^[1]

When will molybdenum rebound?

By Leia Michele Toovey- Exclusive to Moly Investing News

Molybdenum, a seemingly invincible metal this year, finally took a hit in the fall as economic malaise spread. 

The alloying metal is down 65 per cent this year, and this decline was seemingly overnight.  Molybdenum is a minor metal ^[2], therefore, purchase contracts come up less often than the big players copper and nickel. That is why the metal seemed stable for most of the year as the big players took a hit.  Once the new contract came up, purchase prices were reflective of the global economic sentiment, and the metal plunged to an annual low. 

We have all been hearing that in the tough times there is great opportunity, and now is the time to be looking for those opportunities.  With many companies fundamentally undervalued investors have the opportunity to gain a position in companies that analysts say will undoubtedly provide unseen value over the coming years.  The key is to pick the right companies; so without further delay let's look at this week's news makers in the molybdenum industry.

Ivanhoe Mining ^[3] has had a company changing discovery.  Their Merlin deposit in Queensland Australia  has turned back grades that average about one per cent molybdenum disulfide. Typically, a company will "get excited" when they unearth grades in the  0.02 and 0.05 per cent range. Commenting on the discovery, company Chief Executive Officer CEO Peter Reve stated, "This is seriously high grade. It is also easily accessible, being near the surface in parts. But, grade is king. When you hit something that has a high grade, it means high revenue and low costs." This new discovery ranks as one of the highest-grade molybdenum discoveries in the world, and the stock market understands the value of such a high quality, economically feasible deposit. After the discovery was announced, shares in Ivanhoe soared over 23 per cent.

Drill results on the project indicate that the resource could have at least 13 million tonnes of molybdenum, which could be worth more than $US 5 billion at current prices. Reeve said the unexpected discovery has become the company's top priority with the possibility of it being in production by the end of next year. Ivanhoe has tenements covering 2250 sqkm in the Mount Isa-Cloncurry mineral district in Queensland, including copper and gold discoveries. Ivanhoe told press that the Australian arm was cashed-up, with US$45.48 million in the bank for exploration and possible acquisitions. The company could therefore fund the initial operation of the Merlin deposit out of cash reserves. Major decisions regarding the development of the project would be made near the end of 2009.

Golden Phoenix Minerals Inc. ^[4] has appointment of Thomas Klein, an executive from the capital markets industry, to its board of directors . Klein fills the board seat recently vacated by Ronald Parratt. The latter stepped down from the Board owing to the increased professional demands of his public mining company, of which he is CEO. Klein is a Tier One capital markets advisor having specialized in high net worth corporate and trust accounts for a premier Canadian bank. Additionally, Klein advises resource based small cap companies, assisting in all aspects of creative funding and restructuring. He has recently co-founded MI3 Capital, which is focused on investing in the resource sector, specifically those companies that are in or near production.

Thompson Creek Metals Company Inc., ^[5] (TSX:TCM)  one of the world's biggest molybdenum producers, has announced a reduction in planned capital expenditures including the postponement of the completion of the expansion project at its 75 per cent-owned Endako Mine. "Given the sharp decline in the molybdenum price, Thompson Creek has decided to curtail planned capital expenditures. This initiative to conserve cash leaves Thompson Creek with a strong cash position and minimal debt of $18.1 million in equipment loans and puts the Company in an excellent position to weather the downturn in worldwide economic activity," said Kevin Loughrey, Chairman and Chief Executive Officer.  While work on the Endanko project will be suspended, the company plans on leaving the project in a position for quick startup once market conditions improve. The Company estimates it will have cash balances of approximately $225 million on December 31, 2008; the Company also has available a 35 million revolving bank credit facility.  Postponement of the Endako expansion is the second initiative by Thompson Creek to reduce planned capital expenditures until market conditions improve. The Company announced postponement of the Davidson Project on November 6, 2008.

Roca Mines Inc ^[6] will put its  MAX Molybdenum Mill on maintenance shutdown over the Christmas break. The MAX mill and concentrator operations will be suspended December 12, 2008, and will restart on December 27, 2008. During this period maintenance crews will carry out a planned program on the generator sets, crushers, grinding mills and other equipment associated with the mill. Full mining crews will continue to carry out work focused on the development of new sub-levels, production drilling, work on access to a new truck dump system and maintenance of the access adit, rail system and mining equipment.  In addition to ensuring future mill availability, the Christmas maintenance break will allow the mine to advance on development, improving operating efficiencies and reducing future scheduling limitations.