M I I I � V E S T M E � T M E M O

TO: McIntire Investment Institute

FROM: Tim Chen, CLAS 2012

SUBJECT: Election Memo - TC

DATE: November 30, 2009

Thompson Creek Metals Company, Inc. (USA) Sector: Basic Materials | Industry: Metals Mining | NYSE: TC

Thesis: A leading pure-play molybdenum mining company, Thompson Creek Metals Company, Inc. presents a long-term investment opportunity for the McIntire Investment Institute because of molybdenum’s increasing importance in multiple industries and growing global consumption, the company’s high contribution margin, diversification through internal expansion and the London Metals Exchange, and a strong cash position.

I. Financial Summary

Share Price (Nov 27, 2009):

$11.82

Shares Outstanding 123,090,000 Market Cap 1.64B LT Debt (3rd Q) 9.90M P/E (forward) 10.84 P/E (ttm) 251.49 52-Week Range $2.44 - $15.64 Diluted EPS (ttm) 0.05 Avg Daily Volume (3m)

2,206,810

Beta 4.537

II. Business Overview

Thompson Creek Metals Company Inc. is one of the world’s largest publicly traded, pure molybdenum producers in the world. It is a vertically integrated Canadian molybdenum mining company that engages in mining, milling, processing, and marketing molybdenum products in Canada and the US. Properties Thompson Creek Metals Company Inc. owns the Thompson Creek open-pit molybdenum mine and mill in Idaho, a metallurgical roasting facility in Langeloth, Pennsylvania and a 75% share of

the Endako open-pit mine, mill and roasting facility in northern British Columbia. It also has two high-grade underground molybdenum development projects, the Davidson molybdenum property, located in British Columbia, and the Mount Emmons molybdenum property, located in Colorado. Total mineral resources exceed 1 billion pounds of molybdenum, including 500 million pounds of proven and probable mineral reserves (excluding the very large mineral resource at the Mount Emmons Deposit). Thompson Creek’s business model

Thompson Creek is a vertically integrated, pure-play molybdenum producer. This means that the company operates in all aspects of the molybdenum business – from mining to delivering the end product. Because Thompson Creek is a pure-play, it engages in primary mining. After mining molybdenum, Thompson Creek produces concentrates of these metals, and then refines them through its roasting facilities (Langeloth for Thompson Creek; Endako Mine has its own roasting facility). Afterwards, it converts the molybdenum into ferromolybdenum for steel or pure molybdenum to sell in briquettes. It also engages in selling pure oxides.

Source: IMOA

III. Theses:

1. Molybdenum is an irreplaceable material due to its unique properties; it has vast applications

and growing usage in multiple industries.

Molybdenum

Molybdenum (Mo) is element 42 on the periodic table. It is an element with a very high melting point, 2623 degrees Celsius. The majority of it is recovered from the mineral molybdenite, a minority from the mineral wulfenite, and a bit from copper mining. The largest amount of molybdenite production comes from mines in Colorado, New Mexico, and Idaho. The leading producers are US, China and Chile. Properties of Molybdenum

Molybdenum has four important characteristics. One is it’s a high melting temperature that allows it readily forms hard, stable carbides, and is therefore used in high strength steel alloys. It makes steel stronger and highly resistant to temperature. It is a light material that exhibits exceptional incompressibility and good corrosion resistance. It also improves weldability, reduces brittleness and stress cracking, has strong thermal and electrical conductivity and its catalysts are used by refineries to reduce sulfur in gasoline and diesel. It is essentially irreplaceable; few alternative metals can substitute for molybdenum, especially as an alloying element in cast irons and steels. It is over half as dense as tungsten, a viable alternative, and also equally stronger and lighter than tantalum. Furthermore, it is one of the most anti-corrosive materials ever to be tested. The US government had planned to use it in Yucca Mountain to seal nuclear waste but Nevada Senator Harry Reid became majority leader and the proposal was blocked. Uses of Molybdenum

Molybdenum has a wide range of applications. About 25% of all molybdenum produced is used to make moly-grade stainless steel and 50% is used for other iron-based alloys such as constructional steel and cast iron.

Source: IMOA

Sector Sub-Sector/Use

Building & Construction

Stainless Steels, tools

Chemicals Defense Armor plates, jet engines, optics, supermagnets, gun barrels Energy Catalysts, petrochemical processing, nuclear power plants, oil pipelines

and drill stems Industrial Development

Infrastructure

Transportation Aerospace, automotive, rail, shipbuilding Water Industry Drinking water distribution

Source: CPM Group and IMOA

General uses for molybdenum are in machinery (35%), for electrical applications (15%), in transportation (15%), in chemicals (10%), in the oil and gas industry (10%), and assorted others (15%). The iron and steel industries account for more than 75% of molybdenum consumption. The two largest uses of molybdenum are as an alloy in stainless steels and in alloy steels- these two uses consume about 60% of the molybdenum needs in the US.

