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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2016
Or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                   to                                  
Commission File Number: 001-33783
THOMPSON CREEK METALS COMPANY INC.
(Exact name of registrant as specified in its charter)
British Columbia, Canada
(State or other jurisdiction of
incorporation or organization)
 
98-0583591
(I.R.S. Employer
Identification No.)
26 West Dry Creek Circle, Suite 810, Littleton, CO
(Address of principal executive offices)
 
80120
(Zip code)
(303) 761-8801
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer ý
 
Non-accelerated filer o
 (Do not check if a
smaller reporting company)
 
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes o    No ý
As of July 29, 2016, there were 222,782,042 shares of the registrant's common stock, no par value, outstanding.



Table of Contents


Thompson Creek Metals Company Inc.
INDEX TO FORM 10-Q
 
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2

Table of Contents


PART I — FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
THOMPSON CREEK METALS COMPANY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
June 30,

December 31,
(US dollars in millions, except share amounts)
2016

2015
ASSETS
Current assets



Cash and cash equivalents
$
119.7


$
176.8

Accounts receivable (Note 2)
76.0


52.7

Product inventory (Note 3)
56.3


55.8

Materials and supplies inventory
29.3


28.3

Prepaid expenses and other current assets
7.8


4.2

Income and mining taxes receivable
0.2


6.1


289.3


323.9

Property, plant, equipment and development, net (Note 4)
1,952.9


1,856.2

Restricted cash
3.1



Reclamation deposits
10.1


10.1

Other assets
22.2


21.0

Deferred income tax assets (Note 14)
155.7


155.4


$
2,433.3


$
2,366.6

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities



Accounts payable and accrued liabilities
$
79.5


$
72.0

Income, mining and other taxes payable
0.5


1.1

Current portion of Gold Stream deferred revenue (Note 9)
53.6


47.0

Current portion of long-term lease obligations (Note 7)
25.0


25.6

Other current liabilities
1.2


3.5


159.8


149.2

Gold Stream deferred revenue (Note 9)
654.9


677.8

Long-term debt, net of unamortized debt issuance costs and discounts (Note 8)
824.2


821.8

Long-term lease obligations (Note 7)
15.3


27.4

Other liabilities (Note 10)
19.2


13.6

Asset retirement obligations
36.2


33.8

Deferred income tax liabilities (Note 14)
72.1


67.7


1,781.7


1,791.3

Commitments and contingencies (Note 13)



Shareholders' equity



Common stock, no-par, 222,782,042 and 221,622,186 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
1,198.5


1,196.4

Additional paid-in capital
82.9


82.5

Accumulated deficit
(374.6
)

(381.8
)
Accumulated other comprehensive loss
(255.2
)

(321.8
)

651.6


575.3


$
2,433.3


$
2,366.6

See accompanying notes to unaudited condensed consolidated financial statements.

3

Table of Contents


THOMPSON CREEK METALS COMPANY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
 
Three Months Ended June 30,

Six Months Ended June 30,
(US dollars in millions, except per share amounts)
2016

2015

2016

2015
REVENUES







Copper sales
$
37.6


$
49.3


$
65.7


$
81.5

Gold sales
64.6


56.3


109.9


92.3

Molybdenum sales
22.3


20.9


41.9


63.7

Tolling, calcining and other
4.2


7.6


8.6


19.6

Total revenues
128.7


134.1


226.1


257.1

COSTS AND EXPENSES







Cost of sales







Operating expenses
86.4


75.3


143.9


158.3

Depreciation, depletion and amortization
29.1


26.8


48.9


46.8

Total cost of sales
115.5


102.1


192.8


205.1

Selling and marketing
2.7


2.2


4.9


5.2

Strategic initiative related costs
4.9




8.3



Accretion expense
0.6


0.6


1.2


1.2

General and administrative
5.0


4.9


9.1


10.5

Exploration
1.4


0.1


1.4


0.1

Costs for idle mining operations
2.4


12.1


4.8


17.7

Total costs and expenses
132.5


122.0


222.5


239.8

OPERATING (LOSS) INCOME
(3.8
)

12.1


3.6


17.3

OTHER EXPENSE (INCOME)







Loss (gain) on foreign exchange
1.4


(16.9
)

(58.0
)

71.3

Interest and finance fees
20.5


22.3


41.6


44.9

Loss from debt extinguishment


3.1




2.8

Interest income
(0.1
)



(0.2
)

(0.1
)
Other
1.7


(1.8
)

4.9


(3.1
)
Total other expense (income)
23.5


6.7


(11.7
)

115.8

(Loss) income before income and mining taxes
(27.3
)

5.4


15.3


(98.5
)
Total income and mining tax expense (benefit)
0.6


5.1


8.1


(11.6
)
NET (LOSS) INCOME
$
(27.9
)

$
0.3


$
7.2


$
(86.9
)
COMPREHENSIVE (LOSS) INCOME







Foreign currency translation
(2.9
)

17.1


66.6


(79.4
)
Total other comprehensive (loss) income
(2.9
)

17.1


66.6


(79.4
)
Total comprehensive (loss) income
$
(30.8
)

$
17.4


$
73.8


$
(166.3
)








NET (LOSS) INCOME PER SHARE







Basic
$
(0.13
)

$
0.00


$
0.03


$
(0.40
)
Diluted
$
(0.13
)

$
0.00


$
0.03


$
(0.40
)
Weighted-average number of common shares







Basic
221.7


218.0


222.4


216.2

Diluted
221.7


218.1


222.4


216.2

See accompanying notes to unaudited condensed consolidated financial statements.

4

Table of Contents


THOMPSON CREEK METALS COMPANY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
Three Months Ended June 30,

Six Months Ended June 30,
(US dollars in millions)
2016

2015

2016

2015
OPERATING ACTIVITIES







Net (loss) income
$
(27.9
)

$
0.3


$
7.2


$
(86.9
)
Adjustments to reconcile net (loss) income











Depreciation, depletion and amortization
29.1


26.8


48.9


46.8

Deferred revenue related to Gold Stream Arrangement
(11.4
)

(10.0
)

(18.0
)

(16.4
)
Accretion expense
0.6


0.6


1.2


1.2

Amortization of finance fees
1.2


1.2


2.4


2.4

Stock-based compensation
1.2


1.8


2.5


3.1

Product inventory write downs
(0.1
)

1.8


0.6


7.0

Deferred income tax expense (benefit)
0.2


5.0


8.2


(10.1
)
Unrealized loss (gain) on financial instruments and mark-to-market adjustments
1.2


(6.0
)

(9.5
)


Unrealized foreign exchange loss (gain)
4.2


(16.0
)

(55.6
)

70.6

Debt extinguishment loss


0.7




0.4

Changes in other long term liabilities
4.8




5.4



Gold Stream Arrangement net payable
5.5


5.8


15.6


0.3

Change in current assets and liabilities (Note 17)
(2.3
)

11.9


(18.3
)

0.2

Cash generated by (used in) operating activities
6.3


23.9


(9.4
)

18.6

INVESTING ACTIVITIES







Capital expenditures
(15.9
)

(9.7
)

(31.5
)

(22.9
)
Capitalized interest payments
(0.3
)

(0.3
)

(0.7
)

(1.0
)
Restricted cash
(3.1
)

0.1


(3.1
)

7.2

Proceeds from sale of assets




0.1



Cash used in investing activities
(19.3
)

(9.9
)

(35.2
)

(16.7
)
FINANCING ACTIVITIES







Equipment financings and repayments
(6.5
)

(6.1
)

(12.8
)

(12.6
)
Repayment of long-term debt


(1.0
)



(2.3
)
Senior note repurchases


(34.2
)



(41.0
)
Proceeds from issuance of common shares, net


0.2


0.1


0.5

Cash used in financing activities
(6.5
)

(41.1
)

(12.7
)

(55.4
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
0.1




0.2


(1.0
)
DECREASE IN CASH AND CASH EQUIVALENTS
(19.4
)

(27.1
)

(57.1
)

(54.5
)
Cash and cash equivalents, beginning of period
139.1


238.2


176.8


265.6

Cash and cash equivalents, end of period
$
119.7


$
211.1


$
119.7


$
211.1

Supplementary cash flow information (Note 17)







See accompanying notes to unaudited condensed consolidated financial statements.

