Does equity financing offer mean Thompson Creek Metals is acquisition-minded?
One of North America's largest molybdenum miner, Thompson Creek, could be shopping for a possible acquisition, Toronto's Blackmont Resources has suggested.
Posted: Thursday , 27 Aug 2009
RENO, NV -
Blackmont Capital analyst George Topping suggested Wednesday major molybdenum miner Thompson Creek Metals (NYSE: TC, TSX: TCM) is either expecting a pull-back in the moly price "or there may be an acquisition in the pipeline."
On Tuesday, Thompson Creek announced it had entered into an agreement with a syndicate of underwriters led by UBS Securities Canada for a bought deal public offering of 15.5 million shares at a price of C$14 per share.
The gross proceeds of the offering will be approximately C$217 million (US$198 million). The company said it intended to use the net proceeds for development and expansion of existing assets, exploration, acquisitions, working capital and general corporate purposes.
However, Topping noted TCM already had $262 million in cash flow as of July 30th and is expected to be strongly cash flow positive in 2010. Therefore, the equity financing offer could suggest a pull-back in the moly price in the near term or a possible acquisition.
He advised that Mercator Minerals , the operator of the Kingman mine in Arizona, would be a good for a Thompson Creek acquisition, "or possibly a partnership with Quadra Mining (QUA-TSX) on its massive , moly-rich Sierra Gorda project in Chile, or perhaps with General Moly (GMO-TSX) among others."
A source close to Thompson Creek Wednesday declined comment when asked by Mineweb about the possibility of an acquisition.