Thompson Creek Metals Co. Inc. said yesterday it now expects production and sales of molybdenum from its own mines will be in a range of 22 million to 26 million pounds in 2009, up from previous guidance of 20 million to 24 million pounds.
“In response to the recent improvements in the molybdenum market, the company is making operational adjustments at its mines that will result in molybdenum production and sales in 2009 being approximately 10% higher than previously announced estimates,” said Kevin Loughrey, chairman and CEO.
“These operational adjustments include the shortening of the planned shutdown period this summer to two weeks from one month for the milling operations at the Thompson Creek and Endako mines.
“We will continue for the time being with the other main production adjustment we announced in February 2009, namely the reduction in the Thompson Creek mill operation to 70% of capacity (a 10 days on, four days off schedule). However, we will be monitoring market conditions and we intend to remain flexible and ready to adjust our production again in the future.”
Molybdenum production at the Thompson Creek mine is expected to be 16 million to 18 million pounds (compared to previous guidance of 15 million to 17 million pounds) and the company’s 75% share of production at the Endako mine is now estimated at 6 million to 8 million pounds (compared to previous guidance of 5 million to 7 million pounds).
The company’s 2009 cash production costs are currently estimated in the range of $5.75 to $7.00 per pound of molybdenum produced, down from a previously estimated range of $6.25 to $7.25 per pound, with costs at the Thompson Creek mine expected to be $5.50 to $6.50 per pound (compared to previous guidance of $6.00 to $7.00 per pound) and costs at the Endako mine expected to be $6.50 to $7.50 per pound (compared to previous guidance of $7.00 to $8.00 per pound). This assumes a US$/C$ exchange rate of 1.15 (compared to previous guidance of 1.20).
The revised 2009 Thompson Creek mine cash production costs include about $30 million of stripping costs related to future planned production phases, amounting to $1.65 to $1.90 per pound produced (compared to previous guidance of $1.75 to $2.00 per pound produced). The 2009 Endako mine operating plan has minimal stripping costs. All costs estimates are in U.S. dollars.
As the economy and the steel industry tanked late last year, the price of moly fell precipitously in October from about $34 a pound to about $12 in the course of a couple of week. It then continued a slower drop to as little as $8 a pound in April. In the weeks since, it has begun to follow the steel industry out of the slump to just over $10, but with indications that it will rise more over the course of the year.
Typical demand has 35% of moly output going into alloy steel, 24% into stainless steel, 9% into tool and high-speed steel, 6% into cast iron and a further 5% into superalloys.
Loughrey made a presentation that included the change to investors attending RBC Capital Markets’ 2009 Global Mining and Materials Conference in Toronto.