5

Table of Contents


THOMPSON CREEK METALS COMPANY INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)

 
Common Stock
 
Additional Paid-in
Capital
 
Accumulated Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
(US dollars in millions, share data in thousands)
Shares
 
Amount
 
 
 
 
Balances at December 31, 2015
221,622

 
$
1,196.4

 
$
82.5

 
$
(381.8
)
 
$
(321.8
)
 
$
575.3

Amortization of stock-based compensation

 

 
2.4

 

 

 
2.4

Shares issued under stock-based compensation
1,160

 
2.1

 
(2.0
)
 

 

 
0.1

Comprehensive income:
 
 
 
 
 
 
 
 
 
 


Net income

 

 

 
7.2

 

 
7.2

Foreign currency translation

 

 

 

 
66.6

 
66.6

Total comprehensive income
 
 
 
 
 
 
 
 
 
 
$
73.8

Balances at June 30, 2016
222,782

 
$
1,198.5

 
$
82.9

 
$
(374.6
)
 
$
(255.2
)
 
$
651.6

See accompanying notes to unaudited condensed consolidated financial statements.

6

Table of Contents

THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements - Unaudited
(US dollars in millions, except per share amounts)


1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. In compliance with those instructions, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States ("US GAAP") have been condensed or omitted. This report should be read in conjunction with the Thompson Creek Metals Company Inc. ("TCM," the "Company," "we," "us" or "our") consolidated financial statements and notes contained in its Annual Report on Form 10-K for the year ended December 31, 2015 (the "2015 Form 10-K") filed with the Securities and Exchange Commission ("SEC"). The information reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for any other quarter or for the year ending December 31, 2016.
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. TCM bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.
The condensed consolidated financial statements include the accounts of TCM and its subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Financial amounts are presented in United States ("US") dollars unless otherwise stated. References to C$ are Canadian dollars.
The Copper-Gold operations consist of Mount Milligan Mine, a conventional truck-shovel open-pit copper and gold mine and concentrator in British Columbia. The US operations for molybdenum include the Thompson Creek Mine ("TC Mine") (mine and mill) in Idaho and the Langeloth Metallurgical Roasting Facility (the "Langeloth Facility") in Pennsylvania. The Canadian operations for molybdenum consist of a 75% joint venture interest in the Endako Molybdenum Mine Joint Venture ("Endako Mine") (mine, mill and roaster) in British Columbia. As previously disclosed in TCM's 2015 Form 10-K, due to continued weakness in the molybdenum market Endako Mine was placed on temporary suspension effective December 31, 2014 and subsequently placed on care and maintenance effective July 1, 2015. TC Mine was placed on care and maintenance in December 2014 after the processing of stockpiled ore from Phase 7 was completed. During the first seven months of 2015, TC Mine conducted limited stripping for the next phase of mining (“Phase 8”). As part of TCM's cost reduction measures, further stripping at TC Mine ceased effective August 6, 2015. As of January 2016, TCM is operating a commercial molybdenum beneficiation circuit at TC Mine to treat molybdenum concentrates to supplement the concentrate feed TCM sources directly for the Langeloth facility.

The costs related to the Endako Mine temporary suspension and care and maintenance and TC Mine care and
maintenance are reflected in costs for idle mining operations in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The costs related to the molybdenum beneficiation circuit are reflected in operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

TCM also has a 100% interest in a copper and molybdenum exploration property located in British Columbia (the “Berg property”) and a 0.51% net smelter return royalty and a 10.2% net profits interest in a zinc and lead exploration project located in Canada (the "Howards Pass property").

7


THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

1. Basis of Presentation (Continued)

New Accounting Standards

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.

In April and August 2015, the FASB issued Accounting Standard Updates ("ASUs") to simplify the presentation of debt issuance costs. These ASUs require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public entities, these ASUs are effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years. TCM adopted this ASU effective January 1, 2016. Upon adoption, TCM retrospectively adjusted its December 31, 2015 balance sheet by decreasing its other assets by $9.8 million and decreasing its long-term debt by $9.8 million.

In June 2014, the FASB issued an ASU to provide clarity on how to account for certain share-based payment awards where the terms of an award may provide that the performance target could be achieved regardless of whether the employee is rendering service on the date the performance target is achieved. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition and should not be reflected in estimating the grant-date fair value of the award. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The ASU is effective for fiscal years beginning after December 15, 2015. TCM adopted this ASU effective January 1, 2016, and it had no impact on its results of operations.

In January 2016, the FASB issued an ASU to amend certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This ASU eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, requires the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and requires a separate presentation in other comprehensive income for the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk. The ASU is effective for fiscal years beginning after December 15, 2017. TCM is evaluating the impact of this ASU on our financial statements.

In March 2016, the FASB issued an ASU to simplify accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2016. TCM is evaluating the impact of this ASU on our financial statements.


8

Table of Contents
THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

2. Accounts Receivable
Accounts receivable are carried at their estimated collectible amounts and were comprised of the following:
 
 
June 30, 2016
 
December 31, 2015
Receivables
 
 
 
 
  Trade receivables
 
$
64.7

 
$
52.8

Mark-to-market adjustments on trade receivables relating to provisional invoices for Mount Milligan Mine copper and gold concentrate sales
 
4.1

 
(1.9
)
  Goods and services sales tax refunds
 
7.0

 
1.4

  Settlement receivables on hedges and other miscellaneous receivables
 
0.2

 
0.4

 
 
$
76.0

 
$
52.7

3. Product Inventory
The carrying value of product inventory was as follows:
 
 
June 30, 2016
 
December 31, 2015
Copper and Gold Inventory
 
 
 
 
  Concentrate
 
$
20.8

 
$
19.4

  Stockpiled ore
 
16.7

 
15.6

 
 
$
37.5

 
$
35.0

Molybdenum Inventory
 
 
 
 
  Finished product
 
$
9.9

 
$
12.3

  Work-in-process
 
8.9

 
8.5

 
 
$
18.8

 
$
20.8

 
 
$
56.3

 
$
55.8

The following table sets forth the adjustments to TCM's molybdenum inventory as a result of changes in the net realizable value, in the accompanying Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended June 30, 2016 and 2015:
 
Three Months Ended
 
Six Months Ended
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
US Molybdenum
 
 
 
 
 
 
 
Operating expense (1)
$
(0.1
)
 
$
1.8

 
$
0.6

 
$
5.6

Depreciation, depletion and amortization

 
0.1

 

 
0.4

Canadian Molybdenum

 
 
 
 
 
 
Operating expense

 

 

 
1.4

Depreciation, depletion and amortization

 

 

 
0.1

 
$
(0.1
)
 
$
1.9

 
$
0.6

 
$
7.5

_____________________________________________________________________________
(1) Included market price recoveries (not exceeding previously recognized losses) of $0.1 million on molybdenum product inventory during the three months ended June 30, 2016.

