"The history of Eureka lies in its future." - Lambert Molinelli, 1878

DISCLOSURE

The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO), McEwen Ming (MUX) 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.

Wednesday, May 2, 2012

General Moly Announces 1Q 2012; Water Rights & Permitting Update

Lichenometry tells you how long this rock has been exposed

Latest Nevada Gas Prices (click this link)

NEW FORMAT for 2012

Morning Commentary
Daily Market Roundup
- Gold & Silver Report
- Copper & Molybdenum Report
- Oil Watch
- Debt Crisis Watch
- Stock Market Morning Update
- Eureka Miner's Million Dollar Grubstake Portfolio


My latest Kitco commentary: 2012 Copper and Gold - Is a Red Metal Crash Next? (4/16/2012)

My Latest International Business Times commentary: Silver & Gold, “Situation Normal…” (03/26/2012)

This morning's...
COMEX Gold price = $1,655.5/oz (June contract most active)
Eureka Miner’s Gold Value Index© (GVI) = 89.42 (gold value moving sideways)
Value Adjusted Gold Price© (VAGP) = $1,546.9/oz
COMEX - VAGP = $108.6/oz; gold is trading at a premium to key commodities; the gold-to-copper ratio remains below its 3-month average (Cu bullish)



Wōdnesdæg
Morning Miners!

It is 5:56 AM. Have a cold cup of Old Miner Woden's lousy I-Told-You-So coffee...or some delicious hot Red Label in the hi-bay. Our mining curmudgeon couldn't wait to tell me it would be a bad market today after the Dow rose closed Tuesday at its highest level since Dec. 28, 2007.

"Yee-ha!", he exclaimed, "The ADP report is worse than anyone expected. The propeller heads thought we'd add 175,000 new private sector jobs in April and it's only 119,000. We got a bunch of low-grade Euro-data this morning too - I told you everything was going to hell in an ore cart!"

I couldn't wait to tell Woden that his cherished gold was down 6 bucks at $1,655.5 per ounce on the COMEX, my prediction last Friday was $1,650 for the week.

"Phooey, gold will be over $2,000 when the world ends in December!"

"What good will gold do you if we're sucked into a black hole before Christmas?"

"I'll be fine in my cave...got food, water, ammo and I'm high enough up to miss the 5,000 foot tidal wave!"

No use arguing with Old Miner Woden, let's see how General Moly is doing...

General Moly Announces 1Q 2012; Water Rights & Permitting Update

General Moly released their latest quarterly report at 5:44 AM PDT:

General Moly Announces First Quarter 2012 Results (Press Release, 5/2/2012)

Not too much new here, additional financing and mine construction later this year all depend on a successful outcome on the water rights issue and obtaining all the remaining Mt. Hope permits. Here are their thoughts on these key topics:

MT. HOPE PROJECT WATER RIGHTS UPDATE

On July 15, 2011, the Nevada State Engineer issued a second Ruling granting the Company's water right applications for the Mt. Hope Project's mining operations. Permits subject to the State Engineer's Ruling were issued in December 2011 and January 2012. Pending a successful outcome of an appeal of the Ruling discussed below, the water will become available for consumptive use following the State Engineer's approval of a Monitoring, Management and Mitigation Plan ("3M Plan"). The Company is finalizing its proposed 3M Plan, developed with input from Eureka County, and we anticipate the State Engineer to approve the 3M Plan prior to the receipt of Federal permits in the second half of this year.
In August 2011, Eureka County and two other parties comprised of three individual water rights holders in Diamond Valley and one in Kobeh Valley, filed Petitions with the Nevada State District Court appealing the Ruling of the State Engineer. An appeal hearing took place on April 3, 2012 before the Nevada District Court. A decision by the District Court is expected by mid-2012, although the District Court is not required to act under any specified timeline. We continue to anticipate a favorable District Court decision, upholding the State Engineer's Ruling. Pending a successful outcome of the appeal hearing, and approval of the 3M Plan, the Company will have the right to use the water for construction and operations at the Mt. Hope Project.


MT. HOPE PROJECT PERMITTING UPDATE

The Bureau of Land Management ("BLM") published the Mt. Hope Draft Environmental Impact Statement ("EIS") for public comment on December 2, 2011. The public comment period concluded on March 1, 2012. The BLM is now in the process of considering comments received in the development of a Final EIS. Once the Final EIS is completed, it will be advanced toward publication through the Notice of Availability process within the U.S. Department of the Interior and thereafter published in the Federal Register for a 30-day period. Following the close of this period, we anticipate the BLM to issue a Record of Decision ("ROD") allowing the Company to initiate construction activities. Based on a larger number of comments than expected during the public comment period, the Company now anticipates the ROD to be issued in the second half of this year, although circumstances beyond our control, including agency delays or requests for additional information or studies, could cause the ROD to be delayed.
In addition to the ROD, three Nevada state-issued permits are viewed as major environmental permits. These are the Water Pollution Control Permit, the Air Quality Permit and the Reclamation Permit. The Company continues to develop the applications and supporting information for these permits. These three permits are anticipated to be received before the issuance of ROD.


Separate from the report, a faithful follower of the Eureka Miner just reminded the ole Colonel that General Moly has posted these Mt. Hope career opportunities:

Mt. Hope Career Opportunities


I don't know the status of filling these jobs to date.

Daily Market Roundup


Mining Report

This morning's mining stocks...