Stainless steels include the strength and corrosion-resistant requirements for water distribution systems, chemical processing equipment, and oil pipelines. The use of molybdenum in stainless steel has increased from 47,000 metric tons in 2002 to 336,000 tons in 2005; that’s over a 600% increase in three years. In the early 2000’s, oil refineries did not need to use much stainless steel in their processing. However, today, the raw oil to be processed is increasing and thus more stainless steel equipment is needed. Molybdenum strengthens the steel and acts as an anti-corrosive to extend pipe life and efficiency. Molybdenum use in stainless steels in the nuclear energy industry also has strong importance: about 7.5% is used in nuclear power plants’ cooling systems; this extends their life to 26 years instead of the eight years with copper alloys. Alloy steels include the stronger and tougher steels needed in gas transmission pipes, chemicals industries, construction equipments, and automotive parts. Molybdenum has uses as catalysts, corrosion inhibitors, and smoke and flame retardants; therefore it is an important material for the chemicals and lubricant industries. The prevailing trend in these industries is to increase process temperatures and pressures to increase plant efficiency, which favors the use of moly-grade materials. Caterpillar is known for its combining molybdenum with its steel to produce high-grade tools and construction vehicles. Because molybdenum is erosion resistant, Caterpillar coats its large drills and friction areas on its tools with molybdenum to increase the equipment’s usefulness and efficiency. The use of molybdenum is gaining popularity in the automobile making industry. As strength-to weight issues become important, there has been a notable shift towards using advanced steels with molybdenum. Advanced high-strength steels (AHSS) use molybdenum with other elements to gain a level of incredible strength and ductility; therefore, the applications are throughout the

vehicle, from front rails to engine cradles. For example, the 2008 Mazda 2 uses 40% AHSS, which decreased the model’s weight by 100kg, increased fuel efficiency by 15%, and improved its crash safety rating. Furthermore, Honda has improved both performance and safety by increasing the percentage of AHSS in its Civic model to 50% from 32% in 2005. GM and Chrysler use AHSS containing a minimum of 0.2-0.4% molybdenum. For GM’s models in 2008, they required 60,000 tons of AHSS – that’s a minimum of 240 tons or 480,000lbs of molybdenum for one company in one industry. Because molybdenum is anti-corrosive and light-weight, it is also vital in reducing CO2 emissions in cars. A critical advantage molybdenum has over competing metals such as chromium and other light-weight strengthening metals is that it has no known toxic properties. This matters because as the US government is becoming more stringent on safety and environmental issues, it is phasing out a lot of metals. For example, chromium is used in airplane superalloys to provide strength and lightness; however, chromates are toxic and hazardous to health and thus the US government has phased out its use. 2. Strong future global demand for molybdenum, especially in the nuclear and oil industries will

increase Thompson Creek’s production and revenue growth.

Past demand, and future demand from nuclear and oil industries

Molybdenum demand has been growing in all sectors. In the last four years, demand of molybdenum boomed due to strong world-wide push to invest in industrial infrastructure: from factory building booms in China to a rush to develop oilfields. Such growth has occurred in both established uses of the metal – associated with the rapid industrialization in China and India – and the continuing stream of new uses primarily in the energy, aerospace and water distribution sectors. A large factor contributing to the growth of molybdenum is the rapid expansion of the Chinese economy between 2002 and 2006, which resulted in a compounded annual growth rate of 8% for molybdenum demand in those years. This trend may continue for Brazil, a country also in heavy need of healthy infrastructure, as they are about to host the 2010 World Cup and the 2016 Olympics. Worldwide molybdenum consumption was about 470 million lbs in 2008. In the past 50 years, there has been an approximate 4.0% average annual rate of consumption growth. Largely due to China, 2007 to 2008 growth in worldwide consumption was 6.4%. Current projected growth for the future is at 4.5%.

Thompson Creek produced 16.4 million pounds of molybdenum in 2007 and increased production by 59% to 26 million pounds of molybdenum in their 2008 fiscal year. This accounted for about 5.5% of global production (26mil lbs / 470 mil lbs). Thompson Creek’s guidance for the 2009 fiscal year is 24-26 million pounds, and for 2010 is 29-32 million pounds.

Using high guidances as a growth rate indicator, Thompson Creek will produce about 73 million pounds of molybdenum by 2014; low guidance – 62 million pounds; average – 68 million pounds, and if Thompson Creek were to maintain its current global production output rate of 5.5% - 36 million pounds. Growing at the company’s average guidance, Thompson Creek will be able to capture 11% of global consumption by 2014. Maintaining the 5.5% of global production produced in 2008 until

2014, Thompson Creek will capture 5.9% of global consumption by 2014. The global consumption figures at 2014 are based on the projected average 4.5% global consumption rate.

