A miner with a heart of molybdenum
Thompson Creek Metals raises production guidance while lowering cost estimates.
On Nov. 5, molybdenum miner Thompson Creek Metals (TC) reported third-quarter earnings of 14 cents a share, 3 cents a share above the Wall Street consensus, and revenue of $114 million, well above analysts' projections of $90 million.
The upside came from lower costs at just $5.67 per pound of molybdenum and from higher sales volumes -- up 17% from the second quarter, although still down 12% from the third quarter of 2008.
Molybdenum prices remained depressed at $12.75 a pound, down a huge 61% from the third quarter of 2008.
The best news, though, wasn't in the numbers for the third quarter but in the company's guidance for 2009 and 2010. Thompson Creek Metals raised its projected production volume for 2009 to 24 to 26 million pounds (from previous guidance of 22 to 26 million pounds) and for 2010 to 29 to 32 million pounds.
At the same time, the company lowered its estimates of the cost of production to a range of $5.80 to $6.30 a pound in 2009 (from $5.75 to $7.00). For 2010, the company estimated costs at $6 to $7 a pound.
In two other major announcements, Thompson Creek presented a new mine plan that increased the size of its mineral reserves by about 30%, and noted that since U.S.-based investors now make up more than 50% of all shareholders, the company would convert to U.S. GAAP (generally accepted accounting principles) in the fourth quarter. That will result in a one-time charge to earnings of roughly 60 cents a share, according to estimates by Deutsche Bank.
The company also reported that it was looking for an acquisition. It finished the quarter with $480 million in cash and just 14 million of debt. Any deal could, and probably would, add to the short-term volatility of the stock.
With molybdenum prices showing signs that they might creep up towards $15 or 16 a pound in 2010 with a gradual recovery in the global economy, as of November 24th I'm raising my target price just a tad to $16.50 a share by July 2010 from the previous $15 by May 2010. It traded at around $12 Tuesday.
I think Thompson Creek Metals is worth a look if you're trying to increase your exposure to non-U.S. equities. (For why you might want to do that, see this post).
At the time of this writing, Jim Jubak owned shares of Thompson Creek Metals in his personal portfolio.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
These hot movers could rise by double digits in coming months.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.