Molybdenum - next hot commodity?

[Sean K]

Or, maybe this is old news now?

What's hot in metal? Punters tip moly holy
Mark Hawthorne
April 18, 2007

THOSE who missed the boat on the nickel and uranium booms have been trying to identify the next hot commodity.

For months, hedge funds have been taking a bet on molybdenum stocks ”” a metal that resists heat, cold and corrosion better than steel ”” and it looks like they've hit pay dirt.

In Australian mining circles molybdenum is called "moly", and its price has been soaring since January, due to export restrictions in China.

China has the world's largest molybdenum reserves, but in 2005, peasants in Hubei blamed molybdenum mines for poisoning the Chaoshui river. Rioters destroyed an estimated 200 molybdenum mines, crippling the world's supplies.

Ironically, environmental issues are the reason for moly's soaring price ”” it is used by a range of power industries to remove sulphur from emissions, and in oil, gas and water pipelines to prevent rust.

The global molybdenum producers ”” Phelps Dodge, Codelco and Rio Tinto ”” increased output in 2005 after the China riots, but the price of moly on the spot market rose from an average $US4.50 a pound (in the 10 years to 2004) to a record $US40 in late 2005. The price slid back last year, but has again been creeping up, to $US29 a pound.

The interest in the metal has been enough for the London Metals Exchange to announce plans for a moly market, which will begin later this year.

One player is Perth-based Moly Mines, which is listed on the Australian Stock Exchange and in Toronto, where it raised $24 million through a placement this month. The company is developing the Spinifex Ridge molybdenum project.

Moly Mines, which once had Andrew "Twiggy" Forrest as its chairman, has soared since January. It share price is up 400 per cent, from a fraction over $1 a share to $4.99 yesterday. It was given a speeding ticket from the ASX in February

Moly Mines chief executive Derek Fisher has just returned from an investment roadshow in London, where his pitch was that the world's energy pipelines are rotting and need replacing ”” with pipes made frommolybdenum.

 

[bvbfan]

Shhhh, you were supposed to keep it quiet

Australia has taken no interest in Moly why should it bother now.


The Moly fund debutted yesterday in Toronto well up on the $5CAD issue price (code MLY.TO or CA:MLY)

 

[Burnham]

Number of articles in a similar vein at link below provide a good background and a very bullish sentiment.

Thor mining (THR) is another 'moly' stock perhaps worth a look for those interested in the sector.

Disc; I hold THR

http://www.stockinterview.com/molybdenum.html

 

[YOUNG_TRADER]

CYL has a very large and promissing Moly project as well as Uranium
MGO has a very large (up to 1 Billion Tonnes) Copper/Moly deposit and is quite cheap too

Of course Moly Mines has been a Gem performer!

 

[Sean K]

Some good info here for Moly followers:

http://www.infomine.com/commodities/molybdenum.asp

 

[Flying Fish]

great posts

 

[bvbfan]

More reading material on Moly

http://www.stockinterview.com/molybdenum.html

 

[mick2006]

Just doing some number crunching on DGR Anduramba Molybdenum project and this is what it looks like

18.7mt at 0.088% mo eq
= 16456 tonnes of molybdenum
= 36,203,200 lbs of molybdenum

at price of $29 usd per lb

$1,049,892,800 usd

or at price of $34 aud per lb

$1,264,931,084 aud


As recently released the project has a discounted NPV of $155 million which if divided by fully diulted shares on offer of 154 million

gives the Anduramba Molybdenum project a value of $1 per share, which doesn't include the recent round of drilling or any future exploration upside!!

just goes to show how undervalued DGR is at the moment with a shareprice of only 32.5c compared to a value of $1 for just one of its projects not to mention some promising Nickel,Copper,Gold,Uranium projects.

Does anyone have any thoughts?

 

[zt3000]

MGO has 170 million pounds of Molybdenum Oxide inferred resource

... thats a **** load ... and at current spot prices ... equates to a **** load $$$$$$

note it's only an "inferred resource"

DYOR

 

[Sean K]

Thanks Mick:

Panicked Buyers to Drive Molybdenum Price Higher
Posted on Jun 5th, 2007

James Finch submits: There is presently a growing panic among molybdenum traders. From our sources, it appears reduced inventories have been overpowered by rushing demand for the silvery-white ‘energy metal.’

