General Moly & Thompson Creek Report

Morning Miners!

It is 5:55 AM. Have a brimming cup of Thor's java and let's see if things are getting any better for our metals & miners. The euro plumbs a new 14-month low ($1.2702), the greenback is ever stronger and gold has recovered near this Report's nominal of $1180/oz for the month of May (COMEX gold $1180.1/oz in early trading). Strong dollar, strong gold back in the saddle again. Copper is down but stabilizing from its free-fall towards the key $3/lb level yesterday (COMEX copper now at $3.1490/lb). FastMarkets on the floor of the London Metal Exchange (LME) reports, "Premarket trading in base metals was jumpy on the LME on Thursday, with wide price swings in turbulent active conditions as the complex remained buffeted by external influences and waves of investment business." That's a mixed message if I ever heard one, we'll check on Freeport when the market opens. If this benchmark miner is up, I may be inclined to believe we're on the mend from all this week's gloomy-doomy headlines.

While we're waiting here are two good reports to read from General Moly (GMO) and our benchmark molybdenum producer, Thompson Creek (TC):

GENERAL MOLY ANNOUNCES FIRST QUARTER RESULTS (Press release, 5/6/2010)

Thompson Creek announces first-quarter 2010 financial results (Press release, 5/5/2010)

General Moly is on track with their permitting process,

"The Company currently expects the Bureau of Land Management (BLM) to complete an administrative Draft Environmental Impact Statement (EIS) mid-year and to receive its Record of Decision late in the fourth quarter of this year or early in 2011. The two final outstanding technical reports related to regional hydrology and pit lake geochemistry were completed and re-submitted to the BLM in late April and early May addressing comments received from the BLM late last year. The Company believes these reports are now final."

and is optimistic about the eventual outcome of the recent court decision on water rights:

"As announced on April 26, 2010, a Nevada District Court remanded a Nevada State Engineer’s decision to grant water permits to the Company back for a new hearing. A pre-hearing conference has been scheduled by the State Engineer for May 24, where the scope and date of the new hearing will be determined. The Company is working to expedite the schedule to the extent possible and anticipates the re-granting of its water applications to occur in the second half of the year."

Importantly, equipment procurement efforts are expected to resume later in the year and Engineering reports that they have "secured orders for most of the milling equipment, firm orders for much of the mobile mine fleet still must be placed."

Thompson Creek, "achieved excellent operational performance in the first quarter of 2010 as production achieved a quarterly record level of 8.3 million pounds and average production costs were reduced to $5.36 per pound." They noted the benefit of higher moly prices this year although there has been a lag of several weeks between product and market price. This report has noted that molybdenum prices have stabilized in the $17-18/lb range so TC's margins should be fine going forward and the affects of price lag diminished.

I was interested in the mostly positive molybdenum market comments of each company:

General Moly

"Over the first quarter of 2010, spot molybdenum prices traded higher supported by strong demand from global steel producers, particularly in Asia. Reports from a variety of sources indicate that both Korean and Japanese steel mills are running at or near full capacity and that their access to moly is becoming strained. Chinese exports of moly remain at extremely low levels forcing Korean and Japanese steel producers to source moly from the West and providing support to prices. During the quarter, prices averaged approximately $16.50 per pound and are currently at $18 per pound."

Thompson Creek

"For the first quarter of 2010, the average Platts Metals Week published price for molybdenum oxide was $15.73 per pound. The price generally improved throughout the first quarter of 2010, with the Platts Metals Week published prices for molybdenum oxide for the month of January 2010 of $14.51 per pound, $16.24 per pound for the month of February 2010 and $17.42 per pound for the month of March 2010. The Platts Metals Week published price for molybdenum oxide for the month of April 2010 remained essentially unchanged at $17.34 per pound."

This morning Infomine reports Western moly oxide to be $17.75/lb and European moly oxide sits at $17.25/lb. The LME 3-month seller's contarct closed at $17.69/lb yesterday.

OK, markets are open and down but Freeport-McMoRan (FCX) is up. Yee-ha! Hopefully today we can break this important bellwether's 4-day losing streak!

As a point of disclosure, the ole Colonel threw a few shares of Freeport (FCX) and POSCO (PKX) in the buckboard over the last several days.

Enough talk, let's walk the walk:

4-WD is ON - rough roads in the marketplace; the VIX or "fear index" remains in 24-25 territory; metals & miners remain on shaky timber with benchmark FCX still trading below its 200-day average of $75 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment (what's this?)

The GREEN light remains turned on our fuel gauge with oil below $80 (although this may only be a brief respite)

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 down $1.26 in early trading to $78.71 (June contract, most active); Gold is up $5.1 to $1180.1 (June contract, most active); Silver is down $0.059 to $17.475 (July contract); Copper is down $0.0025 to $3.1490 (July contract); Western Molybdenum Oxide sits at $17.75, LME moly 3-month seller's contract drops to $17.69

The DOW is down 15.80 points to 10852.32; the S&P 500 is down 1.02 to 1164.88. The miners are mixed:

Barrick (ABX) $43.34 up 1.07%
Newmont (NEM) $54.38 up 1.61%
US Gold (UXG) $3.57 up 1.13%
General Moly (Eureka Moly, LLC) (GMO) $4.13 down 0.48%
Thompson Creek (TC) $11.00 down 3.34%
Freeport-McMoRan (FCX) $72.13 up 2.40% (a bellwether mining stock spanning copper, gols & molybdenum)

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

ArcelorMittal (MT) $36.57 up 0.44% - global steel producer
POSCO (PKX) $106.65 up 1.31% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is up 0.49% to $1,395,800.24 (what's this?).

Cheers,

Colonel Possum

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