Thursday, August 19, 2010
General Moly (GMO) Makes Key Milestone & US Gold (UXG) Shines
BREAKING NEWS FOR GENERAL MOLY (2:00 p.m. PDT): A second General Moly (GMO) press release has just crossed the wires which bodes well for resolution of the water rights issue:
GENERAL MOLY ANNOUNCES CREATION OF AGRICULTURAL SUSTAINABILITY TRUST IN DIAMOND VALLEY (Press Release, 1:40 p.m., 8/19/2010)
MARKET UPDATE (9:51 a.m. PDT): Mining Stocks opened mostly up on an otherwise down day for the broader markets. After 7:00 a.m. (PDT), the miners were pulled into the red with other equities as a worse than expected jobless claims report was further digested by investors. The DOW is down 165 points at 9:51 a.m.(PDT), bellwether miner Freeport-McMoRan is down 1.35%.
It is 6:03 AM. The coffee is not ready yet but I've got a good excuse. Sit down for a tall tale while we wait for the light to come on. I got a call from a Deputy Sheriff just before midnight, "Colonel, if you want this week to have a Thursday you'd better get down here in hurry and bail out your favorite Norseman!" Nuts, what has Thor done now? I wish he'd concentrate on chucking a rare summer thunderbolt over Diamond Valley and stop all of his durn foolishness.
I jumped into my Carhartts and headed downhill to the station to find both Old Miner Woden and Thor in la pinta. Apparently after drinking quite a few flagons of mead at the Keyhole, these two scalawags got into quite a scrap. The Deputy informed me that the old timers were fighting over which day of the week was more important, Wednesday or Thursday. I knew if I didn't act quickly before the strike of midnight there wouldn't even be a Thursday this week. Now, some of you may think that would be just fine because we'd be closer to the weekend. But think of this: if we were one day ahead of everyone, you'd have to drive in reverse on your next trip to Reno! I don't think most folks out here would appreciate that or being in the same time zone as Shanghai, China. I bailed Thor out but Old Miner Woden wanted to stay at the County Hotel until Ruby Tuesday comes back through - three hots and a cot beats camping out at Lone Mountain. Anyway, the ole Colonel did his best to bring you another morning, "Happy Thor's Day miners!"
General Moly Makes Key Milestone
There the coffee light is on, the broader markets are open and I'll pour you a cup. Looks like the S&P 500 has got the blues over another sour jobless claims report but the miners & metals are smiling. There's more good news for General Moly too. They just announced this morning that the Bureau of Land Management's (BLM) contractor has completed the Preliminary Draft Environmental Impact Statement (PDEIS):
GENERAL MOLY ANNOUNCES COMPLETION OF PRELIMINARY DRAFT ENVIRONMENTAL IMPACT STATEMENT (Press Release, 8/19/2010)
Bruce D. Hansen, Chief Executive Officer, said,
"This is a significant milestone for our project. It marks the completion of four years of studying the environmental, social, and cultural impacts of the Mt. Hope project and signifies that the BLM is comfortable that the completed baseline reports form the basis for a comprehensive and defensible document. We will continue work with the BLM and the other agencies involved to drive the permitting process in a prudent but expeditious manner."
This is a key milestone before the anticipated publication of the DEIS later this year and receipt of the Record of Decision (ROD) by mid-2011.
General Moly hosted a business community meeting Wednesday morning at the Owl Club and had about 25 business leaders from the Eureka Community there to learn more about the Mt. Hope project. This is a continuing effort to involve the community in the pre-mine construction phase to avoid the pitfalls of other mining projects of the past. The Atlas Gold Bar Mine experience comes to mind in the 1980s and early 1990s, speaking of which...
Here Comes Merger Madness
One significant boost to the markets in a backdrop of muddling economic recovery has been the recent spat of attempted mergers. On Monday we covered Australian giant BHP Billiton's offer to takeover Canadian Potash (Copper & Gold Back in the Swing). Yesterday, there was speculation about a reported $80/share offer price from Luxembourg-based ArcelorMittal (MT) for Pittsburgh-based USS (X). ArcelorMittal is the world's largest steel producer and is an investor in General Moly.
There is a Mineweb article this morning on possible junior gold miner mergers in the winds:
Junior gold stocks ripe for takeovers now? (Mineweb, 8/19/2010)
I started thinking about U.S. Gold (UXG) and it seems reasonable to me that they may soon be in Barrick's (ABX) cross-hairs. They own a large portion of the old Atlas Gold Bar Mine and I believe Barrick and possibly a few others own the old mill and adjacent claims. With domestic gold production falling, why wouldn't Barrick be interested in consolidating more properties on the Eureka-Carlin trend?
The ole Colonel has no more information on this than a good hunch. I just threw a few more shares of UXG in the buckboard this morning as a local bet on merger madness. We added UXG to the Eureka Miner's Grubstake Portfolio earlier this year at $2.66/share. This morning UXG is trading at $5.18 up 94.7% from January's purchase - not too bad buckaroos.
Daily Market Roundup
Enough talk, let's walk the walk:
The Eureka Miner's Index(EMI) is above-par at 139.53, a bit up from yesterday's 133.24 and a big improvement from the 6/7/10 low of 50.7. Importantly, the high and low trends remain positive since the EMI high on 6/25. Remember an EMI greater than 100 is good times (or at least better times) for metals & miners.
4-WD is ON - rough but improving roads in the marketplace; The VIX or "fear index" is below 25; metals & miners are on firmer timber with bellwether Freeport-McMoRan (FCX) in the low-$70s and closing on its 200-day average of $75.3 (our new warning level, 8/05 update); 10-year Treasurys are safely below 4% preserving a low-interest rate environment but there is some deflationary caution now that we are sub-3%.
The YELLOW light is turned back on for Commodity Reflation. Although copper is trading above $3/lb, the 10-yr T-Note is solidly below 3.00%
The GREEN light is turned on for Stable Markets the VIX below the 30 level (what's this?)
The YELLOW light is turned on for Inflation/Deflation Watch as the Federal Reserves resumes buying back Treasurys and the 10-yr T-Note remains below 3.00%
The YELLOW light is turned back on for Investor Confidence as the bond markets signal trouble ahead
The GREEN light is turned on our Fuel Gauge with oil below $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, U.S. House committee debates miner workplace safety bill
Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)
NYMEX/COMEX: Oil is up $0.01 in early trading to $75.79 (October contract, most active); Gold is up $4.7 to $1235.8 (December contract, most active); Silver is up $0.141 to $18.540 (September contract, most active); Copper is up $0.0130 to $3.3625 (September contract, most active)
Western Molybdenum Oxide is $14.75; European Molybdenum Oxide is $15.55; LME moly 3-month seller's contract is $16.33, LME cash seller is $16.06
The DOW is down 74.32 points to 10,341.22; the S&P 500 is down 8.40 to 1085.76. The miners are up except the molys:
Barrick (ABX) $45.68 up 0.93%
Newmont (NEM) $60.02 up 0.89%
US Gold (UXG) $5.18 up 1.17%
General Moly (Eureka Moly, LLC) (GMO) $3.20 unchanged
Thompson Creek (TC) $9.10 down 0.87%
Freeport-McMoRan (FCX) $73.86 up 0.87% (a bellwether mining stock spanning copper, gold & molybdenum)
The Steels are up too, (a "tell" for General Moly & Thompson Creek):
ArcelorMittal (MT) $31.48 up 0.70% - global steel producer
POSCO (PKX) $108.49 up 3.12% - South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is is up 0.70% to $1,410,395.67 (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