On the day before the Ryan’s Notes metals conference at the New York Athletic Club on Tuesday, our sources told us moly traders are sweating, scrambling to find inventory. One told us, “$50 per pound molybdenum is a heartbeat away.” This would represent an increase of nearly 50 percent from present pricing.

 

[jooooooles]

Next Molly producer in Australia will be QOL. Minning within 6 months - Native title just signed off yesterday. EPA lodged for review expected to be signed off in August - September.

Has a market capital of under 40 million for a company that will be producing in 6 months? Go figure? Fully funded mine through rights issue.

Will capitalise on bullish molly prices as well as strong tungsten prices. Mining 150,000 tonnes or ore per year with Mos2 @ .17% at a mine life of 5 years. Open cut mine low operating costs and drilling underway to expand the size of resource.

Queensland Ores will be Australia's first molly producer. Many copper miners who mine molly as a bi product are getting lower grades and hence supply is falling.

 

[Mofra]

Just doing some number crunching on DGR Anduramba Molybdenum project and this is what it looks like

Mick,

Has the company issued any guidance on estimated recovery costs? Gross income alone isn't enough if margins are thin. Will be intersting to see how they cost production.

Cheers

 

[insider]

I can't even pronounce Molybdenum... I started calling it Moly Maldrum

 

[porkpie324]

Did a little research on QOL, some interesting reports written by Warwick Grigor on the QOL website with some comparisons with other Moly/Tungston producers. QOL has been given enviromental authority now.The SP is 30c Friday, some increase in volume last week too, worth a look I think, porkpie

 

[mick2006]

The following article taken from Kitco Metals tonight shows why I like stocks with exposure to Molybdenum.

These stocks include AZS,QOL,DGR,FNT,MGO

With AZS and QOL having the higher grades and DGR,FNT,MGO the larger deposits.

The companies on this list that may have the best short term outlook may be AZS,MGO due to the fact they are looking to list on the TSX where they value Molybdenum explorers much higher than here on the ASX.

Also QOL will benefit from the ramp up of production.

Are “moly mania” prices here to stay?

Strong demand, as well as production bottlenecks, may keep molybdenum prices high for the next few years

Tuesday, July 3, 2007

By Virginia Heffernan


Move over nickel and uranium. Here comes molybdenum.

The same fundamentals that have been driving up prices of the better known metals are spilling over onto their exotic cousin, molybdenum. Over the past couple of years, the price of this “energy” metal has more than tripled from its 10-year average of US$10 a pound.

With concerns about future supply in an already tight market and bottlenecks at smelters, analysts say, molybdenum’s historically high prices are here to stay ”” at least, until the end of the decade.

David Charles, mining analyst at Toronto-based GMP Securities LP, is calling for the hard white metal to average US$26.50 a pound in 2007, increasing to US$28 in 2008, before dropping back to US$18 in 2010 and US$9 thereafter. But he thinks these estimates may be understated in the long term.

“We believe our long-term price is conservative and some of the planned molybdenum projects may not be economical at US$9 a pound,” he says in a May report.

Molybdenum provides strength and corrosion resistance for many types of steel and stainless-steel alloys, especially in high-temperature environments. Its main uses are in furnaces, high-temperature applications in the lighting and glass industries, electronics, nuclear energy and aerospace.

Growing applications for the metal include flue-gas desulphurization at coal-burning power plants, oil and gas pipelines, condenser tubes in nuclear plants and catalysts in the petroleum refining sector. In some of these applications, it is difficult to substitute molybdenum with other substances such as vanadium because of the former’s unique attributes.

Although just 10 companies currently control about 65% of global molybdenum mine production, some of the more forward-thinking players in the mining industry are already capitalizing on “moly mania” by creating publicly traded entities with a molybdenum focus, giving investors an opportunity to participate in the metal’s bull run.

For instance, Toronto-based Sprott Securities Inc. recently launched Sprott Molybdenum Participation Corp., hoping to replicate the success of a similar vehicle launched two years ago called Uranium Participation Corp. While UPC invests strictly in uranium, the moly fund invests not only in molybdenum oxide but also its related equities, which tend to appreciate faster than the underlying commodity.

As of April 30, Sprott’s moly fund had a net asset value of $220 million, or $5.27 a share, up $34 million from Jan. 1.

Sprott’s top holding is Thompson Creek Metals Co. Inc., recently acquired by Blue Pearl Mining Ltd. Toronto-based Blue Pearl was just another tiny junior focusing on exploration of the Davidson molybdenum property in British Columbia before it raised US$575 million ”” US$402 million of that in debt securities ”” to buy privately owned Thompson Creek and its North American assets, last year.

