Thompson Creek Metals Company Inc. News
Thompson Creek announces 2007 financial results
TORONTO, March 13 PRNewswire-FirstCall - Overview (all in U.S. dollars): - Revenues were $197.8 million in the fourth quarter and $914.4 million in 2007. - Net income was $28.9 million or $0.25 per basic and $0.22 per diluted share in the fourth quarter and $157.3 million or $1.43 per basic and $1.24 per diluted share in 2007. - Average realized price on molybdenum sales was $31.08 per pound in the fourth quarter and $28.77 per pound during the full year. - Long-term debt borrowed for the acquisition of Thompson Creek USA in October 2006 was reduced by $165.8 million during 2007. At December 31, 2007, the principal outstanding on the First Lien Credit Facility was $236.1 million and cash balances totaled $113.7 million. - Since the acquisition of Thompson Creek USA, the Company has used $327 million of cash to reduce acquisition debt and make payments to the previous owner, including a contingent purchase price payment of $100 million in January 2008. - Molybdenum production from the Company's two mines was 3.4 million pounds in the fourth quarter and 16.3 million pounds in 2007. - Outlook for molybdenum prices remains positive and the Company continues to expect its molybdenum production to increase to between 23 and 24.5 million pounds in 2008 and in excess of 34 million pounds in 2009. - The weighted-average cash operating expense was $11.51 per pound in the fourth quarter and $8.39 per pound for 2007. In 2008, costs are expected to be in the range of $6.00 to $6.50 per pound at the Thompson Creek Mine and $9.50 to $10.25 per pound at the Endako Mine. Note: A conference call and webcast for analysts and investors is scheduled for Friday, March 14, 2008 at 10:00 a.m. Eastern.
Thompson Creek Metals Company Inc. ("the Company"), one of the world's largest publicly traded, pure molybdenum producers, today announced financial results for the year ended
"Thompson Creek achieved significant financial success in 2007 despite experiencing lower molybdenum production at both of our operating mines in the second half of the year," said
"The production difficulties stemming from a rock slide at the Endako Mine and the processing of a low-grade stockpile at the Thompson Creek Mine are now behind us. At the Thompson Creek Mine, where we began mining Phase 6 ore in the fourth quarter of 2007, the ore grade has risen as expected and molybdenum production currently is on track to achieve the guidance that we previously announced for 2008.
"Mining operations are also going well and on track to achieve forecasted production levels at the Endako Mine, where we have experienced good grades and recoveries from the ore that we have been mining from the Denak West Pit since the beginning of the year,"
"With molybdenum prices showing continued strength, we believe that the best is still to come for Thompson Creek shareholders. The Company is well-positioned to deliver substantial gains in earnings and shareholder value this year and beyond, especially due to our internal growth plans.
"Molybdenum production from our existing mines is expected to more than double from the 16.3 million pounds recorded in 2007 to at least 34 million pounds in 2009 due to higher ore grades at the Thompson Creek Mine. The Company is considering a possible mill expansion at the Endako Mine and the development of the Davidson Deposit. Both of these expansion projects could add to production starting in 2010. They currently are under review and decisions will be announced in the coming months.
"An important benefit for our shareholders from rising production is the impact on per-pound production costs, which for the overall company are expected to be lower this year than they were in 2007 and lower still in 2009,"
"During 2007, the reported mineral resources, mineral reserves and mine life increased substantially due to a re-evaluation of our existing mining properties using the assumption of
Financial Results
Thompson Creek's revenues totaled
After the deduction of operating, selling, marketing, depreciation, depletion and accretion costs, the Company generated earnings from mining and processing operations totaling
Net income for the fourth quarter of 2007 was
Net income in 2007 was
Net income and earnings from mining and processing operations in both years were negatively affected by the inclusion in operating expenses of a non-cash acquisition expense related to the inventory portion of the purchase price adjustment associated with the Company's purchase of Thompson Creek USA in
Cash flow from operating activities was
Cash balances were
During the fourth quarter of 2007, Thompson Creek made payments to reduce its First
Since the acquisition of Thompson Creek USA in
The Company's mines produced 3.4 million pounds of molybdenum in the fourth quarter of 2007 and 16.3 million pounds in 2007. The weighted-average cash operating expense was
The production amounts for the fourth quarter and full year 2007 reflect molybdenum produced at the Thompson Creek and Endako mines but do not include molybdenum purchased from third parties, roasted and sold by the Company.
