Replies to post #43766 on GoodFellas Big Board Catalyst and Chart Plays

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GMO-Keep eye for 50 day Break! (Some DD) Inside Buys

http://stockcharts.com/h-sc/ui?s=GMO&p=D&b=5&g=0&id=p23010038728

http://finance.yahoo.com/news/general-moly-announces-completion-preliminary-123743488.html

General Moly Announces Completion of Preliminary FEIS

http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=8463905

General Moly: Valuation Of Mt. Hope Molybdenum Mine

General Moly (GMO) has announced that a Nevada State District Court has issued an order supporting the Nevada State Engineer's Approval of its Mt. Hope Molybdenite Mine's water rights. General Moly also recently announced that it has received a Class 2 Air Quality Permit from the Bureau of Air Pollution Control within the Nevada Division of Environmental Protection. General Moly had its federal Draft Environmental Impact Statement published in December of 2011 and the company anticipates receiving final full federal approval of its environmental permits this summer. This will allow construction of the mine to commence and it is expected to take 20 months to finish before production can begin. Investors in General Moly need to assign a valuation to Mt. Hope to assess the investment merits of General Moly. This is a small-cap company that will need to rely on access to outside capital to fund the Mt. Hope project. It also is a commodity company and has no control over molybdenum prices. Management has not proven it can successfully operate a mine the size of Mt. Hope. Combine these factors with the natural volatility of small-cap companies and General Moly should only be considered for speculative accounts, or for highly diversified portfolios.

Molybdenum prices have averaged $15 per pound in 2012 and any significant increase in price would rely on a supply shock, such as China banning exports, or robust growth in the global economy. China is the largest producer of molybdenum and the average Chinese mine has cash costs in the $12-$13 range. So $15 should hold unless a significant global recession occurs. General Moly estimates they can produce 40 million pounds of molybdenum per year at an average cost of $5.30 per pound. The mine is estimated to have 1.3 billion pounds of proven and probable molybdenite. These assumptions need to be used in valuing Mt. Hope. Although it needs to be mentioned General Moly has not proven it can achieve this goal. The company owns 80% of Mt. Hope and its South Korean steel producing joint venture partner POSCO owns the other 20%. The project has financing with backing from Hanlong, which signed long-term supply commitments for the molybdenum.

General Moly has conducted a bank feasibility study to value Mt. Hope. The study uses an 8% discount rate, an assumed rate for general and administrative expenses, a 6% loan interest rate, and all applicable taxes. It does not include selling or shipping costs, which need to be included. The study assigns an equity value net of debt at three different molybdenum prices; $15, $20, and $25. At $15 per pound the study assumes Mt. Hope is worth $1.2 billion. At $20 per pound the study assumes Mt. Hope is worth $2.08 billion. Finally, at $25 per pound the study assumes Mt. Hope is worth $2.89 billion. Current global economic conditions indicate investors should focus on estimates based on $15 per pound.

General Moly has 96 million shares outstanding with a market cap of $318 million. The company owns 80% of Mt. Hope. Using the $1.2 billion valuation for the mine General Moly has a potential equity upside of $960 million. Selling and shipping costs could reduce the equity value by 10%, giving the mine a potential valuation to General Moly of $864 million. Since the mine won't open for two years it should be discounted @ 8% for a current net present value of $731 million. This offers investors in General Moly significant upside from Mt. Hope if management can execute. The markets can be unforgiving for mining companies that fail to operationally execute, or that face uncertain project financing risks. Thompson Creek (TC) has been punished by investors for operational miscues and financing uncertainty in finalizing its funding for its Mt. Milligan gold and copper mine. The company is trading for less than 1/3 of book value.

Insider Transactions Reported - Last Two Years

Date Insider Shares Type Transaction Value*
Sep 9, 2012 CHAPUT DAVID
Officer
5,000 Direct Purchase at $2.78 per share. 13,900
Sep 9, 2012 HANSEN BRUCE D
Officer
30,000 Direct Purchase at $2.80 per share. 84,000

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Liking iBIO here agin for a trade

filled 1.09