Thompson Creek aims to increase their market share on amount of molybdenum produced globally through internal expansion and acquisitions, which will be discussed in the 4th thesis point. Future demand for molybdenum can be attributed to two main factors: the use of molybdenum in oil pipelines and nuclear power plants. The energy sector alone accounted for 38% of molybdenum demand in 2008 and is still growing. Furthermore, as higher oil prices encourage oil exploration, new facilities, pipelines, and rigs are being built. All of these require molybdenum to increase the efficiency of transporting oil. The Alaskan Pipeline consists of half-inch metal alloy that could handle up to high pressures and very low temperatures. This alloy is composed of around 7% molybdenum in the 800 miles of pipeline, which gives the pipeline 99% reliability rate and delivers 775,000 barrels of oil to the US per day. It takes about 1.6 million pounds of molybdenum for every 1,000 kilometers of pipeline and there is about 80,000 kilometers of pipeline in the planning stages for 2013 globally. This amounts to 128 million pounds of molybdenum, or 27.2% of current global consumption. The other factor is the increase in nuclear reactors to be built: according to the World Nuclear Association, globally there are 48 plants that have acquired permits to be built by 2013. According to IMOA, an average reactor contains about 520,000 feet of stainless steel alloy; larger ones contain over 1 million feet of stainless steel alloy. These alloys contains up to 8% molybdenum. The average nuclear plant requires about 400,000-500,000 pounds of molybdenum; a larger one requires up to 1 million pounds. Therefore, assuming the average plant requires 450,000 pounds of molybdenum, by 2013, a total of 21.6 million pounds of

molybdenum will be required (48 x 450,000) for the 48 plants, which is 4.6% of current global consumption. By 2013, if Thompson Creek maintains its 5.5% global production output, it will capture about 7.04 (5.5% x 128 mil lbs) million pounds of molybdenum demanded by the pipelines. At the 5.5% rate, Thompson Creek will capture about 1.188 (5.5% * 450,000 pounds * 48 plants) million pounds demanded by the nuclear plants. This translates to a total of 8,228,000 million pounds contributed towards these two demand factors; which is 31.60% of Thompson Creek’s current output of 26 million pounds. In 2013, if Thompson Creek’s percent of global production is calculated based on its average guidance production rate divided by the projected average global consumption rate at 4.5%, Thompson Creek would be producing 9.45% of global molybdenum production. In this scenario, Thompson Creek will be able to capture 12.096 million pounds demanded by the oil pipelines and 2.0412 million pounds demanded by the nuclear plants; amounting to a total of 14,137,200 pounds of molybdenum. This translates to 54% of current output. Assuming these productions are realized in addition to current production, which is not unreasonable if Thompson Creek increases output by 2-4 million pounds per year, Thompson Creek will experience 31.60% or 54% in production growth by 2013 in the 5.5% scenario, and 9.45% scenario, respectively. Production growth in turn translates to revenue growth. On the low side, if the revenues from these productions are realized at the current profit margin of $3.35, Thompson Creek will gain an additional $27.6 million or $47.4 million in gross profit at the 5.5% and 9.45% global production, respectively. On the high side, if the production revenue gains are realized at a molybdenum price of $40 – the price investors believed molybdenum would have reached prior to the financial crisis – Thompson Creek will gain an additional $265,353,000 million or $455,918,250 million at the 5.5% and 9.45% global production, respectively. These revenues would be acquired over a period of 3-4 years from now until 2013. 3. Molybdenum supply constraints in the future will cause its current low price to rise; combined

with Thompson Creek’s high contribution margin means revenue growth

Price of Molybdenum

Source: IMOA

Due to the recent financial crisis, countries have put a halt to their infrastructure projects and in turn, steel companies have cut back their production. Because over 75% of the molybdenum produced is used in conjunction with steel and iron, molybdenum consumption, demand, and value are correlated with that of steel. On November 4th, 2008, the price of molybdenum fell from $34 per pound to $8 per pound and as of November 2009, it is at an average of $11 per pound. The price of molybdenum is at its lowest since 2004. However, as the economy recovers, infrastructure develops and industries pick up, steel will once again be strongly demanded; from October 2008 to April 2009, Chinese steel production had already increased 24%. As steel industries recover, molybdenum prices will rise.

Molybdenum Supply

Global production of molybdenum experienced a huge growth rate of 7.30% from 2007 to 2008. However, production still trails consumption. One reason was the lack of roasters leading up to 2005. A roaster is a refinery for ore; it is necessary to process the ore into the final product. In 2003, Western roasters were running at a capacity utilization rate of 77%, and by 2005, reached 100%. Total world molybdenum roasting capacity was at an annual rate of 340 million pounds. After 2005, China built more roasters to increase world roasting capacity. Furthermore, due to the high prices of molybdenum prior to the financial crisis, many companies ventured forth and built roasters. Currently, there is a surplus of roasting capacity. At Thompson Creek’s Langeloth Metallurgical Roaster, it roasted 25 million pounds of molybdenum this year; 71% of its 35 million pound roasting capacity. Arguably, having a roaster is a competitive advantage among other molybdenum miners. While the roaster problem is temporarily solved, molybdenum production supply still lags behind that of molybdenum demand. Consumption growth rate exceeds that of production growth rate.

