August 6, 2010 / 3:46 PM / 8 years ago

Thompson Creek CEO cautious after moly prices ebbed

* Q2 profit 87 cents/shr vs Q2 loss 73 cents yr ago

* Shares up 5.26 percent at C$10.00 on the TSX

* Q2 moly prices soar, but low June/July price to hit Q3

* Terrane Metals deal to close late Sept/early Oct (In U.S. dollars unless noted)

TORONTO, Aug 6 (Reuters) - Molybdenum prices have leveled off recently, making the industry wary about the strength of the global economic recovery, the CEO of Thompson Creek TCM.TO, a leading producer of the metal, said on Friday

While the company expects the price of molybdenum to increase over the second half of 2010, it said late Thursday that lower moly prices in June and July would have an impact on third-quarter earnings.

Molybdenum prices averaged $17.58 per pound in the first half of 2010 but dropped to $14.10 in July, according to the company. Molybdenum was trading for about $10 a pound in June 2009.

The metal is used primarily as a steel-hardening agent, and is used extensively in the pipeline industry. Thompson Creek sells about 20 percent of its moly to chemical companies that use it in catalyst production.

“There is undeniably a sense of caution in the market right now, as the recovery from the recession has not happened as fast as we thought it would,” Chief Executive Kevin Loughrey said in conference call early Friday morning.

But he still thinks the long-term outlook for moly prices is bright.

“We expect the moly market to continue to improve over the long-term,” he said, adding that he sees the price in the third quarter leveling out above the July low.

Shares of Denver-based miner Thompson Creek Metals TCM.TO rose on Friday after it reported a quarterly profit late Thursday, compared with a year-earlier loss a year earlier. Revenue doubled as molybdenum prices jumped from 2009 lows.

The company produced 7 million pounds of molybdenum in the second quarter, compared with 6.7 million pounds in the same period the year before, while molybdenum sales revenue climbed to $145.5 million from $71.2 million.

Loughrey said the fundamental supply and demand projections for molybdenum remain favorable. The company is sticking with its sales projections for 2010.

Thompson Creek also expects its third quarter earnings to be hit by costs related to its C$650 million ($636.5 million) cash and stock deal to acquire exploration company Terrane Metals TRX.V.

The deal, announced in July, will give the molybdenum miner exposure to copper and gold through Terrane’s flagship Mt. Milligan project, as well as growth prospects through the Berg copper-molybdenum-silver project, both in the Canadian province of British Columbia.

Loughrey said the deal was moving well and that he anticipates a closing in late September or early October.

Second-quarter net earnings rose to $126.5 million, or 87 cents a share, in the quarter ended June 30. That compared with a year-before loss of $89.3 million, or 73 cents per share.

Adjusted net income came in at $51.7 million, or 36 cents per share, compared with an adjusted net loss of $6.3 million, or 6 cents per share in the year-before period.

Analysts polled by Thomson Reuters I/B/E/S had expected, on average, a profit of 24 cents a share.

Revenue in the second quarter doubled to $148.4 million.

Thompson Creek was up 5.26 percent at C$10.00 Friday morning on the Toronto Stock Exchange. ($1=$1.02 Canadian) (Reporting by Julie Gordon; Editing by Frank McGurty)

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