Thompson Creek announces first-quarter 2010 financial results
NYSE: TC
TSX: TCM, TCM.WT
Frankfurt: A6R
Overview (all in U.S. dollars):
- Thompson Creek achieved excellent operational performance in the
first quarter of 2010 as production achieved a quarterly record level
of 8.3 million pounds and average production costs were reduced to
$5.36 per pound. The price of molybdenum rose significantly during
the quarter and, as is always the case, the price the Company
received for its product lagged the market price by several weeks.
Sales revenues were also limited by the previously announced buildup
of inventory related to the scheduled maintenance shutdown of the
Langeloth roasting facility.
- First-quarter 2010 net income was $1.1 million or $0.01 per basic and
diluted share, including a non-cash charge of $24.5 million related
to the previously announced requirement under US GAAP to account for
the Company's outstanding common stock purchase warrants as a
derivative liability, with changes in the fair market value recorded
in net income.
- Non-GAAP adjusted net income in the first quarter (excluding the non-
cash charge on the warrants) was $25.6 million or $0.18 per basic and
$0.17 per diluted share.
- Cash flow from operations totaled $25.6 million in the first quarter
of 2010.
- Total cash, cash equivalents and short-term investments at March 31,
2010 were $523.6 million. Total debt was $11.4 million.
- The Company reaffirmed previous estimates for 2010 for molybdenum
production of 29 to 32 million pounds, sales of molybdenum produced
at the Company's mines of 27 to 30 million pounds, cash cost per
pound produced of $6 to $7 per pound, and capital expenditures of
approximately $298 million, including $209 million for its 75% share
of the Endako expansion project.
Note: A conference call and webcast for analysts and investors is scheduled for
Thompson Creek Metals Company Inc. (“Company”), one of the world’s largest publicly traded, pure molybdenum producers, today announced financial results for the three months ended
“Thompson Creek achieved excellent operational performance in the first quarter of 2010 and the Company is on track to achieve its production and cost guidance for the year,” said
“During the first quarter of 2010, the Company produced 8.3 million pounds of molybdenum, a quarterly record, and cash cost per pound produced was
“Reflecting the recovery in the world economy and the steel industry in particular, the Company’s average realized price on molybdenum sales for the first quarter of 2010 has risen by 43% from the same quarter a year earlier. A continuation of the economic recovery can be expected to yield a positive trend for molybdenum prices and an improving financial performance for the Company over the medium term,” Mr. Loughrey said.
The Company’s financial performance for the first quarter of 2010 as reflected in its financial statements was affected by a lag between when a pound of molybdenum is produced and when the same pound is recorded in the income statement as being sold. For the first quarter of 2010, the time lag averaged about two months. As a result, a good portion of the Company’s sales revenues and operating expenses from its mines recorded in the first quarter of 2010 reflected the lower production levels and higher per-pound cash costs experienced in the fourth quarter of 2009.
Another important factor affecting first-quarter financial performance was the Company’s decision, as previously disclosed, to build inventory during the first four months of 2010 in order to supply customers during the scheduled five-week maintenance shutdown of the Langeloth Metallurgical Facility, which commenced
Additionally, contract sales typically trail the market price by one month and this was the main reason why the Company’s average realized sales price of
The Company’s financial performance was also adversely affected by the previously disclosed requirement under US GAAP to account for the Company’s outstanding common stock purchase warrants as a derivative liability, with changes in the fair market value recorded in net income (loss). During the first quarter of 2010, the value of the outstanding warrants (and the Company’s reported derivative liability) gained by
First-Quarter Financial Results
The Company’s revenues rose by 62% to
After the deduction of operating, selling, marketing, general and administrative, exploration, depreciation, depletion, amortization and accretion costs, the Company generated operating income totaling
First-quarter net income was
Non-GAAP adjusted net income (excluding non-cash charges related to the Company’s warrants) was
The non-cash unrealized charges on common stock purchase warrants were the result of a previously disclosed requirement under US GAAP to account for the Company’s outstanding common stock purchase warrants as a derivative liability, with changes in the fair market value recorded in net income (loss), beginning
The Company’s mines produced 8.3 million pounds of molybdenum in the first quarter versus 6.1 million pounds in the first quarter of 2009. The Thompson Creek Mine produced 6.3 million pounds, up from 4.4 million pounds a year earlier, while the Company’s 75% share of the Endako Mine’s production was 2.0 million, up from 1.7 million pounds a year earlier.
