Despite solid third quarter results, Thompson Creek Metals Company Inc. shares were down 10% Friday on growing concerns that molybdenum prices are crashing. The moly miner said earnings quadrupled in the quarter to US$100.6-million, or US74¢ a share versus US$24-million or US18¢ a share, a year earlier.
"Operationally, the company continues to deliver reasonable results, said Blackmont analyst George Topping in a research note. "However, reports from Metal Bulletin suggest the moly market is in disarray, with prices collapsing as traders are forced to liquidate and end users defer purchases."
Thompson Creek also warned that moly prices will be much lower in the fourth quarter than the $32.85 price realized in Q3 and said it would postpone development of its Davidson project in northern British Columbia until economic conditions improve.
Mr. Topping told clients that energy-related demand and lack of new supply should mean more stable moly prices in 2009. Even so, he cautiously reduced his moly prices from $25 to $17 per pound in 2009 and from $25 to $20 per pound in 2010.
He maintained his "buy" rating on Thompson Creek shares but reduced his price target from C$12.25 to C$13.30.
Prices shown in US$ unless otherwise indicated.