"The history of Eureka lies in its future." - Lambert Molinelli, 1878


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Wednesday, August 5, 2009

General Moly Reports, Barrick on the Hunt

Morning Miners!

It is 5:52 AM. Someone in the break room made the coffee so strong this morning that it woke Loquita! There are a passel of odds and ends to chew through this hump day. For starters, General Moly (GMO) issued their financial results for the second quarter:

General Moly Announces Second Quarter Results

Things appear to be humming along; GMO anticipates completion by the BLM of an administrative Draft EIS in late 2009 and expects to receive its Record of Decision (ROD) in mid-2010. Additionally, all mine water permits for the Company's water applications that were approved in late March were issued on July 21 and other Nevada State permits continue to be expected to be received prior to the effective date of the ROD.

Key to their success are continued efforts to secure financing and attract more investment. Interestingly, yesterday's pop in molybdenum prices was in time for their release - Yee-ha!

Yesterday we listened to Dr. Doom in Kalgoolrie, today I discovered something else surfaced at the Diggers and Dealers mining conference in Western Australia. Barrick is apparently on the hunt to acquire a mining operation which could include copper as well as gold. This sounds like some solid strategic thinking given Australia's proximity to China and the explosive rise in copper prices this year. Nothing like a little diversification; here are some thoughts from Gary Halverson, regional president for Barrick Australia Pacific:

"We are a gold company," he said, adding that Barrick was only interested in mines with that precious metal. "If copper is with that gold than we are certainly interested in that."

As reported in InfoMine, Halverson declined to comment on specifics but the buzz is that they looking at Prominent Hill, a copper-gold mine near the Woomera weapons-testing range in the deserts of outback Australia. Sounds like a great field assignment buckaroos, don't forget your HandyMan!

The hugely successful "Cash for Clunkers" is driving the latest rise in platinum and palladium. Both are widely used in catalytic converters that purify exhaust gases. Nearly 60% of the metal mined every year goes into the auto industry, according to CPM Group, a New York-based precious-metal research firm (WSJ, 8/5/2009). The other side to this story is that older cars that are traded in also contain the metals, which are likely to be recycled by scrap-metal producers. Eventually, that scrap supply will find its way back into the market. So it goes pardner, maybe this is another example of why Dr. Doom may be right about an impending slump in commodity prices.

Finally, the Chinese are getting to be more and more like us everyday. Since we're not expected to buy as much of their exports anymore, the Chinese are encouraging domestic consumption with easy credit. Sound familiar? China's central bank said Wednesday:

"We will continue to unswervingly implement the appropriately loose monetary policy, and carry out fine-tuning with market tools according to changes in the domestic and international economic trends and prices.."

Maybe Alan Greenspan is their new economic adviser.

That's all folks, let's walk the walk:

Oil is down $0.82 to $70.60 in early trading (September contract); Gold is down $5.8 to $963.9 (December contract, most active); Silver is down $0.050 to $14.680 (September contract); Copper is up 0.0160 to $2.8115 (September contract); Molybdenum is resting comfortably at $16.50.

The DOW is down 93.03 points to 9227.16; the S&P 500, down 9.07 points to 996.58. The miners are mixed today:

Barrick (ABX) $35.34 down 2.27%
Newmont (NEM) $41.41 down 1,52%
General Moly (Eureka Moly, LLC) (GMO) $2.83 down 1.39%
Freeport McMoran (FCX) $63.12 up 0.03% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are down today, (a "tell" for General Moly):

Nucor (NUE) $46.73 down 0.57% - domestic steel manufacturing
ArcelorMittal (MT) $37.29 down 1.87% - global steel producer
POSCO (PKX) $99.64 down 2.61%- South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 1.25% to $1,122,945.01


Colonel Possum

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