"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.

Tuesday, January 19, 2010

Buffet Wants More POSCO, Both Want Lithium

Morning Miners!

It is 6:39 AM. Let the Colonel pour a cup and brace you up for a few more Pacific storms. We've got some exciting news on the wires this morning but first a word about the Christmas Child, El Niño. You may have taken down your holiday lights but El Niño doesn't want you to forget the season. The readers are reminded that the Report has links to NOAA's El Niño Page as well as the National Weather Service Report for Eureka in the Local Weather and Climate section in the lower right column. For the latter, checkout the 28km infared radar animation for the Western states. This gives you the big picture for what is going on, a climate drama stretching from Japan to Nevada.

I like to think of this weather pattern as the tracks on a bulldozer. The upper track moves from west to east bringing us a series of storms often called the "Pineapple Express" due to their proximity to the Hawaiian Islands. Like road wheels, each storm rotates counterclockwise as it rolls closer to our neck of the woods. The lower track returns along the equator moving in the opposite direction, east to west. This bulldozer has a mean drive sprocket, four road wheels wheels and a big snow plow, pardner.

Now for some really great news that could affect our County. The venerable Sage of Omaha, billionaire Warren Buffet, has expressed a desire to invest more in South Korean steelmaker, POSCO (PKX). POSCO is an investor in General Moly (GMO) and presently owns a 20% share in our Eureka Moly Mt. Hope project.

Buffett wants to buy more POSCO stock - POSCO

Let's connect the dots and there are several. As announced today, Mr. Buffet presently owns 4.5 percent of the world's No.4 steelmaker and has indicated he wants to buy more POSCO stocks. Let's look at some more news. Last week POSCO announced that it is planning to invest $5 million in Pan American Lithium Corp. (TSX-V: PL).

AXcess News: POSCO to Invest in Pan American Lithium

Lithium? Hmm, that's a favorite metal of this Report. Lithium is a key strategic material in advanced battery chemistries for future electric and electric hybrid vehicles. The Report has covered how emerging battery technologies may become very important to our County and State (a complete list of links to these reports is given below the signoff). Who else likes lithium?

Why Warren Buffet is investing in lithium

And how does POSCO think about lithium? From today's announcement:

POSCO CEO Joon-yang Chung said during a signing ceremony in late November for a letter of understanding relating to a magnesium refinery business to be built in Gangwon Province South Korea, "POSCO will be aggressively pursuing projects and future materials like lithium as the new growth engines for the next generation of the company." (Axcess News, 1/18/2010)

The Colonel believes it is not unreasonable to conclude that Warren Buffet isn't just picking a up little more of an Asian steelmaker but seriously investing in a company with a vision of the future. Incidentally, he didn't buy POSCO stock when it was half of what it is today last year. No, Mr. Buffet will probably buy more POSCO near 52-week highs. He is no fool and I'm inclined to believe he now sees promise in a company aligned not only with the expected uptrend in steel production but the demands of future technologies for strategic materials.

A recurring theme of this report is the importance of strategic metals like lithium, vanadium and molybdenum, to the future of Northern Nevada. I believe what has been on the wires lately is encouraging news for the kids and grandkids of Eureka. The next time you drive by Mt. Hope find some comfort in the fact that America's grandpa from Nebraska owns 1% of that mountain and that interest is likely to increase.

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25; smoother road market conditions expected to continue (what's this?)

Yellow light is ON for possible adverse regulation/legislation: Cortez Hills & mercury emissions

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is down $0.44 in early trading to $79.93 (March contract, most active); Gold is up $5.8 $1136.3 (February contract, most active); Silver is up $0.238 to $18.665 (March contract); Copper is up $0.0530 to $3.4190 (March contract); Molybdenum is steady at $15.25

The DOW is up 77.47 points to 10687.12; the S&P 500 is up 9.14 points to 1145.17. The miners are mixed:

Barrick (ABX) $39.19 down 1.28%
Newmont (NEM) $47.79 up 0.38%
US Gold UXG) $2.56 up 0.39%
General Moly (Eureka Moly, LLC) (GMO) $3.10 up 3.16%
Thompson Creek (TC) $14.43 down 1.22%
Freeport McMoran (FCX) $84.02 down 0.34% (a bellwether mining stock spanning gold, copper & molybdenum)

The Steels are up, (a "tell" for General Moly & Thompson Creek):

ArcelorMittal (MT) $46.63 up 0.73% - global steel producer
POSCO (PKX) $135.50 up 3.40% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.75% to $1,374,709.30(what is this?).


Colonel Possum

Headline Photograph by Mariana Titus

If you're just catching up with this exciting story on strategic metals, here are some background articles on how emerging battery technologies may become very important to our County and State:

The Next Big Thing in Northern Nevada (The Eureka Miner's Market Report, 9/28/2009)

A Big Step into the Future for Eureka County (The Eureka Miner's Market Report, 10/23/2009)

A Silver Lining for the Silver State? (The Eureka Miner's Market Report, 11/16/2009)

What's in a Battery for Eureka County? (The Eureka Miner's Market Report, 11/23/2009)

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