Molybdenum has to supply the growth in all energy markets. As more countries are developing and people are industrializing, energy is required. The energy sector alone accounted for 38% of molybdenum demand in 2008 and is still growing. For the future, the supply and demand scenario for molybdenum is bleak; either roasters are unable to keep up with demand again or mine production is unable to keep up with growing demand. Both are likely and only one is required to skyrocket the price of Molybdenum. To make matters worse, China currently produces 20% of global production. If global supply keeps up with demand, China will begin to expand on the one-fifth of global production it controls. China might eventually put a strangle hold on exports, exacerbating global supply problems. Therefore, short-term constraints on supply could mean higher prices for molybdenum. In the long run, known reserves for molybdenum amount to 19 million metric tons, which would be sufficient for 80 years at 2008 demand level. Reserve Base

Global Molybdenum Reserve Base 2008: 19,000,000 mt (rounded)

Source: USGS

Thompson Creek is a pure-play molybdenum mining company and thus offers direct exposure to the metal. If the price of molybdenum skyrockets, so will Thompson Creek’s profit margins. Thompson Creek sells all of the molybdenum that it produces and thus, its profitability will be set by the price of molybdenum on the market in relation to the costs the company incurs and the amount it can produce. Thompson Creek paid off a substantial amount of long-term debt in 2006, which accounted for its 500% growth in revenue from $150.84 million to $914.40 million from 2006 to 2007. Furthermore, cash cost per pound of molybdenum produced from the mines declined in 2008 to $6.01 per pound produced from $13.58 per pound produced in 2007. This was due to increased production as a result of higher recoveries of higher ore grades and throughput (quantity or amount of raw materials processed within a given time) at the mines.

Production also increased from 16.4 million pounds in 2007 to 26 million pounds in 2008. However, from 2007 to 2008, Thompson Creek experienced only 10.6% growth in revenue, limited by revenue generated in the 4th quarter due to the decline in price of molybdenum from $34 per pound to $8 per pound and lower sales due to the financial crisis. Even so, its net income in 2008 grew $33.47 million; a 23.97% growth from $139.63 million in 2007. This was partially due to the lower cost per pound of molybdenum produced and thus cost of revenues declined from 2007 to 2008 by 5.2% from $613.37 million to $581.20 million.

In millions of USD 2008 2007 2006

Total Revenue 1011.40 914.40 150.84

Cost of Revenue 581.20 613.37 145.10

Gross Profit 430.20 301.03 5.74

Total Operating Expense 688.10 686.09 179.76

�et Income 173.10 139.63 (21.13)

The current price of molybdenum is $11.10 and this is forecasted to be the average for the 2009 year. Thompson Creek’s cost per pound of molybdenum produced is currently at an average of $7.75 per pound according to its 3rd quarter report. That is a contribution margin of $3.35 per pound of molybdenum produced. For every dollar increase in the price of molybdenum, Thompson Creek would record an increase of about 30% ($1/$3.35) on its contribution margin.

5.50% rate 5.50% rate CGuideAvg CGuideAvg

Year Current 2013 2013 2013 2013

Price of Moly 11.1 11.1 40 11.1 40

Cost of production for TC 7.75 7.75 7.75 7.75 7.75

CM 3.35 3.35 32.25 3.35 32.25

lbs produced 26000000 33980000 33980000 55407000 55407000

Gross Profit 87,100,000 113,833,000 1,095,855,000 185,613,450 1,786,875,750 A B C D E If Thompson Creek realizes revenues at the current contribution margin of $3.35 (B), the company would generate a gross profit of $113 million in 2013 if it were to maintain a production growth rate proportional to producing 5.5% of global production; this is a 31% growth in profit compared to current projected gross profit of $87.1 million (A). If Thompson Creek produced at a company guidance average, it would generate $185million in gross profit in 2013 at a realized contribution margin of $3.35 (D); this is a 112% growth compared to the current projected profit (A). Both are substantially lower than 2007’s gross profits due to the $11.1 per pound price of molybdenum used in the model versus the $34 per pound in 2007. Because the future price of molybdenum is undeterminable, Thompson Creek is taking conservative steps to maintain current operations and a strong cash flow. This will be discussed in the thesis point 4.

On the other hand, if revenues are realized at the price of $40 per pound, Thompson Creek would experience tremendous gross profits in 2013: $1,095 million if it were to maintain 5.50% of global production (C) and $1,789 million at the company guidance average production (E). At the 5.50% rate, it will be able to more than double its 2008 gross profits by 2013. Thus, Thompson Creek is able to achieve profits purely based on the price of molybdenum even if it maintained its percentage of global production. Thompson Creek doesn’t have to expand market share to increase profits. At the same time, a decrease in the price of molybdenum means a decrease in profits for Thompson Creek. However, Thompson Creek has a healthy balance sheet and the necessary tools to remain profitable in such an unfavorable situation. Its only major competitor in the pure-play class is General Moly, a budding molybdenum mining company. Other competitors are junior miners and are negligible. A swing in the price of molybdenum in the downwards direction will easily push the smaller companies out of the industry.

