Thompson Creek Reports Second Quarter 2015 Financial Results

DENVER, CO, Aug. 6, 2015 /CNW/ - Thompson Creek Metals Company Inc. (NYSE: TC) (TSX: TCM) (the "Company" or "Thompson Creek"), a  North American mining company, announced today financial results for the three and six months ended June 30, 2015, prepared in accordance with United States generally accepted accounting principles ("US GAAP"). All dollar amounts are in United States ("US") dollars unless otherwise indicated.

"During the second quarter, we made significant progress at Mount Milligan Mine compared to the first quarter of this year, including improved throughput, recoveries and unit cash costs," said Jacques Perron, President, Chief Executive Officer and Director of Thompson Creek Metals Company. "We are particularly proud of our improving safety performance, which demonstrates the commitment and quality of all of the members of our team.  With ongoing volatility in the markets, we will continue to prudently manage our balance sheet and actively pursue company-wide cost reductions."

Mr. Perron continued, "We achieved our highest quarterly average daily mill throughput to date of 44,940 tonnes in the second quarter. As a result of several maintenance shutdowns related to the pebble crushers, primary crusher and ball mills, daily throughput in July averaged 43,302 tonnes, but following completion of the necessary maintenance work, daily mill throughput improved in the latter part of the month and averaged 52,290  between  July 26  and August 4.  We expect to make additional operational improvements in the second half of this year, including the installation of a second SAG discharge screen deck, which will be instrumental in achieving higher throughput.  We believe these improvements, together with continued use of secondary crushed material, will help us to complete the ramp-up of Mount Milligan by year-end."

During the quarter, the Company repurchased and retired $34 million of its senior secured notes.  Since December of 2014, the Company has repurchased and retired approximately $68 million of its outstanding notes with future interest savings from these repurchases to maturity of approximately $22 million.  Mr. Perron said, "These bond repurchases are consistent with our strategy to reduce our debt and strengthen our balance sheet.  Since the completion of Mount Milligan Mine through June 30, 2015, we have repaid and retired approximately $121 million of our debt or 12%, including the net repayments of our capital lease obligations," added Mr. Perron.
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Highlights for the Second Quarter 2015

• Operating results for the second quarter of 2015 compared to the first quarter of 2015 reflect positive trends, as management targets completion of the Mount Milligan ramp-up by year end. With our recent improvements in the mine and mill together with the utilization of the temporary secondary crushing circuit, during the second quarter of 2015, we achieved our highest quarterly average daily mill throughput to date of 44,940 tonnes, a 13.6% improvement over the first quarter of 2015. Recoveries for the second quarter of 2015 steadily increased to 85.5% for copper and 72.7% for gold. With the higher throughput and improved recoveries, payable production for both copper and gold increased by approximately 30% from the first quarter of 2015.
  
  
• Financial results for the second quarter of 2015 compared to the first quarter of 2015 also improved with operating income more than doubled and cash generated by operating activities more than quadrupled. During the second quarter of 2015, we also decreased our total debt balance by $41.2 million.
  
  
• Total cash and cash equivalents at June 30, 2015 were $211.1 million compared to $265.6 million at December 31, 2014. Total debt, including capital lease obligations, at June 30, 2015 was $897.6 million, compared to $944.7 million at December 31, 2014. During the second quarter of 2015, we repurchased and retired $34.2 million of the 9.75% senior secured notes due 2017.
  
  
• Cash generated by operating activities was $23.9 million in the second quarter of 2015 compared to cash generated by operating activities of $50.7 million in the second quarter of 2014.
  
  
• Consolidated revenues for the second quarter of 2015 were $134.1 million compared to $248.4 million in the second quarter of 2014. Copper and gold sales contributed $105.6 million in revenue in the second quarter of 2015 compared to $118.9 million in the second quarter of 2014. Molybdenum sales for the second quarter of 2015 were $20.9 million compared to $126.3 million in the second quarter of 2014. During each of the second quarters of 2015 and 2014, we completed three shipments of copper and gold concentrate and recorded four sales.
  
  
• Payable production at Mount Milligan Mine for the second quarter of 2015 was 20.2 million pounds of copper and 59,917 ounces of gold, compared to payable production of 16.0 million pounds of copper and 37,030 ounces of gold for the second quarter of 2014.
  
