share (000's) $/share
Net income $ 116.8 167,251 $ 0.70 172,321 $ 0.68
Add (Deduct):
Unrealized ) 167,251 ) 172,321 (0.35 )
(gain) loss on
common stock
purchase
warrants (60.4 (0.36
Non-GAAP 56.4 167,251 $ 0.34 172,321 $ 0.33
adjusted net
income $
For the Six Months Ended June 30, 2012 (unaudited — US$ in millions except shares and per share amounts)
Weighted Average Weighted Average
Basic Shares Diluted Shares
Net (Loss) Shares Shares
Income (000's) $/share (000's) $/share
Net (loss) 168,111 ) $ (0.08 )
income $ (13.7 ) $ (0.08 168,111
Add (Deduct):
Unrealized
(gain) loss on
common stock
purchase
warrants (1.8 ) 168,111 (0.01 ) 168,111 (0.01 )
Non-GAAP 168,111 ) $ (0.09 )
adjusted net
(loss) income $ (15.5 ) $ (0.09 168,111
For the Six Months Ended June 30, 2011 (unaudited — US$ in millions except shares and per share amounts)
Weighted Average Weighted Average
Basic Shares Diluted Shares
Net Shares Shares
Income (000's) $/share (000's) $/share
Net income $ 245.7 166,413 $ 1.48 174,701 $ 1.41
Add (Deduct):
Unrealized (gain) (126.4 ) 166,413 (0.76 ) 174,701 (0.72 )
loss on common
stock purchase
warrants
Non-GAAP adjusted $ 119.3 166,413 $ 0.72 174,701 $ 0.68
net income
Cash Cost per Pound Produced, Weighted Average Cash Cost per Pound
Produced, and Average Realized Sales Price per Pound Sold
Cash cost per pound produced represents the mining (including all
stripping costs), milling, mine site administration, roasting and
packaging costs for molybdenum oxide and HPM produced by each mine in
the period. Stripping costs represent the costs associated with the
activity of removing overburden in the production phase of a mining
operation. Stripping costs that provide access to mineral reserves
that will be produced in future periods are expensed under US GAAP as
incurred. Cash cost per pound produced excludes the effect of purchase
price adjustments, the effects of changes in inventory, corporate
allocations, stock-based compensation, other non-cash employee
benefits, depreciation, depletion, amortization and accretion, and
commissioning and start-up costs for the Endako mill. Cash cost for
the Thompson Creek mine, which only produces molybdenum sulfide and HPM
on site, includes an estimated molybdenum loss (sulfide to oxide), an
allocation of roasting and packaging costs from the Langeloth facility,
and transportation costs from the Thompson Creek mine to the Langeloth
facility. The weighted average cash cost per pound produced represents
the cumulative total of the cash costs for the Thompson Creek mine and
the Endako mine divided by the cumulative total production from the
Thompson Creek mine and the Endako mine.
The average realized sales price per pound sold represents molybdenum
sales revenue divided by the pounds sold.
The following tables provide reconciliations of cash costs and cash
costs per pound produced, by mine, and operating expenses included in
the Company’s consolidated statements of operations and comprehensive
(loss) income in the determination of net income:
(US$ in millions except per pound amounts — Unaudited)
Three months ended June 30, Three months ended June 30,
2012 2011
Pounds
Operating Pounds Operating Produced
Expenses Produced Expenses (1)
(in (1) (in (000's
millions) (000's lbs) $/lb millions) lbs) $/lb
Thompson Creek
Mine
Cash costs
-- Non-GAAP
(2) $ 34.2 2,544 $ 13.46 $ 36.2 8,322 $ 4.35
Add/(Deduct):
Stock-based
compensation - 0.2
Inventory and
other
adjustments 6.1 1.3
GAAP operating $
expenses $ 40.3 37.7
Endako Mine
Cash costs
-- Non-GAAP
(2) $ 25.8 1,575 $ 16.37 $ 21.3 1,688 $ 12.59
Add/(Deduct):
Stock-based
compensation 0.1 0.2
Commissioning
and start-up
costs 2.9 -
Inventory and )
other
adjustments (4.3 ) (1.0
GAAP operating $
expenses $ 24.5 20.5
Other operations
GAAP operating
expenses (3) $ 43.0 $ 33.5
GAAP $
consolidated
operating
expenses $ 107.8 91.7
Weighted-average
cash cost
-- Non-GAAP $ 60.0 4,119 $ 14.57 $ 57.5 10,010 $ 5.74
(US$ in millions except per pound amounts — Unaudited)
Six months ended June 30, Six months ended June 30,
2012 2011
Pounds
Operating Pounds Operating Produced
Expenses Produced Expenses (1)
(in (1) (in (000's
