One of the great disappointments to me in the last two years was the failure of even a single junior mining company to take advantage of a 500% rise in the price of molybdenum. Since 2003, moly has rocketed from about $5 to $38 before settling down at about $25 for the last couple of months. And not a single junior has gone into production. Yet.
The most advanced moly project has to be the Ruby Creek property of Adanac Moly Corp (AUA, 50 million shares) that I first wrote about in August of 2004. Adanac continues to develop the property with production planned in about two years.
Two other juniors, Golden Phoenix (GPXM-OB, 136 million shares outstanding ) and Roca Mines (ROK-V, 42 million shares outstanding) have been in the running to actually be the first to get into production. I wrote about Roca Mines in December of 2004 and as of now they plan to be in production in late 2006. Golden Phoenix has been burdened with management problems for several years. GPXM looks as if it might get into production this summer but they have issued so many over-optimistic press releases over the past couple of years that I wouldn't make a bet on them until I saw some metal.
There is another miner, a real miner, much closer to the actual production of moly. In November I traveled to the bitter north country of the Geraldton-Beardmore gold mining camp in Ontario. I was leaving 70 degrees in Miami for -1000 degrees in the Thunder Bay area. And boy did it seem cold. I was visiting the Nortoba-Tyson moly/gold property of Roxmark Mines Ltd.
Back in 1999-2000 when the entire industry seemed on the verge of shutting down, the TSE, now TSX Exchange, demanded Roxmark accept a move to the another exchange. Legally Roxmark then fulfilled all the requirements of the TSE but for political reasons the exchange insisted on either more money in the till or a downgrade in their listing. Being a real mining company unlike so many of the promotional-oriented companies springing up today, Roxmark bit the bullet and accepted the downgrade. They listed on the CNQ (Symbol-RMKL), a junior exchange in Canada most people don't even know exists. The shares are way underpriced primarily due to the simple lack of liquidity.
Roxmark spent the last five years acquiring and consolidating their holdings in the camp. They picked up the high grade Leitch Gold Mine and an excellent moly property. They kept a sizable portfolio of medium size gold projects and were content to keep the doors open and the heat turned on. With higher prices for gold they began to increase the pace of their activities in 2005. They already own a 200 TPD mill in Beardmore which has been inactive since 2001. They recommissioned it last year and upgraded it with a new state of the art Knelson concentrator and a Gemeni table for fine gold separation. In addition, and planning for the future, they installed a moly floatation circuit with disc filters and a concentrate dryer.
Then President, now Vice Chairman David Malouf, showed me around his various projects in November for two days. I was impressed. They have some real mines and a good plan and I think they will succeed.
I've said it before and I'm sure our readers will hear me say it many times in the future, I like the real miners a lot more than the Rhinestone Cowboys of the penny dreadful Vancouver stocks. In my mind, the very best miners in the world are the garimpeiro miners of Brazil and Chile and their brethren in Burkina Faso and Tanzania. All of them make a profit and profit is a four letter word in Vancouver. If the artisan miners can't mine at a profit, they don't mine. The most promotional Vancouver companies will drill as long as some fool will belly up to the bar and fork over more hard-earned cash.
Mexican miners drill a hole or two until they find ore, then they drift until they run out of of pay dirt. There are companies in Vancouver that would drill until they hit China, then do a Private Placement or three. I like the real miners. They will be the salvation of the industry.
Roxmark has six past producing gold mines which collectively produced 2 million ounces of gold. They have a fully functional 200 TPD mill, a flotation circuit and have been producing gold in small quantities. In addition to the various gold properties, they have a high grade molybdenum deposit called the Nortoba-Amorada-Tyson prospect located in the Beardmore Mining Camp in the Thunder Bay Mining District.
David Malouf's plan is to put the high grade surface moly ore into production this spring/summer. The moly has a historical reserve grade of 1.72% MoS2 which would be equal to about 1.032% moly oxide worth some $520 gross metal value per ton. Roxmark has outlined about 3000 tons which they have applied to mine via a bulk sample permit. The objective is to prove the capability of the mill and to provide the cash flow to further develop an underground mine where he has already outlined 6,000 tons of the 1.5% to 1.7% MoS2. The permit for the surface bulk sample should be in hand soon and by the time they have mined the surface ore, they should have the underground permit.
I like moly, it's an interesting metal. Some 80% of moly mined, goes into stainless steel. The rest is used in industrial chemicals and in aerospace applications. China is the swing producer and their production determines the world price. Most moly is produced as a byproduct of copper production so the price doesn't have a major effect on supply. China has shut down hundreds of small moly mines in the last two years and since all their production goes straight to steel mills, the price of moly rocketed from $2 a pound to as high as $38 before stabilizing in the $24 range.
It's important for anyone considering the purchase of any primary moly stock to understand there is no shortage of moly properties. In fact, we know of enough moly in the ground to supply 200 years worth of moly. But there is a short term (at least short term) supply shortage. The first companies to actually get into production are the ones who are going to reap the benefit.
I suspect Roxmark will be the firstest with the mostest. I like management, I liked the company enough to buy some shares as soon as I saw the story. I think they have a viable plan for making a nice profit. With over $2 million in the till, Roxmark is well cashed up. The cash flow from the surface bulk sample should pay the way for the underground mining and that should put them back on their feet without further dilution.
I was quite strong in expressing my concerns about the company with David Malouf and he is taking the steps necessary to make the company better. First of all, they have to get off the CNQ exchange. It's worse than being on the pink sheets here.
David assures me they are working on the upgrade to the TSX and I think that will move the stock higher.
Second, I am not comfortable with stocks in the teens. Shares trading in the $.15 to $.18 range just doesn't give me confidence. Anytime they do a placement, they end up giving the company away, literally for pennies. With about 112 million shares outstanding, they might as well bite the bullet when no one gives a damn about the price and roll the shares back.
The other six gold properties are nothing to sneeze at. I've written about the moly property because it's money in the bank but with $640 gold, all of the other mines have good potential for more production. I suspect Roxmark will try to keep them in house so they get the benefit, that's why they have been sitting on them for so long but they could do a JV or two at any time. Roxmark has experienced management who are real miners, they have survived a dreadful period in mining and are on the way back up.
Roxmark has not paid for this piece. They are not advertisers but I wouldn't be opposed to having them on our site. I do own shares and am a long-term investor. It's a good story, worth investing in. You are responsible for your own investment decisions in the same way I am responsible for mine.
Roxmark Mines Ltd