The Thompson Creek Mine produced 1.9 million pounds in the fourth quarter and a total of 9.2 million pounds in 2007. Sales of Thompson Creek Mine molybdenum totaled 1.4 million pounds in the fourth quarter and 12.1 million pounds in 2007. The average cash operating expense was
The Company's 75% share of Endako Mine's production was 1.5 million pounds in the fourth quarter and a total of 7.1 million pounds in 2007. Sales of Endako Mine molybdenum totaled 1.7 million pounds in the fourth quarter and 7.4 million pounds in 2007. The average cash operating expense was
Cash operating expenses represent operating expenses less non-cash items including inventory purchase price adjustments and stripping costs deferred in the reporting period. Cash operating expenses and cash operating expenses per pound are considered a key measure by Thompson Creek in evaluating the Company's operating performance. Cash operating expenses are not a measure of financial performance, nor does it have a standardized meaning prescribed by generally accepted accounting principles ("GAAP") and may not be comparable to similar measures presented by other companies.
Outlook
The molybdenum price on world markets is the single most important variable affecting the cash flow and profitability of Thompson Creek. Management expects that molybdenum prices will remain strong in the near term.
Molybdenum production of between 16.5 and 17.0 million pounds at a cost of between
Mineral ore reserves were recalculated and increased at both operating mines during 2007 using a long-term price of
A feasibility study that examined the expansion of the Endako mill was also completed in 2007. The study indicated there are potential significant returns on an investment of this nature. The Company and the other joint venture participant are reviewing the study and a decision is expected in 2008.
In addition to the extended mine life at the current operating mines, development of the Davidson Project continues. The Davidson deposit is Canada's largest undeveloped molybdenum deposit. A feasibility study examining mining 2,000 tonnes of high-grade ore per day from the deposit and the shipping of this ore to the Endako mill for processing is being prepared by consultants. The Company expects to make a decision on the project in 2008.
Sensitivity Analysis
The effect of a $1-per-pound change in the average price of molybdenum on 2008 net income and diluted earnings per share, based on the Company's plan, is approximately
The effect of a
Additional information on the Company's financial position is available in Thompson Creek's Financial Statements and Management's Discussion and Analysis for the year ended
Conference call and webcast
Thompson Creek will hold a conference call for analysts and investors to discuss its 2007 financial results on
To participate in the call, please dial 416-644-3416 or 1-800-732-9307 about five minutes prior to the start of the call.
A live audio webcast of the conference call will be available at www.newswire.ca and www.thompsoncreekmetals.com.
An archived recording of the call will be available at 416-640-1917 or 1-877-289-8525 (Passcode 21262412 followed by the number sign) from
About Thompson Creek Metals Company Inc.
