Thompson Creek

I was going through the world's largest gold deposits, then seeing which firms own them, -- interestingly you can search the mines here: http://www.minefund.com/mineral-deposits/richest-deposits.php I'd like a large deposit, so that the co can set up operations and then have a long mine life, plus the resource firm's main source of value is its mining assets.

Anyway, what is interesting is that Thompson Creek, mainly a Molybdenum producer, owns the 47th largest gold deposit in the world, Mt Milligan in Canada, with 6 million ounces of gold proven, also contains about 1 M tons copper (comparison, Codelco, Chile's gov't owned copper miner world's largest has 77M tons copper)(which is to say, it won't set records in copper, but the copper is a source of value). 22 year mine life, will come online in 2013, so current forecasts don't include earnings from this forecast to 2012 (current forecast is selling at 13x 2012 earnings). Production will be 194,000 ou gold, which is around a small to mid tier producer -- you'd see this at around $1Bn in market cap by itself at least.

This doesn't include Molybdenum, which is the main asset, interestingly Moly prices haven't moved up too much, despite the fact that iron ore, copper, now nickel -- most base metals are up -- see http://www.infomine.com/chartsanddata/chartbuilder.aspx?z=f&g=127676&dr=5y Moly prices were at $30-35, now at $15, but at an uptrend.

Nice net cash position, market cap of only $2Bn, nice chart (stock looks flat, no breakout yet).

Corporate presentation here: http://www.thompsoncreekmetals.com/i/pdf/Presentation_February_24_2011.pdf

I really like the "hidden" asset of the Mt Milligan gold and copper mine. However note, the grades are on the low side for the mine, -- grades of around 0.4 g/ton for gold -- you want to see at least 1 g/ton, and copper grades of 0.14% copper -- you want to see grades of 1% copper. However, the reserves are very big, I noted one of the most successful gold miners, Newcrest in Australia, has one main mine, Cadia, which has a grade of 0.5 g/ton but 27 M ounces total., Now Newcrest is worth almost $30Bn, due to the fact that they have all the operations set up, even as the mine as a relatively low grade (can just process and process ore).

TC should be able to do the same, perhaps on a bit of a lower scale, but a 6 M ou mine is not small at all (again gold mines of over 1M ounces are very rare).

Anyway, once the market either anticipates the gold mining operation Mt Milligan coming online, or higher moly prices, TC should do better than a relatively low $2Bn market cap.

It's not showing up as a gold producer yet since it is classified as Moly, so that's why I think it hasn't moved too much. (most gold producers are up a ton over the past year and a half). It's sort of like KHGM, which is the world's 6th largest copper producer, but also has the 5th largest reserves of silver (always classified as copper, doesn't get a benefit yet too much from silver) (KGHM has already up a ton so probably isn't too much of a buy here).

Feasibility Study of Mt Milligan:

I found an NPV for a feasibility study of Mt Milligan (located about 500 miles north of Vancouver): http://www.terranemetals.com/i/pdf/2009-10-09_PreTaxMatrix_2.pdf

The chart gives different prices of copper and gold, and different discount rates. The maximum prices for copper are $3.50 per lb (now $4.33) and $1000 for gold (now $1400 ou). At $3.50 copper and $1400 gold, the NPV is $C3,134M at a 5% discount rate, $C2,156M at a 8% discount rate.

Of course you'd increase that value is the value of copper is $4 and gold $1400.

So I think the stock will do really well once revenues come in from Mt Milligan. (and as long as commodity prices stay strong).

Checked the message board for TC, and the explanation for the low stock price is possible bankruptcy, from a potential meteor strike (this is a joke). The messages are very frustrated with the stock, blaming it on management, for some reason (need to figure out why). So perhaps it will be a while before it moves. But it appears the value is there.