"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.

Thursday, May 26, 2011

General Moly (GMO) Presents Today, Stock Bounce at Open


Morning Miners!

It is 6:15 AM. Have a cup of Thor's Storm Buster java. Our favorite Norseman is all stormed out after pitching thunderbolts around Eureka County for the past week. Time for a little sunshine and horse liniment for his sore throwing arm. Looks like the sun is shining on General Moly too...

General Moly (GMO) Presents Today

Goldman Sachs and JP Morgan got the metals back on their feet with upbeat forecasts on demand earlier this week. In a few hours, Bruce D. Hansen, Chief Executive Officer of General Moly, will present at the Goldman Sachs Basic Materials Conference. According to Seth Foreman, Director of Investor Relations, General Moly will also participate in one-on-one investor meetings at the conference. You can listen to a webcast of the presentation by visiting the GMO's website; click on the conference webcast link under the "Upcoming Events" section on the bottom-left of the home page. The slide deck associated with the presentation can be accessed via this link:

General Moly Presentation - Goldman Sachs Basic Materials Conference

In the presentation is their latest schedule. Here is how the ole Colonel deciphered that slide so I could figure when mine construction starts using a best-case/worst-case roll up of their presentation numbers:

Best Case:

Publish DEIS Q2/2011 - for fun let's pick a midpoint, 7/15/2011. That's a Friday with a full moon.

Record-of-Decision (ROD) 6 months later
Financing complete 3 more months

Initiate mine construction: 4/15/2012 (by my figurin')

Worst Case:

Publish DEIS Q3/2011 - for worst case let's say the last working day of the year, 12/30/2011.

Record-of-Decision (ROD) 9 months later
Financing complete 3 more months

Initiate mine construction: 12/30/2012 (by my figurin')

OK then, the digging begins mid-April to late-December of next year. If you don't like my dates give me a holler; if you don't like their numbers, ask some questions next week at the Town hall Meeting. I plan to be at one or both of the meetings (Thursday, June 2; 12 noon to 1:00 PM and 5:30PM to 6:30PM).

When does the first pound of molybdenum come from Mt. Hope? By their numbers added to my dates:

Best Case:

Mine construction: +18 months from 4/15/2012

Commence production: 10/15/2013

Worst Case:

Mine construction: +20 months from 12/30/2012

Commence production: 8/30/2014

There you have it: Hunting season 2013 to just before Labor Day 2014.

General Moly (GMO) Stock Bounces

After a scary drop to $3.83/share on May 17th, General Moly stock had a great day yesterday and opened this morning at $4.91/share - a 28.2% move from the May low. Presently, some profit taking has dropped GMO down to $4.69/share, but that's still up more than 20% from earlier this month. Not too bad, pardner. See you at the town hall meeting next Thursday!

Daily Market Roundup

Enough talk, let's walk the walk:

Eureka Miner's Index(EMI)

This morning the Eureka Miner's Index(EMI) is above-par at 286.76, up from yesterday's 272.89 and below the 1-month moving average of 330.54. The EMI continues to be down from the high set on January 4th and set a new 2011 low of 225.03 on May 23rd. The 1-month average continues a troubling negative trend.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record high for the EMI is 816.78 set 01/04/2011; the low was set 6/7/2010 at 50.7. An EMI of 100 is the boundary between good lands and bad lands for the metals & miners.

200-day averages are used in the EMI to normalize current mining company share price and are updated monthly. Upper and lower trend lines are updated weekly.

Gold Value Index (GVI)

Our newly minted Gold Value Index (GVI) is below-par at 77.28, down from yesterday's 78.40 and above its 1-month average of 76.35. The gold-gaining-value trend is intact. Today's Value Adjusted Gold Price (VAGP) is $1,646.2/oz.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. Although gold prices have been on the rise, the GVI has been trending down since 6/7/2010 when it had a value of 100. These three commodities were chosen for relative value comparison because 1) oil is a common cost element for all miners, 2) copper has been a reliable proxy for global growth and 3) silver is a precious metal that now competes with gold for investment and as a hedge against fiat currencies.

