"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, April 30, 2010

General Moly, Hanlong & US Gold On the Move

Morning Miners!

It is 5:59 AM. Have a cup of well-deserved Raine's TGIF coffee. What a month it has been; if the early morning action is any indication, it should end well. Gold and silver took a nice bounce on the London spot exchange coming within a whisper of $1180/oz and $18.75/oz respectively. Yesterday was the best day yet for General Moly (GMO) since their Hanlong announcement in early March (A Game Changer for General Moly & Eureka County). GMO stock rocketed 10.1% to close at $3.93 on the highest daily up-volume (1,824,201 shares) since the Hanlong deal (see note 1).

In the wee hours this morning, DOW Jones Newswires reported that Hanlong is on the move declaring their intention to invest $5 billion in Australian miners. This Report has been following their investment in Moly Mines Ltd. (Hanlong Invests in Another Moly Miner). It seems their sights have expanded to include iron ore assets as well as molybdenum down under:

SYDNEY (Dow Jones)--Hanlong Mining said Friday it expects to invest $5 billion in Australian miners as part of its plans to become a "fourth force" in the country's iron ore sector to rival BHP Billiton Ltd. (BHP) , Rio Tinto Ltd. (RTNTF) ( RIO.AU), and Fortescue Metals Group Ltd. (FSUMF)...

Last week, the company completed the acquisition of a 57% stake in Moly Mines Ltd. (MYMNF), a molybdenum miner in Western Australia's Pilbara region. Sichuan Hanlong has also acquired a controlling interest in General Moly Inc. (GMO), a U.S. molybdenum miner. Taken together, the interests in both miners are likely to make Sichuan Hanlong a major player in the global market for molybdenum, which is commonly used in steel alloys and to remove sulfur impurities from petroleum products. (DOW Jones Newswires, 5:36 AM, 4/30/2010)

It is important to clarify "controlling interest in General Moly Inc." in the above news-wire with a General Moly statement provided to this Report shortly after the Hanlong announcement:

"GMI will continue to operate with its current management team and its largely independent Board of Directors. Our shareholders (post transaction) will be 65% public and based in the USA."

The markets are now open and there is a surprise for the other junior miner in the Eureka Miner's Grubstake Portfolio (what's this?). US Gold (UXG), owner of the old Atlas Gold Bar Mine property (Eureka God News: US Gold, General Moly & POSCO), has just hit a 5-month high of $3.48 (9:42 AM EDT). GMO has pulled back a bit from yesterday's high but I think we're going to close with a decent Friday. The ole Colonel is taking the day off before something goes bad!

One note of caution before I leave, the COMEX October contract for oil just broke $90. We haven't heard the last of the tragic oil spill in the Gulf. Stay tuned.

Enough talk, let's walk the walk:

4-WD is ON - rough roads in the marketplace; the VIX or "fear index" remains in the 18-20s still too close to 25 for my comfort; metals & miners are OK but benchmark FCX is only 1-buck and change above $75 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment (what's this?)

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

A ORANGE light is ON for possible adverse regulation/legislation: Mine Safety Violations, Miner's claim fee, Miner taxation, Cortez Hills, mercury emissions &
General Moly Mt. Hope Water Rights

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

NYMEX/COMEX: Oil is up $0.83 in early trading to $86.00 (June contract, most active); Gold is up $10.1 to $1178.9 (June contract, most active); Silver is up $0.176 to $18.755 (July contract); Copper is up $0.0170 to $3.3675 (July contract); Western Molybdenum Oxide sits at $17.75, LME moly 3-month seller's contract remains at $18.14

The DOW is down 13.68 points to 11153.64; the S&P 500 is down 4.13 to 1202.65. The miners are mixed:

Barrick (ABX) $43.84 up 2.26%
Newmont (NEM) $56.49 up 1.24%
US Gold (UXG) $3.47 up 2.97%
General Moly (Eureka Moly, LLC) (GMO) $3.87 down 1.53%
Thompson Creek (TC) $12.88 down 1.53%
Freeport-McMoRan (FCX) $76.23 down 1.92% (a bellwether mining stock spanning copper, gols & molybdenum)

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

ArcelorMittal (MT) $39.26 down 2.19% - global steel producer
POSCO (PKX) $113.15 down 2.35% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.24% to $1,443,084.85 (what's this?).


Colonel Possum

Note 1: GMO traded an amazing 12,227,850 shares on the day of the announcement. Their present 10-day average volume is 1,011,735 shares.

Write Colonel Possum at colonelpossum@gmail.com for answers to your questions or to request e-mail updates on the market

Headline photograph by Mariana Titus

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