4. Internal expansion and acquisitions, molybdenum listing on the LME, and a strong cash

position provide safety and growth for Thompson Creek.

Internal Expansion and Acquisitions

Thompson Creek plans for future growth through internal expansion and acquisitions. Increasing internal expansion decreases mineral reserve risks. The internal growth projects for Thompson Creek are at Endako Mine, which it owns 75%, and the Davidson and Mount Emmons Projects. The Endako Mine has the capacity to output around 31,000 tons of ore per day. Expansion was postponed in 2008 due to the financial crisis as Thompson Creek cut its capital expenditures at the mine from $300 million to $60 million to save costs and stay liquid. Plans to expand output at the mine are for 55,000 tons of ore with a proportionate increase in roasting capacity. Furthermore, exploration activity is being conducted on the Endako property outside of the current mining pits, involving both aerial geophysical and soil-sampling geochemical exploration work that may be followed up with diamond drilling. The Davidson Project is the largest undeveloped molybdenum deposit in Canada. Blue Pearl, a subsidiary of Thompson Creek, is planning to build and operate a mine, producing 20,000 tons of ore per day. While the development decision has been delayed until economic conditions improve, permitting is proceeding. The project could be producing molybdenum within two years of time if Thompson Creek decides to do so. Furthermore, Blue Pearl is working with locals and environmentalists to provide the most agreeable outcome for both parties. The Mount Emmons Deposit is the largest, highest-grade undeveloped molybdenum deposit in the world with a historical resource based on drilling to date of 760 million pounds of contained molybdenum (estimated in 1998 by Behre Dolbear & Company Inc.). Thompson Creek has become the project manager and has an option to acquire up to 75% of the property within the next 10 years. However, Thompson Creek estimates that production from Mount Emmons would not be for 5 to 7 years at the earliest.

Moreover, at the Thompson Creek Mine, the company intends to operate the mill at full capacity starting in January 2010, up from 78% full capacity, which will result in an expected increase of over 20% in the annual molybdenum production range to 29 to 32 million pounds in 2010. Growth of Thompson Creek has only been limited by the price of molybdenum within the past 12 months. From 2004 until September of 2008, molybdenum was over $30 per pound. During this time, Thompson Creek repaid its debt and has accumulated cash. This allows Thompson Creek flexibility for low prices and the ability to make acquisitions. Thompson Creek has been cash flow positive this year. As of July 30th, 2009, Thompson Creek had $262 million in cash flow and a month later in August of 2009, Thompson Creek, through equity financing, raised gross proceeds of $198 million. The company said it intends to use the net proceeds for development and expansion of existing assets, acquisitions, explorations, working capital and general corporate purposes. However, Blackmont Capital analyst George Topping believes this could mean a possible acquisition. Topping believes potential acquisitions include Mercator Minerals, the operator of the Kingman Mine in Arizona; a potential partnership with Quadra Mining, who operates a molybdenum-rich Sierra Gorda project in Chile, or with General Moly, the other non-junior miner of molybdenum in North America. All of these acquisitions could be possible expansions for Thompson Creek, who as of September 30th 2009 held a position of $478 million in cash and only $14 million in debt. It also has a $35 million undrawn credit line. The downturn in the economy caused molybdenum prices to drop drastically; hampering growth of Thompson Creek. Thompson Creek is looking to diversify its operations to hedge against the risk of low molybdenum prices. On November 6th, 2009, CEO Loughrey stated that the company is looking to buy a near-term molybdenum producer or even a copper play. A copper play is economic and accretive because molybdenum is often the by-product of copper processing. It is inexpensive to process molybdenum as a by-product from the copper ore. By engaging in copper mining, Thompson Creek can diversify its operations, decreasing its exposure risk to purely the price of molybdenum. To diversify further, Thompson Creek also looks to expand internationally, especially in South America and Australia. In the short term, the next 2-3 years, Thompson Creek believes in the growth of molybdenum prices due to its increased applications and the recovery of the economy. In the long run, Thompson Creek looks to expand market share in the molybdenum mining industry and to diversify into other metal-mining industries such as copper. Molybdenum listing on the LME

Currently, most interactions in molybdenum market are done through forward contracts because of the small market size. However, recently, the London Metals Exchange (LME) announced that it will be listing molybdenum as a minor metal on the exchange in February of 2010. This will have a positive effect on Thompson Creek and the industry as a whole. The LME will provide more transparency to the molybdenum market since pricing now is only available privately through subscription to certain networks. Increased transparency will likely attract more investors to molybdenum and the number of investors interested in investing in Thompson Creek. Furthermore, the listing of the metal on the LME should elevate the profile of the metal, which will lead to future physical demand for LME storage. In the near-term the launch on the LME will use a very small amount of molybdenum; typically 1-2 million pounds versus the

global 440 million pound market. However, as the market becomes more transparent and demand for molybdenum increases, eventually ETFs, hedging or other financial products will spring up to support the industry. LME will provide a necessary step to popularize molybdenum and in turn, increase the size of the industry in the future, benefitting the players in the industry. Strong Cash Position

