Thursday, May 13, 2010
Why Mine for Moly in Eureka When You Can Go to Malmbjerg?
It is 6:13 AM on May 13. Whoa, too many thirteens to start my day! Let's ditch the markets for a minute. Pour some of that Thor's java in our thermos and let's see what's happening in Ely then take quick flight to Reykjavik (if Eyjafjallajökull isn't blowing her top).
What's up in Ely, you say? Lots of copper coming out of the old Robinson mine again, pardner. Checkout the annual report just released by their owner/operator Quadra Mining Ltd. (QUA.TSX):
Quadra Mining Ltd. Announces Strong 2010 First Quarter Financial Results (05/13/2010)
I always like to hear Ely folks are doing well again but what really caught my eye was Quadra's molybdenum project up in Greenland.
Yup, we need to first fly to Reykjavik, Iceland, then take a quick hop to the world's largest island which is 80% covered in ice. Once in Greenland its a run to Scoresbysund, the nearest settlement to the Quadra project. That's a good place to suit up in our arctic long johns and drive another 125 miles northwest to the Malmbjerg moly deposit in our specially equipped 4-WD ice-cap bomber. Here's some of the Quadra guys busting rocks now!
Makes General Moly's Mt. Hope look like a horseback ride in the sage, pardner, and we don't have active volcanoes nearby. Mt. Hope is also expected to be fully funded (A Game Changer for General Moly & Eureka County) while Quadra is still looking for a backer to continue development. To be fair, I don't think Malmbjerg has any water right issues (maybe ice rights?) and it is among one of the highest grade molybdenum projects amenable to open pit mining that is being considered for development. If things get rolling for International Molybdenum plc ("Intermoly"), 98% owned by Quadra, they expect a production rate of approximately 25 million pounds of molybdenum per year. This compares to an estimated 40 million pounds of molybdenum mined annually in the first five years of Mt. Hope production.
I wish them well up in the chilly north and it is encouraging that future moly demand has got miners looking in the far reaches of our globe. The Colonel is also happy to see molybdenum prices haven't budged two-bits during the recent fall of the euro, copper belly flops and choppy global markets. Quadra's stock (QUA.TSX)is doing pretty well too although they have experienced a pullback similar to copper giant Freeport-McMoRan (FCX) in the last several weeks:
Enough globe-trotting, let's walk the walk:
4-WD is ON - rough roads in the marketplace; the VIX or "fear index" is in the 26s near our 25 level threshold but still too high for me; metals & miners are looking better with benchmark FCX trading in the $70s but still below its 200-day average of $75 (our new warning level), 10-year Treasurys are safely below 4% preserving a low-interest rate environment
The GREEN light returns for Stable Markets with the VIX below the 30 level (what's this?)
The GREEN light returns for Investor Confidence with the possibility of a >10% correction in the broader markets possible but less likely
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 $1.36 in early trading to $74.29 (June contract, most active); Gold is down $3.4 to $1239.7 (June contract, most active); Silver is down $0.028 to $19.635 (July contract); Copper is down $0.0045 to $3.1925 (July contract)
Western Molybdenum Oxide sits at $17.75, LME moly 3-month seller's contract sits at $18.14
The DOW is down 15.49 points to 10881.42; the S&P 500 is down 3.42 to 1168.25. The miners are mixed:
Barrick (ABX) $45.60 down 0.13%
Newmont (NEM) $58.65 down 0.10%
US Gold (UXG) $4.22 up 1.20%
General Moly (Eureka Moly, LLC) (GMO) $4.40 up 2.33%
Thompson Creek (TC) $11.10 up 0.18%
Freeport-McMoRan (FCX) $73.36 up 0.49% (a bellwether mining stock spanning copper, gols & molybdenum)
The Steels are mixed, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $35.61 down 0.28% - global steel producer
POSCO (PKX) $102.35 up 0.71% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 0.69% to $1,469,566.60 (what's this?).
Write Colonel Possum at firstname.lastname@example.org for answers to your questions or to request e-mail updates on the market
Headline photograph by Mariana Titus