millions) (000's lbs) $/lb millions) lbs) $/lb
Thompson Creek
Mine
Cash costs
-- Non-GAAP
(2) $ 69.6 5,966 $ 11.67 $ 72.0 17,006 $ 4.24
Add/(Deduct):
Stock-based
compensation 0.1 0.5
Inventory and
other
adjustments 6.1 9.2
GAAP operating $
expenses $ 75.8 81.7
Endako Mine
Cash costs
-- Non-GAAP
(2) $ 47.7 2,577 $ 18.51 $ 40.6 3,333 $ 12.17
Add/(Deduct):
Stock-based
compensation 0.3 0.4
Commissioning
and start-up
costs 5.2 -
Inventory and
other
adjustments 2.8 5.4
GAAP operating $
expenses $ 56.0 46.4
Other operations
GAAP operating
expenses (3) $ 78.4 $ 61.6
GAAP $
consolidated
operating
expenses $ 210.2 189.7
Weighted-average
cash cost
-- Non-GAAP $ 117.3 8,543 $ 13.73 $ 112.6 20,339 $ 5.54
______________________
(1) Mined production pounds are molybdenum oxide and HPM from the
Company's share of the production from the mines; excludes
molybdenum
processed from purchased product.
(2) Cash costs represent the mining (including all stripping
costs), milling, mine site administration, roasting and
packaging costs for molybdenum
oxide and HPM produced in the period. Cash cost excludes: the
effect of purchase price adjustments, the effects of changes
in inventory,
corporate allocations, stock-based compensation, other
non-cash employee benefits, depreciation, depletion,
amortization and accretion,
and commissioning and start-up costs for the Endako mill. The
cash cost for the Thompson Creek mine, which only produces
molybdenum
sulfide and HPM on site, includes an estimated molybdenum loss
(sulfide to oxide), an allocation of roasting and packaging
costs from the
Langeloth facility, and transportation costs from the Thompson
Creek mine to the Langeloth facility.
(3) Other operations represent activities related to the roasting,
processing, and upgrading of third-party concentrate and other
metals at the
Langeloth facility and exclude product volumes and costs
related to the roasting and processing of Thompson Creek mine
and Endako mine
concentrate. The Langeloth facility costs associated with
roasting and processing of Thompson Creek mine and Endako mine
concentrate
are included in their respective operating results above.
Additional information on the Company’s financial position is available
in the Company’s Quarterly Report on Form 10-Q for the period ended
June 30, 2012, which was filed today on EDGAR (www.sec.gov) and SEDAR (www.sedar.com) and posted on the Company’s website (www.thompsoncreekmetals.com).
Conference Call and Webcast
The Company will hold a conference call for analysts and investors to
discuss its 2012 second quarter and first half financial results on
Tuesday, August 14, 2012 at 8:30 am ET. Kevin Loughrey, Chairman and
Chief Executive Officer, and Pamela Saxton, Executive Vice President
and Chief Financial Officer, will be available to answer questions
during the call.
To participate in the call, please dial 1 (647) 427-7450 or 1 (888)
231-8191 about five minutes prior to the start of the call. A live
audio webcast of the conference call will be available at www.newswire.ca/en/webcast and www.thompsoncreekmetals.com.
An archived recording of the conference call will be available at 1
(416) 849-0833 or 1 (855) 859-2056 (access code 99635317#) from 10:30
a.m. ET on August 14 to 11:59 p.m. ET on August 21. An archived
recording of the webcast will also be available at the Company’s
website.
About Thompson Creek Metals Company Inc.
Thompson Creek Metals Company Inc. is a growing, diversified North
American mining company. The Company produces molybdenum at its
100%-owned Thompson Creek Mine in Idaho and Langeloth Metallurgical
Facility in Pennsylvania and its 75%-owned Endako Mine in northern
British Columbia. The Company is also in the process of constructing
the Mt. Milligan copper-gold mine in northern British Columbia, which
is expected to commence production in 2013. The Company’s development
projects include the Berg copper-molybdenum-silver property and the
Davidson molybdenum property, both located in central British
Columbia. Its principal executive office is in Denver, Colorado and
its Canadian administrative office is in Vancouver, British Columbia.