Now Thompson Creek is the largest publicly traded, stand-alone molybdenum producer in the world. Thompson Creek recently traded at $18 a share, up from a 52-week low of $1.70, making it the TSX’s best performer for the year ended June 8.

According to London-based Roskill Information Services, global consumption of molybdenum was about 400 million pounds in 2005 and is forecast to grow to about 490 million pounds by 2010. Meanwhile, mine production totalled 410 million pounds last year, about 76% of which is produced as a byproduct of copper mining.

According to Charles, production has grown at an annual rate of 5.3% a year since 2001, but increased by almost 16% in 2004 as Western copper producers ramped up production to take advantage of higher molybdenum prices.

He expects this growth to stabilize at 4.3% because most of the new copper mines coming onstream in Latin American or the Congo do not recover molybdenum.

Supply from China, which controls an estimated 39% of the world’s molybdenum reserves, could also plummet as the Chinese government reduces exports.

“They view themselves as funding the development of the Western world with their natural resources at prices they consider too low,” says Thompson Creek president and CEO Kevin Loughrey, who just returned from a fact-finding mission to China. “They want to marshal their own resources for their own consumption.”

China just raised its tax on molybdenum exports to 15% from 10%. Loughrey sees quotas and export licences becoming the norm as China cracks down on the amount of metal leaving the country. This choke on supply would, in turn, drive up the molybdenum price.

Like uranium but unlike other metals such as nickel and copper, molybdenum inventories are far from transparent. Rather, the metal’s price is dependent on direct transactions between producers and consumers, who respond to supply/demand fundamentals dictated by global economic conditions. The metal is unhedged and there is no forward market.

The lack of transparency, especially in supply from China, is partially responsible for a volatile molybdenum price. For instance, global inventories fell to historical lows in mid-2005, driving the price up to a peak of US$37.44. But higher prices, in turn, lowered demand and increased supply, resulting in a small surplus by the end of 2006 and a more stable price of US$25-US$30 a pound.

At that price, Thompson Creek ”” which has survived a few down cycles in its 15-year history ”” can make very good money. UBS Securities Canada Inc. recently revised its 2008 earnings estimate for the firm to US$2.12 a share from US$2. Net income is expected to be US$164 million in 2007, rising to US$279 million in 2008.

Thompson Creek owns the namesake mine and concentrator in Idaho; 75% of the Endako mine, concentrator and roaster in B.C.; the Langeloth roasting facility in Pennsylvania; and the high-grade Davidson deposit, also in B.C.

A handful of junior mining companies that have strong exposure to molybdenum and potential for near-term production are also listed on the Toronto Stock Exchange.

Loughrey says that, because the molybdenum price is volatile, deposit grades are key, allowing higher-grade producers to ride out the tough times. At historical molybdenum prices, anything higher than 0.1% molybdenum would be considered a good grade, while lower-grade deposits may be economical at today’s prices.

He adds that because the conversion of molybdenum sulphide into salable product is difficult, investors should be wary about how companies state their resources.

“It’s a fairly complex thing to turn moly sulphide in the ground to moly oxide out of the roaster,” he says. “It’s worth being very careful about the numbers people tout about the size of their deposit.”

Vancouver-based Columbia Yukon Explorations Inc. holds the rights to explore the Storie molybdenum deposit in B.C. The historical resource estimate for Storie is 100.5 million tonnes graded at 0.077% molybdenum.

The deposit has potential for growth. Columbia recently raised $3.2 million to investigate the deposit’s extensions in preparation for a pre-feasibility study next spring.

Toronto-based Virgin Metals Inc. has two advanced exploration-stage molybdenum/copper porphyry properties in northern Mexico: Los Verdes and the less advanced Cuatro Hermanos.

The Los Verdes property is a historical molybdenum producer with resources of 10.5 million tonnes graded at 0.124% molybdenum. The company estimates the deposit could produce as much as 2.5 million pounds of molybdenum and nine million pounds of copper a year.

Another potential winner is Roca Mines Inc., which intends to be the first new Canadian molybdenum producer when its 100%-owned MAX deposit southeast of Revelstoke, B.C., begins operations this summer.

Roca will initially focus on a high-grade core containing 280,000 tonnes graded at 1.95% molybdenum sulphide. Then ”” if prices permit ”” it will expand to a larger deposit of 43 million tonnes graded at 0.20% molybdenum.

