UPDATE 1-Thompson Creek lowers outlook over ore grades

(Adds details; in U.S. dollars unless noted)

TORONTO, Nov 9 (Reuters) - Thompson Creek Metals (TCM.TO) reported a profit for the third quarter, but cut its molybdenum production forecast through 2008 due to lower ore grades handled at its flagship mine, the company said on Friday.

Shares of Thompson, which until May was known as Blue Pearl Mining, fell hard early in the session, but then regained most of the lost ground after company officials said the issue ore grades would soon be resolved.

"We expected the third quarter to be the weakest this year, but I think it will be the weakest quarter... as far out in the future as we can see," Executive Chairman Ian McDonald said on a conference call.

The company said the ore problems were due in part to a lack of investment by the previous owner of the Thompson Creek mine, which left the company with little accessible high-grade ore to extract as it chewed through waste rock to get access to the next phase of the orebody.

This forced Thompson to mill low-grade stockpiled ore that ended up being an even lower grade than expected.

Thompson Creek produced 3 million pounds of molybdenum at an average cost of $11.63 per pound during the quarter. The average realized price was $32.05 a pound, up from $29.59 in the second quarter.

Production in the fourth quarter is expected to rise to between 4.5 million and 5 million pounds, it said.

But the problems at the Thompson Creek mine and slower pace of accessing the new orebody prompted it to lower its production estimates to a range of 17.5 million to 18 million pounds of molybdenum in 2007 and 24 million to 25.5 million pounds in 2008.

The company had previously expected to produce just under 21 million pounds this year and 27 million for 2008.

Production expectations for 2009 were revised upwards to more than 34 million pounds from 29 million.

Late in the session, the stock was down 43 Canadian cents at C$23.07, recovering from an earlier low of C$19.75.

Net profit was $23.9 million, or 18 cents a share, in the quarter, compared with a loss of $2.8 million, or 6 cents, in the year-earlier period.

Revenue at Thompson, the world's No. 5 molybdenum producer, was $200.9 million, versus nil a year ago, when the company had no operating mines.

The company began life as Blue Pearl Mining, then bought Thompson Creek Metals last year, and adopted its target's name this past May.

Thompson Creek also said that it will cost C$373 million ($396 million) to expand its mill at its Endako mine in northern British Columbia. Chief Executive Kevin Loughrey said in a statement the company has not yet decided whether to proceed.

($1=$0.94 Canadian) (Reporting by Cameron French; Editing by Rob Wilson)