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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: que seria who wrote (33847)	2/25/2007 6:17:16 PM
From: hank2010	Read Replies (1) \| Respond to of 78419

I can't say I "know base metals markets" but here is my opinion. moly imparts "toughness" as well as anti-corrosion properties to steels. i.e. usually hardening of steel is accompanied by brittleness and cold weather failure. moly helps to overcome this. IMO moly prices are greatly influenced by energy prices. new pipelines, drill tubing etc. require moly as enviro regs are tightened and drills have to go deeper and into more hostile environments. Moly is also used as a catalyst in oil and gas refining and in conversion of coal to liquid fuels. Moly is a much smaller market than nickel or zinc. A large percentage comes as by-product from copper mines. There are lots of moly deposits proven up, the problem for the most part is that the lead time and capex requirements are so huge there is no immediate relief. On a %age basis moly has gone up more than the other three, and I think will keep that position. Nickel has generally been a game for the big boys. Large investments are required for smelters (sulphide ore bodies) or the roaster/leach or pressure-leach plants that are needed for the laterites. The biggest problem has been that all the new plants/projects have run into problems (cost over-runs, schedule over-runs, poor plant performance, or political delays. The small guys who are shipping to existing plants (mostly sulphide) are doing well. Zinc is the most common and has gone up the least. To put something into production is probably the cheapest and quickest of the 3 but nickel has a head start. I think recent good prices will lead to quick discoveries and production and keep mid term prices down compared to the other two. Do not overlook tungsten. The Chinese almost have a monopoly on tungsten production and are making noises that they will sell only products, (eg tungsten carbide drill bits, machine tools, filaments, armor and armor piercing munitions) not the metal compounds themselves. There are rumors that the U.S. defense dept. will stop using depleted uranium for armor piercing munitions and switch back to tungsten. tungsten has gone up by a factor of five already but if the Defense Dept switches it may be "Katie bar the door" This is all guess work on my part!

To: que seria who wrote (33847)	2/25/2007 7:36:15 PM
From: Mr. Aloha	Read Replies (1) \| Respond to of 78419

I've studied the base metal markets pretty hard, reading many industry reports and analyzing the supply/demand situations for at least zinc and moly pretty well. I'm less familiar with the nickel market. Last month I posted a supply/demand summary table from a CIBC report that indicated why I prefer zinc by far among the base metals, at least for the next few years: Message 23190905 It takes 10+ years to bring a sizable new project to production, so any supply response to higher metals prices will take a long time to hit the market. Supply response for the next few years will be mostly from projects that are already in the pipeline and at least to the feasibility stage with a proven deposit. Evaluating these metals' outlooks for coming years requires looking at the pipeline of new projects, which CIBC and others have done, though they usually don't cover the tiny and opaque moly market. There are a number of projects proposing to add from 3-8% each to the world moly supply in the next few years (e.g., GMO's Mount Hope, Phelps Dodge's Climax, Northern Dynasty's Pebble, NTO's Agua Rica, UNB's Bald Butte and Cannivan Gulch, AUA's Ruby Creek). By contrast, there's not a single zinc project in the pipeline for the next few years expected to add even 2% to the world zinc supply, and most existing zinc mines have a much shorter mine life than moly mines, so many will be closing down in coming years. One big reason I prefer zinc is that the price has recently fallen back on the misperception that supply has suddenly caught up to demand in the last few months (even after last year's supply deficit of over 300,000 tonnes), causing the steady drop in LME zinc inventories to stop. Big headlines have claimed that China has turned into a net exporter of zinc, but I explained last month why I think that's bunk and China remains a huge net importer of zinc concentrate: Message 23230667 . Here's why I think the LME zinc inventories have paused in recent months: Message 23279668 . I think once the LME zinc inventories resume their downtrend, the zinc price will get a nickel-like explosion as the supply crisis becomes more obvious. I wouldn't invest in any primarily moly miner, as I expect the huge projects in the pipeline to a least keep a lid on the price of moly in coming years, and drop the price significantly if some of those projects make it to production. I'd stick to moly miners who have significant other metals. My favorite moly miner, Roxmark Mines, actually has a lot more upside on the gold side from their 6 former-producing gold mines. Nickel miners may do very well, but I don't think nickel will remain at over 12 x the price of zinc for very long. My focus in the base metals would definitely be on undervalued zinc miners who have huge, late stage, low cost deposits in politically secure areas, and also other metals for diversification, but there aren't many of them out there.