Barrick (ABX) $39.50 down 2.32%
Newmont (NEM) $46.89 down 2.41%
McEwen Mining (MUX) 3.70 down 4.15% (formerly US Gold, UXG)
General Moly (Eureka Moly, LLC) (GMO) $3.11 unchanged
Thompson Creek (TC) $5.92 down 1.00%
Freeport-McMoRan (FCX) $38.14 down 0.83% (a bellwether mining stock spanning copper, gold & molybdenum)
Timberline Resources (TLR) $0.44 up 2.33%

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

ArcelorMittal (MT) $17.17 down 1.89% - global steel producer
POSCO (PKX) $83.27 down 0.67% - South Korean integrated steel producer

The Eureka Miner's Index© (EMI) was re-calibrated 2/8 to reflect current 200-day moving averages for benchmark miners.

The EMI is below-par at 116.21, up from last report's 130.53 and below the 1-month moving average of 129.94. The 1-month average is falling but still above the key 100-level.

The EMI gives us the market temperature for the factors that have the greatest impact on mining in Eureka County. The record 2010-2012 high for the EMI is 816.78 set 01/04/2011; the low was set 10/4/2011 at 22.88. An EMI of 100 is the boundary between hot and cold markets for the metals & miners.

Gold & Silver Report

This morning's...

COMEX gold is down $6.9/oz at $1,655.5/oz (June contract, most active)

COMEX silver is down $0.335/oz at $30.575/oz (July contract, most active)

The gold-to-silver ratio (Au:Ag) is 54.146 oz/oz

Silver 1-month CRS© is 1.64% (bullish stability level); very stable ratio; 1-month & 3-month < 3% but divergent trend forming (Ag overall indicators bearish)

The Eureka Miner’s Gold Value Index© (GVI) is below-par at 89.42, down from last report's 89.48 and below its 1-month average of 89.75. Gold value is oscillating about its average and moving sideways. The record high for 2010-2012 is 109.97 set on Oct. 4, 2011.

The Value Adjusted Gold Price© (VAGP) is $1,546.9/oz which is $108.6/oz below the current COMEX gold price.

The GVI gauges the value of gold in relation to oil, copper and silver independent of currency. These three commodities were chosen for relative value comparison because 1) oil derivatives are a common cost element for all miners, 2) copper has proven to be a reliable proxy for global growth and 3) silver is a precious and industrial 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 price is less than the VAGP, then gold is undervalued; if above, overvalued.

Copper & Molybdenum Report

This morning's...

COMEX copper is down $0.0655/lb at $3.7780/lb (July contract, most active)

The gold-to-copper ratio is 438.19 lb/oz; ratios in excess of 400 lb/oz are indicative of a bearish price domian; the ratio is below its 3-month moving average of 443.76 (Cu bullish trend in a bearishPrice Domain B)

Copper 1-month CRS© is 2.32% (bullish stability level); very stable ratio; 1-month & 3-month < 3% (overall indicators mildly bullish)

The latest molybdenum oxide spot and futures prices (courtesy of Thompson Creek Metals):

Metals Week Average:
US$14.175
As of April 30, 2012
(updated weekly)

Ryan's Notes Average:
US$14.20
As of May 1, 2012
(updated twice weekly)

European Molybdenum Oxide (Bloomberg average price, updated Wednesday & Friday):
US$14.15/lb

London metal Exchange (LME) molybdenum 3-month seller's contract:

US$14.29/lb (US$31,500/metric ton)

Daily Oil Watch

Latest Nevada Gas Prices (click this link)

Understanding the Price of Oil (click this link for a quick overview on crude oil prices)

On February 1st, 2011, we identified North Sea Brent crude oil as a good barometer for the crises in the Middle East and North Africa (MENA). The next conflict could be in the Persian Gulf. Brent remains above $115/bbl maintaining a spread above the North American benchmark, Western Texas Intermediate or "Texas light sweet crude", traded on the NYMEX.

Here are the key front-month contracts this morning:

NYMEX light sweet crude $105.73
ICE North Sea Brent crude $119.09
Spread (ICE- NYMEX) = $13.36 (last report, $14.24)

Here are the August contracts* with a narrower spread:

NYMEX light sweet crude $106.29
ICE North Sea Brent crude $118.39
Spread (ICE- NYMEX) = $12.10 (last report, $12.85)

* NYMEX futures contracts have rolled forward, we now show June and August.

NYMEX WTI 1-month CRS© is 1.19% (bullish stability level); CRS© weak convergence (Oil neutral)

Prices remain high for 2012, we have $115+ Brent and $105+ NYMEX in August favoring high oil prices this summer. A front-month spread between Brent and WTI >$20/bbl is a trouble sign.

Daily Debt Crisis Watch

July 26th we introduced the Debt Crisis Index (DCI). The DCI is computed in the mornings and at the market close Friday in much the same way we do the EMI and GVI indices. Today, the DCI is 71.9 up from last report's 68.3. A level above 200 is time for serious concern - we are now well below that level. The highest level recorded since inception was 271.0 Aug. 9, 2011; the lowest level is 65.1 on Mar. 13, 2012

Global sovereign debt issues have been an overhang on markets for many, many months starting with the Dubai crisis in late November, 2009 and spreading to the euro-zone in 2010-2011 and continuing into 2012.

Stock Market Morning Update

The DOW is down 71.37 points to 13,207.95; the S&P 500 is down 9.791 points at 1,396.03

The Eureka Miner's Grubstake Portfolio is down 1.24% at $1,349,155.35 (what's this?).

Cheers,

Colonel Possum

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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