  
• Sales volumes and average realized sales prices for copper and gold for the second quarter of 2015 were 21.2 million pounds of copper at an average realized price of $2.63 per pound and 57,920 ounces of gold at an average realized price of $975 per ounce, as compared to 21.9 million pounds of copper at an average realized price of $3.20 per pound and 51,983 ounces of gold at an average realized price of $1,047 per ounce for the second quarter of 2014. Molybdenum sales volumes in the second quarter of 2015, which consisted of the sale of molybdenum inventory produced at our mines in 2014 and molybdenum sourced from third parties, were 2.3 million pounds at an average realized price of $9.23 per pound compared to 9.7 million pounds at an average realized price of $13.03 per pound for the second quarter of 2014.
  
  
• Consolidated operating income for the second quarter of 2015 was $12.1 million compared to $57.3 million for the second quarter of 2014. Consolidated operating income for the second quarters of 2015 and 2014 was impacted by non-cash lower-of-cost-or-market molybdenum product inventory write downs of $1.9 million and $1.2 million, respectively. Consolidated operating income for the second quarter of 2015 was also impacted by $12.1 million of costs related to idle molybdenum mining operations, including our share of severance costs at Endako Mine of $6.7 million.
  
  
• Net income for the second quarter of 2015 was $0.3 million, or nil per diluted share, compared to net income of $61.6 million, or $0.28 per diluted share, for the second quarter of 2014. The net income for the second quarter of 2015 and 2014 included non-cash foreign exchange gains of $16.9 million and $42.3 million, respectively, primarily on intercompany notes.
  
  
• Non-GAAP adjusted net loss for the second quarter of 2015 was $13.5 million, or $0.06 per diluted share, compared to non-GAAP adjusted net income for the same period of 2014 of $22.0 million, or $0.10 per share. Non-GAAP adjusted net income (loss) excludes foreign exchange gains and losses, net of related income tax effects. See "Non-GAAP Financial Measures" for the definition and reconciliation of non-GAAP adjusted net income (loss).
  
  
• Non-GAAP unit cash cost per pound of copper produced for the second quarter of 2015 was, on a by-product basis, $0.48 per pound and, on a co-product basis, $1.55 per pound of copper and $434 per ounce of gold. Non-GAAP unit cash costs in the second quarter of 2014 was, on a by-product basis, $0.33 per pound and on a co-product basis, $1.97 per pound of copper and $538 per ounce of gold. See "Non-GAAP Financial Measures" for the definition and reconciliation of non-GAAP cash costs.
  
  
• Capital expenditures for the second quarter of 2015 were $9.7 million, composed of $9.1 million for Mount Milligan Mine and $0.6 million for the Langeloth Facility, Endako Mine and corporate combined, compared to $26.7 million for the second quarter of 2014.

Summary of Quarterly Results
(US$ in millions, except per share, per pound and per ounce amounts—unaudited)

Selected Condensed Consolidated Financial and Operational Information
(US$ in millions, except per share, per pound and per ounce amounts)

Current Guidance

The Company updated its 2015 guidance as of the date of this report to reflect (i) certain changes to its molybdenum business guidance as a result of expected decreases in cash flow from Langeloth, expected increases in the proportion of sales of upgraded products from its molybdenum mines, the placement of Endako Mine on care and maintenance, effective July 1, 2015 (in connection with which the Company incurred its share of one-time severance costs), and the decision to cease stripping at Thompson Creek Mine, effective August 6, 2015; and (ii) the addition of capital expenditures for 2015 relating to a settlement of vendor claims in connection with the construction of Mount Milligan. There are no revisions to the production and cash cost guidance for Mount Milligan Mine as of the date of this report.

The table below presents (i) updated guidance for fiscal year 2015 as of the date of this report and (ii) for comparison purposes, the guidance previously provided in the Company's Form 10-Q for the three months ended March 31, 2015.

Non-GAAP Financial Measures

In addition to the condensed consolidated financial statements presented in accordance with US GAAP, management uses certain non-GAAP financial measures to assess its operating performance for the reasons described further below. These measures do not have standard meanings prescribed by US GAAP and may not be comparable to similar measures presented by other companies. The presentation of these measures is not intended to be considered in isolation from, as a substitute for, or as superior to, the financial information prepared and presented in accordance with US GAAP. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the results of operations as determined in accordance with US GAAP.

Adjusted Net Income (Loss), Adjusted Net Income (Loss) Per Share—Basic and Diluted

Management of the Company uses adjusted net income (loss) and adjusted net income (loss) per share—basic and diluted to evaluate the Company's operating performance and for planning and forecasting future business operations. The Company believes the use of these measures allows investors and analysts to compare results of the continuing operations of the Company to similar operating results of other mining companies, by excluding unusual or infrequent items that are considered non-core to our business.

