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
info@kaiserbottomfish.com
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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