9

Table of Contents
THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements - Unaudited
(US dollars in millions, except per share amounts)


4. Property, Plant, Equipment and Development, Net
Property, plant, equipment and development, net, was composed of the following:
 
 
June 30, 2016
 
December 31, 2015
Mining properties and mineral reserves
 
$
669.8

 
$
630.4

Mining and milling equipment and facilities
 
1,389.0

 
1,305.4

Processing facilities
 
177.4

 
176.7

Construction-in-progress (1)
 
48.2

 
16.4

Other
 
9.5

 
9.5

 
 
2,293.9

 
2,138.4

Less: Accumulated depreciation, depletion and amortization
 
(341.0
)
 
(282.2
)
 
 
$
1,952.9

 
$
1,856.2

_____________________________________________________________________________
(1) The construction-in-progress balances primarily related to the permanent secondary crusher project at Mount Milligan Mine.
5. Financial Instruments
TCM enters into various derivative financial instruments in the normal course of operations to manage exposure to the market prices of copper and gold and foreign exchange risk with respect to its Canadian operations. TCM does not apply hedge accounting to its derivative instruments. Accordingly, changes in fair value of derivative instruments are recorded in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, except those contracts for which TCM has elected to apply the normal purchases and normal sales scope exception.
The following table sets forth the fair values of TCM's derivative assets and liabilities:
 
 
Fair value as of
 
 
June 30, 2016

December 31, 2015
Assets (1)
 
 
 
 
Provisionally-priced sales
 
$
4.1

 
$

Forward currency contracts
 
1.0

 

Total
 
$
5.1

 
$

Liabilities (1)
 
 
 
 
Commodity contracts
 
$
0.7

 
$
1.5

Provisionally-priced sales
 

 
1.9

Forward currency contracts
 

 
2.0

Total
 
$
0.7

 
$
5.4

_____________________________________________________________________________
(1) TCM's derivative assets are included in prepaid expenses and other current assets and accounts receivable, and derivative liabilities are included in other current liabilities in the Condensed Consolidated Balance Sheets. TCM is exposed to credit risk when counterparties with whom it has entered into derivative transactions are unable to satisfy their obligations. To reduce counterparty credit exposure, TCM deals primarily with large, credit-worthy financial institutions and companies. TCM believes the counterparties to the contracts to be credit-worthy entities and, therefore, TCM believes credit risk of counterparty non-performance is relatively low, and, as such, the fair value of the derivatives has not been adjusted.

10

Table of Contents
THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)
5. Financial Instruments (Continued)

The following table sets forth the gains (losses) on derivative instruments for the periods presented
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Derivative Type and Activity
 
Statement of Operations Classification
 
2016
 
2015
 
2016
 
2015
Gold hedges related to Gold Stream Arrangement
 
Gold sales
 
$
1.9

 
$
(0.2
)
 
$
5.8

 
$
0.5

Provisional priced MTM gold sales
 
Gold sales
 
$
1.7

 
$
0.5

 
$
3.7

 
$
(0.7
)
Provisional priced MTM copper sales
 
Copper sales
 
$
(0.7
)
 
$
(4.3
)
 
$
2.1

 
$
1.2

Copper and Gold hedges; other commodity contracts
 
Other
 
$
(1.4
)
 
$
1.8

 
$
(4.2
)
 
$
3.1

Forward currency contracts
 
Gain (loss) on foreign exchange, net
 
$
0.3

 
$
0.9

 
$
5.1

 
$
(0.7
)
Gold Hedges Related to Gold Stream Arrangement and Other Commodity Contracts
TCM must satisfy its obligation under the Gold Stream Arrangement (discussed in Note 9) by delivering gold to Royal Gold after TCM receives cash payment from third-party purchasers, including offtakers and traders, that purchase concentrate from Mount Milligan Mine ("MTM Customers").
In order to hedge its gold price risk that arises when physical purchase and concentrate sales pricing periods do not match, hereafter referred to as the Gold Stream Risk, TCM has entered into certain forward gold purchase and sales contracts pursuant to which it purchases gold at an average price during a quotational period and sells gold at a spot price. TCM records its forward commodity contracts at fair value using a market approach based on observable quoted market prices and contracted prices.
In addition to the Gold Stream Risk and in connection with the sale of concentrate from Mount Milligan Mine, TCM is exposed to copper and gold price fluctuations between the dates of concentrate shipment, provisional payment and final payment. In order to hedge the price risk for the metals contained in concentrate, TCM has entered into certain forward copper and gold purchase and sale contracts pursuant to which it purchases copper or gold at an average price during a quotational period and sells copper or gold at a spot price. Additionally, TCM has entered into put/call collars pursuant to which it agrees with a counterparty to a floor and ceiling relative to future prices of gold and copper. If the gold or copper price is below the floor, the counterparty pays TCM the difference between the price and the floor. If the gold or copper price is above the ceiling, TCM pays the counterparty the difference between the ceiling and the price. TCM records its copper and gold commodity contracts at fair value using a market approach based on observable quoted market prices and contracted prices. These activities are intended to protect against the price risk related to the MTM Customer purchase contracts. Additionally, TCM also enters into fuel hedges to manage its exposure to price fluctuations in the cost of diesel purchased for use in operations.
The following table provides details of TCM's commodity contracts as of June 30, 2016:
 
 
Quantity
 
Sell Price
 
Buy Price
 
Maturities Through
Gold Hedge Purchases related to Gold Stream Arrangement (oz)
 
39,470
 
TBD
 
$1,246 - $1,264 / TBD
 
July 2016 - November 2016
Forward Gold Sales (oz)

6,000

$1,310

N/A

July 2016
Fuel Hedges (gallons)
 
780,000
 
N/A
 
$2.00
 
July 2016 - December 2016
 
 
Quantity
 
Put/Sell Price
 
Call/Buy Price
 
Maturities Through
Gold Collars (oz)
 
29,600
 
$1,050 - $1,200
 
$1,164 - $1,350
 
July 2016 - December 2016
Provisionally-Priced Contracts
TCM's copper and gold sales contracts provide for provisional pricing. These sales contain an embedded derivative related to the provisional-pricing mechanism, which is bifurcated and accounted for as a derivative. TCM also enters into provisionally-priced molybdenum purchase contracts that also contain an embedded derivative, which is bifurcated and accounted for as a derivative.