The weighted-average cash cost per pound produced (including all stripping costs) was
Selected Consolidated Financial and Operational Information
(US$ in millions except per share and per pound amounts)
Three Months Ended
March 31,
--------------------
2010 2009
--------------------
(unaudited)
Financial
Revenues:
Molybdenum sales $ 124.0 $ 75.6
Tolling, calcining and other 3.8 3.2
--------------------
127.8 78.8
--------------------
Costs and expenses:
Operating expenses 76.3 58.4
Selling and marketing 1.5 1.4
Depreciation, depletion and amortization 11.0 10.2
Accretion expense 0.4 0.3
General and administrative 5.8 5.0
Exploration 1.7 1.8
--------------------
Total costs and expenses 96.7 77.1
--------------------
Operating income 31.1 1.7
Other (income) and expense 25.1 (3.4)
--------------------
Income before income and mining taxes 6.0 5.1
Income and mining taxes (benefit) 4.9 (3.6)
--------------------
Net income $ 1.1 $ 8.7
--------------------
--------------------
Net income per share:
Basic $ 0.01 $ 0.07
Diluted $ 0.01 $ 0.07
Cash generated by operating activities $ 25.6 $ 37.4
Adjusted non-GAAP Measures:(1)
Adjusted net income(1) $ 25.6 $ 9.0
Adjusted net income per share - basic(1) $ 0.18 $ 0.07
Adjusted net income per share - diluted(1) $ 0.17 $ 0.07
Operational Statistics (unaudited)
Mined molybdenum production (000's lb)(2) 8,269 6,057
Cash cost ($/lb produced)(3) $ 5.36 $ 5.93
Molybdenum sold (000's lb):
Thompson Creek and Endako Mine product 6,735 6,549
Purchased and processed product 1,820 898
--------------------
8,555 7,447
--------------------
Average realized price ($/lb)(1) $ 14.50 $ 10.14
--------------------
--------------------
(1) See "Non-GAAP Financial Measures" below for the definition and
calculation of these non-GAAP measures.
(2) Mined production pounds reflected are molybdenum oxide and high
performance molybdenum disulfide ("HPM") from our share of production
from the mines; excludes molybdenum processed from purchased product.
(3) Weighted-average of Thompson Creek Mine and Endako Mine cash costs
(mining, milling, 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, stock-based compensation, other non-cash
employee benefits and depreciation, depletion, amortization and
accretion. The cash cost for the Thompson Creek Mine, which only
produces molybdenum sulfide on site, includes an estimated molybdenum
loss, an allocation of roasting and packaging costs from the
Langeloth Facility, and transportation costs. See "Non-GAAP Financial
Measures" for additional information.