More information is available at www.thompsoncreekmetals.com.
Cautionary Note Regarding Forward-Looking Statements
This news release contains ”forward-looking statements” within the
meaning of the United States Private Securities Litigation Reform Act
of 1995 , Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and applicable Canadian securities
legislation. These forward-looking statements generally are identified
by the words “believe,” “project,” “expect,” “anticipate,” “estimate,”
“intend,” “future,” “plan,” “may,” “should,” “will,” “would,” “will
be,” “will continue,” “will likely result,” and similar expressions.
Our forward-looking statements include statements with respect to:
anticipated or future financings; future financial or operating
performance of the Company or its subsidiaries and its projects; future
inventory, production, sales, cash costs, capital expenditures and
exploration expenditures; future earnings and operating results;
expected concentrate and recovery grades; statements as to the
projected development of Mt. Milligan and other projects, including
expected production commencement dates; Mt. Milligan development costs;
future operating plans and goals; and future molybdenum prices.
Where we express an expectation or belief as to future events or
results, such expectation or belief is expressed in good faith and
believed to have a reasonable basis. However, our forward-looking
statements are based on current expectations and assumptions that are
subject to risks and uncertainties which may cause actual results to
differ materially from future results expressed, projected or implied
by those forward-looking statements. Important factors that could cause
actual results and events to differ from those described in such
forward-looking statements can be found in the section entitled “Risk
Factors” in Thompson Creek’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and other documents filed on EDGAR at www.sec.gov and on SEDAR at www.sedar.com. Although we have attempted to identify those factors that could cause
actual results or events to differ from those described in such
forward-looking statements, there may be other factors that cause
results or events to differ from those anticipated, estimated or
intended. Many of these factors are beyond our ability to control or
predict. Given these uncertainties, the reader is cautioned not to
place undue reliance on our forward-looking statements. We undertake no
obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events, or otherwise.
THOMPSON CREEK METALS COMPANY INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2012 2011
(in millions, except share data)
ASSETS
Current assets
Cash and cash equivalents $ 409.5 $ 294.5
Accounts receivable 56.3 71.8
Accounts receivable--related 11.0 6.8
parties
Product inventory 91.4 77.9
Material and supplies inventory 36.5 35.9
Prepaid expense and other current 5.1 5.6
assets
Income and mining taxes receivable 14.3 9.1
624.1 501.6
Property, plant, equipment and 2,723.7 2,359.4
development, net
Restricted cash 27.0 39.0
Reclamation deposits 0.3 24.6
Goodwill 47.0 47.0
Other assets 32.6 22.6
$ 3,454.7 $ 2,994.2
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued $ 209.3 $ 186.2
liabilities
Income, mining, and other taxes 0.4 2.2
payable
Current portion of long-term debt 16.8 5.7
Current portion of long-term capital 2.2 1.0
lease obligation
Deferred income tax liabilities 12.0 14.0
Other current liabilities 0.8 9.0
241.5 218.1
Gold Stream deferred revenue 454.6 364.6
Long-term debt 583.1 361.0
Capital lease obligation 9.0 7.2
Other liabilities 16.9 15.9
Asset retirement obligations 34.0 32.8
Common stock purchase warrant - 3.0
derivatives
Deferred income tax liabilities 226.2 262.1
1,565.3 1,264.7
Commitments and contingencies
Shareholders' equity
Common stock, no-par, 168,537,094 1,016.9 1,014.3
and 167,963,639 shares issued and
