Thompson Creek to close moly mines for a month

Vancouver – Following the lead of other molybdenum miners Thompson Creek Metals (TCM-T, TC-N) is slashing its production forecast for 2009.

Thompson Creek had planned to produce between 32 and 34 million lbs. moly this year and as recently as Dec. 5 said “Management currently is not revising its production guidance…in 2009.”

But in view of a bleak world economic outlook and moly prices that remain low, at around US$10 per lb., Thompson Creek now says that in 2009 it will cut moly output by about a third to between 20 and 24 million lbs.

“We are currently planning a temporary shutdown for about a month this summer in mining activity at both the Thompson Creek and Endako mines”, Thompson Creek CEO Kevin Loughrey said in a statement.

He also warned of unspecified production changes “about which we will provide details at a later date after they are decided.”

On news of the revised production forecast Thompson Creek’s share price fell 61¢ to $4.98 at presstime. The company has about 122 million shares outstanding.

The cut to production comes on the heels of measures to reduce US$600 million in capital expenditures between 2008 and 2010, US$300 million of which Thompson Creek slated for spending in 2009.

First it put its US$109 million Davidson mine development, about 200 km west of Prince George, BC, on hold in November. It has pegged the measured and indicated resource estimate there at 77.2 million tonnes grading 0.169% moly.

Then in December it added a US$280 million expansion of its nearby Endako mine to the list of suspended projects.

The company had intended to nearly double production at Endako from its current 28,000-tonne-per-day capacity.  It has pegged Endako’s proven and probable reserves at 293 million tonnes grading 0.050% moly.

All told instead of the US$300 million capital expenditures it forecasted for 2009 Thompson Creek says it will only spend US$69 million. Of that US$33 million will go towards the Endako expansion, keeping the project ready for boot-up if market conditions improve.

Thompson Creek expects to end 2008 with about US$225 million in cash and cash equivalents and about US$19 million in debt. It also says cash costs should come in at around US$7.30 per lb. molybdenum oxide for the year.

In addition to the Endako mine Thompson Creek operates the Thompson Creek mine near Challis, Idaho, and the Langeloth metallurgical facility about 40 km west of Pittsburg, PA. The company holds proven and probable reserves of 95 million tonnes grading 0.099% moly at Thompson Creek.