Thompson Creek cuts spending at Idaho project; expects to save more than $100M

DENVER – Thompson Creek Metals (TSX:TCM), citing uncertainty in the world economy, has announced cutbacks expected to save more than $100 million at its Thompson Creek molybdenum mine in Idaho.

The diversified miner with operations in both the U.S. and Canada said Wednesday that mining will continue at the Idaho project but that it is suspending stripping activity associated with the next phase of production, known as Phase 8.

It expects to save about $100 million in operating costs and $8 million to $9 million in capital expenditures as a result of the changes.

About 100 workers will lose their jobs.

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“As a result of continuing weakness and uncertainty in the world economy, we have decided to reduce our costs, strengthen our balance sheet and conserve cash,” chairman and CEO Kevin Loughrey said in a release.

“This will allow for greater certainty in accessing our existing financings in order to complete the development of Mount Milligan, while we preserve the assets at Thompson Creek until market conditions strengthen.”

Mount Milligan is a gold-copper project in central British Columbia that is expected to begin production next year.

The company said it would restart stripping of Phase 8 of the mine plan when market conditions warrant.

The Thompson Creek Mine is expected to produce 20 million to 22 million pounds of molybdenum in 2013 and 17 million to 19 million pounds in 2014.

Assuming stripping is not restarted prior to 2015, cash costs are expected to be approximately $4.75 to $5.75 a pound in 2013 and $5 to $6 a pound in 2014, the company said.

“If stripping has not recommenced by 2015, we expect that the mine would be placed on care and maintenance at such time,” it added.

Besides the Idaho operation, Thompson Creek Metals products molybdenum at its Langeloth metallurgical facility in Pennsylvania and at its 75 per cent owned Endako mine in northern British Columbia.