Thompson Creek is strongly cash flow positive and is liquid enough to generate profits while the economy has yet to fully recover. As of September 30th 2009, its debt to equity ratio is 0.01; current ratio is 12.28 with total current assets at $621.30 million and total current liabilities at $50.60 million. Thompson Creek paid off most of its debt in 2006 and 2007; its long term debt decreased from $324 million in 2008 to $170 million in 2007 and then to $11.70 million in 2008. Thompson Creek is being conservative in the current economy; slowly adjusting up production, maintaining its $480 million cash and cash equivalents, and keeping its total debt low at $14 million, waiting for the economy to recover. When the economy recovers and molybdenum prices increase, Thompson Creek will expand its internal projects and obtain market share via acquisitions. Because Thompson Creek’s profitability is related to the price of molybdenum and the price it can produced molybdenum, Thompson Creek will keep generating revenues as long as molybdenum prices are above the company’s average production price of $7.75 for 9 months ending 2009. If molybdenum prices do however drop below $7.75 per pound, Thompson Creek will still be liquid enough to remain operational. Hypothetically, if molybdenum prices were to drop to the previous $4 per pound leading up to 2003 and 2004, at 9 months ending 2009 cost per pound production costs of $7.75, Thompson Creek will experience a negative contribution margin of $3.35. At the current output of 26 million pounds, this will translate to a gross loss of $87.1 million, not taking into account operational expenses, etc. However, based on 3rd quarter 2009 results, cash costs per pound produced in 2009 are estimated to be between $5.80 and $6.30 per pound for the year. Decreasing the cost per pound production allows Thompson Creek more flexibility during times of low molybdenum prices. Thompson Creek will also proportionally cut back on operating expenses to minimize overall expenses. Furthermore, with $480 million in cash and cash equivalents and a $35 million undrawn credit line, Thompson Creek has more than enough to sustain its operations if it were to experiences a few consecutive years of losses at molybdenum prices of $4 per pound. As the use of molybdenum in steel alloys is increasing, molybdenum future applications are broadening, and developing countries increase demand for steel for infrastructure, I do not believe the price of molybdenum will fall back to $4 per pound.

IV. Risk Factors

By-product producers versus swing producers

Molybdenum is mined from two types of operations: direct and by-product. Thompson Creek engages in a direct molybdenum mining operation and is considered a swing producer because it increase its production when market has higher demand for molybdenum and decrease production when market has lower demand for molybdenum. Diversified mining companies such as Freeport McMoRan and Rio Tinto engage in mining molybdenum as a by-product of copper. The balance of mining molybdenum shifted towards mining molybdenum as a by-product in the

early 2000’s because copper companies have optimized the recovery of molybdenum. Thus, these diversified companies are able to hedge risk. As of 2007, 60% of molybdenum was produced as a by-product; however, more recently, trends have shifted towards the primary producers and the two types currently split the market equally. It is important to note that for mining companies that engage in by-product operations, molybdenum is only a by-product. Such operations will, de facto, have different goals from swing producers, such as the price of copper. Furthermore, although it is inexpensive for copper companies to mine molybdenum as a by-product, the end result is lower-grade molybdenum than those produced by swing producers. The ores produced contained between 0.01-0.05% molybdenum. Major operations mine more than 50 million tons of ore per year, producing over 200,000 tons of copper and between 5,000-15,000 tons of molybdenum. However, revenues from molybdenum are usually less than 10% of total sales for these companies. Therefore, for these companies, molybdenum output is directly proportional to the demand for copper. For swing producers, ore grades in primary mines contain between 0.12% and 0.20% molybdenum. Because by-product producers are driven by the price of copper, when there is a high demand for molybdenum, it is the swing producers that have the most incentive to supply. Nonetheless, pure-plays like Thompson Creek are exposed to more risk than by-product producers.

