Moly Investing News

London Metal Exchange to start trading Molybdenum futures

By Leia Michele Toovey- Exclusive to Moly Investing News

The London Metal Exchange will add molybdenum to its arsenal in the second half of 2009.

The move was announced on Sept 4 when the LME board voted in favour of adding both, molybdenum and cobalt to its futures trading.

The move was met with mixed reviews. Some producers and suppliers say the introduction of the futures contracts will increase price volatility. Certain commodities traders agree. These traders argue that trading moly serves no purpose other than to attract investors who should not be diving into the minor metals markets. These types of investors are the ones who, when things are going bad for them elsewhere, would just flee the markets. This dumping will contribute to volatility in moly’s prices.

Other commodities traders are in favour of the move, stating that it will enable them to get involved in trading the metal for their clients. Both moly and cobalt have been attracting a great deal of attention from investors as a recent price leap has been fueled by rising demand for steel in Asia and mobile electronic devices worldwide. This price jump coupled with the high probability that record prices will be sustained is what caught the eye of the LME. The current price of molybdenum oxide is around US$34 a pound. Moly prices are being supported by a very tight supply of the metal. Supply is so tight that miners are reopening previously closed mines; for example, Freeport-McMoRan’s Climax facility in Colorado, and The Thompson Creek Mining deposit in British Columbia are soon to return to production. The reintroduction of both of these mines alone will not stop the bleeding. Production at these mines is expected to be insignificant past 2010. There is a current high demand for new production facilities and new deposit discoveries.

TTM Resources (TSX: V.TTQ) has released the updated preliminary economic assessment of their Chu Molybdenum Project in British Columbia. The assessment indicated a base case (US$20 per lb Mo) net present value of US$1,039 million using an in-pit resource estimate of indicated resource at 388.5 million tonnes grading 0.052 per cent. The updated resource estimate represents an increase of 17.3 million tones of molybdenum. Subject to conclusions and recommendations in the upcoming NI 43-101 report, TTM says it will “proceed towards a pre-feasibility study for the CHU project.”

Great Panther Resources Limited (TSX:GPR) has expanded the area of its molybdenum rich skarn mineralization being evaluated at the Bull’s-Eye Zone on the Mapimi Project, Durango, Mexico. Based on the results of seven drill holes, the area is now in excess of 250 meters in diameter. In addition, follow-up drilling in the North Zone has extended base metal veins for 600 meters. Sulphide veins peripheral to the molybdenite veins contain silver, gold, lead, zinc and copper mineralization. These periphery veins were actually Great Panther Resource’s initial targets.

Global Hunter Corp. (TSX.V:BOB) has announced that the first seven drill holes of its diamond drill program at the historic Roper Lake deposit have been completed. Five of the completed holes have confirmed historic molybdenum grades. Pending the completion of the drill program, results will be analyzed by Eco Tech laboratories. A National Instrument 43-101 compliant resource estimate is scheduled to be complete by year-end including data from the current program. The molybdenum mineralization at Roper Lake was discovered in 1959 by Kennco Exploration (Western) Ltd. and was first drilled by Dominic Lake Mining Co. Ltd. in 1967 before being explored further between 1979 and 1981 by Cominco Ltd. Global Hunter optioned the property in January 2004 and has since completed two drill programs in 2005 and 2007.