Cash flow from operating activities in the first quarter of 2010 was
Capital expenditures (including accruals) totaled
Summary of Quarterly Results
(US$ in millions except per share and per pound amounts - unaudited)
Mar 31 Dec 31 Sep 30 Jun 30 Mar 31
2010 2009 2009 2009 2009
---------------------------------------------
Financial
Revenue $ 127.8 $ 106.2 $ 114.4 $ 74.0 $ 78.8
Operating income (loss) $ 31.1 $ 15.8 $ 32.4 $ (0.2) $ 1.7
Net income (loss) $ 1.1 $ 26.0 $ (1.4) $ (89.3) $ 8.7
Income (loss) per share:
- basic $ 0.01 $ 0.19 $ (0.01) $ (0.73) $ 0.07
- diluted $ 0.01 $ 0.18 $ (0.01) $ (0.73) $ 0.07
Cash generated by
operating activities $ 25.6 $ 38.2 $ 24.2 $ 6.1 $ 37.4
Adjusted non-GAAP
Measures:(1)
Adjusted net income
(loss)(1) $ 25.6 $ 20.4 $ 14.3 $ (6.3) $ 9.0
Adjusted net income (loss)
per share: (1)
- basic(1) $ 0.18 $ 0.15 $ 0.11 $ (0.05) $ 0.07
- diluted(1) $ 0.17 $ 0.14 $ 0.11 $ (0.05) $ 0.07
Operational Statistics
Mined molybdenum
production (000's lb) 8,269 6,268 6,221 6,714 6,057
Cash cost
($/lb produced)(1) $ 5.36 $ 6.61 $ 5.67 $ 5.21 $ 5.93
Molybdenum sold (000's lb):
Thompson Creek and
Endako Mine 6,735 6,889 7,445 6,505 6,549
Purchased and processed
product 1,820 1,464 1,324 997 898
---------------------------------------------
8,555 8,353 8,769 7,502 7,447
---------------------------------------------
Average realized price
($/lb)(1) $ 14.50 $ 12.37 $ 12.75 $ 9.41 $ 10.14
---------------------------------------------
(1) See "Non-GAAP Financial Measures" below for the definition and
calculation of these non-GAAP measures.
Outlook
Molybdenum Market
For the first quarter of 2010, the average Platts Metals Week published price for molybdenum oxide was
Operations
For 2010, the Company expects its molybdenum production volumes to be 29 to 32 million pounds, with the Thompson Creek Mine at approximately 22 to 24 million pounds and the 75% share of the Endako Mine at 7 to 8 million pounds (unchanged from previous guidance). Anticipated average cash costs per pound produced are estimated at
Thompson Creek expects to sell 27 to 30 million pounds of its own mined production in 2010 (unchanged from previous guidance). The Company has some flexibility in building or depleting inventory levels depending upon the economic conditions and the related demand and sales price for molybdenum. The Langeloth Metallurgical Facility commenced a five-week shut-down on
Production from the Thompson Creek Mine is expected to be somewhat lower in the second quarter of 2010 compared to the first quarter of 2010 primarily as a result of the planned shut-down at the Langeloth Facility that commenced on
Capital expenditures for 2010 are expected to be approximately
In 2010, Thompson Creek expects to conduct exploration drilling at both of its operating mines totaling
General
The Company continues to evaluate potential acquisitions of other mining properties or interests in such properties from time to time. There is no assurance that any such activities will result in the completion of an acquisition.
Non-GAAP Financial Measures
In addition to the consolidated financial statements presented in accordance with US GAAP, the Company uses certain non-GAAP financial measures of its financial performance for the reasons described further below. The presentation of these measures is not intended to be considered in isolation from, as a substitute for, or as superior to, the financial information prepared and presented in accordance with US GAAP, and 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), and adjusted net income (loss) per share – basic and diluted, are referred to above. 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. Management believes these measures provide useful supplemental information to investors in order that they may evaluate the Company’s financial performance using the same measures as management.
Adjusted net income (loss) represents the net income (loss) prepared in accordance with US GAAP, adjusted for significant non-cash items. For the first quarter of 2010 and 2009, the significant non-cash items were the non-cash losses on the fair value adjustment related to our outstanding common stock purchase warrants.
On
Since a cash payment will never be required at the settlement of the Warrants, management does not consider gains or losses on the Warrants in its evaluation of the Company’s financial performance.
