Attention Business/Financial Editors:
Thompson Creek announces 2008 financial results
NYSE: TC
TSX: TCM, TCM.WT
Frankfurt: A6R
TORONTO, March 19 /CNW/ -
- Record production of 26 million pounds Mo
- Record revenues of $1.01 billion
- Record cash flow from operations of $417.6 million
- Record earning before special non-cash charges of $276.3 million
Overview (all in U.S. dollars):
- Mining operations continued to perform well in the fourth quarter
of 2008 with total molybdenum production rising 20% to 7.8 million
pounds from 6.5 million pounds in the third quarter. Production in
all of 2008 was a record 26 million pounds, up 59% from 16.4
million pounds in 2007.
- Cash flow generated by operating activities totaled $181.0 million
in the fourth quarter, up 64% from $110.3 million in the third
quarter. In 2008, cash flow generated by operating activities was
a record $417.6 million, up 129% from $182.6 million in 2007.
- Debt was reduced during the year to $17.3 million on December 31,
2008 from $237.4 million a year earlier, while cash balances grew
to $258 million on December 31, 2008 from $113.7 million a year
earlier. Cash balances as of February 28, 2009 totaled $255
million.
- Due to the weak global economic conditions and the sharp decline
in molybdenum prices, fourth-quarter 2008 earnings were negatively
affected by a partial write-down of goodwill assets and other
special non-cash charges amounting to $93.1 million, which was
equivalent to $0.76 per common and diluted share in the quarter.
Fourth-quarter net income before these special non-cash
adjustments was $68.5 million or $0.56 per basic and diluted
common share. However, the deduction of the special non-cash items
resulted in a quarterly net loss of $24.6 million or $0.20 per
basic and diluted common share, compared with net income in the
2008 third quarter of $100.6 million or $0.80 per basic and $0.74
per diluted common share.
- In 2008, net income before special non-cash charges totaled a
record $276.3 million or $2.31 per basic and $2.10 per diluted
common share. After deduction of special non-cash charges, 2008
net income was $183.2 million or $1.53 per basic and $1.39 per
diluted common share. In 2007, net income was $157.3 million or
$1.43 per basic and $1.24 per diluted common share.
- Average realized price on molybdenum sales was $21.72 per pound in
the fourth quarter, down from $32.85 in the third quarter. For
2008, the average realized price was $30.04, up from $28.77 in
2007. The market price for molybdenum as of March 18, 2009 was in
the range of $8.40 to $8.80 per pound.
- In response to the decline in molybdenum prices, the Company had
previously announced a revision of 2009 operating and capital
expenditure plans aimed at conserving cash. The plans were based
on expectations that molybdenum sales and production from the
Company's own mines will be between 20 and 24 million this year.
Capital expenditures were reduced to approximately $60 million in
2009.
- As a result of the revised plans, the Company now estimates that
its molybdenum production cash costs will range between $7.25 and
$8.25 per pound produced in 2009. Cash costs in 2008 averaged
$6.01 per pound produced in the fourth quarter and $7.54 per pound
produced during the full year.
Note: A conference call and webcast for analysts and investors is
scheduled for Friday, March 20, 2009 at 8:30 a.m. Eastern.
Thompson Creek Metals Company Inc. ("the Company"), one of the world's
largest publicly traded, pure molybdenum producers, today announced financial
results for the three and twelve months ended December 31, 2008 prepared in
accordance with Canadian generally accepted accounting principles. All dollar
amounts are in U.S. dollars unless otherwise indicated.
"Thompson Creek achieved strong operating performance in 2008 with total
molybdenum production and sales volume exceeding guidance given earlier in the
year," said Kevin Loughrey, Chairman and Chief Executive Officer.
"Cash flow generated by operating activities rose by 129% to a record
$417.6 million in 2008, which contributed to the Company's success in paying
off bank debt and building substantial cash balances of $258 million by
year-end.
"As a result of last year's strong financial performance and our recent
actions to conserve cash, Thompson Creek is well positioned to continue
operating its mines during the economic downturn and to consider possible
acquisitions that will benefit shareholders."
For 2009, in order to conserve cash in a period of lower prices and
reduced demand for molybdenum, the Company, as previously announced, has
reduced planned production to match the expected level of molybdenum sales for
the year and has significantly reduced capital expenditures. The Company is
planning to produce 20 to 24 million pounds of molybdenum from its own mines
this year at an average cash cost ranging between $7.25 and $8.25 per pound.
Capital expenditures are expected to be $60 million.
"Our molybdenum sales have kept pace with production so far in the first
quarter of 2009 and this suggests that we are on the right track operationally
at this time, but we intend to remain flexible and ready to adjust our
production higher or lower if there are substantial changes in market
conditions in the future," Mr. Loughrey stated.
"While the short-term market outlook is uncertain and dependent to a
large degree on how long our traditional steel customers will continue with
inventory destocking and low production, we expect molybdenum demand to
improve and prices to strengthen in the medium-term future as the world
economy recovers from recession."
