MOL - Moly Mines

[J.B.Nimble]

Well this news should not have been unexpected. Moly, being largely contract traded, is a bit slower to react to a downturn but it cannot defy gravity...

NEW YORK, Nov 10 (Reuters) - Freeport-McMoRan Copper & Gold Inc said on Monday it would cut molybdenum production and may cut output of copper due to weak demand and prices, but its shares rose after China announced a huge stimulus package.
Prices for base metals like copper and minor metals including molybdenum have collapsed in recent weeks on mounting concerns about the health of the world economy.
However, prices for copper and other metals rallied Monday after China announced a $586 billion economic stimulus plan, helping to push up Freeport's shares by as much as 11 percent.
Freeport, the world's biggest publicly traded copper producer, said it was preparing revised plans at each of its copper operations to reduce costs and capital spending.
The company said it would provide an update on its revised operating plans in December.
In the meantime, Freeport said it would cut molybdenum production from its Henderson mine and defer the restart of its Climax molybdenum mine. Both mines are in Colorado.
Slowing demand for molybdenum in the metallurgical and chemicals sectors, coupled with weak global economic conditions and turmoil in credit and financial markets, has hurt prices for the metal, the Phoenix-based company said.
Freeport will cut annual production at the Henderson mine, one of the largest primary molybdenum-producing mines in the world, by about 10 million pounds, or 25 percent of capacity.
The company said it would also look at curtailing output at other mines that produce molybdenum as a by-product.
The Metals Week molybdenum dealer oxide price was $12 per pound on Monday, down from about $30 in mid-October, it noted.
Molybdenum, which has the ability to withstand extreme temperatures without significantly expanding or softening, is widely used in the manufacture of aircraft parts, electrical contacts, industrial motors and filaments.
"We have a positive long-term view for molybdenum markets and will be positioned to increase our production as market conditions improve," CEO Richard Adkerson said in a statement.

http://www.guardian.co.uk/business/feedarticle/8008351

So where does this leave MOL. A couple of hundred million dollars of capex committed, and an interim finance package that leaves them a long way short of being able to produce - not a pretty picture. And now the market is signalling that there just isn't a need for their moly right now. Hard to see them raising the remaining funds in the near term.

It doesn't look good for holders right now. Perhaps the best hope is that they might be taken out in a takeover. This has to be an atractive target for one of the bigger players...

 

[jman2007]

It doesn't look good for holders right now. Perhaps the best hope is that they might be taken out in a takeover. This has to be an atractive target for one of the bigger players...

Why do a lot people assume that because a stock has become cheap that it automatically rates as a takeover target?...what would make MOL attractive to anyone right now?

Trust me, the toe-cutters are coming out of the woodwork in a lot of companies, everyone is looking at reducing costs and getting rid of unecessary overheads. Takeovers are the last thing on their minds right now.

jman

 

[noco]

Why do a lot people assume that because a stock has become cheap that it automatically rates as a takeover target?...what would make MOL attractive to anyone right now?

Trust me, the toe-cutters are coming out of the woodwork in a lot of companies, everyone is looking at reducing costs and getting rid of unecessary overheads. Takeovers are the last thing on their minds right now.

jman

On researching info from Moly Mines annual report, production will not commence until July 2010, so by then the price of Molybdenum may be quite different from today.
Refer to page 12 of their reportroduct Offtake Arrangements
In June 2008, the Company completed a 10 year Offtake Agreement
with ThyssenKrupp Metallurgie GmbH (“TKMet”) of Germany for all of
the molybdenum production from the Project. TKMet will take delivery
and purchase 100% of Moly Metals Australia’s interest (currently
100%) in molybdenum product from Spinifex Ridge as oxide and ferromoly
after it has been toll processed under the Company’s Tolling
Agreement with strategic alliance partner, the Chilean metallurgical
group Molymet.
Pricing will be determined with reference to the prevailing market
prices and conditions at the time of sale, therefore maintaining full
exposure to molybdenum price.
IMHO this enough for me to hang in to July 2010.

