Thompson Creek -2.3% after TD points out solvency issue

Thompson Creek Metals (TC -2.3%) appears to be running out of cash, TD Securities warns, pointing to TC's highly leveraged balance sheet and its unsustainable molybdenum operations at current metal prices.

TC's long-term solvency is a "major issue" whatever the outcome of the Mt. Milligan ramp-up, the firm says; with a bad ramp-up and even lower metal prices, TC could be pressured to refinance next year.

The firm maintains its Reduce rating and $0.50 price target.

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Comments (7)
  • steady888
    , contributor
    Comments (441) | Send Message
    Well they had a .50 price target on JCP a few weeks ago and then it exploded upwards. But I have no doubt that will never happen with TC.
    4 Dec 2013, 12:24 PM Reply Like
  • engbulldog3
    , contributor
    Comments (206) | Send Message
    Yup, just one analysts rating! They actual made money on "moly" by reducing their cost basis recently. OOPS forgot to mention that. We all know TC has huge financial commitments in the future. We just need to make sure their are on their production and costs. Just like most companies!
    4 Dec 2013, 03:39 PM Reply Like
  • xtddd
    , contributor
    Comments (333) | Send Message
    analysis is only their job! please ignore them!
    4 Dec 2013, 08:38 PM Reply Like
  • vireoman
    , contributor
    Comments (1269) | Send Message
    Yes, there are real concerns with this company, but nothing that was said by TD Securities today was anything new. Yet, the stock fell 9.7%. As an investor, I am fully aware that copper and moly prices need to rise next year, or my investment might not work out the way I would like it to.
    4 Dec 2013, 09:41 PM Reply Like
  • vireoman
    , contributor
    Comments (1269) | Send Message
    From TheStreet:


    "In TD Securities' report, analyst Daniel Earle wrote, "We believe that the company's long-term solvency is a major issue. Based on our forecasts, we expect that the company will not be able to generate sufficient cash to repay approximately $1billion in debt maturities between 2017 and 2019."


    [2017 and 2019?!! Give me a break!]


    "TC's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that TC's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.10 is high and demonstrates strong liquidity."


    Does this sound like a reason that one should immediately sell?
    4 Dec 2013, 11:43 PM Reply Like
  • xtddd
    , contributor
    Comments (333) | Send Message
    that is right! experience tells me that if i follow analyst i will make no money.
    5 Dec 2013, 09:43 AM Reply Like
  • johnnyvolvo
    , contributor
    Comments (345) | Send Message
    My First Point:
    The Disclosures on TC Report by TD Securities on Page 5 State:


    5. A LONG POSITION (emphasis added) in the securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which the research analyst has discretion or control.
    9. TD Securities Inc. and/or an affiliated company is a market maker, or is associated with the specialist that makes a market, in the securities of the subject company.


    So you have a beneficial long position in the stock, AND your company owned nearly 800,000 shares long as of 9/30/2013, AND your company makes or helps to make a market in the security, AND THEN you come out with a seriously negative report on the stock AND you give a price target based on your worst possible case projection on all six key areas; metals pricing, mill throughput, ore grade, concentrate recovery percentage, mine operating costs, company capex, as well total dismissal of any moly production at all....AND additionally your projection trends are in direct contradiction to recent public information disseminated by the company?


    AND you want this to be taken seriously?!?


    Does ANYONE else see a MAJOR issue here?


    My Second Point:
    The response from Thompson Creek:


    Over the past several weeks, we have been meeting with sell-side analysts and institutional holders to introduce our new CEO, review our Q3 financial results and provide an update on the Mt. Milligan ramp-up. Our message has been positive and consistent with everyone whom we've met. It is also consistent with what was stated on our conference call:


    1. The Mt. Milligan ramp-up continues to go well.
    2. We believe we will have sufficient cash to get us through the ramp-up period.
    3. We do not believe we have liquidity issues.
    4. None of our outstanding notes mature until 2017 at the earliest, which gives us several years of what we expect to be strong performance at Mt. Milligan to generate significant cash.
    5. Once Mt. Milligan is fully operational and generating cash, we will review our debt structure and consider options available to us at that time to possibly refinance, repurchase, etc. our debt.
    6. We’ve begun shipping concentrate from MTM, and expect our next shipment in January 2014.
    7. We expect to reach commercial production on Q1 2014.


    We met with TD Securities and communicated the message above. Unfortuntely, the analysts run their own models, make their own assumptions, and write what they see fit, even after they meet with us. We cannot control what they write. We will issue 2014 production and cost guidance once 2014 budgets have been approved.


    Please do not hesitate to contact me should you have additional questions or concerns. I am traveling, but will be back in the office on Friday.


    Pam Solly
    Director, Investor Relations
    5 Dec 2013, 09:42 AM Reply Like
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