Fourth-Quarter Financial Results
The Company's revenues were $181.6 million in the fourth quarter,
compared with $331.1 million in the third quarter of 2008, and $197.8 million
in the fourth quarter of 2007. The reduction in revenues from the third
quarter of 2008 was due to a decrease in the average realized price to $21.72
per pound from $32.85 per pound and in total sales volume to 8.1 million
pounds from 9.9 million pounds. Sales of molybdenum from the Company's own
mines were 6.6 million pounds in the fourth quarter, down from 6.9 million
pounds in the third quarter, while sales of third-party molybdenum purchased,
processed and resold were reduced to 1.6 million pounds in the fourth quarter
from 3 million pounds in the third quarter.
The year-over-year decline in revenues reflected a decrease in the
average realized price, offset to a large degree by generally higher
production volumes and sales from the company's mines in 2008 compared with
2007. Total sales in the fourth quarter of 2007 were 6.2 million pounds,
comprised of sales from the Company's own mines of 3.2 million pounds and
sales of third-party molybdenum of 3.1 million pounds. The average realized
sale price for molybdenum products in the fourth quarter of 2007 was $31.08
per pound.
After the deduction of operating, selling, marketing, depreciation,
depletion and accretion costs, the Company generated income from mining and
processing operations totaling $88.5 million the fourth quarter, down from
$159 million in the third quarter of 2008 but up from $47.9 million in the
fourth quarter of 2007.
Net income before special non-cash charges in the fourth quarter of 2008
was $68.5 million or $0.56 per basic and diluted common share. After deduction
of special non-cash charges, the Company recorded a net loss in the fourth
quarter of 2008 of $24.6 million or $0.20 per basic and diluted common share,
compared with net income of $100.6 million or $0.80 per basic and $0.74 per
diluted common share in the third quarter of 2008 and $28.8 million or $0.25
per basic and $0.22 per diluted share in the fourth quarter of 2007.
Special non-cash charges in the fourth quarter totaled $93.1 million or
$0.76 per basic and diluted common share, comprising the write-down of
goodwill assets of $68.2 million, a change in tax valuation allowances of
$23.1 million (related to the realization of tax assets for alternative
minimum tax and stock compensation) and an after-tax valuation allowance
against the carrying value of finished goods inventories of $1.8 million.
The per-share figures are based on a weighted-average number of shares
outstanding of 122.6 million (basic) and 122.7 million (diluted) in the fourth
quarter of 2008, compared with 125.0 million (basic) and 136.8 million
(diluted) in the third quarter of 2008 and 113.3 million (basic) and 131.0
million (diluted) in the fourth quarter of 2007. At March 19, 2009, there were
122.3 million common shares, 24.5 million warrants and 8.9 million employee
options outstanding.
Cash flow from operating activities was $181.0 million in the fourth
quarter, compared with $110.3 million in the third quarter of 2008 and $45.7
million in the fourth quarter of 2007.
Cash balances were $258 million at December 31, 2008, compared with
$151.7 million at September 30, 2008 and $113.7 million at December 31, 2007.
Cash balances as of February 28, 2009 were $255 million.
The Company's total debt on December 31, 2008 was $17.3 million in
equipment loans.
The Company's mines produced 7.8 million pounds of molybdenum in the
fourth quarter, up from 6.5 million pounds in the third quarter of 2008 and
3.4 million pounds in the fourth quarter of 2007. The Thompson Creek Mine
produced 4.8 million pounds in the fourth quarter, up from 4.3 million pounds
in the third quarter and 2.0 million pounds in the fourth quarter of 2007. The
Company's 75% share of the Endako Mine's production was 3.0 million in the
fourth quarter, compared with 2.2 million pounds in the third quarter and 1.5
million pounds in the fourth quarter of 2007.
The production amounts reflect molybdenum produced at the Thompson Creek
and Endako mines but do not include molybdenum purchased from third parties,
roasted and sold by the Company.
The weighted-average cash costs were $6.01 per pound produced in the
fourth quarter of 2008, compared with $7.33 per pound produced in the third
quarter of 2008 and $13.58 per pound produced in the fourth quarter of 2007.
The decline was primarily due to increased production as a result of higher
ore grades, recoveries and throughput at the Company's mines. The cash costs
include production costs for the mining, milling, roasting and packaging of
molybdenum oxide and high-performance molybdenum disulfide (HPM) and deferred
stripping costs (mining costs related to future planned production phases). At
the Thompson Creek Mine, cash costs in the fourth quarter were $6.30 per pound
produced (including deferred stripping costs of $1.64 per pound produced),
compared with $7.38 per pound produced (including deferred stripping costs of
$1.79 per pound produced) in the third quarter of 2008 and $14.48 per pound
produced (including deferred stripping costs of $4.57 per pound produced) in
the fourth quarter of 2007. The Endako Mine's cash costs per pound produced
were $5.54 per pound produced in the fourth quarter, compared with $7.23 per
pound produced in the third quarter of 2008 and $12.39 per pound produced in
the fourth quarter of 2007. There were no deferred stripping costs at Endako.
2008 Financial Results
Thompson Creek's revenues were a record $1.01 billion in 2008, up 11%
from $914.4 million a year earlier. The revenue gain reflected higher
molybdenum sales volume and higher average realized sales prices in 2008.