 

[jman2007]

On researching info from Moly Mines annual report, production will not commence until July 2010, so by then the price of Molybdenum may be quite different from today. IMHO this enough for me to hang in to July 2010.

Looks like Harbinger have thrown in the towel in this one, and the MOL price has collapsed again since the recent Quaterly. Perhaps the best option for the time being is to reduce the rate of work at Spinifex Ridge, to a crawl and just maintain a skeleton crew. I'm sure under normal economic/supply and demand conditions this project would be a goer, but unfortunately miners do not have the flexibility to adjust their gameplan at such short notice.

2010 is a long way off, I don't think anyone has the foresight to predict what supply-demand will be like by then.

jman

 

[Goldmann]

Well Jman... looks like another molyb small cap has heeded your advice, but instead of scaling back they suspending operations:

"Queensland Ores Ltd has suspended operations at its troubled Wolfram Camp tungsten and molybdenum mine and is pursuing funding options amid the global financial crisis.

The company said operations had been suspended to conserve cash while some mining and metallurgical issues are addressed amid a downturn in molybdenum prices and financial markets.

Queensland Ores warned last month that its cash reserves could be exhausted by January 2009."

That 150 M finance option MOL took was a godsend!

 

[CityMiner]

With current liabilities minus current assets at $36.8M, reduced ore price and $101.7M commitment within 1 year situation looks bad for Moly.

 

[jman2007]

Well Jman... looks like another molyb small cap has heeded your advice, but instead of scaling back they suspending operations:

"Queensland Ores Ltd has suspended operations at its troubled Wolfram Camp tungsten and molybdenum mine and is pursuing funding options amid the global financial crisis.

The company said operations had been suspended to conserve cash while some mining and metallurgical issues are addressed amid a downturn in molybdenum prices and financial markets."

Hi Goldmann

Well I don't really take much pleasure in seeing these kind of predictions come true, numerous issues with the aforementioned QOL that had me concerned some time ago. And of course, the fact that I'm a QOL shareholder

Anyway, I'm not 100% sure on the exact financial situation that MOL are in (eg. how much debt do they have?), but moly clearly not the metal of choice atm. The moly price crash was rather spectacular, not a slow steady decline as with some of the base metals, but more akin to someone turning off the light switch.

jman

 

[Goldmann]

Been a quiet few plodding months for this one, but the last two weeks have seen some action - highlighted by a 26% jump today??? WTF?

any explanations? did Molyb prices just boom again??? weird.

 

[noco]

Been a quiet few plodding months for this one, but the last two weeks have seen some action - highlighted by a 26% jump today??? WTF?

any explanations? did Molyb prices just boom again??? weird.

Goldman, the only news I have detected is the expiration of some 3,235,000 employee options.

To the best of my knwoledge, Moly is still on track for production July 2010.
Let's hope the price has risen by then.
Noco.

 

[J.B.Nimble]

The BFS shows them as profitable at current moly prices but that is hardly the point. The key issue remains the not too trivial matter of raising the several hundred million dollars required to complete the Spinifex Ridge development. The sp was getting in to the territory of "priced to fail" but has since picked up significantly. Make no mistake, this is extremely high risk, and at anything above "priced to fail", the potential reward may not justify the risk...

 

[Sean K]

Might be worth putting this on the watch list for a potential breakout when it's closer to the 50c mark. Looks very bottomish at 25c at the moment, and increased volume the past 2 months has been in line with a lift off that bottom and finding further support around the 35c mark.

 

[happytown]

ann out his morning regarding maiden resource estimate for spinifex ridge

7.3M t @ 59% Fe

including 6.1M t indicated, 1.2M t inferred

discussions continue with principal lender re potential restructure of mol's debt obligations (us$150M maturing 31/10/09)

sp currently unchanged @.425, nil volume

cheers

 

[SM Junkie]

Moly Mines is so unloved on this forum. But they have had two very amazing days, up over 20% yesterday and then nearly 42% before going into a trading halt. Must be some very big announcement that someone must have know about for this type of price action.

 

[motion]

It has and I hold MOL & ARV.. ARV got lots of action today considering it's right on the door step to MOL... interesting times for both...