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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)
5. Financial Instruments (Continued)

TCM determines the fair value of its provisionally-priced contracts using a market approach based upon observable inputs from published market prices and contract terms. Changes to the fair values of the embedded derivatives related to provisionally-priced molybdenum purchases are included in operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income as the product inventory is sold.
The following table sets forth TCM's outstanding provisionally-priced contracts as of June 30, 2016:
 
 
 
 
Average Price Per Unit
 
 
 
 
Open Positions
 
Market Price
 
Contract
 
Maturities Through
Embedded derivatives in provisional sales contracts
 
 
 
 
 
 
 
 
   Copper (millions of pounds)
 
25.3
 
TBD
 
TBD
 
November 2016
   Gold (ounces)
 
50,506
 
TBD
 
TBD
 
September 2016
Embedded derivatives in provisional purchase contracts
 
 
 
 
 
 
 
 
   Molybdenum (millions of pounds)
 
1.0
 
N/A
 
TBD
 
August 2016
Forward Currency Contracts
TCM transacts business in various currencies in the normal course of its operations and for capital expenditures. In addition, although TCM's revenues are denominated in US dollars, TCM has ongoing foreign exchange risk with respect to its Canadian operations. To help mitigate this risk, TCM has entered into foreign currency forward contracts pursuant to which it has agreed to buy Canadian dollars at an agreed-upon rate. TCM records its currency contracts at fair value using a market approach based on observable quoted exchange rates and contracted notional amounts. As of June 30, 2016, TCM had 11 open foreign currency option contracts.
The following table provides details of TCM's forward currency contracts as of June 30, 2016:
 
 
Notional Amount
 
Buy Price
 
Maturities Through
Forward currency contracts
 
C$30,000,000
 
$1USD/C$1.36
 
July 2016 - October 2016
Fixed-Priced Contracts
TCM enters into certain sales contracts pursuant to which it sells molybdenum products at certain times in the future at fixed prices. These fixed prices may be different than the quoted market prices at the date of sale. TCM has elected to treat these contracts as normal sale contracts.
The Gold Stream Arrangement contains an agreement to sell gold at a fixed price, but it does not meet the definition of a derivative instrument. See discussion of the Gold Stream Arrangement in Note 9.
The following table sets forth TCM's outstanding molybdenum fixed-priced sales contracts as of June 30, 2016:
 
 
Quantity (000's lb)
 
Sell Price
 
Maturities Through
Molybdenum fixed price sales
 
255.5
 
$11.23
 
December 2019

12

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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)


6. Fair Value Measurement
US GAAP includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). TCM's policy is to recognize transfers into and out of Level 3 as of the actual date of the event or change in circumstances. There were no transfers into or out of Level 1, 2 or 3 during the three or six months ended June 30, 2016.
As of June 30, 2016 and December 31, 2015, TCM held certain items that were required to be measured at fair value on a recurring basis. These included derivative assets and liabilities which consist of commodity and foreign currency derivative instruments and provisionally priced contracts. In addition to the fair value disclosure requirements related to financial instruments carried at fair value, TCM has provided disclosures regarding the fair value of all of TCM's financial instruments in accordance with US GAAP. The methods and significant assumptions used to estimate the fair value of these financial instruments have also been disclosed. As of June 30, 2016, there have been no significant changes to these methods or assumptions. As required, financial instruments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following tables set forth TCM's financial assets and liabilities measured at fair value by level within the fair value hierarchy.
 
 
Fair Value at June 30, 2016
 
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets
 
 
 
 
 
 
 
 
Provisionally-priced sales
 
$
4.1

 
$

 
$
4.1

 
$

Forward currency contracts
 
1.0

 
1.0

 

 

 
 
$
5.1

 
$
1.0

 
$
4.1

 
$

Liabilities
 
 
 
 
 
 
 
 
Senior secured notes
 
$
311.5

 
$

 
$
311.5

 
$

Senior unsecured notes
 
367.6

 

 
367.6

 

  Commodity contracts
 
0.7

 

 
0.7

 

 
 
$
679.8

 
$

 
$
679.8

 
$

 
 
Fair Value at December 31, 2015
 
 
Total
 
Level 1
 
Level 2
 
Level 3
Liabilities
 
 
 
 
 
 
 
 
Senior secured notes
 
$
257.6

 
$

 
$
257.6

 
$

Senior unsecured notes
 
96.7

 

 
96.7

 

Commodity contracts
 
1.5

 

 
1.5

 

Provisionally-priced sales
 
1.9

 

 
1.9

 

  Forward currency contracts
 
2.0

 
2.0

 

 

 
 
$
359.7

 
$
2.0

 
$
357.7

 
$


As of June 30, 2016, the carrying values of the 9.75% senior secured notes, the 7.375% senior unsecured notes and the 12.5% senior unsecured notes were higher than their fair values of $311.5 million, $237.6 million and $130.0 million, respectively. TCM determined the fair value of the notes using a discounted cash flow valuation model, consisting of inputs such as risk-free interest rates and credit spreads. See Note 8 for more information regarding the debt. As of December 31, 2015, the carrying values of the 9.75% senior secured notes, the 7.375% senior unsecured notes and the 12.5% senior unsecured notes were higher than their fair values of $257.6 million$61.1 million and $35.6 million, respectively.


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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

6. Fair Value Measurement (Continued)

As of June 30, 2016, the carrying values of TCM's financial instruments approximated their fair values. TCM determined the fair value of its financial instruments using LME or COMEX copper and gold forward prices and option pricing models using the counterparties' and TCM's credit quality. See Note 5 for more information regarding TCM's financial instruments.

7. Leases
TCM's total capital lease obligations consisted of the following:
 
 
June 30, 2016
 
December 31, 2015
Equipment Facility capital leases
 
$
15.6

 
$
20.1

Equipment Facility sale leaseback
 
23.6

 
31.2

Sale leaseback
 
1.1

 
1.7

  Total lease obligations
 
40.3


53.0

Less: Current portion
 
(25.0
)
 
(25.6
)
Total long-term lease obligations
 
$
15.3

 
$
27.4

TCM entered into an equipment financing facility, as amended from time to time (the "Equipment Facility"), pursuant to which Caterpillar Financial Services Limited ("Caterpillar") agreed to underwrite up to $132.0 million in mobile fleet equipment financing for Mount Milligan Mine. Each borrowing under the Equipment Facility represents a capital lease or a sale leaseback arrangement and has a term of 48 or 60 months. Interest on the amounts borrowed under the Equipment Facility is payable at either floating or fixed rates, at TCM's option. At the end of each 48 or 60 month lease period, TCM has the option to purchase the underlying equipment for a nominal sum. The Equipment Facility includes non-financial covenants, and as of June 30, 2016, TCM was in compliance with these covenants. TCM's ability to finance additional equipment under the Equipment Facility expired in September 2015 per the amended terms of the Equipment Facility agreement. TCM did not enter into any new capital leases pursuant to the Equipment Facility during the three or six months ended June 30, 2016. In May 2016, TCM posted $2.6 million in cash collateral to a surety company in connection with the $10.4 million surety bond for the Equipment Facility with Caterpillar.
With respect to certain equipment pursuant to the Equipment Facility, TCM entered into three leases with Caterpillar, of which two are considered sale-leaseback transactions. Interest payments are based on a fixed rate of 5.50%.
Separate from the Equipment Facility, during 2013, TCM entered into a sale-leaseback transaction with Caterpillar with respect to 75% of certain Endako Mine equipment. Interest payments are based on a fixed rate of 5.85%. During 2015, TCM assumed the lease for the remaining 25% of the equipment and subsequently transferred this equipment to Mount Milligan Mine.

