"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.

Friday, February 26, 2010

Miss Moly Clicks Her Heels, Newmont & TC Report

Morning Miners!

It is 6:04 AM and Friday at last! Excuse me for sounding like a proud father but our Miss Moly clicked her heels in London yesterday as LME molybdenum futures broke $18/lb. We'll close the Report with a complete moly roundup. First, have a cup of that terrific Raine's TGIF Red Label and let's look at some more good news to close out an otherwise rocky week in the mines. Newmont (NEM) and major moly producer, Thompson Creek (TC), both reported 2009 financial results yesterday and have words of optimism for 2010 (with the exception of lower expected Newmont production in Nevada). Here are the links to their reports:

Newmont Records Record Breaking Cash Flow of $2.9 Billion and Adjusted Net Income of $1.4 Billion ($2.79 per share) in 2009

Thompson Creek Announces 2009 Financial Results

I'm including the Newmont Nevada Report in full because it offers a lot of useful information about the Carlin operational status and outlook for 2010:

"Nevada - Nevada sold 567,000 equity ounces of gold at costs applicable to sales of $495 per ounce during the fourth quarter. Equity gold sales were above expectations due to higher grade from the underground operations and improved leach pad recoveries. During the quarter, costs applicable to sales were lower than expected as higher production was partially offset by higher underground mining costs and production taxes. Equity sales for the year were 2.0 million ounces at costs applicable to sales of $521 per ounce."

"In 2010, the Company expects equity gold production from Nevada of approximately 1.6 to 1.7 million ounces due to lower production from the Carlin operations and the closure of Deep Post, partially offset by increased production at Leeville. Production from the Carlin operations is expected to be impacted by a geotechnical event that occurred at Gold Quarry in late December 2009, limiting access to ore that was originally scheduled to be mined in 2010 and 2011. Following a series of geotechnical, mine planning and ore blending analyses conducted by the Company in January and February 2010, the Company now expects up to approximately 150,000 equity ounces of gold production to be deferred from Gold Quarry in 2010 and 2011. The Company currently anticipates mining these deferred ounces in 2012 and 2013, while continuing to study opportunities to safely accelerate that production. 2010 costs applicable to sales in Nevada are expected to increase to between $590 and $630 per ounce, primarily due to lower production and higher contracted mining costs, diesel and input commodity price assumptions."

Thompson Creek CEO, Kevin Loughrey, has this to say about 2010:

"As we begin 2010, the world economy is showing signs of recovery and Thompson Creek and its shareholders are in an excellent position to benefit financially from improving market conditions..."

"Thompson Creek's mines are currently operating at full capacity and the Company expects molybdenum production in 2010 to reach a record level of 29 to 32 million pounds. At the same time, cash costs are expected to be in the range of $6 to $7 per pound, which is well below current world molybdenum prices of approximately $17 per pound."

"The medium-term outlook for molybdenum prices remains favorable, especially as the world industrial economy returns to a more normal growth rate and that growth stimulates additional demand for molybdenum."

These statements remain consistent with Mr. Loughrey's interview on CNBC Business News last November (Molybdenum on CNBC News, 11/24/2009). Thompson Creek is up over 1% in early trading, the leading miner today in the Eureka Miner's Grubstake Portfolio.

Below is a wrap up of molybdenum 2/25 price action. The 3-month LME futures contract broke $18/lb, an encouraging sign:

Western Moly Oxide (FeMo65) $17.50/lb (the price reported by Infomine and tracked by Base Metals on the General Moly Website)

Moly Oxide, Europe (Mo Drummed Molydbic Oxide EU) $17.42/lb (the price reported in the Metals Bulletin)

LME Futures Contracts

3-Month (Buyer) $38,000/metric ton $17.24/lb
3-Month (Seller)$40,000/metric ton $18.14/lb

15-Month (Buyer) $37,000/metric ton $16.78/lb
15-Month (Seller)$39,000/metric ton $17.69/lb

Here is the price action of the LME 3-month contract (seller) from this Monday's launch:

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" is below 25, improving broader markets are expected; metals & miners have a smoother road with FCX slightly above $74 (what is this?)

The GREEN light is our fuel gauge has returned with oil just below $80

An ORANGE light is ON for possible adverse regulation/legislation: Miner Taxation, Cortez Hills & mercury emissions

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

NYMEX/COMEX: Oil is down $1.92 in early trading to $78.08 (April contract, most active); Gold is down $3.7 to $1093.5 (April contract, most active); Silver is down $0.198 to $15.730 (May contract); Copper is up $0.0125 to $3.1830 (May contract); Western Molybdenum Oxide is up $0.25 to $17.50

The DOW is up 10.73 points to 10331.76; the S&P 500 is up 1.61 1104.55. The miners are mixed:

Barrick (ABX) $37.78 up 0.91%
Newmont (NEM) $49.09 up 0.14%
US Gold UXG) $2.70 down 1.10%
General Moly (Eureka Moly, LLC) (GMO) $2.35 down 1.26%
Thompson Creek (TC) $13.57 up 1.80%
Freeport-McMoRan (FCX) $74.68 up 0.82% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $38.10 down 0.78% - global steel producer
POSCO (PKX) $113.74 down 1.09% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.22% to $1,249,553.85 (what is this?).


Colonel Possum

Headline photograph from Life 123

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