Thompson Creek Metals Company Inc. is one of the largest publicly traded, pure molybdenum producers in the world. The Company owns the Thompson Creek open-pit molybdenum mine and mill in Idaho, a 75% share of the Endako open-pit mine, mill and roasting facility in northern British Columbia, and a metallurgical roasting facility in Langeloth, Pennsylvania. Thompson Creek is also developing the Davidson Deposit, a high-grade underground molybdenum project near Smithers, B.C. The Company has approximately 800 employees. Its principal executive office is in
Cautionary Note Regarding Forward-Looking Statements
——————————————————————————
This news release contains "forward-looking information" within the meaning of the
Readers should refer to Thompson Creek's annual information form for the year ended
Thompson Creek Metals Company Inc. (formerly Blue Pearl Mining Ltd.) Management's Discussion and Analysis Years Ended December 31, 2007 and 2006 (US dollars in thousands, except per share and per pound amounts, unless otherwise indicated)
This discussion and analysis should be read in conjunction with Thompson Creek Metals Company Inc.'s ("Thompson Creek" or the "Corporation") consolidated financial statements and related notes thereto for the years ended
Name Changes
In
2007 Overview - Molybdenum sold in 2007 was 31.0 million pounds, including 12.1 million pounds from the Thompson Creek Mine and 7.4 million pounds from the Corporation's 75% interest in the Endako Mine, with the remaining sales from the processing of purchased concentrates. - The average price realized on molybdenum sales was $28.77 per pound in 2007. - Revenue increased by $763,559 in 2007 to $914,402, reflecting ownership of Thompson Creek USA for the full year in 2007 compared to the October 26 to December 31 period post-acquisition of Thompson Creek USA in 2006. - Net income was $157,347 or $1.43 per basic and $1.24 per diluted common share. - Long-term debt borrowed for the acquisition of Thompson Creek USA was reduced by $165,765 to $236,090 at year end. - $100,000 contingent purchase price payment was recorded as a liability at December 31, 2007 and paid to the former owners of Thompson Creek USA in January 2008. - The first of a two-part re-evaluation of Thompson Creek Mine increased estimated mineral reserves to 213.5 million pounds of contained molybdenum and indicates a remaining 10-year mine life. - A re-evaluation of Endako Mine increased the Corporation's 75% interest in estimated mineral reserves to 233.0 million pounds of contained molybdenum and significantly extended the mine life to 27 years based on current mining rates. - A positive feasibility study on increasing milling capacity at the Endako Mine was completed and is under review by the Corporation and the other Endako Mine joint venture participant. Introduction
Thompson Creek acquired Thompson Creek USA on
The Corporation acquired the Davidson molybdenum property ("Davidson Project") in British Columbia in 2005. It has been developing this project since that time and in
Selected Annual Information (Unaudited) 2007 2006 2005 Operations Molybdenum sold (000's lb)(1) 30,969 5,737 - Molybdenum production from mines (000's lb)(2) 16,366 3,846 - Realized price ($/lb) $ 28.77 $ 25.74 $ - Weighted-average cash operating expenses ($/lb)(3) $ 8.39 $ 6.29 $ - Financial Revenue $ 914,402 $ 150,843 $ - Net income (loss) $ 157,347 $ (20,643) $ (4,113) Net income (loss) per share - basic $ 1.43 $ (0.36) $ (0.13) - diluted $ 1.24 $ (0.36) $ (0.13) Cash flow provided by (used in) operating activities $ 182,551 $ 75,444 $ (2,723) Cash and cash equivalents $ 113,692 $ 98,059 $ 6,915 Total assets $ 1,109,722 $ 899,912 $ 8,397 Total long-term debt $ 237,420 $ 397,806 $ - Total liabilities $ 622,080 $ 675,861 $ 1,541 Shareholders' equity $ 487,642 $ 224,051 $ 6,856 Shares outstanding (000's) 113,364 100,528 43,079 (1) Includes molybdenum from mines and molybdenum processed from purchased concentrate at the Langeloth facility and resold. (2) Includes molybdenum produced at Thompson Creek Mine and the Corporation's share of the Endako Mine production; excludes molybdenum produced from purchased concentrate. (3) Weighted-average of Thompson Creek Mine and Endako Mine cash operating costs; excludes the effect of purchase price adjustments recorded on acquisition of Thompson Creek USA. See Non-GAAP Financial Measures - Cash Operating Expenses for additional information. Non-GAAP Financial Measures - Cash Operating Expenses
Throughout this management's discussion and analysis reference is made to cash operating expenses and cash operating expenses per pound. Cash operating expenses and cash operating expenses per pound are considered a key measure by Thompson Creek in evaluating the Corporation's operating performance. Cash operating expenses are not a measure of financial performance, nor does it have a standardized meaning prescribed by generally accepted accounting principles ("GAAP") and may not be comparable to similar measures presented by other companies. The Corporation's management believes this non-GAAP measure provides useful supplemental information to investors in order that they may evaluate the Corporation's financial performance using the same measures as management, and that as a result, the investor is afforded greater transparency in assessing the financial performance of the Corporation. Non-GAAP financial measures should not be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with GAAP.