Interest and debt issuance costs on TCM's equipment financings, as described above, consisted of the following:
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Interest paid
 
$
0.6

 
$
1.0

 
$
1.4

 
$
1.9

Interest and debt issuance costs expensed
 
$
0.6

 
$
1.2

 
$
1.4

 
$
2.3


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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

8. Debt
TCM's debt balance at June 30, 2016 is net of reductions of $8.7 million for unamortized net discounts and unamortized debt issuance costs; and at December 31, 2015 is net of reductions of $11.1 million for unamortized net discounts and unamortized debt issuance costs. The components of debt follow:
 
 
June 30, 2016
 
December 31, 2015
9.75% Senior secured notes due 2017
 
$
315.8

 
$
315.8

   Less : Deferred financing fees and debt discounts
 
(3.5
)
 
(4.8
)
 
 
312.3

 
311.0

7.375% Senior unsecured notes due 2018
 
334.1

 
334.1

   Less : Deferred financing fees
 
(2.6
)
 
(3.3
)
 
 
331.5

 
330.8

12.5% Senior unsecured notes due 2019
 
183.0

 
183.0

   Less : Deferred financing fees
 
(2.6
)
 
(3.0
)
 
 
180.4

 
180.0

Total long-term debt
 
$
824.2

 
$
821.8

Interest paid, capitalized and expensed on our senior secured and unsecured notes was as follows:
 
Three Months Ended
 
Six Months Ended
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Interest paid
$
23.8

 
$
24.9

 
$
39.2

 
$
42.2

Interest capitalized
$
0.8

 
$
0.3

 
$
1.3

 
$
0.6

Interest expensed
$
19.9

 
$
21.1

 
$
40.2

 
$
42.6


9.75% Senior Secured Notes

The 9.75% senior secured notes (the “2017 Notes”) are guaranteed on a senior basis by substantially all of TCM's subsidiaries and are secured by a first priority lien, subject to permitted liens, on substantially all of TCM's and the guarantors' property and assets. The 2017 Notes mature on December 1, 2017 and accrue interest from November 27, 2012 until maturity at a fixed rate of 9.75% per year. Interest on the 2017 Notes is payable on February 1 and August 1 of each year, commencing February 1, 2013, to the holders of record at the close of business on the January 15 and July 15 prior to each interest payment date. There are no maintenance covenants with respect to TCM's financial performance. However, the indenture contains certain transaction-based restrictive covenants. For more information regarding the 2017 Notes, see Note 9 within Item 8 of TCM's 2015 Form 10-K. For additional information see Note 21.
7.375% Senior Unsecured Notes
The 7.375% senior unsecured notes (the "2018 Notes") are guaranteed on a senior basis by substantially all of TCM's subsidiaries. The 2018 Notes mature on June 1, 2018 and accrue interest from May 20, 2011 until maturity at a fixed rate of 7.375% per year. Interest is payable on June 1 and December 1 of each year, and the first interest payment occurred on December 1, 2011. Interest is payable to the holders of record at the close of business on the May 15 and November 15 prior to each interest payment date. There are no maintenance covenants with respect to TCM's financial performance. However, the indenture contains certain transaction-based restrictive covenants. For more information regarding the 2018 Notes, see Note 9 within Item 8 of TCM's 2015 Form 10-K. For additional information see Note 21.

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Table of Contents
THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

8. Debt (Continued)

12.5% Senior Unsecured Notes
The 12.5% senior unsecured notes (the “2019 Notes”) are guaranteed on a senior basis by substantially all of TCM's subsidiaries. The 2019 Notes mature on May 1, 2019 and accrue interest from May 11, 2012 until maturity at a fixed rate of 12.5% per year. Interest on the 2019 Notes is payable on May 1 and November 1 of each year, commencing November 1, 2012, to the holders of record at the close of business on the April 15 and October 15 prior to each interest payment date. There are no maintenance covenants with respect to TCM's financial performance. However, the indenture contains certain transaction-based restrictive covenants. For more information regarding the 2019 Notes, see Note 9 within Item 8 of TCM's 2015 Form 10-K. For additional information see Note 21.

9. Gold Stream Arrangement
Pursuant to TCM's agreement with a subsidiary of Royal Gold, Inc. ("Royal Gold") ("Gold Stream Arrangement"), TCM agreed to sell to Royal Gold 52.25% of the refined gold production from Mount Milligan Mine for a total upfront payment of $781.5 million, plus $435 per ounce, or the prevailing market rate if lower than $435 per ounce, when the gold is delivered. The upfront cash payments received under the Gold Stream Arrangement ("Record of Deposit") were recorded as deferred revenue and classified as a liability on TCM's Condensed Consolidated Balance Sheets. As of June 30, 2016, the outstanding Record of Deposit under the Gold Stream Arrangement totaled $618.6 million. In the event of any default under the Company's agreement with Royal Gold, Royal Gold could require TCM to repay the outstanding Record of Deposit. For more information regarding the Gold Stream Arrangement, see Note 10 within Item 8 of TCM's 2015 Form 10-K.
The following table presents the revenue under the Gold Stream Arrangement for the three and six months ended June 30, 2016 and 2015, respectively, in the form of (i) cash receipts based on gold sales during the applicable period, and (ii) deferred revenue for gold ounces delivered and deferred revenue to be recognized upon final settlement during the applicable period:
 
Three Months Ended
 
Six Months Ended
(US$ in millions)
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Gold sales related to cash portion of Gold Stream Arrangement
$
14.1

 
$
13.1

 
$
24.1

 
$
21.4

Gold sales related to deferred portion of Gold Stream Arrangement (1) (2)
11.4

 
10.0

 
18.0

 
16.4

Total gold sales under Gold Stream Arrangement (1)
$
25.5

 
$
23.1

 
$
42.1

 
$
37.8

_____________________________________________________________________________
(1) The three and six months ended June 30, 2016 included $10.3 million and $16.3 million, respectively, of revenue for gold ounces delivered, and $1.1 million and $1.7 million, respectively, in future reduction of deferred revenue liability ultimately to be recognized upon delivery of gold. The three and six months ended June 30, 2015 included $12.8 million and $16.9 million, respectively of revenue for gold ounces delivered partially offset by $2.8 million and $0.5 million, respectively in future reduction of deferred revenue liability ultimately to be recognized upon delivery of gold.
(2) The six months ended June 30, 2016 included a $1.5 million reduction related to five provisional invoices from 2015. The decrease resulted from a downward revision to the rate at which the deferred revenue liability resulting from the Gold Stream Arrangement was amortized. This rate is calculated based on the remaining deferred revenue liability and total ounces of refined gold owed to Royal Gold.


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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

10. Other Liabilities

Other liabilities comprised the following:
 
 
June 30, 2016
 
December 31, 2015
Liabilities for unrecognized tax benefits (1)
 
$
8.3

 
$
9.7

Deferred vendor payable (2)
 
6.4

 

Employee benefits, retention and incentives (3)
 
4.5

 
3.9

 
 
$
19.2

 
$
13.6

_____________________________________________________________________________
(1) Unrecognized tax benefits related to an uncertain tax position primarily related to timing differences for certain deductions.
(2) In March 2016 TCM entered into a program (the "BC Hydro Program") offered by the government of British Columbia to certain copper and coal producers. The BC Hydro Program amended the terms of TCM's existing utility agreement with British Columbia’s crown corporation, BC Hydro. As a participant in this program, TCM can defer payment on up to 75% of electrical obligations to BC Hydro, with the percentage deferral and repayment being dependent upon levels of copper prices and Canadian foreign exchange rates. The BC Hydro Program is a five-year program, with a two-year deferral period. All amounts outstanding must be repaid by the end of the five-year period or if copper prices are above C$3.40. The deferred balance will accrue interest at an annual rate of Prime (as set by the Bank of Canada) +5%, compounded monthly. As of June 30, 2016, TCM continued to elect to participate in the program. TCM can elect to end its participation in the BC Hydro Program at any time by paying the then outstanding obligations in full.
(3) See Note 11 for further discussion.

11. Cash-Based Incentive Plan    
On March 31, 2016, the Board of Directors of TCM approved the framework for the Thompson Creek Metals Company Inc. Cash-Based Incentive Plan (the “Incentive Plan”), which was finalized and approved by the Compensation Committee of the Board on April 6, 2016. Pursuant to the Incentive Plan, the Compensation Committee approved grants of certain cash-based awards that vest over 2.75 years (the “Performance and Inducement Awards”) and other cash-based awards (the “Incentive Awards”), subject in each case to the terms and conditions of the Incentive Plan and the applicable award agreements, to TCM’s named executive officers and key employees.