Commodity Price Risk

Thompson Creek is a pure-play molybdenum mining company and offers direct exposure to the metal. Furthermore, its revenues and profits are majorly based on the price of molybdenum on the market, not so much its competitors. Therefore, a further reduction in the price of molybdenum may lead to losses. If the price of molybdenum falls below the price Thompson Creek can produce it at, the company will have to readjust output, projects, capital expenditures, etc. However, if the company is unable to readjust these in adequate time, the company may be adversely affected. Forward Contract Risk Thompson Creek enters into forward contracts where it sells future molybdenum production at fixed prices. However, these only constitute a small portion of Thompson Creek’s revenues and are not a strong strategy for hedging commodity risk because the company may be required to sell future molybdenum production at prices lower than the prevailing market price. However, as of September 30, 2009, the Corporation had committed to sell approximately 3.1 million pounds at an average market price of approximately $14.73 per pound, which is currently higher than the prevailing market price. Currency Risk

Thompson Creek is a Canadian-based company but has operations in both the US and Canada. Molybdenum sales are denominated in US dollars and the majority of operating expenses and a portion of capital expenditures are in Canadian dollars. To manage these exposures, the company enters into foreign exchange forward contracts. As of September 30, 2009, the Corporation had open forward exchange contracts of CAD$14.1 million to sell US dollars and buy Canadian dollars at a weighted average of US dollar to Canadian dollar exchange rate of 1.12. The fair

value of these contracts as of September 30th, 2009 was an asset of $0.6 million. However, if there is an adverse change in the currency exchange rate, Thompson Creek will be at risk. Mineral Reserve Risk

Mineral reserves and resources are estimates and no assurance can be given that they will be realized. Ore grade recovered may differ from estimated grades of the reserves and resources. Changes in mine operating and processing costs, changes in ore grade and decline in the market price of molybdenum may render some or all of the mineral reserves uneconomic.

V. Value added Research (VAR)

In my VAR I explored the future potential uses for molybdenum, global effects, and four topics related to Thompson Creek: hedging strategies, growth strategies, roasting and global supply, and the listing of molybdenum on the London Metals Exchange. Wayne Cheveldayoff, Thompson Creek, Director of Investor Relations

• 1. There is no good hedging mechanism to obtain moly prices for future delivery. We sometimes at a customer’s request will agree to a fixed-price contract for delivery in the future but there are few such requests and the amount of moly sold forward by us at a fixed price is a small percentage of total sales. Moly is not presently traded on an exchange or futures market.

2. We intend to grow internally and also possibly through acquisition. The internal growth projects are the Endako expansion, Davidson Project and the Mount Emmons Project. The limited Davidson project could be producing moly within 2 years of the time we get the environmental permits if we decide to go ahead. Production from Mount Emmons would not be for 5 to 7 years at the earliest. Our financial success will not be much affected by competition from other producers. Rather, our profitability will be set by the price of moly in relation to the costs we incur, and the amount we can produce, since we sell all that we produce.

3. There is no shortage of roasting capacity in the world. In fact, there is a surplus and recently has been except for a brief time in 2005 which was quickly resolved by China supplying more roasting capacity quite quickly. So, this is not an issue. In fact, at Langeloth, we only roasted about 25 million pounds this year even though we had capacity to roast 35 million pounds.

4. We think the LME will provide more transparency to the moly market since pricing in the market now is only available to those who subscribe to publications and many investors don’t subscribe. So, having pricing out in the open and viewable by all will likely attract more investors to the molybdenum story and that will also increase the number of investors interested in investing in our company.

David Cotterell, BMO Capital Markets, Mining Equity Research Analyst

• 1) Thompson Creek is not what I regard as a swing producer. Usually a swing producer is one that can alter the market by bringing on spare capacity. Freeport is the swing

producer in the moly sector. Growth has only been limited by the price in the last 12 months, remember that until September 2008 moly was over US$30/lb for a few years. In this time the company repaid debt and has accumulated cash. This allows flexibilty for low prices and ability to make acquisitions. In terms of forward sales there are contracts set yearly, but the price is not set until delivery and based on the previous months average. The only sales that Thompson Creek has with the price locked in are to Sojitz, the JV partner at Endako. These are only small amounts.The best way the company has "hedged" is through low cost operations and reducing overheads as much as possible during the downturn. 2) The growth strategies are expansion of Endako and acquisitions (more moly, but also copper/moly assets). Davidson and Mt Emmons are not really in their growth profile as they're too far out, particularly Mt Emmons. 3) Roasting capacity is one thing, but demand is far more important as a supply constraint. Without one you don't get the other. Arguably having a roaster allows Thompson Creek a competitive advantage. 4) There's been a lot of talk about the LME contracts, but I don't see it as that important. Thompson Creek and a number of traders have indicated they don't think the contracts will make an impact for years. The moly market is relatively small ~400Mlb/year, so the customer interaction is quite different to other commodities. Also Thompson Creek is one of the few pure play moly investments globally, not just Nth America , so I don't think shares are likely to be affected by the LME contracts.

Jorge Beristain, CFA, Managing Director, Metals & Mining Research, Deutsche Bank Securities, Inc.

• 1)They sell forward and can "lock" prices over several quarters (or years). In future they may be able to purchase financial derivates on the LME once moly trades which would accomplish the same thing, synthetically. 2) They aim to grow by diversifying into moly-related metals such as copper, which yields moly as a by-product. Other Ferroalloys are not ruled out. And yes, internal long-term organic growth on Davidson and Mt. Emmons are also possible. 3) I don't believe roasting capacity is a constraint over the next 1-2 years as North American clients are not operating at full utilization. As in most other smelting-related industries, roasting is not a bottle-neck in my view and could be done overseas and TC could simply sell concentrate (its bulkier, but could be done). 4) Positive, in that it elevates the "profile" of the metals, will lead to an increased phyisical demand for LME storage and eventually ETF's, hedging or other financial products that spring up. Near-term looks like launch on LME will use a very small amount of physical metal 1-2m lbs vs global 440m lb market.