The following table provides a reconciliation of cash operating expenses and cash operating expenses per pound, by mine, and operating expenses included in the Corporation's consolidated statements of income (loss) in the determination of net income.
2007 2006 ——————————————- ——————————————- Pounds Pounds Operating Sold(1) Operating Sold(1) Expenses (000's lbs) $/lb Expenses (000's lbs) $/lb Thompson Creek Mine Cash opera- ting expen- ses(2) $ 100,708 12,064 $ 8.35 $ 14,711 2,529 $ 5.82 Inventory purchase price adjustment (3) 30,997 48,324 ————— ————— 131,705 63,035 ————— ————— Endako Mine Cash operating expenses $ 62,612 7,413 $ 8.45 $ 12,193 1,745 $ 6.99 Inventory purchase price adjustment (3) - 20,608 —————- ————— $ 62,612 $ 32,801 —————- ————— Other Operations 360,171 11,492 43,279 1,463 —————- ————- ————— ————- Operating expenses - consolidated $ 554,488 30,969 $ 139,115 5,737 ————— ————- ————— ———— ————— ————- ————— ———— Weighted- average cash operating expenses(4) $ 163,320 19,477 $ 8.39 $ 26,904 4,274 $ 6.29 ————— ————- ——— ————— ———— ———- ————— ————- ——— ————- ———— ———- (1) Pounds of molybdenum sold. (2) Excludes stripping costs deferred at Thompson Creek Mine in 2007. (3) On acquisition of Thompson Creek USA an accounting adjustment was made to increase the carrying value of the product inventory on hand at that date to its estimated fair value. This non-cash adjustment was charged to operating expenses in 2006 as the inventory was sold. (4) Weighted-average of Thompson Creek Mine and Endako Mine cash operating costs; excludes the effect of purchase price adjustments recorded on acquisition of Thompson Creek USA. Operations Thompson Creek Mine
The Corporation's Thompson Creek Mine and mill are located near Challis, in central Idaho. Mining is done by conventional open pit methods utilizing electric-powered shovels and 180-tonne haul trucks. The property covers 8,500 hectares with all the necessary permits, water, power, easements and rights-of-way to allow operations. The mill has a capacity of 27,000 tonnes per day and operates with a crusher, SAG mill, ball mill and flotation circuit.
The table that follows presents a summary of Thompson Creek Mine's operating and financial results for 2007 and 2006. Amounts for 2006 include results for the period subsequent to the Corporation's acquisition of Thompson Creek USA, from
2007 2006 Operations Mined (000's ore tonnes) 6,659 899 Milled (000's tonnes) 8,047 883 Grade (% molybdenum) 0.06 0.14 Recovery (%) 82.1 90.0 Molybdenum production (000's lb) 9,269 2,473 Molybdenum sold (000's lb) 12,064 2,529 Realized price ($/lb) $ 27.69 $ 26.33 Cash operating expenses ($/lb)(1) $ 8.35 $ 5.82 Financial Molybdenum sales $ 334,011 $ 66,583 —————— —————— Operating expenses 131,705 66,313 Selling and marketing 3,950 252 Depreciation, depletion and amortization 19,643 1,330 Accretion 1,275 11 —————— —————— 156,573 67,906 —————— —————— Income (loss) from mining and processing $ 177,438 $ (1,323) —————— —————— —————— —————— (1) Excludes the effect of purchase price adjustments recorded on acquisition of Thompson Creek USA. See Non-GAAP Financial Measures - Cash Operating Expenses for additional information.
