Thompson Creek Metals Company Inc. is in a dire financial position. At the end of September, the formerly high-flying miner had cash of US$217 million and a debt load of US$832 million, including $314 million of notes due in 2017.

“(Thompson Creek) is quickly approaching an end-game,” Deutsche Bank analyst Jorge Beristain said in a note.

Beristain thinks Thompson Creek should put all its focus on fixing its balance sheet. So he is mystified that the company is thinking of investing about US$53 million in a permanent crusher at its Mount Milligan mine in British Columbia. Management has spent some capital on the crusher already, but Beristain said it should consider that a “sunk cost” and not a rationale to spend more.

Instead, he said Thompson Creek should buy back its distressed unsecured bonds, which are trading at roughly 25 cents on the dollar. Then the firm could try to refinance its secured debt and salvage some value for equity holders.

“We estimate if all available cash on hand were used to purchase 100 per cent of its US$517-million of unsecured debt, while spending on permanent crusher (is) deferred to 2018, this could generate a nine-fold positive impact to the company’s (net present value),” Beristain said.

He cut his price target on Thompson Creek in half to 25 cents U.S. a share. The stock was worth more than US$24 at its peak in 2008.