"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, February 3, 2010

Molybdenum North of $20/lb in 2010?

Morning Miners!

It is 6:00 AM sharp. The drums are beating for molybdenum lately as we are only a few days away from Miss Moly's debut on the London Metal Exchange (LME). The Report remains bullish on this event (Miss Moly and the Platinum Looking Glass) as more participants looking to put money to work will be drawn into the molybdenum marketplace. There is new excitement on the wires about the prospects for this minor metal and molybdenum focused miners such as our General Moly (GMO). This morning's article on a junior moly miner in Poland with interests in Australia is a good example:

Rising molybdenum price should be good news for Strzelecki Metals (Proactive Investors USA & Canada, 2/3/2010)

Last month JP Morgan analysts forecast that molybdenum would rise from around $15/lb currently to $21/lb by the end of the year, and could rise to $24/lb by the end of 2011. This is good for producers like Thompson Creek Metals (TC) but should also raise investor confidence in companies in the pre-production phase such as General Moly. As this article points out, other juniors like Strzelecki are just beginning to generate interest. Here's another bullish article from last month:

Big Time Rebound Set For Moly (Moly Investing News, 1/24/2010)

This article expands on the JP Morgan view:

'Moly inventories remain very lean,' they [JP Morgan] wrote. 'We also see more sustainability in the recent surge in moly prices compared to the spike this summer,' they [JP Morgan] have said in a report on Canadian molybdenum miner Thompson Creek Metals (TC).

The article notes that Haywood Securities has a less bullish outlook for molybdenum prices predicting $15/lb level this year (we're there) and $20/lb in 2011. Their long-term estimate is $15/lb in +2013.

'Looking ahead, we believe global molybdenum roasting capacity, currently at 480 million pounds per annum, is an important consideration, with some (arguably bullish) market commentators forecasting world consumption in excess of 480 million pounds within the next two years,” the [Hayward] analysts said, '…we expect growing demand fundamentals to dominate the molybdenum market, noting that the current list of greenfields projects lacks a significant number of large-scale ventures to potentially fill the expected supply deficit.'

Say pardner, let's get Eureka Moly's Mt. Hope project online and start filling that future supply deficit! I'm not ready to make any moly price predictions yet but I am willing to bet that next week's LME hoopla will push molybdenum north of $15/lb. How about a Colonel Yee-ha!

Say that sounds like another one for the Colonel's Beer Derby (lower right column of this blog).

Molybdenum will be north of $15/lb before Chinese New Year

Enough talk, let's walk the walk:

4-WD is OFF - the VIX or "fear index" remains below 25 for several days, smoother roads ahead (what's this?)

Green light is ON for a cautious return of investor confidence in the metal and mining sectors

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 up $0.12 in early trading to $77.35 (March contract, most active); Gold is down $1.9 to $1116.1 (April contract, most active); Silver is down $0.173 to $16.570 (March contract); Copper is down $0.0360 to $3.0535 (March contract); Molybdenum is steady at $15.00

The DOW is down 22.07 points to 10274.78; the S&P 500 is down 4.57 points to 1098.75. The miners are mixed:

Barrick (ABX) $36.21 unchanged
Newmont (NEM) $45.90 up 1.39%
US Gold UXG) $2.29 down 2.55%.
General Moly (Eureka Moly, LLC) (GMO) $2.54 down 1.17%
Thompson Creek (TC) $12.22 down 1.93%
Freeport McMoRan (FCX) $72.44 down 0.10% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $40.84 down 0.90% - global steel producer
POSCO (PKX) $118.87 up 0.39% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.42% to $1,232,142.49 (what is this?).


Colonel Possum

Headline photograph by Mariana Titus

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