Molybdenum sold from the Thompson Creek Mine increased by 9,535,000 pounds or 377% in 2007 compared to 2006 as a result of owning the mine for the full year rather than only the post-acquisition period in 2006. Mining transitioned from Phase 5 to the new Phase 6 area in 2007, and some of the ore milled during the transition came from a low grade stockpile. While actual molybdenum production increased in 2007, it was less than planned as a result of inability to maintain access to high-grade ore from Phase 5, poorer than planned quality of the low grade stockpile ore processed in the year and a delay in stripping activity for Phase 6. These factors negatively impacted recovery, grade and mill throughput, which reduced molybdenum production compared to planned production for 2007. Realized prices increased by
The first of a two-part reserve re-evaluation for the Thompson Creek Mine was completed as of
Endako Mine
The Corporation has a 75% interest in the Endako open-pit mine, mill and roaster which is located near Fraser Lake, British Columbia. The mine property covers 7,741 hectares and has the necessary permits and ancillary facilities to allow current operations. The infrastructure includes a 28,000 tonne per day mill and a 14,000 to 16,000 kilogram per day multiple-hearth roaster.
The table that follows presents a summary of the Corporation's 75% share of the Endako Mine's operating and financial results for 2007 and 2006. Amounts for 2006 include results for the period subsequent to the Corporation's acquisition of Thompson Creek USA, from October 26 to December 31, 2006. 2007 2006 Operations Mined (000's ore tonnes) 7,499 1,320 Milled (000's tonnes) 7,356 1,129 Grade (% molybdenum) 0.06 0.06 Recovery (%) 72.7 75.7 Molybdenum production (000's lb) 7,097 1,373 Molybdenum sold (000's lb) 7,413 1,745 Realized price ($/lb) $ 28.26 $ 24.23 Cash operating expenses ($/lb)(1) $ 8.45 $ 6.99 Financial Molybdenum sales $ 209,492 $ 42,275 —————— —————— Operating expenses 62,612 32,801 Selling and marketing 2,518 842 Depreciation, depletion and amortization 18,475 1,450 Accretion 381 4 —————— —————— 83,986 35,097 —————— —————— Income from mining and processing $ 125,506 $ 7,178 —————— —————— —————— —————— (1) Excludes the effect of purchase price adjustments recorded on acquisition of Thompson Creek USA. See Non-GAAP Financial Measures - Cash Operating Expenses for additional information.
The Corporation's share of molybdenum sold from the Endako Mine increased by 5,668,000 pounds or 325% in 2007 compared to 2006 as a result of owning the mine for the full year rather than only the post-acquisition period in 2006. While actual molybdenum production increased in 2007, it was less than planned. A rock slide occurred on the south wall of the Endako Pit in
Proven and probable ore reserve estimates were revised upwards in
A detailed feasibility study that examined the possible expansion of the Endako mill to 50,000 tonnes per day from its current operation at 28,000 tonnes per day was completed in 2007. The study indicated the Corporation's share of the capital cost, in addition to ongoing capital expenditures, would be
Other Operations
The Corporation operates a metallurgical facility located in Langeloth, near
Other Operations include the processing activities at the Langeloth facility, excluding the processing of Thompson Creek Mine material. The Corporation purchases molybdenum concentrate from third parties for processing at the Langeloth metallurgical facility. These purchases are made to improve operating efficiency by increasing capacity utilization at the Langeloth facility and to maintain customers with a continuing molybdenum supply, especially in periods when molybdenum produced from the Corporation's mining operations is low. The Corporation also processes molybdenum and certain other metals for other parties on a tolling, or cost-per-unit processed, basis.
