Friday, August 14, 2009
Moly Down Under, Cap-and-Trade Update
It is 5:56 AM, let me pour you a hot cup of TGIF coffee! Australian Marengo Mining Ltd. is undertaking a massive copper/molybdenum project in Papau New Guinea. It is expected to be in production by 2013 if all goes well. Reading about this effort made me fell even better about our Mt. Hope project. The Yandera porphyry copper-molybdenum venture is the typical way that moly is mined in the world, as a byproduct of copper mining. Mt. Hope is unique in offering a pure play for the valuable steel strengthening metal.
When the term "massive" is applied to Yandera it refers more to the copper potential than the moly byproduct. Let's look at the numbers:
Mt. Hope - In the first five years of production, General Moly estimates 40 million pounds of molybdenum will be mined annually at approximately 0.103 % moly. The present plan is for the open pit mineralization to be mined in the first 20 years with lower grade mineralization being mined and processed in the succeeding 30 years.
Yandera - Marengo estimates a total potential for 82 million pounds of molybdenum over a ten year life at 0.0135% moly.
So what we have in our backyard is a nearly 8 times higher grade of moly than the Yandera find down under. In two years Eureka Moly can pack out ten years of Yandera production with another 18 to 28 years left for Mt. Hope. Yee-ha!
Tim Arnold should check the ole Colonel's calculations in case I made an early morning slip of the decimal. If I pass his test, the "massive" Yandera undertaking adds a new perspective to the terrific potential of the Mt. Hope project. Also, I bet a cold beer and WalMart are easier to find here than in the steamy jungles of Papau.
Switching gears, there is an interesting article on cap-and-trade versus carbon tax in the Wall Street Journal. This is an issue that our own Natural Resource Advisory Commission has looked at because of its potential impact on miners, ranchers and farmers. Presently legislation using cap-and-trade to limit greenhouse gases is working its way through Congress and could become the law of the land. This is an approach that caps emissions of pollutants and then lets folks trade permits that allow them to pollute within those limits. The alternative concept is a direct tax on carbon emissions. Both attempt to curtail global greenhouse-gas emissions; the downside is the near term impact this may have on struggling domestic and world economies.
Thomas Crocker who came up with the cap-and-trade idea in the 1960s as a University of Wisconsin graduate student, is now having second thoughts about his idea applied on a global scale:
"I'm skeptical that cap-and-trade is the most effective way to go about regulating carbon," says Mr. Crocker, 73 years old, a retired economist in Centennial, Wyo. He says he prefers an outright tax on emissions because it would be easier to enforce and provide needed flexibility to deal with the problem. (WSJ, 08/13/09)
I encourage you to read further about the thoughts of John Crocker:
Cap-and-Trade's Unlikely Critics: Its Creators
Looks like a tough day for markets and miners, let's walk the walk:
Oil is down $2.05 to $68.47 (September contract); Gold is down $2.3 to $954.2(December contract, most active); Silver is down $0.252 to $14.735; Copper is up $0.0675 to $2.8465 (September contract); Molybdenum continues to hold at at $18.25
The DOW is down 160.75 points to 9237.44; the S&P 500, down 17.83 points to 995.10. The miners are down:
Barrick (ABX) $33.85 down 0.99%
Newmont (NEM) $40.75 down 1.74%
General Moly (Eureka Moly, LLC) (GMO) $2.69 down 3.58%
Freeport McMoran (FCX) $63.04 down 4.58% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are down, (a "tell" for General Moly):
Nucor (NUE) $46.46 down 2.62% - domestic steel manufacturing
ArcelorMittal (MT) $35.14 down 2.66% - global steel producer
POSCO (PKX) $94.89 down 2.50%- South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is down 2.37% to $1,094,749.90