Pursuant to the Incentive Plan, $3.3 million of Incentive Awards were granted to TCM’s named executive officers and key employees of which $2.2 million in Incentive Awards were paid to named executive and key officers in April 2016. This payment is subject to an obligation to repay to TCM the total amount of the Incentive Award if the participant’s employment with TCM terminates under certain circumstances, subject to the conditions contained in the applicable award agreement.

The Performance and Inducement Awards of $3.6 million to named executive officers and key employees will be accrued and expensed over the vesting period, commencing in April 2016.

As of June 30, 2016, we had expensed $1.5 million in connection with these Performance and Inducement Awards and Incentive Awards. In accordance with GAAP, in expectation of the consummation of the Arrangement (as defined and discussed in Note 21), the expense related to the Performance and Inducement Awards and Incentive Awards will be accelerated and recognized in full prior to the date of the consummation of the Arrangement.


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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

12. Stock-Based Compensation

TCM recognized stock-based compensation expense as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Stock options
 
$

 
$
0.1

 
$
0.1

 
$
0.2

Performance share units
 
0.7

 
0.9

 
1.4

 
1.4

Restricted stock units
 
0.5

 
0.7

 
1.0

 
1.4

Total stock-based compensation expense
 
$
1.2

 
$
1.7

 
$
2.5

 
$
3.0

As of June 30, 2016, TCM has outstanding stock options, PSUs and RSUs, as discussed below.
Stock Options
The expiration date and vesting provisions of stock options granted are established at the time an award is made. Stock options vest over 3 years and are exercisable over a period of time not to exceed 10 years from the grant date but generally expire 5 years from the grant date. When an option is exercised, TCM may issue the requisite shares from authorized but unissued common stock, or from treasury stock. The exercise price of options granted is equal to the volume weighted-average trading price of the underlying shares on the TSX over the five consecutive trading days immediately before the grant date, converted to U.S. dollars at the noon exchange rate of the Bank of Canada on the grant date.
The following table summarizes stock option activity during the six months ended June 30, 2016:
 
 
Options (000's)
 
Weighted-Average
Exercise Price
Stock options outstanding at December 31, 2015
 
1,156

 
$
3.26

Granted
 
6

 
$
0.53

Canceled/expired/forfeited
 
(20
)
 
$
12.99

Stock options outstanding at June 30, 2016
 
1,142

 
$
3.08

 
 
 
 
 
Vested and exercisable at June 30, 2016 (1)
 
742

 
$
3.48

_____________________________________________________________________________
(1) The aggregate intrinsic value of these exercisable awards was nil as of June 30, 2016.
As of June 30, 2016, approximately 0.4 million outstanding options had not vested and were not exercisable. The total unrecognized compensation cost related to these options was $0.2 million as of June 30, 2016 and is expected to be recognized over a weighted-average period of 1.41 years. See Note 21 for additional information.
Performance Share Units (PSUs)
The vesting of the outstanding PSUs granted subsequent to January 1, 2012 and prior to January 1, 2014 is contingent upon two metrics: 1) TCM's Total Shareholder Return (TSR) relative to the Russell 2000 Index during the three-year performance period; and 2) the proven and probable mine reserves replaced by TCM during the three-year performance period as measured by the replacement reserves percentage determined by the plan administrator. The PSUs cliff vest three years from the date of issuance upon achievement of the above metrics. Any PSUs not vested at such time will expire.
The vesting of the outstanding PSUs granted subsequent to January 1, 2014 is contingent upon two metrics: 1) TCM’s Total Shareholder Return (TSR) relative to the S&P TSX Global Base Metals Index during the three-year period commencing on January 1 of the year in which the grant was made (the “performance period”); and 2) cash flow from operations, defined as TCM’s aggregate “cash generated by (used in) operating activities” less aggregate “capital expenditures,” as reported in the Statements of Cash Flows in the Company’s Annual Report on Form 10-K for each fiscal year in the performance period. The PSUs cliff vest approximately three years from the date of grant, or on the date in the first quarter of the fiscal year immediately succeeding the performance period on which the plan administrator determines and certifies the achievement of the above metrics. Any PSUs not vested at such time will expire.

18

THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)
12. Stock-Based Compensation (Continued)

All PSUs granted are accounted for at fair value using a Monte Carlo simulation valuation model on the date of grant. The Monte Carlo model is based on random projections of stock price paths. Expected volatility is calculated using a weighted average of historical daily volatilities and implied volatility and represents the extent to which TCM's stock price performance is expected to fluctuate during the three-year terms of the respective award.
As of June 30, 2016, unrecognized compensation expense related to PSUs totaled $3.7 million and will be recognized on a straight-line basis over a weighted-average period of 1.42 years. See Note 21 for additional information.
The following table summarizes PSU activity during the six months ended June 30, 2016:
 
 
Units
 
Weighted-Average
Fair Value
 
 
(000's)
 
 
Outstanding at December 31, 2015
 
3,799

 
$
2.61

Canceled/expired/forfeited
 
(411
)
 
$
4.02

Outstanding at June 30, 2016
 
3,388

 
$
2.44

Restricted Stock Units (RSUs)
TCM accounts for RSUs at fair value, which is based on the market value of TCM's common shares on the day of grant and recognized over the vesting period of three years. Upon vesting, TCM may issue the requisite shares from authorized but unissued common stock, or from treasury stock.
As of June 30, 2016, unrecognized compensation expense related to RSUs totaled $1.5 million and will be recognized on a straight-line basis over a weighted-average period of 1.39 years. See Note 21 for additional information.
The following table summarizes RSU activity during the six months ended June 30, 2016:
 
 
Units
 
Weighted-Average
Fair Value
 
 
(000's)
 
 
Outstanding at December 31, 2015
 
2,680

 
$
1.87

RSUs vested and common shares issued
 
(1,136
)
 
$
1.85

Canceled/expired/forfeited
 
(35
)
 
$
1.76

Outstanding at June 30, 2016
 
1,509

 
$
1.88


13. Commitments and Contingencies
Legal Matters
TCM is from time to time involved in or subject to legal proceedings related to its business. While it is not feasible to predict or determine the outcome of these proceedings, it is the opinion of management that the resolution of such proceedings is not expected to have a material adverse effect on TCM's consolidated financial position, results of operations or cash flows.
Concentrate Sales Agreements
As of June 30, 2016, TCM has multi-year concentrate sales agreements with four counter parties for the sale of concentrate produced at Mount Milligan Mine. Pursuant to these agreements, TCM has agreed to sell an aggregate of the copper and gold concentrate produced at Mount Milligan Mine of approximately 136,000 dry tonnes in 2016, 100,000 dry tonnes in 2017, 80,000 dry tonnes in 2018 and 40,000 dry tonnes of concentrate in 2019. Pricing under these concentrate sales agreements will be determined by reference to specified published reference prices during the applicable quotation periods. Payment for the concentrate will be based on the price for the agreed copper and gold content of the parcels delivered, less smelting and refining charges and certain other deductions, if applicable. The copper smelting and refining charges will be negotiated in good faith and agreed by the parties for each contract year based on terms generally acknowledged as industry benchmark terms. The gold refining charges are as specified in the agreements. Remaining concentrate produced at Mount Milligan Mine will be sold under short-term contracts or on a spot basis.