The table that follows presents a summary of Other Operations' operating and financial results for 2007 and 2006. Amounts for 2006 include results for the period subsequent to the Corporation's acquisition of Thompson Creek USA, from
2007 2006 Operations Molybdenum sold from purchased concentrate (000's lb) 11,492 1,463 Realized price on molybdenum sold from purchased concentrate ($/lb) $ 30.25 $ 26.53 Toll roasted molybdenum (000's lb) 13,070 1,999 Roasted metal products processed (000's lb) 27,698 5,682 Financial Molybdenum sales $ 347,598 $ 38,818 Tolling and calcining 23,301 3,167 —————— —————— 370,899 41,985 —————— —————— Operating expenses 360,171 40,001 Selling and marketing 2,574 145 Depreciation, depletion and amortization 9,979 1,812 —————— —————— 372,724 41,958 —————— —————— (Loss) income from mining and processing $ (1,825) $ 27 —————— —————— —————— ——————
Molybdenum sold from purchased concentrates, toll roasted molybdenum and roasted metal products processed increased by 686%, 554% and 387%, respectively, in 2007 compared to 2006 as a result of the Corporation owning the Langeloth facility for the full year in 2007 compared to only the post-acquisition period in 2006.
Davidson Project
An independent engineering firm is preparing a feasibility study on the Davidson molybdenum deposit, located near Smithers, British Columbia. The proposed underground mine has been designed to produce an average of 2,000 tonnes of high-grade ore per day. The main components of the project include: the underground mine, an ore load out facility, a 7.2 kilometre haul road and a water treatment plant and discharge line. The Davidson Project ore will be transported to the Endako Mine for processing. Discussions on the sale of a portion of the Davidson Project are underway with the other participant in the Endako joint venture.
The Davidson Project will require approvals from provincial and federal regulators for construction and operation of the mine. Obtaining these approvals will be the focus of activities on Davidson for 2008.
Markets
Thompson Creek produces primarily molybdenum products. The products produced cover most of the range of molybdenum products available in the market.
The largest consumption of molybdenum occurs as a metallurgical alloy in the production of certain steels. Molybdenum is added as an alloy to enhance the steel's high temperature strength, to impart hardness, toughness and to improve the weldability of steel, and to improve their anti-corrosive characteristics. Molybdenum is an important ingredient in high-performance stainless steel and other alloys. Molybdenum is also used in chemical products such as lubricants and pigments and as a catalyst to reduce sulfur in refined petroleum products.
Molybdenum demand has grown at an average of approximately 4% a year over the last 20 years and the world consumption is now in excess of 440 million pounds annually. Demand growth stems from the demand for the industrial capital goods sector especially from the oil and gas industry where it is used in pipeline steel, drill steel, and ocean platforms, as well as a desulfurization catalyst in petroleum refining. Other industrial sectors important to the future demand for molybdenum include aircraft manufacturing, shipbuilding, nuclear and coal power generation, and desalination plants among others. Given expectations of continued strong growth in energy investments and a continuation of global economic expansion, especially in
Molybdenum supply is expected to be constrained over the next couple of years. Approximately 60% of the world's molybdenum production comes from by-product production at certain copper mines. While some of these mines are expecting to increase molybdenum production in the coming years, others have forecast lower production. Many have been mining areas of higher grade molybdenum within their mines over the last two or three years to take advantage of the recent increase in molybdenum prices. However, these mines are unable to indefinitely maintain this high-grade molybdenum activity due to the nature of their ore bodies. Other operators have announced construction of molybdenum recovery circuits that will add small amounts to the supply. One major operator has announced a mine reopening but it is not expected to start producing until 2010 at the earliest. There are also potential additional sources of molybdenum from new primary mine construction. Many of the significant deposits are held by mining companies that do not have the financial strength to finance mine development without assuming considerable debt, and it may be difficult for these entities to obtain the necessary financing, partly due to the lack of forward markets to hedge the molybdenum price. The time required to complete construction related to the development of new sources may be considerable therefore supply may not be available from these sources for several years to come.
The price of molybdenum, which averaged
Financial Review Acquisition of Thompson Creek USA
On
This acquisition has been accounted for using the purchase method, whereby the purchase consideration was allocated to the estimated fair values of the assets acquired and liabilities assumed at the effective date of the purchase. A preliminary allocation was made at
Prior to this acquisition, the Corporation's mining assets were limited to the Davidson Project which is presently in the development stage.