The Value Adjusted Gold Price (VAGP) is a level that supports current oil, copper & oil prices based on historical commodity norms. If the daily COMEX gold price is below the VAGP, then gold is undervalued; if above, overvalued.

Daily Oil Watch

Latest Nevada Fuel Prices

On February 1st we identified North Sea Brent crude oil as a good barometer for the developing crisis in the Middle East and North Africa (MENA). It is now above $110/bbl with a large spread from the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX (see note 1). The Report normally follows the latter but will track both until things settle out in the region.

Here are the key front-month contracts as of this morning:

NYMEX light sweet crude $101.04
ICE North Sea Brent crude $114.84
Spread (ICE- NYMEX) = $13.80 (Yesterday, $13.55)

Here are the September contracts* with a narrower spread:

NYMEX light sweet crude $102.10
ICE North Sea Brent crude $113.90
Spread (ICE- NYMEX) = $11.80 (Yesterday, $11.77)

* NYMEX futures contracts have rolled forward, we now show July & September for a 2-month look-ahead

Prices are off their crisis highs but we still have $110+ Brent and $100+ NYMEX in September favoring high oil prices throughout the summer. My December prediction that we would see NYMEX $100/bbl oil before the Fourth of July came true on February 23rd.

Eureka Outlook Dashboard

4-WD is ON - The miners are still on very rough roads; The VIX or "fear index" is below 25; bellwether Freeport-McMoRan (FCX) is just above its 200-day moving average of $50.26 (our new warning level, 05/25 update); 10-year Treasurys are safely below 4% preserving a low-interest rate environment.

The GREEN light is turned back on for Commodity Reflation with copper trading comfortably above $3.50/lb

The GREEN light is turned on for Stable Markets with the VIX below the 30 level (what's this?)

The YELLOW light is turned on for Inflation Watch The Federal Reserve will phase out buying Treasurys (aka QE2) but maintain low interest rates for now

The YELLOW light is turned back on for Investor Confidence as some investors avoid commodity-sensitive equities

The RED light is turned on our Fuel Gauge with oil above $100

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, R&R Partners parts ways with Nevada Mining Association, Obama budget includes mining royalty , Mineral commission fights consolidation, Democrats seek to repeal mining tax from the constitution, Rhoads, Ellison oppose repeal of net proceeds tax, Proposal could change net proceeds tax, 'You get to deduct WHAT???' Nevada lawmakers ask gold miners

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

Commodity Market Morning Update

NYMEX/COMEX: Oil is down $0.28 in early trading at $101.04 (July contract, most active); Gold is down $4.2 to $1522.5 (June contract, most active); Silver is down $0.187 to $37.455 (July contract, most active); Copper is up $0.0045 at $4.1115 (July contract, most active)

Western Molybdenum Oxide is $16.65; European Molybdenum Oxide is $16.65; LME cash seller is $17.10, LME moly 3-month seller's contract is $17.24

Stock Market Morning Update

The DOW is down 52.60 points to 12,342.06; the S&P 500 is down 3.34 at 1,317.13

Miners are mixed:

Barrick (ABX) $47.20 up 0.43%
Newmont (NEM) $55.69 up 0.14%
US Gold (UXG) $6.82 down 1.45%
General Moly (Eureka Moly, LLC) (GMO) $4.69 down 2.90%
Thompson Creek (TC) $10.53 up 0.19%
Freeport-McMoRan (FCX) $50.61 up 1.26% (a bellwether mining stock spanning copper, gold & molybdenum)

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

ArcelorMittal (MT) $32.43 down 0.15% - global steel producer
POSCO (PKX) $101.17 up 0.86% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is down 0.83% at $1,723,606.29 (what's this?).


Colonel Possum

Note 1 - West Texas intermediate (WTI), also known as Texas light sweet, is a type of crude oil used as a benchmark in oil pricing and is the underlying commodity of New York Mercantile Exchange's (NYMEX) oil futures contracts. The price of WTI is often referenced in North American news reports on oil prices, alongside the price of North Sea Brent crude (source: Wikipedia)

Headline photograph by Mariana Titus

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

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