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Table of Contents
THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

13. Commitments and Contingencies (Continued)

Molybdenum Purchases
In the normal course of operations, TCM enters into agreements for the purchase of molybdenum to utilize the upgrading capabilities at its Langeloth facility and generate saleable upgraded molybdenum products. As of June 30, 2016, TCM had commitments to purchase approximately 7.0 million pounds of unroasted molybdenum concentrate and 1.4 million pounds of molybdenum oxide from 2016 to 2017, to be priced at the time of purchase at a set discount to the market price.
Molybdenum Sales
In the normal course of operations, TCM enters into certain molybdenum sales contracts pursuant to which it sells future production at fixed prices. As of June 30, 2016, TCM had commitments to sell approximately 255.5 thousand pounds of molybdenum oxide from 2016 to 2019 at an average price of $11.23 per pound.
Capital Purchase Commitments
As of June 30, 2016, TCM had open capital purchase commitments of $12.7 million related to the Mount Milligan Mine, which are expected to be incurred throughout 2016.
14. Income and Mining Tax Expense (Benefit)

Income and mining tax expense for the three months ended June 30, 2016 and 2015 was $0.6 million and $5.1 million, respectively. Income and mining tax expense (benefit) for the six months ended June 30, 2016 and 2015 was an expense of $8.1 million and a benefit of $11.6 million, respectively.

For the three and six months ended June 30, 2016, the tax expense did not contain significant unusual items. Usual drivers of differences between our effective rate and from applying the Canadian federal and provincial income tax rates are due to foreign exchange, which largely have no tax impact due to valuation allowances on the associated deferred tax assets, and the British Columbia mineral taxes for Mount Milligan. Furthermore, as a result of a change in the legal structure in late 2015, which will facilitate future consolidation of our Canadian tax reporting entities, the non-foreign exchange income and expenses from the Canadian tax reporting entities largely have no federal and provincial tax impact due to valuation allowances on the associated deferred tax assets.

For the three and six months ended June 30, 2015, the tax expense (benefit) did not contain significant unusual items. Usual drivers of differences between our effective rate and from applying the Canadian federal and provincial income tax rates are due to pre-tax losses from the Endako Mine and foreign exchange, which largely have no tax impact due to valuation allowances on the associated deferred tax assets, and the British Columbia mineral taxes for Mount Milligan.

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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

15. Net (Loss) Income per Share
The following is a reconciliation of net (loss) income and weighted-average common shares outstanding for purposes of calculating diluted net (loss) income per share for the three and six months ended June 30, 2016 and 2015:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Net (loss) income
$
(27.9
)
 
$
0.3

 
$
7.2

 
$
(86.9
)
Basic weighted-average number of shares outstanding
221.7

 
218.0

 
222.4

 
216.2

Effect of dilutive securities
 
 
 
 
 
 
 
Share-based awards

 
0.1

 

 

Diluted weighted-average number of shares outstanding
221.7

 
218.1

 
222.4

 
216.2

Net (loss) income per share
 
 
 
 
 
 
 
Basic
$
(0.13
)
 
$
0.00

 
$
0.03

 
$
(0.40
)
Diluted
$
(0.13
)
 
$
0.00

 
$
0.03

 
$
(0.40
)
For the three and six months ended June 30, 2016, respectively, approximately 1.1 million options were excluded from the computation of diluted weighted-average shares as the exercise prices exceeded the price of the common stock. For the three and six months ended June 30, 2016, respectively, approximately 3.4 million PSUs were excluded from the computation of diluted weighted-average shares because the underlying market and performance metrics are highly probable of not being met. For the three and six months ended June 30, 2016, respectively, approximately 1.5 million RSUs were excluded from the computation of diluted weighted-average shares as the hypothetical repurchase of shares exceeded the number of unvested units.

For the three and six months ended June 30, 2015, respectively, approximately 1.2 million options were excluded from the computation of diluted weighted-average shares as the exercise prices exceeded the price of the common stock. For the three and six months ended June 30, 2015, approximately 2.8 million RSUs were excluded from the computation of diluted weighted-average shares as the hypothetical repurchase of shares exceeded the number of unvested units. For the three and six months ended June 30, 2015, approximately 4.3 million PSUs have been excluded from the computation of diluted weighted average shares because the underlying market and performance metrics had not been met.

16. Transactions with our Endako Mine Joint Venture Partner
During the three and six months ended June 30, 2016, sales to Sojitz, TCM's Endako Mine joint venture partner were nil. Total sales by TCM to Sojitz, TCM's Endako Mine joint venture partner, were $1.4 million and $7.4 million for the three and six months ended June 30, 2015, respectively. These sales represented 1.0% and 2.9% of TCM's total revenues for these respective periods.
For the three and six months ended June 30, 2016 and June 30, 2015, TCM recorded insignificant amounts for management fee income and selling and marketing costs from Sojitz.
TCM's related accounts receivable owed from Sojitz were nil as of June 30, 2016 and December 31, 2015.

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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)

17. Supplementary Cash Flow Information
The following table discloses the change in current assets and current liabilities for the three and six months ended June 30, 2016 and 2015:
 
Three Months Ended
 
Six Months Ended
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Change in current assets and current liabilities:
 
 
 
 
 
 
 
Accounts receivable
$
(14.7
)
 
$
14.3

 
$
(17.5
)
 
$
14.5

Product inventory
11.1

 
(0.4
)
 
(0.2
)
 
10.1

Materials and supplies inventory
2.4

 
0.7

 
(0.3
)
 

Prepaid expenses and other current assets
(0.5
)
 
(0.3
)
 
(2.4
)
 
0.2

Income and mining taxes receivable
6.0

 
(3.8
)
 
5.9

 
(6.4
)
Accounts payable and accrued liabilities
(5.7
)
 
2.0

 
(3.0
)
 
(17.6
)
Income and mining taxes payable
(0.9
)
 
(0.6
)
 
(0.8
)
 
(0.6
)
 
$
(2.3
)
 
$
11.9

 
$
(18.3
)
 
$
0.2

Cash interest paid (1)
$
24.4

 
$
25.9

 
$
40.6

 
$
44.1

Income and mining tax (refunds) payments, net (2)
$
(4.9
)
 
$
1.7

 
$
(3.9
)
 
$
2.6

_____________________________________________________________________________
(1) Included cash interest paid on senior secured and unsecured notes and equipment financing arrangements. For the three months and six months ended June 30, 2016, cash interest paid of $0.3 million and $0.7 million, respectively, had been previously capitalized related to TCM's debt. For the three and six months ended June 30, 2015, cash interest paid of $0.3 million and $1.0 million, respectively, had been previously capitalized related to TCM's debt. See Notes 7 and 8 for additional information.
(2) For each of the three and six months ended June 30, 2016, TCM received $6.1 million in refunds of US and Canadian income taxes related to prior year tax returns. For each of the three and six months ended June 30, 2015, TCM received nil in refunds of US and Canadian income taxes related to prior year tax returns.
Non-cash Investing and Financing Activities
 
Three Months Ended
 
Six Months Ended
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Investing activities
 
 
 
 
 
 
 
Acquisition of property, plant and equipment under the Equipment Facility (see Note 7)
$

 
$

 
$

 
$
9.2

Financing activities
 
 

 
 
 
 
Capitalized debt costs (1)
$
0.8

 
$
0.3

 
$
1.3

 
$
0.6

Long-term lease obligations
$

 
$

 
$

 
$
8.3

Settlement of tMEDS
$

 
$
(7.2
)
 
$

 
$
(7.2
)
____________________________________________________________________________
(1) Included capitalized interest not paid in cash, amortization of deferred financing costs and debt discounts.


