New pipeline construction will be a component of the infrastructure stimulus plan.

By Leia Michele Toovey- Exclusive to Moly Investing News

Slower Chinese buying impacted Ferro-molybdenum prices between last Wednesday and Friday; however, the U.S.’s proposed $136 billion infrastructure spending plan capped the downside.

Western-grade Ferro-molybdenum fell to $24.50-26.50 per kg from $26-28 per kg previously, with the bulk of material sold towards the low end of the range.

President-elect Barrack Obama’s proposed $136 billion infrastructure economic stimulus program provided encouragement to base metal and gold prices last week. The plan is expected to generate up to 2.5 million U.S. jobs by 2011 and has Federal lawmakers scrambling to create their own infrastructure packages. The nation’s governors have also proposed $136 billion in infrastructure projects and have established a coalition for infrastructure investment.  On Monday, The U.S. Conference of Mayors proposed 11,391 infrastructure projects, which would cost $73 billion. Projects that could award contracts in 90 to 120 days would be given priority in the proposal, as Obama wants infrastructure projects that could be started and completed within two years to be given first consideration.

Haywood Securities’ base metals report states that molybdenum is particularly well poised to take advantage of the proposed infrastructure program. Molybdenum is a chief component in stainless steel employed in high stress situations; this is exactly the type of steel that the oil and gas pipeline industry needs.  With more than 115,000 kilometers of new oil pipeline planned over the next seven years demand for molybdenum will see a future increase.

Molybdenum is already in a tight supply situation that has been aggravated by recent shutdowns and output curtailments.  Moly demand typically grows at a rate of 4 per cent to 6 per cent each year, and in order to supply this growth one new molybdenum mine is required to come into production each year.  With only three advanced stage +20 million pound per annum development projects currently under consideration: Freeport-McMoRan’s Climax project in Colorado, General Moly’s Mt. Hope project in Nevada, and Moly Mines’ Spinifex Ridge project in Western Australia, in the foreseeable future demand will outstrip supply.  Most new significant development projects are currently being delayed, as a result of a low price environment and the company’s capital preservation initiatives.

Company news

Shares of Sprott Molybdenum Participation Corp. (TSX: MLY) got a boost Wednesday after the company announced it is reviewing strategic alternatives, including a possible liquidation. The investment holding company said the review is taking place “in light of both recent market developments and the fact that the corporation’s shares continue to trade at a significant discount to net asset value.” As of December 5, the company’s net asset value was $1.74 per common share, of which $1.31 was in cash and near cash securities, net of short-term liabilities. Sprott Molybdenum shares were up 30 cents or 36 per cent to $1.13 in Wednesday morning trading. The company’s shares have traded as high as $5.20 and as low as 67 cents in the past year.

Moly Mines Ltd. (TSX: MOL) will either have to sell a stake or bring in a partner to take its $854 million Spinifex Ridge Project into development. Moly needs a further $687 million for the Spinifex Ridge project as the credit crisis has frozen lending around the world. “Everything is on hold waiting for the black fog to clear with respect to the markets and financing,” said Derek Fisher, Managing Director.  ”We are reasonably confident we will see an improvement in the molybdenum price in the next three to six months.” TCW Group Inc., a Los Angeles-based institution that has $130 billion in assets, provided a $150 million bridging loan to Moly in October. Moly drew down the last $120 million of the loan last month and it may last for a year should the current rate of development be maintained. TCW has expressed interest n providing part of the project funding, but Moly Mines will have to find another partner in order to raise the capital it needs.

Largo Resources Ltd. (TSX:V.LGO)  is embarking on a non-brokered private placement financing of up to $3 million, based on the sale of common shares at a price of $0.06 per share. Closing of the offering is anticipated to occur on or before December 29, 2008, and is subject to receipt of applicable regulatory approvals including approval of the TSX Venture Exchange.