General Moly (GMO)

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MOLYBDENUM, light/heavy rare earths, lithium... remember those words, they'll become the most precious commodity soon. everyone jump on this bandwagon.

Adding to my TC moly pick.

Current 3.28, Sept 19 09. Limit 2.22

Like Pennyperson said, molybdenum prices will be going up in the next year or two. August showed moly prices steadily rising from 7.70 to 10, trading as high as 17/lb.

Everyone should already know, however, that this is a very long term play. Mount Hope will not be completed for 15-18 months if everything goes according to plan, including acquiring permits and interim financing. If financing cannot be acquired, company will go into cash conservation mode and project will be delayed.

General Moly Inc sees the molybdenum market poised for a rebound with a pick up in demand growth and limited new supply sending prices to a peak in 2012. Demand for the metal, used as a strengthening and anti-corrosion agent in steel, should increase as low inventories get replenished, China turns net importer and consumers start to increase purchases.
On the supply side, limited growth of copper mines with molybdenum as a by-product and disciplined output cuts at both primary and by-product molybdenum mines following sharp declines in global demand should help support prices.
Moly inventories have remained low and are projected to remain relatively low going forward, partly because there are no new primary moly mines currently in development. Molybdenum prices should peak in 2011 to 2012 in the $18 to $22 a lb range, with long-term averages ranging from $13 to $15 a lb.
Slumping steel market are already showing growth, especially stainless steel which was significantly de-stocked even before metal prices crashed last fall.
About 40 percent of molybdenum demand comes from the energy sector and General Moly thinks it will continue to be a robust growth area for the metal.
About 60 percent of the project's basic engineering was completed last July, but the company is still moving forward with equipment orders for mills and roasters requiring long lead times and expects to complete permitting by mid-2010.
Mount Hope will stay in a conserving cash mode until the molybdenum price gets into the mid-teens. The mine has direct operating costs of $5.23 per lb of molybdenum assuming an oil price of $80 a barrel. Once Mount Hope starts up, it has capacity to produce an average of 40 million lbs per year in the first 5 years, with proven and probable reserves of 1.3 billion lbs of molybdenum.
Therefore, my belief in moly is simple fools “BUY” just as I bought Thompson Creek “TC” when it was $4.00.
Projecting forward, GMO will be huge in 2010 and forward. It’s the richest moly mine in America and you can’t go wrong – the world needs it.

According to their Q-10, the Mt. Hope Project (which they are completely reliant upon for income) is "not expected to be operational" before their investor set deadline of December 2011. They will thus be forced to return atleast $36 of $100 Million in invested funds... Perhaps a quick play as steel rallies, but a short position afterward seems profitable.

A very under priced commodity stock that goes into high gear once the production of steel goes into high gear. It has already doubled in the last four months. Check out the five year performance.

Not yet producing Moly, but in 2010 if this company goes on line, stock price could explode. The price of Moly is also rising nicely.

steel will recover soon

Moly prices on the upswing, risky play that will skyrocket if permits come through...

next year they will have their mine in operation about the time that moly price will spike if not sooner

Alright, looked a bit closer at GMO.

I like it enough that I bought a small amount, and will continue to follow it. But it definitely seems to have a big question mark with it...

On the plus side. In it's current state it owns 80% of the Mt. Hope project. The stock is $1.63, but yet they have $1.08 in cash per share and virtually no debt. The entire enterprise value of the company is just $35 million... which is essentially nothing for a company that states they want to be the worlds largest moly producer. Crazy. They estimate 40M lbs a year for the first 5 years, half of that is already contracted out at set prices I guess, but none the less that is a lot of revenues if we say moly might be between $10 and $30 and thus profitable if it cost them perhaps $6 to $9 to extract. Also TC and GMO have historically been very highly correlated, but just recently TC has diverged up in price quite a bit more than GMO. Perhaps that divergence will converge again.

As I' ve said before I really like a play on Moly because it is being used more and more in various applications, but yet there is no real inventories stored anywhere. The TC confrence calls had talked about that in the past, and in the GMO fact sheet they state a commodities research group says there is basically a month supply of total inventory, compared to 4 and 5 month inventories of other metals. TC in their last conference call even said that 25% of their sales are now to China! They have never sold to china before, and the CEO even said that 6 months ago he thought they would never have ANY sales to China. He also said Europe started increasing thier activity with it. So I really think these low cost producers of moly have some great times ahead of them.

On the downside, when will they start actually producing any revenues? And what will the capital structure of the company look like at that point? They are saying perhaps as soon as a year from now. BUT, it looks like they will need almost $700 million to get this Mt. Hope project financed. Will they trade off a further portion of thier interest in the project to fund this? Raise a lot of debt? Issue (and dilute) more shares? These are huge questions and it'll be interesting to see how it plays out. But, with the current low prices for moly, I think the general outlook for this company is dismal -which is already fully reflected in the stock price. That is why I think it might be a good buying opportunity here. As soon as the infrastructure demand for steel gets back on track, moly, with its low inventory levels should see a huge run up in price, and thus the moly producers such as TC (and GMO if they ever actually produce) will have a great run.

RK

rely completely on mount hope, Investors will lose entire investment, Cannot get financing, will dilute shares by a lot for financing, Will not conseve enough cash because they pay themselves repulsive saleries, there partner will stop making payments (pos-minerals), reserve estimates uncertain, They can be challenged and lose their right to the mount hope, Your talking investing in their 80 million then if they are success getting diluted by 1 billion dollars. And ya they spend all investors money on 1 million a year salary and worthless museams that make 0$.

Infrastructure play...Have made 100% on this stock several times .77-1.80 Playing......

Today's close was $1.70, high beta, no where to go but up! An easy double.

They're a very speculative play if you want something short term. If you're going to hold them for 5+ years, they aim to be the largest producer of Molybdnium in the next decade. They fully expect to acquire all the licensing, and they're on top of the largest pure Molybdnium mine in the world. Molybdnium prices are very low right now, but once the recession is over and industrial manufacturing starts up again, GMO should do very nicely for those willing to get in early.

This is standput in its peer group and its poised for a take off. Let the production begin!

Total inventories of aluminum, copper, nickel and zinc remain at historically low levels. Precious metals are ready to become a much wanted commodity. Moly is in this business with a site that can produce at historic levels. They need to work out all the red tape with the goverment and get this working. You can buy low now and take the ride.