Thompson Creek flounders after announcing moly mine shutdown
Shares in Thompson Creek Metals (TSX:TCM, NYSE:TC) sunk to 52-week lows, after news broke last Wednesday that the B.C.-focused company is putting its Endako molybdenum mine on temporary suspension.
Trading at $1.45 a share before the news, TCM dropped to $1.37 following the announcement that the company and its joint-venture partner, Sojitz Moly Resources, agreed to place the Endako molybdenum mine on temporary suspension effective December 31, due to continued weakness in the molybdenum market. The mine is three-quarters owned by Thompson Creek, with Sojitz holding the remaining 25 percent.
The shutdown means around half of the mine's salaried employees will lose their jobs, incurring severance costs of about $1.7 million.
“We expected that the operational improvements that we implemented in 2014 would have been sufficient to keep the Endako Mine operating profitably during this prolonged volatility in the molybdenum market, but as a result of the current and expected molybdenum price weakness in the near term, we have no other option but to place the mine on temporary suspension," president and CEO Jacques Perron said in a statement.
TCM has had a rough quarter, with its stock sliding 50 percent over the last three months. The bad news on Endako followed an announcement last month that the company's Thompson Creek moly mine will be put on care and maintenance by the end of the year. That leaves just one mine standing for Thompson Creek, its Mt. Milligan copper and gold mine.
Moly prices, meanwhile, have dropped from a 52-week high of US$14.97 a pound to $9.46/lb, just above the 52-week low of $9.12. Molybdenum, used for strengthening steel, has been hard-hit by the lower demand for steelmaking by China and other large producers, that are struggling with lower economic growth forecasts.