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THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements - Unaudited
(US dollars in millions, except per share amounts)

18. Concentration of Credit Risk
TCM is exposed to counterparty risk from its cash and cash equivalent balances and its reclamation deposits held by financial institutions and governmental entities. TCM monitors its positions with, and the credit quality of, the financial institutions and companies in which it invests its cash and cash equivalents, and that hold its reclamation deposits. Counterparties to cash balances and reclamation deposits, other than balances maintained in various bank operating accounts, are US and Canadian institutions and the US and Canadian governments.
TCM manages its credit risk from its accounts receivable through its collection activities. As of June 30, 2016, TCM had four customers who owed TCM more than $3.0 million each and collectively accounted for approximately 61.4% of total accounts and other receivables outstanding. As of June 30, 2016, TCM had five customers who owed TCM more than $1.0 million each but less than $3.0 million. As of June 30, 2016, all of the customers discussed above were compliant with credit terms and scheduled payment dates.
TCM's maximum counterparty and credit risk exposure is the carrying value of its cash and cash equivalents and accounts receivable. The carrying amounts of accounts receivable, accounts payable, accrued liabilities and fixed-rate debt, excluding the 2017 Notes, 2018 Notes and 2019 Notes, as discussed in Note 6, approximate fair value as of June 30, 2016.
19. Segment Information
TCM has three reportable segments, based on products and geography: Copper-Gold, US Molybdenum and Canadian Molybdenum. The Copper-Gold segment represents the Mount Milligan Mine and includes the sale of copper-gold products, net of refining costs and all expenditures, including all mining, milling, on-site general and administration, transportation and warehousing. The US Molybdenum segment includes all US molybdenum sales and tolling and calcining revenue, all Langeloth roasting and on-site general and administration expenditures and all expenditures from TC Mine, which was placed on care and maintenance in December 2014, including all mine site general and administration and stripping costs and costs for idle mining operations. The Canadian Molybdenum segment which consists of the 75% owned Endako Mine, which was placed on temporary suspension effective December 31, 2014 and care and maintenance effective July 1, 2015, includes 75% of all Canadian molybdenum sales as well as TCM's 75% share of expenditures from the Endako Mine, including all site general and administration costs, transportation costs, and costs for idle mining operations. The costs related to care and maintenance at TC Mine for the three and six months ended June 30, 2016 and 2015, and our 75% share of the temporary suspension and care and maintenance costs at Endako Mine for the three and six months ended June 30, 2016 and 2015 are reflected in costs for idle mining operations in the statements of operations. The inter-segment represents the elimination of intercompany transactions between the Langeloth Facility and the corporate entity for the three and six months ended June 30, 2016 and 2015.
TCM's chief operating decision makers (President and CEO, CFO) evaluate segment performance based on segment revenue less costs and expenses. TCM attributes other income and expenses to the reporting segments if the income or expense is directly related to segment operations, as described above. TCM does not allocate corporate expenditures such as general and administrative, exploration and interest income and expense items to its reporting segments, unless such expenditures are directly related to segment operations. Gains and losses on foreign exchange are calculated on transactions denominated in a different currency than the segment's functional currency; the Copper-Gold segment's unrealized foreign exchange balance is primarily comprised of its intercompany notes.

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Table of Contents
THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)


19. Segment Information (Continued)

Segment information for the three and six months ended June 30, 2016 and 2015 was as follows:
For the three months ended June 30, 2016:
 
 Copper-Gold
 
 US Molybdenum
 
 Canadian Molybdenum
 
Inter-segment
 
 Total
Revenues
 
 
 
 
 
 
 
 
 
Copper sales
$
37.6

 
$

 
$

 
$

 
$
37.6

Gold sales
64.6

 

 

 

 
64.6

Molybdenum sales

 
22.3

 

 

 
22.3

Tolling, calcining and other

 
4.2

 

 

 
4.2

 
102.2

 
26.5

 

 

 
128.7

Cost and expenses
 
 
 
 
 
 
 
 
 
Operating expenses
61.9

 
24.5

 

 

 
86.4

Depreciation, depletion and amortization
27.0

 
2.1

 

 

 
29.1

Cost of sales
88.9

 
26.6

 

 

 
115.5

Selling and marketing
2.2

 
0.5

 

 

 
2.7

Accretion expense
0.1

 
0.1

 
0.4

 

 
0.6

Costs for idle mining operations

 
1.7

 
0.7

 

 
2.4

 
91.2

 
28.9

 
1.1

 

 
121.2

Segment operating income (loss)
11.0

 
(2.4
)
 
(1.1
)
 

 
7.5

Other segment (income) expense
 
 
 
 
 
 
 
 
 
Gain on foreign exchange
(1.0
)
 

 

 

 
(1.0
)
Segment income (loss) before income and mining taxes
$
12.0

 
$
(2.4
)
 
$
(1.1
)
 
$

 
$
8.5

For the three months ended June 30, 2015:

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Table of Contents
THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)


19. Segment Information (Continued)

 
 Copper-Gold
 
 US Molybdenum
 
 Canadian Molybdenum
 
Inter-segment
 
 Total
Revenues
  
 
  
 
  
 
 
 
 
Copper sales
$
49.3

 
$

 
$

 
$

 
$
49.3

Gold sales
56.3

 

 

 

 
56.3

Molybdenum sales

 
20.5

 
0.4

 

 
20.9

Tolling, calcining and other

 
7.8

 

 
(0.2
)
 
7.6

 
105.6

 
28.3

 
0.4

 
(0.2
)
 
134.1

Cost and expenses
  
 
  
 
  
 
 
 
  
Operating expenses
49.6

 
25.7

 
0.2

 
(0.2
)
 
75.3

Depreciation, depletion and amortization
22.8

 
3.8

 

 
0.2

 
26.8

Cost of sales
72.4

 
29.5

 
0.2

 

 
102.1

Selling and marketing
1.8

 
0.5

 

 
(0.1
)
 
2.2

Accretion expense
0.1

 
0.1

 
0.4

 

 
0.6

  Cost of idle operations

 
1.8

 
10.3

 

 
12.1

 
74.3

 
31.9

 
10.9

 
(0.1
)
 
117.0

Segment operating income (loss)
31.3

 
(3.6
)
 
(10.5
)
 
(0.1
)
 
17.1

Other segment (income) expenses
 
 
 
 
 
 
 
 
 
(Gain) loss on foreign exchange
(4.3
)
 

 
0.6

 

 
(3.7
)
Segment income (loss) before income and mining taxes
$
35.6

 
$
(3.6
)
 
$
(11.1
)
 
$
(0.1
)
 
$
20.8


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Table of Contents
THOMPSON CREEK METALS COMPANY INC.
Notes to the Condensed Consolidated Financial Statements (Continued) - Unaudited
(US dollars in millions, except per share amounts)


19. Segment Information (Continued)

For the six months ended June 30, 2016:
 
 Copper-Gold
 
 US Molybdenum
 
 Canadian Molybdenum
 
Inter-segment
 
 Total
Revenues
 
 
 
 
 
 
 
 
 
Copper sales
$
65.7

 
$

 
$

 
$

 
$
65.7

Gold sales
109.9

 

 

 

 
109.9

Molybdenum sales

 
41.9

 

 

 
41.9

Tolling, calcining and other

 
8.6

 

 

 
8.6

 
175.6

 
50.5

 

 

 
226.1

Cost and expenses
  
 
  
 
  
 
 
 
 
Operating expenses
97.9

 
46.0