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 table is a reconciliation of the net income presented in accordance with US GAAP to the non-GAAP financial measures of adjusted net income (loss), and adjusted net income (loss) per share – basic and diluted for the three months ended
For the three months ended March 31, 2010 (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
---------- ------------------- -------------------
US GAAP measures $ 1.1 139,629 $ 0.01 149,329 $ 0.01
Add (Deduct):
Unrealized loss on
common stock
warrants 24.5 139,629 0.17 149,329 0.16
---------- --------- ---------
Non-GAAP measures $ 25.6 139,629 $ 0.18 149,329 $ 0.17
---------- --------- ---------
---------- --------- ---------
For the three months ended March 31, 2009 (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
---------- ------------------- -------------------
US GAAP measures $ 8.7 122,253 $ 0.07 122,330 $ 0.07
Add (Deduct):
Unrealized loss on
common stock
warrants 0.3 122,253 - 122,330 -
---------- --------- ---------
Non-GAAP measures $ 9.0 122,253 $ 0.07 122,330 $ 0.07
---------- --------- ---------
---------- --------- ---------
Additional information on the Company’s financial position is available in Thompson Creek’s Quarterly Report on Form 10-Q for the period ended
Conference call and webcast
Thompson Creek will hold a conference call for analysts and investors to discuss its first-quarter 2010 financial results on
To participate in the call, please dial 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 and www.thompsoncreekmetals.com.
An archived recording of the call will be available at 416-849-0833 or 1-800-642-1687 (Access code 53551188 followed by the number sign) from
About Thompson Creek Metals Company Inc.
Thompson Creek Metals Company Inc. is one of the largest publicly traded, pure molybdenum producers in the world. The Company owns the Thompson Creek open-pit molybdenum mine and mill in
Cautionary Note Regarding Forward-Looking Statements
----------------------------------------------------
This news release contains “forward-looking information” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company, its subsidiaries and its projects, the future price of molybdenum, currency fluctuations, energy price fluctuations, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims and limitations of insurance coverage. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to general business, economic, competitive, political and social uncertainties including the current global recessionary economic conditions, the associated low molybdenum prices and the levels of disruption and continuing illiquidity in the credit markets; risks related to foreign currency fluctuations; risks related to the volatility of the Company’s share price; changes in environmental regulation; the actual results of current exploration activities; actual results of reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; possible variations of ore grade or recovery rates; impurities and toxic substances in the mined material, failure of plant, equipment or processes to operate as anticipated; the age of the Langeloth Facility; structural integrity and old equipment at the Endako Mine; accidents, labor disputes and other risks of the mining industry; access to skilled labor; relations with employees; dependence upon key management personnel and executives; political instability, insurrection or war; disruption of transportation services; increased transportation costs and delays in obtaining governmental permits and approvals, or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled “Risk Factors” in the current Annual Report on Form 10-K, as amended, and subsequent documents filed on EDGAR at www.sec.gov and on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.
Readers should refer to Thompson Creek’s current Annual Report on Form 10-K, as amended, which is available on SEDAR at www.sedar.com and EDGAR at www.sec.gov and other continuous disclosure documents available at www.sedar.com and www.sec.gov for further information on ore reserves and mineralized material, which is subject to the qualifications and notes set forth therein.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2010 2009
------------ ------------
(in millions, except
share data)
ASSETS
Current assets
Cash and cash equivalents................... $ 136.0 $ 158.5
Short-term investments...................... 387.6 353.0
Accounts receivable - trade................. 45.6 32.4
Accounts receivable - related parties....... 8.5 10.3
Product inventory........................... 54.4 43.5
Material and supplies inventory............. 33.6 34.5
Prepaid expense and other current assets.... 5.5 6.0
Income tax receivable....................... 6.8 4.8
------------ ------------
678.0 643.0
Property, plant and equipment, net............ 631.8 605.7
Restricted cash............................... 18.3 16.8
Reclamation deposits.......................... 30.5 30.3
