Thompson Creek (TCM): Highlights from the RBC Glob Thompson Creek Metals Company (TSX: TCM C$3.17, NYSE: TC; Sector Perform; Price Target C$4.30)
Thompson Creek attended our Global Mining & Materials Conference (June 18 and June 19). We had an opportunity to sit down with Kevin Loughrey, Chairman & CEO and get an update on the company and its prospects.
Mt. Milligan on track for Q3/13 completion: The company said all mine equipment is onsite and functional, the crusher and conveyor are working, and the SAG mill worked when powered up. It is in the final stages of mechanical and electrical completion and expects to be complete and turn the mill on in July or August 2013, with commercial production in Q4/13. The company has still not provided definitive guidance for reaching full production rates. The mine is nearly fully staffed and they have on the order of 375 of the planned 410 people ready to go. While a year ago the company struggled to find workers, the change in the market and planned construction of a permanent residence camp have made the process much easier.
Timing and recoveries are largest risks at Mt. Milligan: Workers are onsite 24/7 trying to complete the mine, with a lot of work happening in a relatively confined space. Therefore, the company believes one risk to the project is timing. The company said there is a chance it could be delayed by 1 month, but would be shocked if it were 2. The second risk is recoveries and the metallurgy not working as expected. However, no new technology is being used.
Thompson Creek mine: As previously announced, stripping was halted at Thompson Creek mine to conserve cash. If the moly market does not improve, TCM will put the mine on care and maintenance. The pre-stripping of Phase 8 would cost $100 million, and the initial ore uncovered would be lower grade and therefore produced at higher costs.
Endako progressing slowly: Endako is getting to throughput rates of 50-55,000 tpd, and recoveries are slowly improving as fine tuning continues. Recoveries are now in the low 70%’s versus design of 79%. The company has reached 79% recovery, just not on a consistent basis. The company has moved back into mining at the heart of the ore in the Endako pit.
New CEO possible in Q4: The current CEO indicated that the search for a successor is progressing well and the company has narrowed it down to a few individuals. The company should be in a position to put out an initial offer in early July, which could lead to a new CEO at the helm by early Q4.