Before we begin discussing our second quarter results -- so therefore, before we start looking at the slides, I want to make a statement with respect to our recent performance. Clearly, we've had a difficult first half of the year, and while it's true that there have been some factors beyond our control, such as moly price, which has had a negative impact upon us, we have also, in some cases, not performed as well as we would have hoped. I hasten to add, however, that despite some operational difficulties, the most important thing we do is to send everyone who visits our properties home safely each day. In this effort, we are performing very well, and our safety performance continues a several-year pattern of improvement. In difficult times, companies are often accused of cutting back on safety, but for us, it remains our number one priority.At the Thompson Creek Mine, we had an unanticipated problem with a pit wall that caused us to curtail production for a time and then to revise our mine plan to ensure safe operation. These actions had a negative impact on our first half production from the mine. We have since moved into higher grade portion of the ore body, and we expect that we will make up much of that lost production and we expect to produce, for the full year at Thompson Creek, within the guidance we have previously provided. At Endako, we encountered 2 issues that reduced our moly production. As we came to the final months of mining from the Denak West pit, 1 of the 3 distinct pits in the Endako complex, the ore grade we encountered was below what we had expected. While overall, the Denak West pit has performed better than our model predicted, this last portion of the pit underperformed. In addition and partially as a result of this low-grade ore, the new Denak mill did not generate the recoveries we assumed it would. High grade typically generates higher recoveries, and the reverse is also normally true, so lower-grade ore exacerbated our problem with the mill. However, in retrospect, it is fair to say that we were not as efficient in managing the transition to the new mill as well as we would have hoped. Although we are getting both the throughput and the quality of moly concentrate that we have planned, recovery, that being the percentage of available moly that the mill successfully extracts from the ore, is not yet at design standards. Although recovery problems at new mills are by no means unexpected, we had hoped to do better and to do so faster. We have looked at this problem very closely, employing experts from outside the company and from within. We have made significant process changes, and we've also made personnel adjustments, and we remain confident we will do better in the future in bringing the mill up to design standards. This problem with the ore grade at Denak West, when coupled with the falling price for molybdenum, has caused us to rethink our mine plan at Endako. We have decided to feed the mill from a stockpile of material on the property. This will temporarily alleviate the need from mining from the pits and should reduce our costs from what they otherwise would be. With this plan, we can achieve production in the second half of the year which is in line with what we had anticipated for the entire year. Unlike the Thompson Creek Mine, however, we cannot recover the shortfall from the first 6 months, and so we have reduced full year guidance at Endako.
The saying that good things end bad come in threes has proven true for us this year. Problems of both mines have occurred at the same time as a pronounced weakness in the moly market. In a year in which most analysts expected a strong moly market, the prices fall into the $11 range. Weakness in the European markets and reduced growth rates in China, when coupled with a sense of uncertainty worldwide, have slowed market activity in moly to a crawl. We continue to believe that underlying market fundamentals are sound, but there is not much short-term optimism at the moment.Read the rest of this transcript for free on seekingalpha.com