White Rock, B.C.-based Adanac Molybdenum Corp. has also been an investor darling, doubling to $2 a share from $1 earlier this year. Adanac owns the Ruby Creek deposit, a low-grade bulk-tonnage deposit in B.C., and three moly or moly/copper projects in Nevada. Adanac expects to begin producing from Ruby Creek in early 2008. IE

 

[jman2007]

Both tungsten and moly prices have been strengthening, but the firming up of tungsten prices has been overshadowed by the surge in moly prices from US$25/lb at the beginning of the year to close to US$40/lb recently.

Moly is used in high-performance steels in the oil and gas industry, nuclear power stations and desalination plants. The crux of the matter however, is that about two-thirds of all oil pipelines will have to be replaced because their steel does not contain moly.

However, in virtually every case the Australian projects being brought online by prospective producers have been fraught with delays. This is mainly due to the notoriously difficult nature of specilaty metals projects to obtain debt financing for, due to thin markets, and the fact that in the past China has flooded the market with cheap tungsten and exerted a disproportionate level of control over prices.

Some Australian companies have had unsuccessful relationships with Chinese customers this year. In the case of Thor Mining PLC, a MOU with Hunan Non-ferrous Metals Holdings was terminated in April 2007, and an arrangement with Penfold to arrange off-take and secure finance was also terminated. Vigorous off-take negotiations with other interested parties are currently underway.

Queensland Ores is the only fully-funded development from 100% equity sources, but is tungsten only, but is in a good position to benefit from the current high tungsten prices.

There are also other prospective producers out there.

Cheers!
jman2007

 

[michael_selway]

Both tungsten and moly prices have been strengthening, but the firming up of tungsten prices has been overshadowed by the surge in moly prices from US$25/lb at the beginning of the year to close to US$40/lb recently.

Moly is used in high-performance steels in the oil and gas industry, nuclear power stations and desalination plants. The crux of the matter however, is that about two-thirds of all oil pipelines will have to be replaced because their steel does not contain moly.

However, in virtually every case the Australian projects being brought online by prospective producers have been fraught with delays. This is mainly due to the notoriously difficult nature of specilaty metals projects to obtain debt financing for, due to thin markets, and the fact that in the past China has flooded the market with cheap tungsten and exerted a disproportionate level of control over prices.

Some Australian companies have had unsuccessful relationships with Chinese customers this year. In the case of Thor Mining PLC, a MOU with Hunan Non-ferrous Metals Holdings was terminated in April 2007, and an arrangement with Penfold to arrange off-take and secure finance was also terminated. Vigorous off-take negotiations with other interested parties are currently underway.

Queensland Ores is the only fully-funded development from 100% equity sources, but is tungsten only, but is in a good position to benefit from the current high tungsten prices.

There are also other prospective producers out there.

Cheers!
jman2007

Does anyone know a good site for Molybdenum current prices and charts?

MOL - Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -1.6 -68.9 34.6 196.8
DPS 0.0 0.0 0.0 0.0

thx

MS

 

[jman2007]

Hi Michael,

Infomine.com is a fantastic site for up-to-date prices for a whole host of commodities, including moly. Click on the commodities box to access these, each commodity has charts from 7 days, to as long ago as 10 years.

Cheers
jman2007

Does anyone know a good site for Molybdenum current prices and charts?

MOL - Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -1.6 -68.9 34.6 196.8
DPS 0.0 0.0 0.0 0.0

thx

MS

 

[michael_selway]

Hi Michael,

Infomine.com is a fantastic site for up-to-date prices for a whole host of commodities, including moly. Click on the commodities box to access these, each commodity has charts from 7 days, to as long ago as 10 years.

Cheers
jman2007

Hi jman, ok thanks its looks good



thx

MS

 

[AussiePaul72]

Does anyone know much about Wedgetail Mining Ltd (WTE)?
I came across WTE which seems to have been concentrated on gold but by chance seems to have come across a potentially world-class moly resource which they have called the Millenium prospect. Initial results seem to suggest that the Millenium prospect could be a resource in an order greater than the world-class Spinifex Ridge deposit being conducted by Moly Mines Ltd (MOL). The WTE Millenium project is located about 115km to the south of the MOL Spinifex deposit.
WTE is on my watch list (currently trading at 17c) but i'd be interested to know what others think of this one.