Income Statement
Revenues increased by
Operating expenses increased by
Depreciation, depletion and amortization increased by
General and administrative expense was
Interest and finance fees increased by
Exploration and development expenses were
Stock-based compensation increased by
Income and mining taxes for 2007 totaled
Cash Flows
Cash from operating activities provided
Investing activities used
Financing activities required
Liquidity and Capital Resources
During 2007, cash and cash equivalents increased by
At
A positive feasibility study has been prepared for the expansion of the Endako mill that shows the Corporation's share of capital costs, in addition to ongoing capital expenditures, would be
Outlook
The molybdenum price on world markets is the single most important variable affecting the cash flow and profitability of the Corporation. Management expects that molybdenum prices will remain strong in the near term.
Molybdenum production of between 16.5 and 17.0 million pounds at an operating cost of
Ore mineral reserves were recalculated and increased at both operating mines during 2007 using a long-term price of
In addition to the extended mine life at the current operating mines, development of the Davidson Project continues. The Davidson deposit is Canada's largest undeveloped molybdenum deposit. A feasibility study is being prepared to examine the mining of 2,000 tonnes of high-grade ore per day from the deposit and the shipping of this ore to the Endako mill for processing. The Corporation expects to make a decision on the project in 2008. Efforts to secure permitting for the project are ongoing.
A feasibility study that examined the expansion of the Endako mill was also completed in 2007. The study indicated there are potential positive returns on an investment of this nature. The Corporation and the other joint venture participant are reviewing the study and a decision is expected in 2008.
Sensitivity Analysis
The effect of a
The effect of a
Related Party Transactions
The Corporation has a 75% interest in the Endako Mine joint venture. The other participant in the joint venture is a related party as they jointly control significant assets. Consolidated sales to members of a group of companies affiliated with the other participant in the Endako Mine joint venture were
Commitments and Contingencies
As discussed above, in connection with the acquisition of Thompson Creek USA, the Corporation entered into the First Lien and Second Lien credit facility loan agreements. During the first quarter of 2007, the Corporation repaid the Second Lien credit facility. The First Lien credit facility requires quarterly principal payments. In addition to the regular principal payments, the Corporation is required to make additional principal payments upon the issuance of any new equity subsequent to the acquisition of Thompson Creek USA. In 2007, the Corporation made additional principal payments of
In
The Corporation has entered into variable-rate loan agreements to finance the purchase of certain mining equipment. The mining equipment is pledged as collateral for the loans. Each of these loans requires regular principal repayments and mature no later than 2010. These loans bear interest at LIBOR plus 200 basis points. As at
Maturities of long-term debt obligations are as follows: First Lien Equipment Senior Loans Total Year ending December 31: 2008 $ 66,818 $ 2,704 $ 69,522 2009 66,818 2,898 69,716 2010 44,545 1,165 45,710 2011 31,182 - 31,182 2012 26,727 - 26,727 Thereafter - - - —————— —————— —————— $ 236,090 $ 6,767 $ 242,857 —————— —————— —————— —————— —————— ——————
On acquisition of Thompson Creek USA, the Corporation has assumed an agreement with a company affiliated with the other participant in the Endako joint venture in which the Corporation will sell up to 10% of certain production from the Thompson Creek Mine. The price to be paid will vary depending on the production costs and the market price of molybdenum. The Corporation expects to sell approximately 8.0 million pounds of molybdenum from 2007 to 2011 under the terms of this agreement. One million pounds in each of the four years, 2008 through to 2011, will be sold at a price as determined by the agreement not to exceed
In addition to the above noted contract, the Corporation has entered into agreements in which it has committed to sell specified amounts of molybdenum from 2008 to 2011 at fixed prices. At
The Corporation enters into forward currency contracts in order to reduce the impact of certain foreign currency fluctuations related to the operations of Endako. The forward currency contracts provide protection to the Corporation from fluctuations in the Canadian dollar. The terms of the contracts are less than one year. At
In
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