First Bitcoin Capital Corp (BITCF)

[Alex Chory]

OT- but worth a looksee, remember, MACH and myself find

many good potential winners from RI,

RNO, Roca Mines and PTMQF and more

just fwiw
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Overlooked Moly Producer Primed for Major Upside

By David J. DesLauriers
07 May 2007 at 06:18 PM GMT-04:00


TORONTO (ResourceInvestor.com) -- Given Sprott’s recent push on the molybdenum market, almost every listed equity has doubled, tripled or better.

One company has been overlooked, however, and it is a producer - one of the handful (perhaps less than 5) of listed moly producers, as opposed to development companies that won’t be in production for years.




Win-Eldrich Mines [TSX-V:WEX] which has only about 14 million shares fully diluted and closed at C$2.75 today is producing molybdenum from its 40% Ashdown property in Nevada and should be fully ramped up by the end of this month. As a result, WEX is getting discovered.

Catalysts and Resource

In the next month or so WEX will release a 43-101 which should show 4 million pounds of extremely high-grade moly, averaging a head grade of probably 2% or 40 lbs of moly per tonne (rock value of $1,200/t at $30/lb moly). Because this is an underground mine there are probably more like 10 or 20 million pounds of moly there but those pounds can only be calculated as ongoing development work continues.

We are not geologists so we will only touch on this, but those working on the project believe that the rich underground system they are mining could be an offshoot to a much bigger system at Ashdown. That is important blue sky and cash flow from production now will be used to test various geologically theories at depth, etc. If some of those work, WEX will trade at a much higher valuation than a standard cash flow multiple. Time will tell.

Cash Flow

The company and its J/V partner, Golden Phoenix [OTCBB:GPXM], should be producing at a rate of 100 tonnes per day later this month. Grades vary but should average 2% moly after recoveries.

As the mine is optimized over the next couple of months, it is believed that per pound costs should come down to $5.

We estimate that at $30/lb moly, WEX can generate about $14 million in annualized cash flow or $1 per share, net to its interest. Save BLE and ROK which have both already run, who else can say that?

http://stockcharts.com/h-sc/ui?s=ble.to&p=D&yr=0&mn=7&dy=0&id=p47748833620


http://stockcharts.com/h-sc/ui?s=rok.v&p=D&yr=0&mn=7&dy=0&id=p47748833620

Moly Leverage

The moly play is heating up thanks to Sprott and their ETF. Talk of a futures market as well could take moly much higher, at least for a while.

If moly went to $45 per pound WEX would cash flow something like $1.50 per share, but could also double production or expand to 250 tpd, building another small mill and mining with a lower cut-off grade.

As we’ve said above, there are so few listed moly producers this gives WEX great optionality.

Conclusion

Win-Eldrich is in the enviable position of actually being a moly producer, something only a handful of other listed companies can boast. While the stock has run up a little bit recently, it has not experienced anything near the triples and quadruples we have seen across the sector in the last month or so.

We believe that the stock could trade at anywhere between $6 and $10 almost immediately given the following:

Scarcity value due to lack of producing moly options for investors.
The optionality of a producer in a hot moly market if the ETF pushes prices much higher in that opaque, illiquid market.
A cash flow multiple of 6X-10X.
The possibility of much larger moly resources at Ashdown
A very tight share structure.
The relative performance of other moly plays recently which WEX has yet to experience.
In the final analysis, those looking for moly plays should be searching out the handful of listed producers who will take advantage of today’s high prices, and tomorrow’s potentially higher prices.

WEX looks to be one of the very few cheap ways to achieve that and will use its cash flow from the safety of Nevada to potentially uncover a much larger resource within its grounds.

http://www.resourceinvestor.com/pebble.asp?relid=31566

http://stockcharts.com/h-sc/ui?s=gpxm&p=D&yr=0&mn=7&dy=0&id=p47748833620

http://stockcharts.com/h-sc/ui?s=wex.v&p=D&yr=0&mn=7&dy=0&id=p47748833620