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Express 2005-01:
Will MolyMania Hit the Juniors in 2005?

John Kaiser
Kaiser Bottom Fish Report
January 5, 2005

Synopsis: An obscure but ubiquitous metal called molybdenum underwent a little-noticed tenfold spot price increase during the past two years which has started to catch the attention of the Canadian exploration industry.

Molybdenum is widely used in steel and other metal alloys to provide hardness and corrosion resistance. Molybdenum's low toxicity has also turned it into an important component of catalysts and lubricants, many of which are used by the oil industry. Molybdenum demand has grown as a result of the infrastructure development boom in China and the push to develop and deliver new energy sources that ease global dependency on Islamic oil. Molybdenum last boomed during the seventies when many of the known molybdenum deposits in Alaska, British Columbia and western United States were delineated. Prices collapsed under the pressures of the 1982 recession and the arrival of molybdenum by-product production from copper mines. Molybdenum languished in the $1-$3 per lb range for more than two decades except for a short-lived spike in 1994-1995 related to a temporary mine shutdown. The world's needs were amply met by Chinese production, several major North American primary molybdenum mines such as Endako and Henderson, and price-insensitive by-product production from North and South American copper mines. The sharp molybdenum price increase in 2004 to nearly $35/lb is due partly to a structural shift in demand, and partly due to processing bottlenecks.

The industry consensus is that current prices are unsustainable for the simple reason that at this level an enormous portion of the in ground inventory of molybdenum is very economic and if developed would soon enough glut the market. In addition, existing molybdenum producers are not operating at capacity, and there is some suspicion that the price spike is due to forces similar to those which pushed American electricity prices through the roof in 2000. The conventional view is that prices will retreat sharply in 2005 as existing producers, particularly the primary molybdenum mines which have been operating below capacity, act to increase supply by processing higher grade material or moving to full capacity. Less clear is the price level at which molybdenum eventually stabilizes, which presents to the speculative juniors the question of whether to ignore the stunning price increase as a temporary aberration or to grab long abandoned known deposits or good exploration targets and promote the story that this time is different. One's willingness to believe that long term prices higher than the historical average of the past decades lie ahead depends on the degree one believes that the economic revolution underway in Asia has staying power. I hold the view that MolyMania will catch on in 2005 much as UraMania did in 2004 and will result in substantial price increases for juniors with good pure molybdenum projects.

*JK owns shares of Leeward and El Nino

John Kaiser

NOTE from Bob Moriarty, President 321gold, Inc

Obviously John believes MolyMania will hit the juniors this year. He has prepared a 20 page report on moly and moly Juniors. I've read a zillion reports of one sort or another over the years and this report has to be the best job I have ever seen done on any commodity. It's nothing short of brilliant and if you have even the slightest interest in moly, you owe it to yourself to at least sign up for a free trial of the KBFR. It's cheap at half the price.

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