UPDATE: Thompson Creek to build $498M mill complex

Vancouver – Instead of revamping existing equipment as originally envisioned, Thompson Creek Metals (TCM-T) is proposing to build an all-new $498 million mill at its 75%-owned Endako mine in southwestern B.C.

In early 2008 Thompson Creek had outlined a $125 million cheaper plan that would have included a mix of mill upgrades and purchases of new equipment.

But, with credit and commodity markets crumbling, Thompson Creek shelved the Endako upgrade in December 2008.

Now, however, Thompson Creek is not only bringing capital investment at Endako back to the forefront, but upping the ante.

Thompson, which will be responsible for 75% or roughly $374 million of the cost, says it decided to go with an all new mill over upgrades because it would lock in forecasted production savings.

“The delay gave us time to reassess the project’s design and we have made a number of improvements which we believe will ensure the efficiency and reliability of the milling process and the planned significant reduction in operating costs,” said Thompson Creek CEO Kevin Loughrey in a prepared statement. “Among the significant changes are an enhanced and more flexible pebble crusher circuit to ensure a finer grind and an enhanced automation system – both of which will contribute to improved recovery of molybdenum from the ore.”

In addition to enhanced systems, the new mill will also increase throughput from 30,000 tonnes to 50,000 tonnes.

Before it can go ahead with the plan Thompson Creek first has to get the approval of Sojitz, which has a 25% stake in the project. So long as it receives Sojitz’s blessing then Thompson Creek says the new mill will be operational in the second half of 2011.

The end result, Thompson Creek says, will be a mill that churns out about 15 to 16 million lbs of molybdenum a year.

On news of the Endako mill plan Thompson Creek’s shareprice dropped 39¢ to $11.92. Thompson Creek has about 139.2 million shares outstanding.