According to Desjardins Securities:
Thompson Creek Metals Company Inc. (TCM C$3.64, TSX/TC US$3.56, NYSE)
Rating Hold–Above-average Risk Target C$5.70
4Q12 adjusted loss lower than expectations; 74% of Endako asset written off
4Q12 earnings. This morning, Thompson Creek reported a 4Q12 net loss of US$484.4m or US$2.87/share, due to an after-tax impairment on the value of fixed assets at its Endako mine of US$466.4m or US$2.76/share. The adjusted net loss of US$0.11/share compares with our estimate of a loss of US$0.05/share and consensus of a loss of US$0.06/share.
Operational update. During the quarter, the company produced 7.7m lbs of molybdenum (vs our estimate of 8.8m lbs), up 26% from 6.1m lbs in the previous quarter. Previous announcements on the updated mine plans for Endako and Thompson Creek had indicated that Endako had ceased mining operations in 3Q12 and would process stockpiled ore until 2H13 (previously spring 2013) due to high operating costs, while Thompson Creek had suspended the pre-stripping program associated with the next phase of production due to poor economics as a result of a declining molybdenum price. As a result of these initiatives, the company incurred cash costs during the quarter that were in line or lower; cash costs came in at US$13.26/lb (vs US$13.19/lb in 3Q12) at the Endako mine and at US$4.59/lb (vs US$7.87/lb in 3Q12) at the Thompson Creek mine.
Production guidance for 2013 decreased. Management slightly lowered its consolidated molybdenum production guidance for 2013 to 27.5–30.5m lbs (previously 29.0–32.5m lbs) and reiterated its production guidance of 27.5–30.5m lbs of molybdenum for 2014.
Mt. Milligan on budget and on schedule. Management gave an update on progress at its 100%-owned Mt. Milligan copper-gold project. The most recent capital cost estimate for the project of approximately C$1.5b remains unchanged; of this, approximately C$370–390m has yet to be spent (as at December 31, 2012). The 85m lb/yr copper project also remains on schedule, with commissioning and start-up expected to occur in 3Q13, followed by commercial production in 4Q13.
We reiterate our Hold–Above-average Risk rating and C$5.70/share target on the shares of Thompson Creek.