Kevin Loughrey,
Chairman, Chief Executive Officer and Director

Some companies pursue a diversified approach and broaden their skill-set while minimizing their risks. Other companies go in the opposite direction, focusing solely on a single target, which gives them other advantages and mitigates other risks. Thompson Creek Metals Company (NYSE: TC, TSX: TCM) pursues the latter strategy and investors who are excited about the burgeoning opportunities in the molybdenum market will love this company's focus.

We spoke with Kevin Loughrey, the CEO of Thompson Creek Metals. Under his leadership, the company completed an acquisition in 2006, became listed on the New York Stock Exchange in 2007, and earned $1 billion of revenue in 2008. He has over 3 decades of experience in the mining industry with a successful track record of working through major acquisitions.

At first, the Thompson Creek Metals story seems complex and Mr. Loughrey gave us a quick recap of its history: "Our Endako mine in British Columbia has been in operation since 1965, and the Thompson Creek Mine in Idaho has been in operation since 1983. Both of those mines were in private ownership until 2006 when the Blue Pearl Mining Company, which ran a project in Davidson British Columbia, merged with Thompson Creek. Blue Pearl was the surviving entity from this merger but we changed the name back to Thompson Creek Metals, since that was the entity known in the mining industry." Since then, Thompson Creek Metals has added operations in Mount Emmons.

Although this may seem complex, the story of Thompson Creek Metals is a simple one: They are one of the world's largest molybdenum producers. Period. "Thompson Creek is a moly-only mining company," says Mr. Loughrey. "This year we'll make about 29 to 32 million pounds of molybdenum." That production comes solely from their Endako mine and their Thompson Creek mine. The Davidson and the Mount Emmons mines are not in production and their Pennsylvania operation is a post-milling roasting facility.

The company's long track record of success and focus means that they have several optimal elements that a newer, untested company lacks: First is their balance sheet: "We have a very strong balance sheet. We have about $500 million in cash, about $11 million of debt, and we'll sell about 27 to 29 million pounds of molybdenum into the market," says Mr. Loughrey. Along with a healthy balance sheet, they also have an established market of users: "We sell our material in Western Europe, North America, Japan, South Korea, India, and China." And, they have a series of processes that extends beyond molybdenum extraction to include production as well: "The product that comes out of the mill is called molybdenum sulphide and it's not the final product. It needs to be roasted and we have the capacity to roast our own molybdenum. At Endako we can roast it onsite and then we truck it to the port in Vancouver. The material that comes out of the Thompson Creek Mine is trucked to a wholly owned roaster in Pennsylvania. We roast it there before it goes to Western Europe. We're fully integrated: We go from the mine to the molybdenum sulphide to the roaster to the final product."

Langeloth Metallurgical Facility with the sulfuric acid plant in the foreground

Mr. Loughrey next talks about investors and what makes Thompson Creek an attractive option for investors: "Investors who invest in Thompson Creek do so because they believe in the molybdenum story." This metal is widely used in steel alloys for its heat-resisting and corrosion-resisting properties. "Molybdenum is a product that we think has a rosy future. And, there are only three public companies that are primary producers (that are producing ONLY moly). Two of them are Chinese and we are the only one in North America. We have two great properties [Endako and Thompson Creek] that produce very well at low cost; we have two growth projects [Davidson and Mount Emmons] and we're in the process of developing each one of those; we think that the molybdenum price and the supply/demand dynamics are good; and we're very active in the acquisition market trying to find properties that we can acquire and manage."

Inside the Thompson Creek Mill

In terms of a growth trajectory, they want to continue to focus on molybdenum but are willing to expand into other markets where their expertise can be applied. "We're looking for molybdenum properties but we're looking beyond moly… probably to entities that supply the steel industry where moly is used. As well, copper is a logical choice because half of the molybdenum in the world comes from copper mines that produce molybdenum as a byproduct, so a copper or copper/molybdenum deposit is a logical choice."

Every investment story comes with challenges. It is how a company faces and overcomes those challenges that make it a quality investment. Mr. Loughrey talks about Thompson Creek's biggest challenge: "We have an issue with growth. In 2012, the Thompson Creek Mine (in Idaho) is scheduled to go from the bottom of the pit to the top of the pit, where the grade is lower, and we'll start our way back down. The lower grade means a reduction in production and revenues, unless we do something different from what the current plan calls for. We're working hard to improve that production. We'd like to increase our revenue base so that we deal with the growth problem. We're looking to use our strong balance sheet to create new opportunities that will generate near term revenue in the next 2 to 4 years."

Mr. Loughrey is confident that the strong management team that makes up Thompson Creek Metals is up to the task, and their focused experience in the moly industry will help: "We're lucky to have our team. Most of our team has operated the properties for several years; they've been through the high and low points of the cycle. They have demonstrated the ability to extract more moly when prices are high and reduce costs when prices are low. We have an experienced management team; we feel quite fortunate with the management team we have."

Thompson Creek's focus, it seems, is not just on molybdenum but on successful best practices that can create an integrated, long-running company.

References

http://www.thompsoncreekmetals.com

Investor Relations

Wayne Cheveldayoff, Director of Investor Relations

Tel: (416) 860-1438

wcheveldayoff@tcrk.com

Other Inquiries

Toronto Office

401 Bay Street, Suite 2010

P.O. Box 118

Toronto, Ontario

Canada M5H 2Y4

Tel: (416) 860-1438

Toll Free: (800) 827-0992