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

DISCLOSURE

The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO), McEwen Ming (MUX) 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.

Monday, March 1, 2010

Miner's Monday Tax Surprise, Copper & Euro Moly Jump


Morning Miners!

It is 5:57 AM. Grab a warm one and let's kickoff a new month and a news-filled Monday. Nevada miners will start the week with a new claims fee to help close the state budget gap. A special session of the Nevada Legislature ended in the early morning hours with Nevada miners agreeing to pay a new fee on mining claims as reported by Mineweb:

Nevada mining to pay new claims fee to help shore up state budget shortfall (Mineweb, 3/1/2010)

The new tax is alleged to be temporary:

"Nevada Mining Association CEO Tim Crowley told Mineweb the new tax on mining claims is based on a four-tier system ranging from $0 to $195 per claim, depending on the amount of claims held by a mining or exploration company in the Silver State. The new fee is scheduled to sunset in June 30, 2011, which is when the current biennial state budget ends." (Mineweb, 3/1/2010)

We have been following other potential new taxes on miner's in the Report (Nevada Miner's New Taxation Worry, 2/17/2010), not a happy situation for a state that is already experiencing a decline in gold production. Phooey.

Fortunately a tsunami didn't wash away Eureka over the weekend but the 8.8 magnitude earthquake in Chile did cause a jump in copper prices. At the COMEX open (Sunday, 3:00 PM PST) copper hit $3.487 before falling back to the $3.30 level this morning. Another encouraging sign is a decrease in the London Metal Exchange warehouse stocks which have been steadily building since the beginning of the year.


It looks like a favorable day for the metals and miners even though the U.S. dollar is back in rally mode with more dark news coming from Europe. As reported by the Wall Street Journal this morning:

NEW YORK--The U.K. pound fell sharply against the dollar as concerns over the country's fiscal position and an uncertain political picture led investors to sell off sterling more than 2% on the day...The euro also declined against the dollar as investors wary of Greece's swollen debt questioned whether reports of a possible aid plan would pull that country--and the rest of the teetering euro zone periphery--from the fiscal doldrums. (ESJ, 3/1/2010)

The ole Colonel will continue tracking these events across the pond like a hungry coyote in a snow storm.

Latest Molybdenum News

"Pick-up in stainless output supports FeMo price in Europe - The price of ferro-molybdenum in Europe is continuing to rise and trading sources canvassed by Steel Business Briefing say the price will go even higher over the next few weeks. The price of FeMo in warehouse duty paid Rotterdam is around $41.50-42/kg (€30.55-30.92/kg)[or $18.82/lb], which is up from $36.50/kg [or $16.56/lb] last month." (Steel Business Briefing, 3/01/2010)

Below is a wrap up of molybdenum Friday (2/26) price action. The 3-month and 15-month LME futures contract are now both above $18/lb, an encouraging sign for this nascent market:

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)$39,900/metric ton $18.10/lb

15-Month (Buyer) $37,900/metric ton $17.19/lb
15-Month (Seller)$39,900/metric ton $18.10/lb

Here is the price action of the LME 3-month contract (seller) from last 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 above $74 (what is this?)

The YELLOW light is back on our fuel gauge with oil just above $80

An ORANGE light is ON for possible adverse regulation/legislation: Miner's claim fee, 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 up $0.59 in early trading to $80.25 (April contract, most active); Gold is down $0.8 to $1118.1 (April contract, most active); Silver is up $0.024 to $16.545 (May contract); Copper is up $$0.0795 to $3.3635 (May contract); Western Molybdenum Oxide is steady at $17.50

The DOW is up 43.76 points to 10369.02; the S&P 500 is up 6.64 1111.13. The miners are mixed:

Barrick (ABX) $37.56 down 0.27%
Newmont (NEM) $49.09 down 0.39%
US Gold UXG) $2.72 up 1.12%
General Moly (Eureka Moly, LLC) (GMO) $2.40 up 2.13%
Thompson Creek (TC) $14.00 up 1.82%
Freeport-McMoRan (FCX) $76.14 up 1.31% (a bellwether mining stock spanning gold, copper & molybdenum)

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

ArcelorMittal (MT) $38.04 down 0.47% - global steel producer
POSCO (PKX) $116.13 up 0.58% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.70% to $1,263,043.41 (what is this?).

Cheers,

Colonel Possum

Headline photograph by Mariana Titus

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