"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.

Friday, March 29, 2013

General Moly (GMO) Update, Liu Han Saga Continues; The Colonel's Gold Price for Next Week

Eureka stories, old building glories, Eureka, Nevada


Last week a $665 million loan was suspended for the General Moly Mt. Hope molybdenum project. Below is a chronology of related articles that came to the attention of the Eureka Miner this week (newest to oldest, click here for earlier articles):

(1518 PT Mar 28, 2013)

Missing Tycoon Mars Overseas Push of China’s Private Businesses (Michael Wei in Shanghai, By Bloomberg News - Mar 28, 2013 9:00 AM PT)

This report is presently trying to contact Michael Wei

Tuesday's market mover:

Hanlong Misses Deadline for $1.19 Billion Sundance Iron Bid (Elisabeth Behrmann, Soraya Permatasari, Henry Sanderson and Helen Yuan, Bloomberg News Mar 25, 2013 9:43 pm ET)

(1041 PT Mar 24, 2013, note that Australia is one day ahead)

Murder claims hit Sundance takeover (SARAH-JANE TASKER From: The Australian March 25, 2013 12:00AM) 

(0822 PT Mar 23, 2013)

Firms Try to Get Fix On Chinese Tycoon (with Liu Han video) (By JAMES T. AREDDY in Shanghai and GILLIAN TAN in Sydney, Wall Street Journal, Updated March 20, 2013, 5:34 p.m. ET)

James Areddy is the lead WSJ correspondent in Shanghai and contacted this report in 2012 to check on how things were going with the Mt. Hope project.

Source article on Liu Han & Mt. Hope (reported by the Eureka Miner Dec 28, 2012):

In Nevada, a Chinese King of the Hill (James T. Areddy, WSJ, Dec 28, 2012)

Latest Nevada Gas Prices (click this link)

My latest Kitco commentary:  Copper & Gold Weather Report (03/25/2013)

Paintings by Mariana Titus, The Three Anas, are presently being featured at Lafitte Guest House & Gallery, New Orleans

Friday's morning prices...

Below are the closing prices for yesterday, the last market day of this shortened holiday week:

COMEX Gold price = $1,595.7/oz (April contract most active)

COMEX Silver = $28.323/oz (May)
COMEX Copper = $3.4020/lb (May)
NYMEX WTI crude = $97.23 (May)
ICE Brent crude = $110.02/bbl (May)
Eureka Miner’s Gold Value Index© (GVI) = 94.35 (gold value is elevated with respect to key commodities oil & copper given historical norms)
Value Adjusted Gold Price© (VAGP) = $1,413.2/oz
COMEX - VAGP = $182.5/oz; gold is trading at a premium to key commodities.

Happy Easter Miners!

The Mt. Hope and Liu Han saga rolled into this week with more details emerging about Mr. Liu's errant brother, an alleged triple murder and politics of doing business with China's new leaders. This would be a terrific mystery thriller if Eureka County weren't one of the set props in the unfolding drama. Links to the latest articles are given below today's headline photo including a Liu Han video.

Here is a quote from Chairman Liu Han taken from his website: www.hanlonggroup.com

Mountains stand tall and high, and our ambitions stand higher than the sky. Looking into the future, with the preeminent management and innovation capabilities, Hanlong Group shall devote its efforts to providing the society with richer and better life choices and jointly creates a better future to make contributions for the country and society in accordance with credible and sound management style.

Early in the week Mr. Liu's Sichuan Hanlong Group faced the collapse of their $1.19 billion takeover of Australia’s Sundance Resources Ltd. after missing a term-sheet deadline. This news hit our markets Tuesday morning and took General Moly (GMO) stock down another leg. Last week Hanlong had suspended a $665 million loan for General Moly's Mt. Hope molybdenum project. Here's a quick replay of closing and intraday low share prices:

Friday (3/22) close $2.43
Monday (3/25) close $2.32 ($2.23 low)
Tuesday (3/26) close $2.17 ($2.12 low)
Wednesday (3/25) close $2.25 ($2.10 low)
Thursday (3/25) close $2.21 ($2.16 low)

A rough slide considering that GMO share price touched $4.25 on January 3 and yesterday the S&P 500 set an all time new record closing at 1,569.19 - Ouch.

On the positive side, share price still remains above $2 indicating that the markets have not lost faith in General Moly's resourceful management team to turn Mt. Hope around with an alternate financing plan(s). I believe mine pre-construction activities are funded and will continue. Remember, pardner, Mt. Hope remains a world class asset of strategic and critical minerals with a lot of hard work already done.

A faithful follower of the Eureka Miner recently took this photo of Mt. Hope as viewed from Diamond Valley near 10th Street. You can see some of the clearing and grubbing that has occurred as part of the mine pre-construction phase.

Molybdenum Prices

Spot moly oxide prices are below the key-$11 per pound level. Here are the latest numbers compliments of moly benchmark miner  Thompson Creek (TC):

Metals Week Weekly Average: US$10.75 As of March 25, 2013 (updated weekly)

Ryan's Notes Average: US$10.75 As of March 26, 2013 (updated twice weekly)

The London Metal Exchange (LME) futures contracts are above $11 per pound this week which is encouraging. Remember that this is a thinly traded futures market and contract prices reflect developments in Europe probably more than the global spot price averages above.

3-month seller's contract $24,500 per metric ton ($11.11 per pound)

15-month seller's contract $25,185 per metric ton ($11.42 per pound)

The Colonel's Gold, Silver & Copper Prices for Next Week

My weekly input to Kitco Gold Survey was a target price for gold without the usual in-depth analysis on this shortened holiday week and no targets for silver or copper price.

Here is my e-mail survey input to the Kitco News Global Editor Debbie Carlson:

Just under the wire "Up, $1,610 per ounce target" 

Technical analysis: Positive bias above March lows & highs ($1,588.9 geometric mean) + yesterday's quiz question and answers (strange correlation landscape for the yellow metal)

Headline analysis: If Cyprus crisis grows worse, gold up: if not, sideways to down.

The strange "correlation landscape" is a reference to a quiz the ole Colonel put together on gold's curious relation to other market parameters. Admittedly, this is a quiz for market nerds; if you are so inclined have fun:

Crazy Market Quiz

On a one month basis...

1) Comex gold is positively correlated with the S&P VIX     T or F

2) Comex gold is positively correlated with Nymex WTI & Brent crude  T or F

3) At least gold has a friend in silver, both are still highly correlated  T or F

For the last 3 months...

4) Oil prices have been more volatile than gold  T or F


1) False, gold has zero correlation with the so-called "fear index" (rolling correlation -= -0.06)
2) False, gold is positively correlated with WTI and negatively correlated with Brent (+0.64 & -0.37 with WTI-Brent spread collapsing)
3) False, gold is gaining value on the white metal and the correlation is a paltry +0.25
4) False, WTI has been 0.9X less volatile than gold on a relative basis over the last three months

If you got all four answers correct, I'll buy you a beer at the Keyhole. Have a good'un.


Colonel Possum

Inset painting and headline photo by Mariana Titus

Please checkout bayoutales.com for books and book orders

Paintings by Mariana Titus, The Three Anas, are presently being featured at Lafitte Guest House & Gallery, New Orleans

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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