Total molybdenum sales rose to 33 million pounds from 31 million pounds.
Molybdenum sold from the Company's mines in 2008 increased to 22.3 million
pounds from 19.5 million pounds sold in 2007, while sales of third-party
molybdenum purchased, processed and resold declined to 10.7 million pounds in
2008 from 11.5 million pounds a year earlier. The average realized sales price
was $30.04 per pound in 2008, compared with $28.77 per pound in 2007.
After the deduction of operating, selling, marketing, depreciation,
depletion and accretion costs, the Company generated income from mining and
processing operations totaling $430.2 million in 2008, up 43% from $301.0
million a year earlier.
Net income before special non-cash charges in 2008 was $276.3 million or
$2.31 per basic and $2.10 per diluted common share. After deduction of $93.1
million in special non-cash charges, the Company recorded net income of $183.2
million or $1.53 per basic and $1.39 per diluted common share in 2008,
compared with net income of $157.3 million or $1.43 per basic and $1.24 per
diluted common share in 2007.
The per-share figures are based on a weighted-average number of shares
outstanding of 119.5 million (basic) and 131.7 million (diluted) in 2008
versus 110.2 million (basic) and 126.6 million (diluted) in 2007.
Net income and earnings from mining and processing operations in 2007
were negatively affected by the inclusion in operating expenses of a non-cash
acquisition expense related to the inventory portion of the purchase price
adjustment associated with the Company's purchase of Thompson Creek Metals
Company USA in October 2006. This non-cash expense amounted to $29.6 million
in the first quarter of 2007.
Cash flow from operating activities was $417.6 million in 2008, compared
with $182.6 million a year earlier. The increase in cash flow from operations
was mainly due to the higher revenues and net income before special non-cash
charges, together with working capital adjustments related to the collection
of accounts receivable and the drawdown of product inventory.
Capital expenditures totaled $114 million in 2008, comprised of $71
million of sustaining capital expenditures at the operating sites and $43
million of capital expenditures for the 75% share of the mill expansion at the
Endako Mine. In 2007, capital expenditures were $14.6 million.
The Company's mines produced 26 million pounds of molybdenum in 2008, up
from 16.4 million pounds a year earlier. The Thompson Creek Mine produced 16.8
million pounds in the latest year, up from 9.3 million pounds in 2007, while
the Company's 75% share of Endako Mine's production rose to 9.3 million pounds
from 7.1 million pounds a year earlier.
The weighted-average cash costs were $7.54 per pound produced in 2008,
compared with $10.03 per pound produced in 2007. The decline was primarily due
to increased production as a result of higher ore grades, recoveries and
throughput at the Company's mines. The cash costs include production costs for
the mining, milling, roasting and packaging of molybdenum oxide and HPM and
deferred stripping costs (mining costs related to future planned production
phases). At the Thompson Creek Mine, cash costs in 2008 were $7.75 per pound
produced (including deferred stripping costs of $1.71 per pound produced),
compared with $10.91 per pound produced (including deferred stripping costs of
$3.69 per pound produced) in 2007. The Endako Mine's cash costs per pound
produced were $7.15 per pound produced in 2008, compared with $8.89 per pound
produced in the fourth quarter of 2007. There were no deferred stripping costs
at Endako.
On December 31, 2008, the Company had working capital of $356.3 million,
including $258 million of cash balances, $55.0 million of receivables, no
borrowings under its $35 million line of credit facility and $5.6 million as
the current portion of equipment loans.
Outlook
Thompson Creek believes the long-term outlook for its business and the
molybdenum market is positive. However, in order to conserve cash during the
current economic uncertainty, the Company's 2009 plans have been modified to
reduce molybdenum production, cost profile and capital expenditures. The
Company believes that these actions will ensure that adequate working capital
levels are maintained.
The Company has reduced its planned level of molybdenum production for
2009 to match its expectations of sales volumes. As previously announced, the
Company expects molybdenum production to be in the range of 20 to 24 million
pounds this year, down from previous guidance of 31.5 to 34 million pounds.
Production at the Thompson Creek Mine is expected to be 15 to 17 million
pounds (down from previous guidance of 24.5 to 26 million pounds) and the
Company's 75% share of the Endako Mine production is forecast at 5 to 7
million pounds (down from previous guidance of 7 to 8 million pounds). The
planned production reductions include a reduction in mill operation at the
Thompson Creek Mine to 70% capacity (10 days on, four days off schedule),
which began in March, a reduction in the Endako Mine production capacity to
80% and a temporary summer suspension of operations for approximately one
month at both the Thompson Creek and Endako mines.
For 2009, total capital expenditures at the Company's operating sites are
expected to be approximately $60 million, including estimated sustaining
capital spending at both mines and the Langeloth Metallurgical Facility
totaling $38 million and the Company's 75% share of the estimated mill
expansion at the Endako Mine totaling $22 million. The Company previously had
planned capital expenditures of approximately $300 million for 2009, including
$149 million for its share of the mill expansion at the Endako Mine, $50
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