Howie Xia, Barclays Capital

• Countries who haven’t offered stimulus package probably won’t because they’re already getting better. Those who have it already done it; such as Europe, China, US; its hard for us to predict the economy.

Bruce Reynolds, Economics Professor, UVa, Econ365: Economy of China

• Projecting demand for molybdenum is difficult. China’s GDP growth rate will be 8-10% per year for at least the next 3-5 years.

Gary Shiflet, Materials Scientist, Engineering Professor, UVa, MSE201: Materials That Shape Civilization

• Strategic steels: tool steels; market is for hard steels; Molybdenum (Mo) is strong and tough.

• Mo good anti-corrosive; most corrosion resistant metal ever tested. Government planned to use it in yucca mountain. Professor Shiflet developed an iron-carbon-boron-molybdenum-gatillinium steel for Navy. Key: Mo and rare earth. Navy tested it for corrosion resistance against various stainless steels; and this steel was by far the best ever tested. Turned results over to Dept of energy. DOE was going to bury nuclear waste in Nevada in containers 30ft tall in nickel. Encase nuclear waste in glass in this container but align walls w/ the developed alloy. Had to last 100thousand-500thousandyrs to prevent radiation. Needed a shelter thing for this, and was going to spray the roof coating with this stuff. Political change, Reed is head of senate from Nevada, killed the project.

• Caterpillar uses this. They were coating friction areas with this. Mo is erosion resistant. Caterpillar uses it for drills, etc.

• NAVY uses it for coating ships in Pearl Harbor.

• Construction steel: Mo used for hardenability.

• Martencite is hardest material you can make, but also brittle. Temper it to remove brittleness and some hardness, but increase its toughness. Mo allows you to put in bigger pieces of metal because you can’t quench large metals in water. Mo allows cooling to occur more slowly, and still get this martencite. The thickness of the material that you can still get the martencite is hardenability. Higher the better, Mo does this. Key for construction companies.

• Mo grade means amount for every ton. Copper mining: low grade. Has lots of waste to deal with. Byproduct: company makes its wealth on primary metal. Can just sell the ore with Mo. Most companies demand the end product of Mo.

• Roast Mo: oxidize

• Going green: recycle more steel than aluminum. Mo competitors? Environmental impacts? Future: government will clamp down on certain elements that are hazardous to health and environment (shiflet used beryllium)

• Look at China – what prevents them from dumping like they did w/ rare earths?

• Good property, supply, going green environmental policies

• Government phasing out chromium in airplanes, looking for replacement. Mo doesn’t seem to have these problems (Chromium: chromates are toxic/poisonous)

• No known toxicity states or projects with Mo to be phased out.

• Show that in the future the Gov’t won’t clamp down on Mo use.

Eric Moster, Barclays Capital

• (awaiting tentative references and response) Fraser Phillips, RBC Capital Markets

• (awaiting response) John Tumazos, Founder, Very Independent Research

• (awaiting response) V. Ideas for MII Improvement

• Virtual Stock Market Competition: MII offers opportunities for its members to contribute, as an analyst, to the portfolio as a whole by pitching stocks. However, motivation to become analyst and to become more involved can be increased by implementing semester-long competitions. I believe members should form groups of 3-4 and participate in these competitions. Not only will this allow members to socialize, network, and get to know each other, the competition will get them more involved in the stock market as it motivates them to find stocks to put in their portfolios. The risk is that members will pick stocks illogically by speculation; however, the competition can require members to do analysis on the stocks before adding them to the portfolio. Furthermore, we can require them to hold stocks for a period of at least 3 weeks so they don’t become speculative day-traders. These actions and options can be done via websites like virtualstockexchange.com. This way, not only do more members become more involved, there will be more analyses generated. Another plus is the competition can be promoted school-wide, promoting MII; rewards for winning the competition can add incentive for new members to join.

• Briefing members on portfolio news: Associates currently provide bi-weekly memos to management detailing news and developments on current holdings; however, members and analysts may be left out. Perhaps, at the beginning of the meeting, five minutes can be allocated to briefing and any highly relevant news about a particular holding can be addressed. Furthermore, some concerns managers may have about portfolio risk such as inflation may not be known to members. If transparency is increased in this aspect, analysts and prospective analysts may look into companies that are good hedges against inflation and pitch them for MII.

• Member education: many members may not have the motivation or time to go out and learn more about investing strategies, fundamentals, etc. Even though instructional materials are online, management can hold training sessions a few times per semester to instruct members on certain topics. Managers or guest speakers can lead these sessions.