excellent article in the Australian today about the future prospects of Molybdenum, we know from previous exploration that AZS has some of the highest grades going around.
Check out the bolded text it explains why AZS will list on the TSX
Good golly, Moly
CRITERION
Tim Blue
July 13, 2007
Moly Mines (MOL) $4.88
Aussie Q Resources (AQR) 24.5c
MOLY (rhymes with lolly) is the kind of metal that doesn't attract much attention, unless you happen to have some Moly Mines shares and have seen them rise four-fold in the past six months. A former chairman is Andrew "Twiggy" Forrest, whose name on anything always caught the eye.
It plans to produce molybdenum, a high-performance steel additive whose price has been hovering at historically high levels for about two years now, up from traditional levels of about $US4 to $US6 a pound to above $US25 a pound since 2005 and $US32 a pound lately.
Moly Mines expects to complete a bankable feasibility study for the Spinifex Ridge project in Western Australia this month, having spent $35million over the past 30 months.
The company's share price was about $1.20 early this year when it dual-listed in Toronto and caught local media attention. It took off to a high of $5.20 last month, then eased to the low-$4 level. Yesterday it was back in great favour, jumping 53c to $4.88 for reasons as yet unclear.
Moly Mines managing director Derek Fisher recently returned from a month-long roadshow in North America and Europe, where overseas investors liked his company's story.
"The Australian market has paid little attention to us," Dr Fisher said. "That's why we've gone to Toronto, where we saw peer companies trading at significant multiples to our ASX price."
For example, the initial public offering for the $C75 million ($80.6 million) Sprott Molybdenum Fund was so heavily oversubscribed that it accepted $C190 million.
Molybdenum, or "moly", is used in high-performance steels in the oil and gas industry, nuclear power stations and desalination plants. And here is the cruncher: about two-thirds of all oil pipelines will eventually have to be replaced because their steel does not contain molybdenum.
"It's a metal for our time, as we say," Dr Fisher said. "The stars are aligning at the moment."
Moly Mines is finishing the feasibility study for a moly development in Western Australia's Pilbara region that could be in production by 2009.
The Spinifex Ridge project, containing 621 million pounds of moly and 932 million pounds of copper, has a 20- to 30-year mine life and would make the company a major global moly producer. The project economics are based on a long-term moly price of $US12.50 a pound.
Paradigm Capital and Harwood Securities, the Canadian brokers that assisted with Moly Mines' TSX listing, have a "buy" recommendation on the stock. It has yet to receive any analyst coverage in Australia.
Mr Forrest resigned from the company's board last year, but retains 12 million options exercisable at 20c each. As Moly Mines shares closed yesterday at $4.88, Twiggy must be sitting on about a $60million paper profit.
Such favour has yet to hit another moly stock, recently listed Aussie Q Resources. With its flagship Whitewash project north of Eidsvold, Queensland, the company's $10 million float closed in May. Its case is that world moly production in 2005 was 181,000 tonnes. Just the oil and gas pipelines now being planned will take 250,000 tonnes while the flood of new coal liquefaction plants being built will each require 3000 tonnes a year of molybdenum as a catalyst. Artemis Resources (ARV) has started exploration for molybdenum on ground next door to the deposit owned by Moly Mines.
If you take a view that steel production is going to climb, especially pipeline steel, then so will molybdenum demand. Criterion rates Moly as a SPECULATIVE BUY.
Vital Metals (VML 78c
Paradigm Metals (PDM) 16.5c
Queensland Ores (QOL) 35c
Thor Mining (THR) 33c
OFTEN found with molybdenum is tungsten, another steel additive. Vital Metals and Queensland Ores are each working on tungsten projects in north Queensland. Queensland Ores also has molybdenum while Vital's Watershed Project is strictly tungsten only. Thor Mining is also exploring north-east of Alice Springs. Tungsten, at 3410C, has the highest melting point of all non-alloyed metals and is used mainly as hard metal in cutting tools and drills.
In the past 10 days or so, Vital Metals has moved up 25 per cent, from just over 60c to just under 80c, which is impressive since it was only 20c a year ago. Moreover, it has been moving up against the breeze of substantial fund raisings, including a placement of 11 million shares at 60c that comes with a pro rata rights issue to raise another $6.9million.
Vital Metals has made three announcements in the past month, among them a resource estimate for its Watershed project in far north Queensland, a favourable report on proposed metallurgical processes and a broad timetable for mining. Executive chairman Bill Ryan says the resource statement was probably bigger than expected but that the grade was a little lower: regardless, there is still a lot of tungsten in the ground. The JORC figure of 56,300 tonnes of tungsten ore in situ - so far - ranks Watershed among the large known deposits in the world. A diamond drill campaign now under way may improve on that figure.
"The metallurgical process outcome was extremely encouraging and will have big implications for the project," Ryan said yesterday. It shows that a low-cost processing technology will work, which means a substantial reduction in size - and therefore capital cost - of the treatment plant.
Since there will be a tailings dam, attention now turns to the terms of an environmental impact statement, but Ryan is comfortable with the expected outcome.
Expected annual production of about 6500 tonnes of concentrate will be taken to either Townsville or Brisbane for export, since there is no tungsten consumer in Australia. "We estimate that gross revenue will be of the order of $100 million a year," Ryan said yesterday.
Elsewhere in tungsten, there is Paradigm Metals, whose White Rock deposit near Boorowa in NSW is so far small (150,000 tonnes) but high grade by tungsten standards (0.9 per cent). Queensland Ores has traded up to 45c but yesterday closed 35c; Thor Mining has been up to 50c but yesterday closed at 33c and Paradigm was trading at 16.5c yesterday, or around half its high of 32c in May.
Bill Ryan's story sound good, and enough for Criterion to rank Vital as a SPECULATIVE BUY.