Thompson Creek Metals, a producer of molybdenum in Canada and the U.S., announced that it plans to suspend stripping activity associated with the next phase of production at the Thompson Creek Mine in Idaho, referred to as Phase 8. Mining operations will continue as planned through 2014 in the current phase of production at the mine. About 100 jobs will be cut.
The company expects to save approximately $100 million in operating costs and $8-$9 million in capital expenditures because of the decision.
Production at the mine may be halted in 2015 if the suspended work isn’t restarted, the Littleton, CO-based company said.
Molybdenum futures have dropped 25 percent on the London Metal Exchange over the past year. Global steel production declined in August as economic growth in China, the biggest consumer and producer of the metal, slowed to its weakest since 2009. Thompson Creek fell 1.5 percent to $2.64 in New York. The shares have declined 62 percent this year.
Kevin Loughrey, chairman and chief executive officer of Thompson Creek, said, “As a result of continuing weakness and uncertainty in the world economy, we have decided to reduce our costs, strengthen our balance sheet, and conserve cash. This will allow for greater certainty in accessing our existing financings in order to complete the development of Mt. Milligan, while we preserve the assets at Thompson Creek until market conditions strengthen.”
The company announced that it would expect to restart stripping of Phase 8 of the mine plan when market conditions warrant. The Thompson Creek Mine is expected to produce 20 - 22 million lbs of molybdenum in 2013 and 17 - 19 million lbs in 2014. Assuming stripping is not restarted prior to 2015, cash costs are expected to be approximately $4.75 - $5.75/lb in 2013 and $5 - $6/lb in 2014. If stripping has not recommenced by 2015, we expect that the mine would be placed on care and maintenance at such time. If the decision to recommence stripping is made prior to 2015, guidance with respect to costs will be revised accordingly, but we expect that molybdenum production guidance should not be affected.
The Company’s Langeloth roasting facility in Pennsylvania will continue to treat material from the Thompson Creek Mine, third party purchased concentrates and tolled molybdenum concentrates.