The Best-Performing Base Metal of the Decade By Luke Burgess | Friday, March 19th, 2010
Before the global economic meltdown, molybdenum was one of the best-performing base metals.
Prices soared over 1,700% in five years between 2000 and 2005.
A little over a year ago, molybdenum prices were still trading at a steady high of about $35 per pound. But as the financial crisis softened demand for molybdenum, prices have been discounted to nearly $15 per pound.
Nevertheless, analysts worldwide believe that this minor metal is headed for a strong rebound.
That's because molybdenum is no ordinary metal...
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Molybdenum or moly for short has the sixth-highest melting point of any element and is one of the least corrosive metals. This makes it a key component in high-strength steel alloys.
According to the International Molybdenum Association, nearly 80% of the moly demand comes from the manufacturing of tools, high-speed steel, stainless steel, and low-alloy steel.
These high-strength steels are required for extreme conditions and used in such applications as offshore drilling rigs, power plants, ships, turbine engines, tools, hospital equipment, and desalination plants.
But molybdenum's uses don't stop there. The metal plays an important role in environmental protection since it is included in nuclear reactors and oil and gas pipelines to prevent leaks, and as a catalyst in oil refining to reduce sulfur in fuels.
Molybdenum is also valued as a specialty high-performance lubricant and a component in flame retardants, fertilizers, and even vitamin supplements.
This metal's versatility is truly unmatched.
Investing in Molybdenum
Molybdenum could again be one of the most profitable metals to invest in over the next several months.
Why? Because Global molybdenum demand is expected to continue increasing by an average 5% per year for at least the next two decades.
Demand will exceed supply for the seventh straight year this year. And the market is expected to remain in deficit for at least the next three decades.
With demand so quickly outstripping supply, the price of molybdenum will likely go higher.
Keep in mind, there are limited ways to invest in molybdenum. Publicly-available molybdenum futures just began trading on the London Metals Exchange.
The easiest and most profitable way to invest in the metal is moly stocks.
Here's a short list of a few moly stocks to check out:
Adanac Molybdenum (TSX: AUA)
Adanac is a Canadian-based junior exploration and development company that owns the Ruby Creek molybdenum project in Northern British Columbia. The Ruby Creek deposit contains over 660 million pounds of molybdenum reserves and resources. The company has advanced the project through feasibility studies, a production decision and has ordered equipment, completed permitting for construction, constructed a road to the site and secured $80 million in bridge financing.
Amerigo Resources (TSX-V: ARG)
Through its wholly-owned subsidiary, Amerigo produces copper and molybdenum concentrates from tailings from Codelco's El Teniente mine, the world's largest underground copper mine. The company is treating all the fresh tailings from El Teniente's present production and has the right to treat the higher grade tailings from a 200 million tonne in situ tailings impoundment known as Colihues. In 2008, the company produced close to 35 million pounds of copper and approximately 769,000 pounds of molybdenum.
Avanti Mining (TSX-V: AVT)
Avanti Mining is a Canadian-based junior firm that is focused on the development of the Kitsault molybdenum project, a former producing mine with established infrastructure, located near coastal British Columbia. A NI 43-101 compliant Prefeasibility Study completed in December, 2009 calculated proven & probable reserves of 215.3 million tonnes grading 0.085% Mo, with a 15-year mine life, producing 368 million pounds of molybdenum.
Creston Moly (TSX-V: CMS)
Creston is another Canadian junior company focused on the exploration and development of the Creston molybdenum project, located in the State of Sonora in Mexico. The project boasts excellent infrastructure with close proximity to power, roads, and railway; a semi-desert climate allows for year round development. The Main Zone of the deposit contains 250 million pounds of molybdenum and 159 million pounds of copper in a proven and probable mineral reserve of 146,705,000 tonnes grading 0.077% Mo and 0.049% Cu.
General Moly (AMEX: GMO)
General Moly is a U.S.-based mineral company engaged in the exploration, development and mining of molybdenum. The company has two main molybdenum assets, its 80% interest in the Mt. Hope project and the Liberty project. Both are located in central Nevada. Once production commences at Mt. Hope and Liberty, General Moly is expected to become the world's largest primary moly producer.
Mercator Minerals (TSX: ML)
Mercator Minerals is a diversified natural resource company engaged in the exploration, development and mining of base and precious metals deposits. Mercator embarked on a two-phase expansion of its Mineral Park operations to a 50,000 ton per day copper and molybdenum milling operation which is expected to increase total Mineral Park average annual production over the first ten years of a 25-year mine life to 56 million pounds of copper, 10 million pounds of molybdenum and .6 million ounces of silver. Mercator's Mineral Park Mine expansion is one of the largest, furthest advanced copper-molybdenum expansion projects in North America.
Northern Dynasty Minerals (AMEX: NAK)
Northern Dynasty is a mineral exploration and development company based in Vancouver. Its principal asset is the Pebble copper-gold-molybdenum deposit in southwest Alaska and 186 square miles of associated resource lands. The Pebble deposit is remarkable for both its size and composition. Current estimates indicate a total resource of 5.94 billion tonnes measured and indicated containing 55 billion lb copper, 66.9 million oz gold and 3.3 billion lb molybdenum; and 4.84 billion tonnes inferred, containing 25.6 billion lb copper, 40.4 million oz gold and 2.3 billion lb molybdenum. Quantities of silver, palladium, and rhenium also occur in the deposit.
Roca Mines (TSX-V: ROK)
ROCA Mines is focused on the outstanding mineral exploration and development potential located within British Columbia. Roca's management team has proven experience in adding shareholder value through strategic acquisition, exploration, and development of mineral projects. Roca's primary asset is the MAX Molybdenum Mine, the first new, primary molybdenum mine in Canada and British Columbia's first new metal mine in over a decade.
Thompson Creek Metals (TSX: TCM)
Thompson Creek is one of the largest publicly traded, pure molybdenum producers in the world. The company owns the Thompson Creek molybdenum mine and mill in Idaho, a metallurgical roasting facility in Pennsylvania and a 75% share of the Endako mine, mill, and roasting facility in northern British Columbia.
In less than two weeks I will be bringing you my latest molybdenum idea. Trading at just over a dollar, this company has recently completed a series of drill tests in final preparation before tapping into their giant moly resource.
And with a major investor relations firm retained to handle what promises to be a record-setting influx of new ownership, this stock could easily see gains approaching the 1200% mark within the next 24 months. Double- and triple-digit gains could be in sight within as little as eight weeks.
I'll have the full details for you as soon as I've wrapped up my research. Meantime, if you haven't read my latest silver research write-up, please do so here. I've uncovered four ways to profit from the metal, and they're just starting to heat up. By the way, my portfolio includes several silver plays... all part of the 100% winning track record of the Hard Money Millionaire.
Until next week...
Luke Burgess Editor, Wealth Daily Investment Director, Hard Money Millionaire
MOL Price at posting:
86.5¢ Sentiment: ST Buy Disclosure: Not Held
