Thompson Creek Metals Company Inc. TC is set to release its first-quarter 2015 results after the closing bell on May 6.
In the last quarter, this mining company delivered a negative surprise of 150%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Thompson Creek expects to generate positive net cash flow of about $25 million to $27 million from its molybdenum business. The expected sale of the molybdenum inventory from its mines, together with expected net cash flow from Langeloth will more than offset the share of the estimated cost for care and maintenance and stripping at the Thompson Creek Mine and temporary suspension cost at Endako.
The company remains focused on the Mount Milligan Mine in 2015 and expects to achieve mill throughput of 60,000 ton per day by year-end, which is possible with the temporary crushing circuit currently in place. By completing the detailed engineering for the permanent secondary crusher in 2015, Thompson Creek will be well-positioned to commence construction once market conditions improve and the company believes it is appropriate to make the capital investment.
Thompson Creek expects that its payable copper and gold production will significantly increase in 2015 and that it will achieve cash costs of $0.60 to $0.85 per pound of copper on a by-product basis, making Mount Milligan one of the lowest cost copper producers in the world on a by-product basis.
Since the beginning of 2015, throughput at Mt. Milligan has been impacted by frozen and plugged feeders and unscheduled mechanical issues. Action plans have been developed and are currently being executed. The company expects average throughput for the first quarter to be lower than expected, and believes that it will reach its goal of about 60,000 tons per day by year-end.
Earnings Whispers
Our proven model shows that Thompson Creek is likely to miss earnings estimates this quarter. This is because the stock has a negative Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #4 (Sell).
Negative Zacks ESP: The Earnings ESP for Thompson Creek is -33.33% — the difference between the Most Accurate estimate of a loss of 4 cents and the Zacks Consensus Estimate of a loss of 3 cents.
Zacks Rank #4 (Sell): Thompson Creek’s Zacks Rank #4, when combined with a negative ESP, indicates an earnings miss. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some other companies in the basic materials sector you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Alamos Gold Inc. AGI has an earnings ESP of +50.00% and a Zacks Rank #3 (Hold).
CF Industries Holdings, Inc. CF has an earnings ESP of +3.69% and a Zacks Rank #3 (Hold).
Agrium Inc. AGU has an earnings ESP of +6.06% and a Zacks Rank #3.
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