Thompson Creek Metals (TCM-T)

There was a huge run in base metals. It is a positive pattern on the chart. They are probably going to do well again. He would come back to it in the fall.

Had been Short this because they had to raise a lot of money to fund their CapX. Has been covering his Shorts because it could have a small bounce into the end of tax loss selling. They need to raise money.

Has always been a molybdenum player, but doesn’t see any great upside. There is an excess supply. This comes out as a by-product. They did an acquisition, which was mostly copper, and has struggled with that a little. He would prefer some of the larger names that have more diversified exposure.

Their big claim to fame was the molybdenum play, which was hot a few years ago. Trying to diversify. Building a new copper mine so when that is up and running, they will probably do better because copper has a better outlook. Still trying to ramp it up and raise money to finish the mine. It will be a challenge in the short term. There are probably better places to be in the metal sector.

Moly is their primary product. There is worry that China could be the next black swan.

(Market Call Minute) Ramp up risk.

Would only go into this if you are willing to take a fairly significant risk. Recently sold his holdings. The balance sheet was giving him concerns. Have gold production coming on, but the gold area isn’t that great. Good company when times are really good, but right now he considers it very high risk.

(Market Call Minute) There are so many things ahead of them that even if you get a base metal cycle it will go ahead of that.

He has a short position. Covered a while back because of some positive news and then layered back on the shorts. Last quarter they delivered a lot out of inventory so he thinks the moly is shrinking but meanwhile they are building out a copper/gold project. These names tend to underperform heading into production so he waits for results.

Likes the base building that is going on now. Bottom fish here. Or wait until it gets above $4.50 in case it never breaks out. It could be dead money.

Okay name. Moly is used as a harder in steel. Still too oversupplied and price is too weak. Hold rather than buy.

They were the only Moly producer in Canada on a large cap basis and a pure play. Then they did a copper acquisition and the price of copper got stretched. He would not own it and would look elsewhere in the metals sector.

80% of its value is in the Thompson Creek mine and they’ve stopped stripping so essentially are not preparing the soil for future exploration down the road. Expansion into gold is a little late for them. Going to run out of the ability to generate cash in about a year’s time if they continue with this program. Primarily a molybdenum producer and steel has been pretty weak.

Buying up properties in the US. Just did a convertible debenture to increase their exposure. He is negative on Canadian real estate, which he feels is going to end quite badly. 20% upside from here would be reasonable. 3.6% yield.

Seasonality for Molybdenum is similar to that for industrial metals such as copper, silver, platinum and palladium. Moly normally bottoms around mid-November and then moves higher until the beginning of May each year. Chart shows this company bottomed around mid-November and is starting to move up. If it moves beyond its resistance level, it will go to at least the bottom of its trading range in the last part of 2011.