I mean Moriarty)
I suspect John Kaiser has a far better understanding of the market than does Dave Forest. Forest suggests that a six million pound drop in supply from China has somehow driven the price of moly up 600%. I doubt it. The moly market is tight but hardly that tight. According to Forest, moly was actually in surplus in the second half of 2004. Well, after touching $34.50-$37 in January, moly made a perfectly normal correction to $26.20 in February, taking the shares in all the moly juniors into the tank with it before rocketing higher lately. In the last week moly shot from $29.50 to $35.50. [chart].
I believe moly will remain in short term deficit and prices will continue to be strong as long as Chinese demand continues. Of course a banking crisis in China would decrease demand for all commodities. And it's possible, their banking system is your basic disaster waiting to happen with up to 40% of all loans non-performing. But at least China produces something, the US has transferred millions of manufacturing jobs overseas under the Bush fiasco. One day soon Americans will wake up and realize slapping two beef patties on a sesame seed bun isn't really manufacturing.
In any case, moly juniors have been up and down like a bride's nightie and I believe are back in the sweet spot, where reward greatly outweighs risk. I am invested in several moly juniors and that should give you an idea of where I stand.
moly junior is Adanac Moly Corp. - (AUA-V $.61 Canadian
31,000,000 shares outstanding, about $18 million market cap ANCGF-OTCBB
website) CEO Larry Reaugh has added on several
interesting moly projects in Nevada to the core project at Ruby
Creek in BC amounting to just under 200 million pounds of moly
based on the prior numbers. Reaugh is bringing the resource up
to 43-101 standards by the end of March, 2005.
I wrote a a piece about Roca Mines in January, the same time John Kaiser came up with his excellent report. Roca Mines Inc (ROK-V, $.35 Canadian 31.8 million shares outstanding market cap $11.1 million Canadian; website) In the piece I was very critical about the management of Roca and their unwillingness to fully communicate with their shareholders. The critism remains valid and the shares have gone nowhere at all. That's a problem they should and could have solved and haven't and it reflects in their share price. But they have filed for a small scale mining permit and still could be in production within six months. If moly prices stay up, Roca will find windfall profits. I just wish they would share the news with their shareholders. They have a good story, they just don't tell it clearly.
Another project with incredible potential but management problems beyond belief is the Ashdown project in Nevada. Toronto junior Win-Eldridge sat on the property for 21 years and never considered going into production even though even at $5 moly the project was robust. Finally, last year, 81 year-old CEO Rubin Brandt literally gave the project away to Golden Phoenix for the grand sum of $5,000 a month (GPXM-OTCBB $.131 120 million shares outstanding website).
that the project is still stuck at the Letter of Intent stage
and the two companies have failed to actually sign a formal contract
even though Golden Phoenix seems to have bet their financial
future on the project finally going into production.
Golden Pheonix stands to earn 70% of the project by investing no more than $5 million or by going into production. With ore now valued at up to $4,000 per ton or equilivant to almost 10 ounce to the ton gold, GPXM should be highly profitable, Win-Eldridge far less so, based on initial production between 100-200 tons per day.
If the management of Win-Eldridge had the sense God gave a goose, they would buy out the outrageous NSR and insist on a more equitable share in the profit but don't hold your breath. Brant has no interest in the welfare of his shareholders, his sole interest in the agreement was to find enough money to keep the doors open.
Down the list of possible, moly companies is United Bolero. (UNB-V $.22 Canadian 19 million shares, market cap of about $4 million Canadian website) UNB has purchased one Montana moly project and optioned another totaling almost 500 million pounds of moly. The projects are still early stage but UNB plans an aggressive drill program in 2005 to verify historical results.
Investing in moly is not for the faint of heart. It's common knowledge in the industry that there is no long term shortage of moly and obviously opinions vary as to just how long prices will remain high. My opinion is that shortages will last longer than most investors believe and those moly juniors swift of feet will profit greatly. But investing in moly isn't a case of buying shares and sitting on them until they hatch. If you buy shares in a company and the shares rocket higher remember that no one ever went broke taking a profit. If any sector ever suggested trading on a regular basis, it would be the moly juniors.
We own shares
in Adanac, Roca Mines, United Bolero and sad to say, Win-Eldridge.
Adanac and United Bolero are advertisers. Since
we have an obvious vested interest, investors should make up
their own minds as to the merits of investing in any stocks.