GOLDEN PHOENIX MINERALS (GPXM)

[rossi]

Resource Investor
What is known is that the price of moly has taken a big hit recently and in an interview with RI, an industry insider noted that new roasting capacity has been added in South America and capacity has also been increased in the U.S. Additionally, a number of copper producers are currently in the process of, or planning to begin production of moly as a by-product – a proposition which has quite a favourable IRR on a standalone basis, as adding a moly circuit to an existing facility isn’t too expensive a proposition.

Further, as RI pointed out in July, “there is an awful lot of molybdenum in the world. According to the IMOA, world reserves are 12 million tonnes. The USGS attributes substantially more to China, and puts the number at some 19 million tonnes. Either way, there is probably more than one hundred years of current demand already identified.”

The bottom line for investors is that with so little visibility in the moly market and apparent resurgent supply, it may be well advised to reevaluate one’s position, especially given the fact that production from some of these juniors is still several years off. Companies like Adanac Moly [TSXv:AUA] are making projections in their pre-feasibility, which show a gradual decrease in moly prices from $20 in 2008 to $15 in 2012.

While this may be useful for them in terms of displaying favourable IRR numbers, one wonders how realistic it really is? Many of these juniors have done an admirable job at securing moly properties with historical resources and getting their stocks up by drilling, creating 43-101 compliant numbers, and issuing scoping studies that use lofty moly price assumptions.

That said, if the metal goes back to $5, they might as well be shells because their deposits will be categorized once again in geological tables as mere anomalies and not potential mines