By Leia Michele Toovey- Exclusive to Moly Investing News

As the shock waves permeated the global economy; many analysts are starting to hedge their bets on when a recovery will start. 

Now, given the path that the crisis has thus far followed, pinpointing the timing of the rebound will prove challenging.  One thing we can be certain of is that a rebound will occur. When it does happen, it will be like nothing we have ever seen.

In their Global Metal’s Report released this week, Morgan Stanley gave its take on the near future for the molybdenum market. Morgan Stanley has stated, “We forecast prices to remain at a low of US$12 per pound in 2009 as the industry remains in surplus for most of the year. Given that the end market for moly is steel and related sectors, with the steel market contracting, our demand forecast looks for a contraction in line with our steel demand forecast of 5 per cent in 2009.” Morgan Stanley is forecasting global consumption in 2009 at 431.9 million pound, down 5.7 per cent from 458.2 million pounds in 2008. However, they have a bullish caveat to add on the metal’s potential. “If governments follow China’s lead in stockpiling the strategic metal, demand at the later part of 2009 and into 2010 could push the metals price back up to US $30 per pound.” For the near term, more output cuts are predicted.  ”We forecast global production to decline by 6.7 per cent in 2009 and demand to closely track that of steel, declining 5.7 per cent this year. We estimate a surplus of only 14.2 million pound in 2009 and 9.9 million pound in 2010, compared to 19.8 million pound in 2008.”

Company news

Freeport McMoRan Copper and Gold Inc  has revised its forecast for molybdenum sales in 2009 and 2010 to 60 million pounds for each year, down 25 per cent and 40 per cent, respectively, from previous estimates. In November, Freeport said it would defer the restart of its Climax molybdenum mine and cut output at its Henderson mine by around 25 per cent. The company is closely watching market conditions and is prepared to make further output cuts if necessary.

Serengeti Resources Inc.’s (TSX.V: SIR) board of directors has approved its 2009 exploration program.  Exploration spending will total $2.7 million dollars; and will cover diamond drilling on the Mil project and rotary drilling on at least four new targets at Kwanika, at the Osilinka project, and on two QUEST JV properties. Surface exploration work will also be conducted on other properties in the Company’s portfolio. Sergenti Resources is “cashed up” with a working capital of approximately $9.2 million.

In light of the current crisis, Moly Mines Limited (ASX, TSX: MOL) has commenced detailed investigations to modify the development profile for its Spinifex Ridge moly-copper project in Western Australia. The company’s recent activities have focused on scoping studies for a smaller start-up project for Stage 1 of the project, and on completing construction and payment for the major long lead time items that were ordered for the original 20m tpa project.  The smaller start-up project would mine 8-10m tpa of ore and produce 11-13m pounds of molybdenum annually, with future expansion to 20m tpa and beyond when appropriate. The advantages of a smaller scale project include an enhanced grade profile, lower strip ratio, less onerous concentrate specifications and a reduced capital requirement.  The Spinifex ridge project remains one of only two major moly projects still in operation.

Hi Ho Silver Resources Inc. has signed a Letter of Intent with a New York-based intermediary financial group to facilitate a possible loan of up to U.S $8.429 million. The potential loan will be a collateral loan backed by the assets of the Company.  The potential loan would be prime plus 4 per cent, with a repayment time of up to 36 months, with further extensions available up to 60 months at 1 per cent per annum plus the closing rate. Hi Ho Silver is not committed to utilizing the entire loan, and will only access funds according to the disbursement schedule, the related needs of the Company and defined use of proceeds. Part of any loan proceeds will be utilized to complete the recommended 75-hole diamond drill program on the Carmi Molybdenum Project. Hi Ho Silver expects to receive the Check List within 7 to 10 days and will act promptly to service and satisfy all requests by the Lending Group.

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