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Thompson Creek Metals and General Moly released first quarter results. While the price of molybdenum has been steadily increasing the two companies have posted a loss for the quarter. However, long term outlook for the two remain strong based on increased production and rising prices. They may be a bargain for investors looking to capitalize on long term molybdenum forecasts.
By Michael Montgomery—Exclusive to Moly Investing News
Thompson Creek Metals Inc [TSE:TCM][NYSE:TC] has announced its first quarter financials. The company has increased production to 8.3 million pounds up from 6.1 million pounds in the previous quarter. Rising prices and increased production helped the company’s revenue, however, a $24.5 million accounting charge killed any hope of first quarter profits.
“Its first-quarter profit fell 87 percent, as a non-cash $24.5 million accounting charge more than offset the impact of rising molybdenum prices… Excluding the charge — taken to account for changes in the fair market value of outstanding common stock purchase warrants — the company earned 17 cents a share… Revenue jumped 62 percent to $127.8 million, as molybdenum prices rose 43 percent on rebounding demand for steel,” reported Cameron French for Reuters.
The long term outlook for Thompson Creek remains strong. The company is eying new acquisitions in South America and Australia, and may be looking to diversify into other metals. “We’re looking in South America, and we’d look in Australia… We are working very hard. We’ve identified targets, we’re looking at a wide array of acquisition candidates and we’re optimistic that we’ll do one,” stated Thompson Creek CEO Kevin Loughery.
Thompson Creek’s stock price has dropped from its 50 day moving average of $13.47 down to $10.94. The drop in price probably reflects the net loss for the company in the first quarter due to the $24 million accounting charge. However, the company expects to produce 29 to 32 million pounds of moly this year, combined with steadily rising prices for moly, the company is in a good position. Last Friday, the investment banking firm Canaccord Adams upgraded the stock to a ‘buy’ from hold: “Thompson Creek Metals is currently below its 50-day moving average of $13.47 and below its 200-day moving average of $12.75. SmarTrend is bearish on shares of TC and our subscribers received a Downtrend alert on May 04, 2010 at $11.67, which has returned 11.7% to date,” as reported on Smart Trend.
General Moly Corp. [AMEXGMO][TSE:GMO] also released first quarter results. “Net loss for the three months ended March 31, 2010 was approximately $2.8 million ($0.04 per share), compared to a loss of $3.0 million ($0.04 per share) for the year ago period… Consolidated cash balance at the end of the quarter was approximately $25 million compared to approximately $49 million at the end of 2009. During the first quarter, cash use of $24 million was the result of $21 million in development and milling equipment deposit costs and $3 million in General and Administrative costs,” according to the press release.
The company was the beneficiary of a large financing deal with the Chinese Hanlong Group, and the company has received the first $10 million of the bridge loan on April 26th, which doesn’t appear on the company’s statement in the release.
The company was dealt a blow on their Mt. Hope project after it was denied water rights, however, meetings have been set up to address the issues. The company expects to be granted water rights in the later half of the year. The Mt. Hope project is expected to be of significant size. “The company has two main molybdenum assets, its 80% interest in the Mt. Hope project and the Liberty project. Both are located in central Nevada. Once production commences at Mt. Hope and Liberty, General Moly is expected to become the world’s largest primary moly producer,” reported Luke Burgess for Wealth Daily.