outstanding,
as of June 30, 2012 and December
31, 2011, respectively
Additional paid-in capital 231.2 52.6
Retained earnings 624.9 638.6
Accumulated other comprehensive 16.4 24.0
income
1,889.4 1,729.5
$ 3,454.7 $ 2,994.2
THOMPSON CREEK METALS COMPANY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE (LOSS) INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
(in millions, except per share amounts)
REVENUES
Molybdenum sales $ 109.6 $ 186.2 $ 219.2 $ 388.6
Tolling, calcining and 3.9 4.7 7.9 9.0
other
Total revenues 113.5 190.9 227.1 397.6
COSTS AND EXPENSES
Cost of sales
Operating expenses 107.8 91.7 210.2 189.7
Depreciation, 14.3 17.6 31.1 36.0
depletion and
amortization
Total cost of sales 122.1 109.3 241.3 225.7
Selling and marketing 1.6 2.5 3.1 4.9
Accretion expense 0.6 0.4 1.1 0.9
General and 7.0 6.4 15.1 14.3
administrative
Exploration 0.6 3.2 1.4 6.8
Total costs and 131.9 121.8 262.0 252.6
expenses
OPERATING (LOSS) INCOME (18.4) 69.1 (34.9) 145.0
OTHER EXPENSE (INCOME)
Change in fair value of (1.9) (60.4) (1.8) (126.4)
common stock purchase
warrants
Loss (gain) on foreign 7.9 (2.4) 1.3 (2.1)
exchange
Interest and finance 1.5 1.4 3.0 2.7
fees
Interest income (0.2) (0.6) (0.4) (1.0)
Other (0.1) (0.3) (0.4) (0.5)
Total other expense 7.2 (62.3) 1.7 (127.3)
(income)
(Loss) income before (25.6) 131.4 (36.6) 272.3
income and mining taxes
Income and mining tax (10.8) 14.6 (22.9) 26.6
(benefit) expense
NET (LOSS) INCOME $ (14.8) $ 116.8 $ (13.7) $ 245.7
COMPREHENSIVE (LOSS)
INCOME
Foreign currency (35.0) 10.2 (7.6) 40.7
translation
Total comprehensive $ (49.8) $ 127.0 $ (21.3) $ 286.4
(loss) income
NET (LOSS) INCOME PER
SHARE
Basic $ (0.09) $ 0.70 $ (0.08) $ 1.48
Diluted $ (0.09) $ 0.68 $ (0.08) $ 1.41
Weighted average number of
common shares
Basic 168.2 167.3 168.1 166.4
Diluted 168.2 172.3 168.1 174.7
THOMPSON CREEK METALS COMPANY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
(in millions)
OPERATING ACTIVITIES
Net (loss) income $ (14.8) $ 116.8 $ (13.7) $ 245.7
Items not affecting cash:
Change in fair value of (1.9) (60.4) (1.8) (126.4)
common stock purchase
warrants
Depreciation, depletion 14.3 17.6 31.1 36.0
and amortization
Accretion expense 0.6 0.4 1.1 0.9
Amortization of finance 0.5 0.6 1.2 1.1
fees
Stock-based 1.8 2.1 3.3 3.9
compensation
Product inventory 9.8 5.7 20.9 5.7
write-downs
Deferred income tax (11.4) (0.8) (22.7) (6.1)
benefit
Unrealized loss (gain) 0.5 (0.5) 2.1 (0.5)
on foreign currency
derivative instruments
Unrealized foreign 3.7 - (1.4) -
exchange loss (gain)
Change in working (23.5) (27.9) (37.4) (30.1)
capital accounts
Cash (used) generated (20.4) 53.6 (17.3) 130.2
by operating
activities
INVESTING ACTIVITIES
Capital expenditures (193.3) (155.2) (381.2) (248.1)
Capitalized bond interest (13.1) - (13.1) -
payment
Restricted cash 9.2 (2.1) 11.9 (4.0)
Reclamation deposits 19.1 0.3 24.3 0.3
Cash (used) in (178.1) (157.0) (358.1) (251.8)
investing activities
FINANCING ACTIVITIES
(Costs) proceeds from (1.4) 20.4 (0.9) 25.8
issuance of common
shares, net
Proceeds from senior 200.0 350.0 220.0 350.0
unsecured note issuance
Proceeds from tangible 213.6 - 213.6 -
equity units, net
Debt issuance costs (8.2) (10.4) (8.2) (11.9)
Gold Stream proceeds 45.0 - 90.0 -
Repayment of long-term (1.9) (1.3) (3.4) (2.8)
debt
Cash generated by 447.1 358.7 491.1 361.1
financing activities
EFFECT OF EXCHANGE RATE (1.8) 2.0 (0.7) 4.9
CHANGES ON CASH
INCREASE IN CASH AND 246.8 257.3 115.0 244.4
CASH EQUIVALENTS
Cash and cash 162.7 303.1 294.5 316.0
equivalents, beginning of
period
Cash and cash $ 409.5 $ 560.4 409.5 $ 560.4
equivalents, end of
period
Pamela Solly
Director, Investor Relations
Thompson Creek Metals Company Inc.
Tel: (303) 762-3526
psolly@tcrk.com
Christine Stewart
Renmark Financial Communications Inc.
Tel: (416) 644-2020
cstewart@renmarkfinancial.com
SOURCE Thompson Creek Metals Company Inc.
