Wednesday 10 February 2010

Thompson Creek Metals on the look-out for acquisitions

Kevin Loughrey, CEO of Thompson Creek, said in a presentation at a mining conference in New York last November that they are seeking to buy Moly projects that are close to production in the near future.
He said that the company is looking primarily in North America but would also consider assets in South America. The company expects global demand for the metal to rise to 600 million lbs by 2015 from about 460 million lbs in 2009.

After my recent post about TCM's outlook, I felt it would interesting to post a list of potential take-over candidates, which are either close to production or are already producing.

Company Location Metals Production Market Cap. $CAD Price $CAD






1. Avanti Mining ++ Mo - $36.98 m CAD 0.23
2. General Moly + Mo - $167.33 m CAD 2.31
3. Mercator Minerals + Mo, Cu, Ag + $442.25 m CAD 2.48
4. Roca Mines ++ Mo, Cu, Ag, Au + $55.86 m CAD 0.61


1. Avanti Mining is in a relatively early stage, but geographically it is near to TCM properties. Additionally one of the directors is the former Chief Operating Officer of TCM, which gives the two companies an interesting connection! Maybe a company to watch in the long-term.

2. General Moly owns two Moly properties in Nevada; Mt.Hope and The Liberty Project. Mt.Hope is its most advanced project and contains over 1.3 billion pounds of proven and probable Moly reserves, which makes it one of the largest Moly properties in the world. They expect to produce 40m lbs per year and their anticipated direct operating costs will be $5.29/lb. This is in comparison to other projects very low. The company has significant cash holdings and strategic partnerships with ArcelorMittal and POSCO (South Korean Steel Company) that already makes General Moly well positioned. And by looking at the market cap. a very affordable acquisition for TCM.

3. Mercator Minerals has quite a hefty price tag on it, but it is definitely on the same level than TCM in terms of production rates. Mercator's open pit copper-molybdenum mine located in northwestern Arizona, is expecting to average in the next 10 years, a production rate of 56.4m lbs of Copper per year, 10.3 million lbs of molybdenum and 600,000 ounces of silver. The Company achieved commercial production in the second quarter of 2009, with a production capacity of 25,000 tons of ore per day through the mill. Mercator plan to increase their capacity to 50,000 tons per day of ore in late 2010.

4. Roca Mines is like General Moly a low cost producer with its Max Molybdenum mine in British Columbia. They expect an operating cash cost of $5 per pound. The company also owns other interests in Gold and Silver projects. Roca intends to complete back-to-back production runs resulting in the production of approximately 3.0 million lbs of contained molybdenum, which in my opinion is probably a too "smaller" investment for TCM.

Both General Moly and Mercator Minerals seem like ideal candidates for Thompson Creek Metals and with cash positions of more then $500m, quite affordable for TCM too. If I had to put my money on one, I would go for General Moly.

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