Goodwill...................................... 47.0 47.0
Other assets.................................. 1.3 1.8
------------ ------------
$ 1,406.9 $ 1,344.6
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities.... $ 43.9 $ 29.9
Income and mining taxes payable............. 6.9 3.6
Current portion of long-term debt........... 3.1 3.7
Deferred income tax liabilities............. 6.7 6.7
------------ ------------
60.6 43.9
Long-term debt................................ 8.3 9.2
Other liabilities............................. 24.9 24.6
Asset retirement obligations.................. 25.5 24.8
Common stock warrant derivatives.............. 139.9 115.4
Deferred income tax liabilities............... 142.3 141.3
------------ ------------
401.5 359.2
------------ ------------
Shareholders' equity
Common stock, no-par, 139,781,591 and
139,511,257 shares issued and outstanding,
as of March 31, 2010 and December 31, 2009,
respectively............................... 700.1 697.1
Additional paid-in-capital.................. 46.1 45.7
Retained earnings........................... 233.9 232.8
Accumulated other comprehensive income...... 25.3 9.8
------------ ------------
1,005.4 985.4
------------ ------------
$ 1,406.9 $ 1,344.6
------------ ------------
------------ ------------
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
--------------------------
2010 2009
------------ ------------
(in millions, except
per share amounts)
REVENUES:
Molybdenum sales............................ $ 124.0 $ 75.6
Tolling, calcining and other................ 3.8 3.2
------------ ------------
Total revenues 127.8 78.8
------------ ------------
COSTS AND EXPENSES:
Operating expenses.......................... 76.3 58.4
Selling and marketing....................... 1.5 1.4
Depreciation, depletion and amortization.... 11.0 10.2
Accretion expense........................... 0.4 0.3
General and administrative.................. 5.8 5.0
Exploration................................. 1.7 1.8
------------ ------------
Total costs and expenses 96.7 77.1
------------ ------------
OPERATING INCOME 31.1 1.7
OTHER (INCOME) AND EXPENSE
Change in fair value of common
stock warrants............................. 24.5 0.3
Loss (gain) on foreign exchange............. 0.6 (3.2)
Interest (income) expense, net.............. 0.1 (0.1)
Other....................................... (0.1) (0.4)
------------ ------------
Total other (income) and expense 25.1 (3.4)
------------ ------------
Income before income and mining taxes......... 6.0 5.1
Income and mining tax expense (benefit) 4.9 (3.6)
------------ ------------
NET INCOME.................................... $ 1.1 $ 8.7
------------ ------------
------------ ------------
NET INCOME PER SHARE
Basic....................................... $ 0.01 $ 0.07
------------ ------------
------------ ------------
Diluted..................................... $ 0.01 $ 0.07
------------ ------------
------------ ------------
Weighted average number of common shares
Basic....................................... 139.6 122.3
------------ ------------
Diluted..................................... 149.3 122.3
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
--------------------------
2010 2009
------------ ------------
(in millions)
OPERATING ACTIVITIES
Net income.................................... $ 1.1 $ 8.7
Items not affecting cash:
Change in fair value of
common stock warrants...................... 24.5 0.3
Depreciation, depletion and amortization.... 11.0 10.2
Accretion expense........................... 0.4 0.3
Stock-based compensation.................... 2.5 1.4
Deferred income tax benefit................. (1.8) (6.9)
Unrealized loss on derivative instruments... 0.6 0.1
Change in working capital accounts............ (12.7) 23.3
------------ ------------
Cash generated by operating activities ... 25.6 37.4
------------ ------------
INVESTING ACTIVITIES
Short-term investments........................ (30.1) (100.3)
Capital expenditures.......................... (19.4) (27.6)
Restricted cash............................... (1.5) (0.8)
Reclamation deposits.......................... - (2.4)
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Cash used in investing activities......... (51.0) (131.1)
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FINANCING ACTIVITIES
Proceeds from issuance of common shares, net.. 2.0 -
Repayment of long-term debt................... (1.5) (1.3)
------------ ------------
Cash generated (used) by
financing activities..................... 0.5 (1.3)
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH....... 2.4 (2.7)
------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS......... (22.5) (97.7)
------------ ------------
Cash and cash equivalents,
eginning of period........................... 158.5 258.0
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Cash and cash equivalents, end of period...... $ 136.0 $ 160.3
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SOURCE Thompson Creek Metals Company Inc.