Moly Investing News

The moly market will have tight supplies come fall

By Leia Michele Toovey- Exclusive to Moly Investing News

The molybdenum market is bracing for price increases in September on increased buying activity from stainless steel mills and mounting concerns over a consistent supply. The availability of ferromolybdenum remains tight as output falls at a number of major producers. For this reason, companies are increasingly eager to explore for new, and expand current molybdenum mines. Moly’s projected supply and demand picture is quite different than what commentators are projecting for many of the other metals.  Even Uranium, the star of the near past, has experienced a recent slowdown.  You can read “Summer Slumber Continues” on Uranium Investing News to get an idea of what that metal has been going through. Many analysts give moly the moniker “the next uranium“.

Thompson Creek Metals (TSX: TCM), one of the world’s largest publicly traded, pure molybdenum producers, has entered into and agreement with U.S. Energy Corp (Nasdaq:USEG). The agreement pertains to US energy corporation’s Lucky Jack molybdenum property, located in Gunnison County, Colorado. USE is a natural resources exploration and development company. Thompson Creek has the option to earn up to a 75% interest in the Lucky Jack molybdenum property. TCM has paid USE $500,000 as an option payment. If TCM pays USE additional option payments of $1 million on January 1 of each year from 2009 through 2014, and also contributes a minimum of $8.5 million in expenditures on or related to the property in stages by June 30, 2011, TCM will earn a 15% interest in the property. TCM can earn a further 35% by expending an additional $35 million by July 31, 2018 for a total of 50%. To obtain a 75% interest in the project TCM will have to make added expenditures of $350 million.  When all is said and done, to earn a 75% TCM will contribute at total of $400 million. Through the option period, TCM will manage the property with USE. At such time as the property goes into production, TCM will purchase USE’s portion of output from the mine.

The Lucky Jack (formerly known as Mt. Emmons) molybdenum property was originally discovered by AMAX Inc, and was later acquired by USE. Historical records filed with the Bureau of Land Management in the nineties for the application of patented mineral claims identify resources of approximately 220 million tonnes of ore with a grade of 0.366% molybdenite and a high grade section of the mineralization containing some 22.5 million tonnes at a grade of 0.701% molybdenite.

Max Resource Corp (TSX.V: MXR) has completed a ten hole, 7664 foot diamond drill program its Gold Hill molybdenum project in Alaska. The 2008 drill program at Gold Hill is a follow- up on a five hole drill program MAX conducted in 2007.  The 2007 drill program intersected significant molybdenum mineralization over long intervals starting at surface and ending in mineralization at depth in four of the holes. In the new drill holes, visual observation points to significant mineralization. However, Max Resources is not making any conclusions as to the nature or extent of such mineralization prior to the receipt of assay. The drilling conducted during the current program has expanded the known area of the mineralized system to the north and northeast. It has also drilled through overburden, showing that mineralization previously not seen at the surface exists under Gold Hill. The Gold Hill property comprises 8,520 acres located approximately 212 miles north northeast of Anchorage.

Drilling is also continuing at Max’s Ravin molybdenum/tungsten property in Lander County, where MAX is permitted for an 11 hole drill program designed to follow up on previous drilling reported by Houston Oil and Minerals and Freeport. Ravin property is comprised of 162 claims located 20 miles north of the town of Austin in Central Nevada and approximately 50 miles west of General Moly, Inc.’s (TSX: GMO) Mount Hope molybdenum mine, which is scheduled to begin production in late 2010. Although historic information infers that there is a significant resource in this area, there is no NI 43-101compliant data.

Erdene Resource Development Corp., based in Canada, announced this week that it’s Mongolian Zuun Mod Molybdenum Project has become one of the largest and most advanced molybdenum projects in northern Asia. The Zuun Mod project is wholly owned by Erdene and located within 200 kilometers of China’s border.  Initial estimates find 237 million tonnes of higher grade molybdenum at the site, along with an additional 50 million tonnes of lower grade molybdenum.