After a decidedly rough ride through the plummeting molybdenum prices of yesteryear, Thompson Creek Metals
Alongside molybdenum prices that rebounded some 80% by the company's mid-year earnings report, Thompson Creek rapidly expanded its cash-on-hand from just $77.5 million to $482 million in one year's time. All the while, the company remained essentially unhindered by debt, leading forward-looking Fools to wonder where that accumulating capital would be invested to fund future growth.
The answer that emerged in July likely came as a surprise to onlookers everywhere. Rather than scooping up pure-play molybdenum assets to pad the production pipelines from the company's maturing mines, Thompson Creek dove into diversification mode with the acquisition of Terrane Metals for approximately $630 million.
Terrane's primary asset, the fully permitted Mt. Milligan project in British Columbia, boasts an alluring 6 million ounces of gold and 2.1 billion pounds of copper in proven and probable reserves. As a long-standing Terrane Metals shareholder, I have considered the Mt. Milligan project one of the more exciting investment opportunities among the world's pre-construction mine projects. The project enjoys meaningful support from major stakeholder Goldcorp
Additionally, Terrane's simultaneous deal with Royal Gold
In this way, Thompson Creek will retain some of that hard-earned financial flexibility while pressing forward toward production at Mt. Milligan by 2013.
Fools delving deeper into this Terrane transaction are likely discover an attractive bonus that has this far garnered little attention. Just as the equity markets clearly failed to take notice of Taseko Mines'
Despite the noteworthy diversification into copper and gold, Thompson Creek Metals remains a primary molybdenum producer whose stock performance remains likely to track trends in the global steel market. For Fools who share my bullish long-term outlook for both gold and copper, however, this molybdenum play stands upon favorable terrain.
Tracking my real-life transfer of investment from Terrane Metals into shares of acquirer Thompson Creek Metals, I added Thompson Creek to my silverminer CAPS portfolio shortly after the announcement. Some 85% of my stock picks there are outperforming the S&P 500, and I invite Fools interested in precious metals exposure to peruse the list of holdings as a conduit for further research. Better yet, join the free Motley Fool CAPS community, and build your own portfolio to test your investment objectives.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Silver Wheaton, Royal Gold, Taseko Mines, and Thompson Creek Metals.Try any of our Foolish newsletter services free for 30 days.
True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.