Molybdenum starts off 2009 with weak trading volumes

By Leia Michele Toovey- Exclusive to Moly Investing News

The first week of 2009 was a sleepy one for molybdenum with thin trading volume as many customers remained on holidays.  Activity in China was by far the slowest, with Chinese molybdenum oxide and ferromolybdenum producers halting spot molybdenum offers to overseas customers. The trading hiatus was initiated by China as prices offered were, in their opinion, below acceptable levels. One China based producer said that his company wants to sell their material at above US$30 per kilogram, but there are simply no overseas buyers willing to pay such a price.  China is bound to have difficulty achieving that price point, given European producers are currently asking US$24 to US$26 per kilogram. With both buyers and sellers waiting for further direction after the long holiday, the Platts Metals Week Dealer has set molybdenum prices for this week unchanged from last week’s prices. Meanwhile, China based traders said that domestic prices of ferromolybdenum were down by CNY 50 per tonne as compared to a week ago.  

Company news

Xstrata has decided to put plans to expand molybdenum processing capacity at its Altonorte metallurgical complex on hold following the price crash of the minor metal over the last two months. Juan Pablo Schaeffer, Corporate Affairs Manager at Xstrata Copper, announced, “Due to current market conditions, we are not immediately going ahead with the expansion project but there is still the flexibility to do so in the future if conditions allow.” Earlier in 2008, Xstrata Copper said that it was evaluating plans to install a Brenda molybdenum leaching plant and refurbish a second roaster, lifting processing capacity up to 28,000 tonnes per annum from the facilities current annual processing rate of 12,000 tonnes. But, with molybdenum trading at less than a third of levels seen just a few months ago, and the company looking into ways to conserve cash in the current economic climate, the expansion has been cancelled.  Once conditions improve, the company will evaluate its options to move forward.

Happy Creek Minerals Ltd. TSX-V: HPY is pleased to announce that it has reached an agreement with Candorado Operating Company Ltd. to purchase from a 100 per cent interest in five mineral claims located in the Cariboo Mining Division, in British Columbia. The claims are wholly-owned by Candorado and are adjacent to the Company’s Silverboss Property. To acquire the claims, the Company is required to pay to Candorado $15,000 and issue 50,000 Happy Creek shares. The agreement is subject to regulatory approval.

The five mineral claims total 18.7 square kilometers in area, and four out of the five claims are not subject to any underlying royalty interests. The new mineral claims adjoin and compliment the Company’s 100 per cent owned Silverboss property, making Happy Creek the 100 per cent owner of mineral claims covering over 100 square kilometers in area. Exploration by the Company over the past two years to the north of the Boss Mountain mine property has returned strong evidence that molybdenum mineralization expands outward from the mine and well onto the Silverboss property. In addition, large scale and positive values of up to 53.0 g/t (grams per tonne) gold occurs in soil and rock at higher elevations and outward of the molybdenum zone.

The difficulty of Moly Mines Ltd. in obtaining financing for its Spinifex Ridge Mine means that in the coming months the company will likely have to sell an interest in the project to another company. The Spinifex ridge mine is now fully permitted, but requires an estimated capital financing of US$1.35-billion.  The news has caused analysts to sharply cut their targets for Moly Mines Ltd. One analyst cut her price target by more than half on Monday, but maintained her rating of “speculative buy.”