Adjusted net income (loss) represents the income (loss) prepared in accordance with US GAAP, adjusted for significant non-cash items.

For the first half of 2015 and 2014, the significant items were the net gains and losses related to the impact of foreign exchange due primarily to intercompany notes and related tax effects. For the five quarters ended June 30, 2015, the significant items were the net gains and losses related to the impact of foreign exchange due primarily to intercompany notes and related tax effects and impairments on our property, plant and equipment and materials and supplies inventory.

In connection with the Company's strategy to manage cash balances, fund its operations and provide future tax benefits, the Company may enter into intercompany loan arrangements. At times, the loans are denominated in currencies other than the measurement currency of one of the parties. US GAAP requires that notes that are intended to be repaid should not be considered a capital contribution, and, therefore, the foreign exchange fluctuations related to these loans impact net income (loss) each period. At each period end, management compares the exchange rate between the Canadian and US dollars to the exchange rate at the end of the prior reporting period. The difference between those rates is recorded as an unrealized gain or loss on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Settlement of these intercompany loans results in realized foreign exchange gains or losses recorded on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). As the loans between the parent company and its subsidiaries are the primary driver of the Company's foreign exchange gains and losses, as discussed above, management does not consider gains or losses on foreign exchange in its evaluation of our financial performance. Management believes that presentation of our non-GAAP measures excluding these gains or losses provides useful information to our investors regarding the Company's financial condition and results of operations.

Adjusted net income (loss) per share (basic and diluted) is calculated using adjusted net income (loss), as defined above, divided by the weighted-average basic and weighted-average diluted shares outstanding during the period as determined in accordance with US GAAP. If the adjustments to net (loss) on a US GAAP basis result in non-GAAP adjusted net income, management calculates weighted-average diluted shares outstanding in accordance with US GAAP and use that to calculate adjusted net income per share—diluted. If the adjustments to net income on a US GAAP basis result in non-GAAP adjusted net (loss), the Company utilizes weighted-average basic shares outstanding to calculate adjusted net income per share—diluted, in accordance with US GAAP.

The following tables reconcile net income (loss) presented in accordance with US GAAP to the non-GAAP financial measures of adjusted net income (loss) and adjusted net income (loss) per share—basic and diluted, for the three and six months ended June 30, 2015 and 2014 and for the five quarters ended June 30, 2015.  All figures within the tables are unaudited and are presented in US$ in millions, except shares and per share amounts.

Non-GAAP Reconciliation

Copper-Gold Operations - Unit Cash Cost and Average Realized Price per Payable Pound or Payable Ounce Sold

Unit cash cost on a by-product and co-product basis are considered key measures in evaluating operating performance in the Company's Copper-Gold operations, as well as measures of profitability and efficiency on a consolidated basis. Although, unit cash cost on a by-product and co-product basis are not measures of financial performance, do not have standardized meaning prescribed by US GAAP and may not be comparable to similar measures presented by other companies, management believes these non-GAAP measures provide useful supplemental information to investors.

Unit cash cost on a by-product and co-product basis represent the mining, milling, on-site general and administration, truck and rail transportation, warehousing, refining and treatment, and ocean freight and insurance costs; and exclude the effects of changes in inventory; non-cash corporate allocations; other non-cash employee benefits, such as stock-based compensation; depreciation, depletion, amortization and accretion.

On a by-product basis, sales of by-product metals are deducted when computing cash costs in accordance with the cash cost standard endorsed by the World Gold Council and, previously, the Gold Institute. On a co-product basis, cash costs are allocated between copper and gold based on production. Copper production is stated in thousands of pounds. Gold production has been converted to thousands of copper equivalent (Cu eq.) pounds using the gold production for the periods presented, as well as the most recent quarterly average prices for copper and gold. The price used for copper is the most recent quarterly average of the Metals Bulletin Daily published price for LME settlement per tonne. The price used for gold is a weighted average of the most recent quarterly average of the Metals Bulletin Daily published prices for daily average London price per ounce adjusted for the fixed price established under the Gold Stream Arrangement ($435 per oz).

The following tables provide a reconciliation of cash costs, unit cash costs, and operating expenses for Copper-Gold operations included in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) in the determination of net income (loss) for the three and six months ended June 30, 2015 and 2014 and for the five quarters ended June 30, 2015.

Non-GAAP cash cost

By-Product

Co- Product

Average realized sales price

The average realized sales price per payable pound or payable ounce sold is calculated by dividing copper or gold sales revenue, gross together with the final pricing adjustments and mark-to-market adjustments by the pounds or ounces sold, respectively, as shown in the tables below.