Thompson Creek Metals Co., a producer of molybdenum from mines in Canada and the U.S., fell the most in more than three years after saying it will sell debt and shares to finance completion of a project in British Columbia.
Thompson Creek dropped 16 percent to C$4.61 at the close in Toronto, the biggest decline since Nov. 7, 2008. The Littleton, Colorado-based company has lost 35 percent this year.
Thompson Creek will sell $200 million of senior notes due 2019 and 8 million so-called tangible-equity units of $25 each, it said in a statement today. The new units comprise a prepaid stock purchase contract and a senior amortizing note due May 15, 2015.
The proceeds will be used to complete construction of the Mt. Milligan copper and gold project and for working capital, the company said. The cost to build the mine may be as much as C$1.5 billion ($1.51 billion), compared with an earlier estimate of C$1.27 billion, because of higher prices for materials and labor, the company said Feb. 27.
Moody’s Investors Service downgraded Thompson Creek’s corporate family rating and probability of default rating one level to Caa1 from B3 and assigned a Caa2 rating to the proposed new notes.
While the financing plans today offer some short-term relief from the company’s liquidity pressure, the company may need to raise additional funds should the Mt. Milligan project’s costs increase, Moody’s analysts led by Anna Zubets-Anderson said in a statement.
Thompson Creek will generate negative free cash flow over the next 12 to 18 months, which will “erode” the company’s liquidity position, Moody’s said.