mol - current overview / potential

Hi all,

Just thought Id put forward a few reasons why I think that MOL has got big potential right now,

The first thing that drew me to these guys was the immediate cash flows. They are one of the few Mid-Cap Iron ore mining stocks out there that have just recently made the transition from explorer to producer and that�s high grade Iron Ore they are digging up! not the low quality stuff that a lot of other explorers have been proving up around the place,

With Iron Ore prices sitting at record highs, a start up mining operation pumping out 1million tones of high grade ore is not a bad way to generate some solid cash flows while you prepare to ramp up production and start constructing a world class molybdenum and copper mine,
The second factor that drew my attention was a combination of two things

1) Their major shareholder is Hanlong Mining! Now Im not sure how many people have had their eyes on the business columns lately but Hanlong are one of the worlds biggest and most powerful mining houses and they just put out a very generous offer to buy Sundance resources at a huge premium with some spare change from their war chest, its also worth noting that this offer was made at a time when the Sundance share price was sitting pretty low as a result of the overall market conditions and could be considered opportunistic given the potential of SDL but this brings me to my next point which is these guys have just secured a half billion dollar loan facility to get their molybdenum / copper mine up off the ground!

2) The fact that they have secured this loan is, in my opinion, great news! As a shareholder there is nothing worse than when your stock is sitting around a certain price and then all of a sudden your company directors announce an equity capital raising at a huge discount, push a huge package of shares onto the market and dilute any value that you may have been sitting on! Im pretty confident that a $500m debt facility and 1m tone p.a. Iron Ore operation should bring in plenty of cash to ensure they can get this new mine up off the ground without having to go to the market with their cap in their hand like a lot of others

The third factor that drew me to these guys was the proven track record of management so far, I thought it was pretty impressive that they have delivered what they have promised ahead of time and under budget and this, to me, signals a quality team with the potential to push this new mine forward according to plan,

Fourth factor is the potential for even more resource upgrades, anyone with a bit of background info on the location of Spinifex will tell you that there have been various upgrades within the surrounding area and Moly Mines is not in a position to miss out on any potential upgrades to their already impressive reserves,

The fifth factor was a great diversification of exposure to a range of base metals, Iron Ore is as high as its ever been, copper is creeping up to $10,000 per tonne and if you do a little research on molybdenum you will find that a few years back this stuff hit $100K+ per tonne! Given projections of demand to outstrip supply in the next year or so it should be pretty apparent that this stuff has got a huge upside at the moment...

Now, considering the start up goal is to pump out 11 million lbs of molybdenum and 13.5 million lbs of copper ON TOP of the 1 million tonnes of high grade iron ore per annum I think this presents a big opportunity to any investor looking to get in on an up and coming Australian miner,

Having said all this I think that there would be a lot of long term holders who are pretty unhappy with the current share price BUT considering that the Iron Ore mine is now up and running and debt facilities have been secured, Moly Mines looks set to play a starring role in the mid cap sector,

I think that anything between 60 and 70 cents looks like a bargain right now, I have picked up a few this week and as soon as the volumes pick up and they reach a couple more mile stones I will be picking up more,

As with any mining investment there are risks which can include delays to production and funding etc but looking at where these guys are now they are looking cheap as chips,

Probably also worth noting that MOL has hit 6 bucks pre GFC so plenty more upside to the current share price,
A valid point was raised to never read or believe any rumours or whispers here on hot copper but I think that when you look at the facts and figures here there is no denying that Moly Mines three major commodities are hot property right now and if they can get this up and running as soon as possible its gonna be big bucks for any holders!

Happy to hear any thoughts for or against this,
Best of luck to all the current holders, fingers crossed for a bit more market stability going forward and looking forward to seeing what these guys can do!

Cheers,

- DD

(any information here should not be misconstrued ad financial advice, this is just my overview / analysis on MOL at this stage, July 2011)