Look Beyond 2013 for Moly Market Recovery, Analysts Say

Further confirmation that molybdenum prices likely will not recover until after the end of 2013 was recently provided by analysts interviewed by Metal-Pages.

Stephan Ioannou, an analyst at Haywood Securities, told the publication that lack of steel demand from China continues to dampen the molybdenum market. “In terms of moly price strengthening, it’s hard to anticipate. At the very earliest it will be late this year, but probably it’s a 2014 to 2015 story,” he explained.

Similarly, Catherine Virga, CPM’s director of research, commented, “[b]y the very end of the year we could get back up to around $11/lb, but we are not overly optimistic for prices this year,” while John Tumazos of Very Independent Research said that the current weakness in prices is unsurprising given current market conditions. “Moly should not be viewed as unique or special,” he said.

Molybdenum oxide hit $11.90 per pound, its highest price this year, in January, but since then has sunk to its current price of $9.35 per pound, a 21.4-percent decline.

Moly in Iran

Iran is not currently known as a molybdenum hotspot, but a recent discovery means that may change in the future.

Azerbaijan’s Trend news agency reported that the largest porphyry molybdenum reserves in the country have been discovered in the Meyaneh region, Metal-Pages notes.

The purity of proven reserves sits at around 539 grams of molybdenum per tonne.

Company news

Molybdenum market players got a surprise at the end of July, when China Molybdenum Luoyang Company (HKEX:3993) agreed to pay $820 million for Rio Tinto’s (ASX:RIO,LSE:RIO,NYSE:RIO) 80-percent stake in the Australia-based Northparkes copper mine. Australia’s OZ Minerals (ASX:OZL) had been expected to win.

Less surprising were second-quarter 2013 results from General Moly (TSX:GMO,NYSEMKT:GMO), which incurred a net loss of $14.3 million, up from $2.7 million in the year-ago quarter. An $11.5-million non-cash charge related to the termination of General’s $125-million loan deal with Hanlong (USA) Mining Investment mainly caused the decline.

The loss of funding from Hanlong was a “serious bump in the road” for General, CEO Bruce D. Hansen told AMM in June, but he remains confident that the company will find a new partner for its Mount Hope project. “While we expect the financing process to take time, the Company has received interest from potential strategic investors both in and outside of China. Multiple parties have signed non-disclosure agreements and are currently engaged in due diligence on the project,” he is quoted as saying in the company’s results release.

Just yesterday, Inova Resources (TSX:IVA,ASX:IVA) cut two directors on its board, at the same time stating that it still plans to move forward with its $345-million Merlin molybdenum-rhenium project. A recent mining review shows that the deposit’s mine production could “be increased by 10% with a 5% reduction in unit operating cost and the molybdenum-rhenium concentrate upgraded to between 38% and 45% [molybdenum],” Metal-Pages notes. The company is currently focusing on finding a strategic partner for the project and hopes to update its feasibility project.

KGHM Polska Miedz (OTC Pink:KGHPF) is also making progress on a project; it told Metal-Pages last month that its Chile-based Sierra Gorda copper-molybdenum project is set to start production midway through 2014. The mine is expected to last for 20 years, producing an average of 50 million pounds of moly for the first five years, then 15 to 20 million pounds thereafter.

Junior company news

Towards the end of July, Duran Ventures (TSXV:DRV) filed an updated technical report for its Peru-based Aguila copper-molybdenum project. The report, which includes data from the company’s 2012 trenching and 2013 drilling programs, reveals a 430-percent tonnage increase in the project’s indicated resource; that brings contained copper up to 662 million pounds and molybdenum up to 52 million pounds.

About two weeks later, Northcliff Resources (TSX:NCF) announced the completion of the Environmental Impact Assessment report for its New Brunswick-based Sisson tungsten-molybdenum project. It has been submitted to the Canadian Environmental Assessment Agency as well as to the New Brunswick Department of Environment and Local Government.

Making the biggest commotion was Avanti Mining (TSXV:AVT), which revealed that it plans to oppose a petition, filed by the Nisga’a Nation, that challenges the BC Environmental Assessment Office’s decision to grant its Kitsault mine project an Environmental Assessment Certificate.

Avanti has been in conflict with the first nation since March, when the Nisga’a Lisims Government launched a dispute resolution process regarding the assessment with the BC government. Craig Nelsen, president and CEO of the company, described the Nisga’a Nation’s most recent move as “disappointing,” also commenting, “we are confident that the Province’s EA process is robust and that all environmental and human health issues have been thoroughly addressed — years of assessment and thousands of pages tell us so.”

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Related reading:

Brighter Future in Store for Moly Following Lackluster 2012

General Moly Breaks Ground at Mount Hope

Avanti Responds to Nisga’a Move on Kitsault Moly Mine

PROJECT UPDATE: Kitsault Mine Granted Environmental Permit

Kitsault Moving Forward Despite First Nation’s Concerns