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While rising Molybdenum prices have helped the revenues of most all molybdenum mining companies, new projects and other miscellaneous costs have hampered first quarter profits. As the results for Q1 come in, which companies have capitalized on rising demand for moly? Also, an update for the merger between Quadra Mining and FNX Mining.
The rising prices for molybdenum worldwide have helped some companies recover from the downturn of 2008-09, which saw prices for Moly drop from nearly $33 down to $8. Prices have recovered slowly up to approximately $17 on the back of rebounding steel demand in Asia. While the increase in prices have helped profit margins, new mining projects yet to produce, and other miscellaneous costs hampered the profitability of Thompson Creek Minerals and General Moly, as reported on Moly Investing News last week.
Quadra Mining Ltd. [TSE:QUA]
Strong first quarter results for the company has been announced. The company reported a net profit of $55.6 million or 0.56 cents per basic share. Profits more than doubled over the first quarter of 2009, where the company recorded a profit of $26.7 million. “During the first quarter 2010, Quadra recorded revenues of $192.9 million from the sale of 47.6 million pounds of copper and 23,928 ounces of gold,” stated the press release.
The merger between Quadra Mining, and FNX Mining Company [TSE:FNX] has been approved by shareholder vote. The merger between the two companies may provide for a more well-rounded mining company, as well as streamlining the companies’ individual projects.
“With a combined market capitalization of $3.5 billion and $550 million in cash, the new company will draw on the specialized abilities of both firms… This includes the open mining and metallurgical expertise of Quadra, and the underground mining and exploration talent of FNX,” reported Nick Stewart of Northern Ontario Business.
In addition to the strong first quarter financials and the merger with FNX, Quadra also has a partnership with State Grid, China’s prime power utility, for a Chilean Copper project.
“We continue to move forward on the two transformative transactions previously announced… negotiations are advancing on the definitive agreement. The culmination of these transactions will establish a new, mid-cap copper mining company with five existing mining operations… both organically within the Sudbury basin and at Sierra Gorda, as well as the financial strength and critical mass to continue further consolidation,” stated Quadra President Paul Blythe in the press release.
Amerigo Resources Ltd. [TSE:ARG]
Amerigo Resources has posted “net earnings were $3.6 million and cash flow from operations was $5.1 million,” stated the press release. The company reports molybdenum production of 143,371 pounds, up 48 percent over 2009. Amerigo expects copper production in the 2nd quarter to increase by 30 to 40 percent because the earthquake in Chile hampered first quarter production. Molybdenum production is also expected to rise.
Mercator Minerals Ltd. [TSE:ML]
“After the accrual for interest and interest payments of $3.56 million ($3.45 million in interest accrued on the Notes issued by the Company in 2007) and $5.36 million in non-cash items… the Company recorded a net loss of $11.5 million or $0.06 per share compared to a loss of $10.65 million or $0.11 per share for the corresponding period in 2009,” according to the press release. As a result, shares for the company have dropped $0.43 cents, or 21.94 per cent in the 2 days since the release.
The press release was not all bad news. The company did increase production and revenues over the period. “During the period, the Company generated revenues of $23.88 million, a 376% increase over revenues of $6.34 million in the first quarter of 2009 on the shipment of 6,000,374 pounds of copper in concentrates (2009 – 2,306,308 pounds), 628,490 pounds of molybdenum in concentrates (2009 – 94,094 pounds),” stated the press release.
Erdene Resources Development Corp. [TSE:ERD]
Erdene Resources has posted a loss for Q1. “The company recorded a net loss of $857,978, or $0.01 per share, in the first quarter of 2010 compared to net income of $681,223, or $0.01 per share, in the first quarter of 2009. The Company recognized an $878,595 dilution gain on the disposal of a subsidiary in the first quarter of 2009,” stated the press release.
The losses were mainly attributable to the advancement of mining operations yet to produce, mainly the company’s Zuun Mod Molybdenum Project, Donkin Coal Project, and metal exploration in Mongolia. The moly project is of significant size and should provide the company with much needed revenues. “An independent assessment of the resource potential valued the molybdenum at $10 billion and the copper deposits at $2 billion”, reported The Chronicle Herald.
General Moly Update
Shareholders of General Moly [AMEX:GMO][TSE:GMO] have approved the financing deal with Sichuan Hanlong Group. “The proposal to issue Hanlong more than 20% of the Company’s shares in conjunction with the $745 million in debt and equity investment announced in early March, which is anticipated to fully fund the Company’s Mt. Hope project,” stated the press release.
General Moly’s Mt Hope project was dealt a blow when the state of Nevada withheld water rights for the project pending further review. However, an independent poll has shown increased support for the project from local citizens.
“The results of this survey are extremely encouraging. That 74% of Eureka County residents support the development of the Mt. Hope project and 60% have a positive impression of our Company are phenomenal results for a modern greenfield mining project and speak to the importance of doing things right and maintaining open and honest communication with the community,” stated Bruce D. Hansen, General Moly’s Chief Executive Officer.