Molybdenum Market - What Now???
Michael Alexander
In my editorial on February 18, 2006, "Molybdenum Market, What If??? which was published by Gold Eagle among others, I asked a few questions. For a refresher here is the link to the original article again.
www.gold-eagle.com/editorials_05/alexander021606.html
We are now fifteen months further along from that article and I thought it was high time I followed up. I have also had several requests from those who enjoyed the first article to do so as well.
Let me start with the first question I posed.
"What if there was a large publicly traded primary molybdenum producer in North America?" Would the price of molybdenum and the share valuation of the publicly traded molybdenum companies finally see their values increase and a bull market develop?
I postulated that it would and that the fact there was no publicly traded molybdenum producer paving the way, we weren't seeing molybdenum given its full due.
Since then, Blue Pearl Mining purchased Thompson Creek Endako and we saw our first publicly traded molybdenum producer.
Let us look at how that has seen the bigger players in molybdenum react. The green line represents the announcement of the acquisition and the introduction of a publicly traded large scale molybdenum producer.
BLE - T (now TCM)
AUA - T
GMO - AMEX
MOL - T
ROK - TSX-V
Since the announced deal, the share price of each company compared with where they are trading now, has seen the share prices of these companies increase by the following; TCM (BLE) 372%, AUA 100%, GMO 378%, MOL 258%, ROK 230%
So from the announced acquisition of the Thompson Creek Endako mines and the jump Blue Pearl then made to publicly traded producer, the top five have seen an average increase in their share price of 268% across the board!
Remarkable numbers and numbers that have me completely stunned that the retail sector has not come into molybdenum as yet and what we continue to see, is the metals buyers and those institutions in the know in the markets. What it does do however, is paint a pretty tantalizing picture for what the landscape will look like when euphoria hits the market and we see what that retail sector and market wide buying will bring. I expect even the weaker boats will rise with the tide and be buoyed right along with the bigger boys.
It is also safe to say given the above, that my postulation that a publicly traded molybdenum company was just what the doctor ordered for the other companies headed for production. Numbers and charts don't lie.
Of course my crystal ball wasn't completely without flaw as I saw Adanac Molybdenum Corp being the first large scale molybdenum producer to be publicly traded, but of course no one could foresee the acquisition by Blue Pearl of Thompson Creek Endako.
As it stands, Adanac Molybdenum Corp is still the closest to bringing new large scale molybdenum production to market with the full support of the first nations people who have stated in the press that Adanac Molybdenum Corp. is the model that all future miners in BC should follow. They have set up camp, they have hired AMEC for the engineering of the mine construction, they have ordered and placed deposits on many long lead items including their ball mill, they have hired Ledcor for construction services and with the awarding of the supply of secondary cone crushers to Sandvik Mining & Construction Canada Inc., and supply of high-pressure grinding rolls (HPGR) to Humboldt Wedag Inc. of Norcross, Ga. They have committed a further $39.15-million, of which 10 per cent in down payments have been committed. They also have received their mining leases, which leaves them only waiting on permits to go into full construction of the Ruby Creek mine and eventual production on their 20,000 TPD, open pit mine.
As molybdenum grade has always been important to investors, it should also be stressed that Adanac's first five years of production from their phase one five year pit is .084%Mo (.1344% MoS2) with very little waste to ore strip ratio.
Permits are expected sometime in the next eight weeks and production is scheduled to commence 4th quarter 2008, 1st quarter 2009.
No due diligence and no news releases of substance backed by independent engineering companies and arms length sources has uncovered anyone else even remotely close.
The Molybdenum Market What If??? Has turned into the Molybdenum Market What now???
What now, is simple.
We have a large scale primary molybdenum company paving the way and alerting the market to molybdenum. The metal continues to trade higher now commanding over $32.00 per pound with many forecasting an increase in that price. So the answer to the question of what now, is quite simply finding the next one.
In my opinion that remains Adanac Molybdenum Corp, but as always it is up to you to perform your own due diligence, which as this market only gets stronger and with more funds and institutional money finding its way to molybdenum, only becomes that much more critical.
Things you should look for.
Sentiment of natives and locals, bankable feasibility study, capital expenditures and start up costs as stated by arms length engineering firms in a feasibility study, mining lease, long lead items ordered with deposits given, status of application for permits and when it was applied for and how long has elapsed since, transparency of the company and how much of what is said can be backed up by arms length individuals and firms.
As always, let your eyes be your guide and not your ears. We entered into something special here a few years ago and now it is taking shape. Ensure that you are not only on the train, but on the right train. The what if, is what now and it is more important to you now than ever, that your answer to "what now" is the correct one.
I have taken you back into the station, the rest is up to you. As always the best to you in your due diligence and I am more than happy to answer any questions you may have or to guide you to any resources I am familiar with and have access to in order to help you. My contact information appears below.
June 3, 2007
Michael Alexander
Accelerated Capital Investments
Grand Cayman, Cayman Islands BWI
(345) 940-ACIL Cell: (345) 9-2-NVEST
email: m.alex@acil.ca
website: www.acil.ca
Disclaimer: The opinions expressed above are those of Accelerated Capital and Michael Alexander. Michael Alexander is not an IDA accredited analyst nor a licensed broker and as such the above is not intended to be taken as investment advice. It is to be taken as opinion, with an invitation to perform further due diligence to assist you in making a more informed investment decision.
Disclosure: Michael Alexander is employed by Adanac Moly Corp. to perform Investor and Public Relations for which a remuneration is received. Michael Alexander also owns AUA personally.
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