Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Thompson Creek Metals Co Inc. (1415020) 10-Q published on Aug 08, 2016 at 5:23 pm
Reporting Period: Jun 29, 2016
In May 2014, the Financial Accounting Standards Board ("FASB") issued new accounting guidance on revenue recognition, which provides for a single five-step model to be applied to all revenue contracts with customers. The new standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. Companies have an option to use either a retrospective approach or cumulative effect adjustment approach to implement the standard. In June 2015, the FASB agreed to defer by one year the mandatory effective date of this standard but will also provide entities the option to adopt the new guidance as of the original effective date. The provisions of the new guidance will be effective as of the beginning of our 2018 fiscal year but TCM has the option to adopt the guidance as early as the beginning of our 2017 fiscal year. TCM is evaluating the impact of the new guidance on our financial statements and have not yet selected either a transition approach to implement the standard or an adoption date.
Subject to the terms and conditions of the Arrangement Agreement, at the effective time of the Arrangement, each outstanding TCM common share, other than TCM common shares with respect to which dissent rights have been properly exercised and not withdrawn, will be exchanged for 0.0988 (the “Exchange Ratio”) of a common share of Centerra (a “Centerra common share”). Pursuant to the Arrangement, (i) all outstanding restricted stock unit awards and performance stock unit awards will be accelerated and exchanged for Centerra common shares at the Exchange Ratio, and (ii) each outstanding stock option to purchase TCM common shares, whether vested or unvested, will be converted automatically at the effective time of the Arrangement into a stock option denominated in Centerra common shares based on the Exchange Ratio and subject to terms and conditions substantially identical to those in effect at the effective time of the Arrangement. In addition, on or about the effective time of the Arrangement, the 2017 Notes, the 2018 Notes and the 2019 Notes (collectively, the “ Senior Notes”) will be redeemed, or otherwise satisfied and discharged, in their entirety for cash pursuant to the terms of the Arrangement Agreement and the respective indentures for the Senior Notes.
The closing of the Arrangement is subject to satisfaction of certain conditions, including, among others, approval of the Arrangement by TCM’s shareholders, approval by the Supreme Court of British Columbia, receipt of any regulatory or stock exchange approvals, including approval of the Toronto Stock Exchange, and other customary closing conditions. The Arrangement Agreement contains certain customary termination rights for both TCM and Centerra, including, among other things, a termination right for either party if the transaction is not consummated by October 31, 2016 or if Centerra’s financing to fund the transactions contemplated by the Arrangement Agreement is terminated. In addition, upon termination of the Arrangement Agreement under specified circumstances, including a change in the recommendation of the Company’s board of directors or in order to enter into an alternative transaction, the Company will be required to pay a cash termination fee to Centerra of $35 million. In connection with the successful consummation of the Transaction, an estimated success fee of $10.0 million (net of previously paid amounts of approximately $1 million) will be paid by TCM to its financial advisors. In addition, the costs related to the Incentive Plan discussed in Note 11 and the remaining expense related to stock-based compensation for PSUs and RSUs, discussed in Note 12 will be accelerated and recognized in connection with the consummation of the Arrangement. We anticipate that the Arrangement will be consummated in the second half of 2016.
Subject to the terms and conditions of the Arrangement Agreement, at the effective time of the Arrangement, each outstanding TCM common share, other than TCM common shares with respect to which dissent rights have been properly exercised and not withdrawn, will be exchanged for 0.0988 (the “Exchange Ratio”) of a common share of Centerra (a “Centerra common share”). Pursuant to the Arrangement, (i) all outstanding restricted stock unit awards and performance stock unit awards will be accelerated and exchanged for Centerra common shares at the Exchange Ratio, and (ii) each outstanding stock option to purchase TCM common shares, whether vested or unvested, will be converted automatically at the effective time of the Arrangement into a stock option denominated in Centerra common shares based on the Exchange Ratio and subject to terms and conditions substantially identical to those in effect at the effective time of the Arrangement. In addition, on or about the effective time of the Arrangement, TCM’s 9.75% senior secured notes due 2017, 7.375% senior unsecured notes due 2018 and 12.5% senior unsecured notes due 2019 (collectively, the “Senior Notes”) will be redeemed, or otherwise satisfied and discharged, in their entirety for cash pursuant to the terms of the Arrangement Agreement and the respective indentures for the Senior Notes.
Average daily throughput for the quarter and six months ended June 30, 2016 significantly improved to 49,980 tonnes, and 54,040 tonnes, respectively compared to 44,940 tonnes and 42,269 tonnes for the quarter and six months ended June 30, 2015, respectively. Various modifications and enhancements that were made in 2015 to remedy operational challenges proved to be successful which resulted in daily mill throughput increases of 11.2% and 27.8%, respectively in the second quarter and first six months of 2016 compared to the same periods of 2015. However, copper payable production decreased by 27.1% and 5.1%, respectively, and gold payable production decreased by 22.6% and 6.0%, respectively, over the same comparative periods in 2015, primarily due to a decrease in ore grades and recoveries. Quarter over quarter, copper ore grade and recovery decreased by 28.6% and 9.7%, respectively, and gold ore grade and recovery decreased by 16.9% and 16.9%, respectively. For the first half of 2016, compared to the first half of 2015, copper ore grade decreased by 18.5% and copper recovery decreased by 8.2%. For the first half of 2016, compared to the first half of 2015, gold ore grade decreased by 14.1% and gold recovery decreased by14.6%. Copper and gold recoveries for the quarter and six months June 30, 2016 were lower as compared to the same periods in 2015 as a result of changes in operational conditions primarily from increased throughput together with lower ore grades due to pit sequencing and transitioning from phase 2 to phase 3 mining. During 2015, our primary focus at Mount Milligan was to increase daily mill throughput. For 2016, our primary focus is to optimize the mine and mill throughput with expected increase in recoveries.