Thanks to a hot moly market and new CEO, Idaho General gains more recognition
Thanks to a hot molybdenum market and a highly respected CEO, Idaho General Mines’ moly projects gain more recognition.
Author: Dorothy Kosich
Posted: Wednesday , 04 Apr 2007
RENO, NV -
Idaho General Mines' new CEO, Bruce Hansen, a former Newmont Mining Senior Vice President, told investors Tuesday that the Spokane-based junior is getting "much more recognition by the market in our high quality assets."
During a conference call to discuss the company's annual results, Hansen assured investors that Chinese moly production, the reopening of the Climax molybdenum mine in Colorado, and small moly operations will only generate "some excess supply for a short time."
Instead, Hansen suggested that 20 million to 25 million pounds of new moly supply will be required to meet world demand for steel and other products.
Initially drilled by Exxon Minerals decades ago, Idaho General's Mount Hope project is estimated to contain 1.2 billion pounds of recoverable molybdenum over a 50-plus year mine life. "Using updated mid-range capital and operating cost estimates and using a $15 price, Mount Hope generates a net present value of approximately $840 million and a 27% return on investment," Hansen asserted. "At current moly prices and using the same assumptions, Mount Hope has a net present value approaching $2.5 billion."
Hansen noted that Mount Hope will not face the large TC/RC charges which copper deposits--which produce moly as a by-product or secondary product-encounter. The project will also have a roaster, which will require a Class Two permit, which isn't as rigorous as the Class One permit for ore roasters and power plants.
A mining engineer, who was involved in project development for Santa Fe Pacific Gold and Newmont, Hansen will help shepherd the world's largest primary molybdenum project in development, which is anticipated to produce 13% of global molybdenum supply. Chairman of the Board Robert L. Russell was actively involved in the development of Freeport-McMoRan's massive Grasberg Mine in Indonesia, the world's largest gold and second largest copper mine.
Hansen estimated that the initial capex for the project will range from $600 million to $700 million. He told investors that the mining company will finance the project through incurring 60 to 75% in debt with the remainder to be financed through equity. Among Idaho's new shareholders is Canada's Sprott Asset Management.
The Bureau of Land Management approved Mount Hope's plan of operations in December 2006. An environmental impact statement is expected to be completed in 2008 with construction scheduled to commence during the second half of 2008. Production is expected in 2010.
Last year, Idaho General acquired the Hall-Tonopah project, also in Nevada for $5.5 million. Since the project has been mined by Anaconda, Cyprus Minerals, and Equatorial Mining, Hansen said existing mining infrastructure remains on site.
A $2.2 million drilling program is expected to be completed early this year with results scheduled to be released during the second quarter.
On March 29, 2007, Idaho General Mines arranged a private placement of units for gross proceeds of $25 million. Net proceeds will be used to continue the permitting and development of Mount Hope, for the drilling and evaluation work on Hall-Tonopah, and for general corporate purposes.
In response to an investor's question, Hansen said he would consider a joint venture with steel companies on the Mount Hope project.
The company announced a net loss of $12.7 million in 2006, compared to a loss of $4.52 million in 2005.
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