 

[tkwaku]

It has and I hold MOL & ARV.. ARV got lots of action today considering it's right on the door step to MOL... interesting times for both...

I have some. Mol sp retreating fast. So I sold to take some profit, today! I've just joined this forum and still getting used to it. I like it so far.

 

[SM Junkie]

Welcome to the forum TKWAKU - some really great knowledgeable people in here, so I'm sure you will enjoy your time and gain from their experience. My advice is to grow some thick skin (you may need it at times) and be careful not to act on the opinions on the forum without doing your own research. I'm sure you wil enjoy it.

So nothing really new from Moly, very interesting to know what drove the price increase. I really hope the pull it together and get this mine up and going, the resources are really good.

 

[noco]

Welcome to the forum TKWAKU - some really great knowledgeable people in here, so I'm sure you will enjoy your time and gain from their experience. My advice is to grow some thick skin (you may need it at times) and be careful not to act on the opinions on the forum without doing your own research. I'm sure you wil enjoy it.

So nothing really new from Moly, very interesting to know what drove the price increase. I really hope the pull it together and get this mine up and going, the resources are really good.

Molybdnum price has risen 100% in the last couple of months, from a low of US$8.00 per pound to US$17.00 per pound. Still way short of US$36.00 per pound a year ago. The price is expected to rise further as is the case with all other commodities.

On top of that good news, the special machinery required to process Molybdenum which Moly Mines have had on order from Germany since the begining of 2008 has just arrived in Australia. I believe Moly Mines are still on track to start producing July 2010.

Whilst Molybdenum has many uses, this metal will be great demand again and will be required in deep oil wells to counter sulpher.

Most of this information has been derived from Comsec.

 

[boronia]

This announcement today looks like a significant step fwd in getting the 10 MTPA Mo operation under way - subject to independant assessment of course


Moly Mines CEO Dr Derek Fisher said “This Agreement represents a wonderful
opportunity for Moly Mines to clear the Company’s existing debt and build the Spinifex
Ridge Molybdenum/Copper Project significantly ahead of the point at which funding
from the traditional debt and equity markets becomes available. The Agreement will
deliver shareholders the value benefits of a substantial funding package and a major
project partner with a strong balance sheet, diversified operations and mining interests.
The Company could be in the envious position of having constructed the
molybdenum/copper mine at the beginning of the next metals cycle, benefitting from
higher metal prices in the mine’s early production years.”

 

[Wysiwyg]

Don`t know Garp.

Still watching MOL slip down further as world market situation and future share dilution eats away at investor confidence.Harbingers officially reduced holdings and the 20 c share price range is nearing.

There is also the 980 million dollars required to complete the project so this deal has a long way to go.I suppose the future dilution is being factored in now.

Chart showing fall from $4.60 with bottom not yet visible.

The ball is well and truly rolling now with I/O production planned from mid 2010. Financial muscle from the Chinese (no Australian's stepped up ) ensures the Mo project will materialise in combination with the direct shipped I/O. Plenty of growth in MOL one would think if all goes to plan.

19 cent low was a steal.

 

[noco]

The ball is well and truly rolling now with I/O production planned from mid 2010. Financial muscle from the Chinese (no Australian's stepped up ) ensures the Mo project will materialise in combination with the direct shipped I/O. Plenty of growth in MOL one would think if all goes to plan.

19 cent low was a steal.

Wysiwyg, you are correct with planned production mid 2010 as per my post #157 07/08/09.

Sichuan Hanlong Group through its Australian subsiduary, Hanlong Mining Investment Pty has a US$200 million controlling interest in Moly Mines and I believe will cover a debt of some US$500 million to bring the Spinerfex Ridge iron ore project on line in the first half of 2010.

Molybdenum hit $36 per pound in April 2008. It dropped to $19.5 Aug 2009 and again to a low of $11 1st Dec 2009. Since then it has risen to $15.5 last Friday. I believe their production costs are around $8 per pound.

Moly Mines shares sold for $3.70 back in 2007.

IMHO, Moly Mines is in for an exciting year ahead.