* Production outlook for 2011 maintained
* Demand for molybdenum seen high, sold out for year
* Mt Milligan, Endako expansion plans financed
* Shares rise 10.2 percent in Toronto
(In U.S. dollars unless noted)
By Julie Gordon
TORONTO, Aug 9 Shares of Thompson Creek Metals
TCM.TO climbed off a year low on Tuesday after the molybdenum
miner backed its full-year production outlook and broader
market fears of a double-dip recession calmed.
Shares closed at a year-low of C$6.94 on Monday ahead of
the company's results. Later it posted a lower quarterly profit
and warned that output at its flagship Thompson Creek mine
would slip in the second half of the year as it produced a
lower-grade ore. [ID:nL3E7J83JC]
Even so, the company said demand for molybdenum is strong
and it boosted its sales forecast slightly.
"People are buying. We're sold out," Chief Executive Kevin
Loughrey told Reuters. "There is material out there moving all
the time at normal rates and prices."
Even though concerns about a possible double-dip recession
pushed the stock lower on Monday, Loughrey pointed out that no
orders were canceled and the spot market remains strong.
"To me this moment in time feels a lot different than 2008
when we saw the similar carnage in the marketplace," Loughrey
said earlier in a conference call with investors. "Right now
the moly market looks much stronger."
With the market for metal used to harden steel expected to
grow by 25 to 30 million pounds a year on demand from emerging
markets like China, Brazil and India, Loughrey said he expects
molybdenum prices to be slightly higher on average in 2012.
The Denver-based company expects to produce 22 to 24
million pounds of molybdenum this year at cash costs of $5.50
to $6.50 a pound. The sales outlook for 2011 was tightened to
31 to 34 million pounds from 30 to 34 million pounds.
Preliminary production estimates for 2012 are 26 to 28
million pounds of molybdenum.
"We feel quite confident about the direction in which our
company is headed," Loughrey said.
Thompson Creek is in the process of expanding its mill at
the Endako Mine and developing the Mt. Milligan copper-gold
project, both in British Columbia, which will diversify the
molybdenum miner into copper and precious metals.
Despite rising capital costs, Loughrey said he is confident
that the company has the resources needed to finance its growth
"We have the financing in place that will enable us to
complete the Endako expansion and the Mt Milligan construction
project with our existing capital assets," he said. "We're very
comfortable that we can get these projects built and paid for
without issuing additional equity."
Development at Mt Milligan, which is expected to produce
some 81 million pounds of copper and 194,500 ounces of gold a
year, is forecast to total around $1.3 billion.
That project is expected online in 2013, with the Endako
mill expansion expected to come online in early 2012.
With gold prices at record highs over $1,700 an ounce,
Loughrey said he open to locking in some of that production,
via a streaming deal, hedging or forward-selling, should the
company needs additional financing in the future.
"Our sense is that ... gold is apt to go up, but $1,700 is
a pretty attractive gold price to do something with a portion
of that production," he said.
Shares of Thompson Creek Metals were up 10.2 percent at
C$7.65 on Tuesday afternoon on the Toronto Stock Exchange.
Shares have slipped almost 50 percent so far this year.
(Reporting by Julie Gordon)