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Why Thompson Creek Shares Popped

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of molybdenum miner Thompson Creek Minerals (TSX: TCM) surged 13% today after its quarterly results and outlook impressed Bay Street.

So what: The stock has slumped in 2013 on headaches associated with its massive gold and copper Mt. Milligan mine, but today’s Q2 beat[V1]  — adjusted EPS of $0.08 vs. the consensus of a $0.02 loss — coupled with continued progress at Mt. Milligan suggests that things are turning. In fact, Thompson boosted molybdenum output 58% year-over-year while managing to bring down costs by 49%, giving analysts plenty of good vibes over its profitability going forward.

Now what: Management still expects commercial production at Mt. Milligan to begin in the fourth quarter of this year, followed by a twelve-month ramp up period to full design production and recovery. “We are pleased to have ended the quarter with continued improvement in operational performance at both the Thompson Creek and Endako Mines,” said Chairman and CEO Kevin Loughrey. “During these volatile times in the commodities markets, we continue to look for ways to reduce costs and improve efficiencies.” Given Thompson’s still hefty debt load, sensitivity to resource prices, and execution risks associated with Mt. Milligan, however, the downside might be a little too big for average Fools to take on.  

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Fool contributor Brian Pacampara does not own shares in any company mentioned at this time.  The Motley Fool doesn’t own shares in any of the companies mentioned.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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