Moly forecast looks good for GXM
in response to
by
New Brunswick
Advanced tungsten - molybdenum - copper resources.
Message: GXM gaining nice momentum !!
BASE METALS
THOMPSON CREEK, IDAHO GENERAL RECOMMENDED
Scotia revises moly price forecasts upward from $25.25/lb to $30.43/lb for ‘07
Suggesting that molybdenum markets will be driven by the economics of primary production due to increased product demand, Scotia Capital has substantially revised its moly price forecasts upward.
Author: Dorothy Kosich
Posted: Friday , 05 Oct 2007
RENO, NV -
Scotia Capital has recently initiated coverage of three molybdenum equities, revising its moly price forecast for this year from $25.25/lb to $30.43/lb, the 2008 forecast from $19.25/lb to $33.25/lb, its 2009 forecast from $8/lb to $27/lb and long-term forecast from $7.50/lb to $12/lb.
Metals analysts Lawrence Smith and Alex Terentiew predicted global molybdenum consumption growth of 7.1% in 2007 (previously forecast at 6.2%) and 8.4% in 2008, up from 3.9%.
"The increase in our long-term price is based primarily in the incentive price necessary to include sufficient new capacity into production, taking into account our estimates of capital and operating costs," they said. "We are now assuming that the long-term price is reached in 2015, rather than 2010, which was previously assumed."
Scotia's analysts asserted that they believe "molybdenum equities will transition from being considered special situation to being mainstream mining equities."
"In our opinion the molybdenum market is undergoing an evaluation from being driven by by-product copper production to becoming more driven by the economics of primary product," Smith and Terentiew suggested. "Similarly, we believe this evolution will be reflected in the equity markets, where an investable universe of molybdenum-focused equities are emerging."
Scotia's analysis revealed that industry consolidation has seen the "investable universe of aluminum and nickel names disappear from the Toronto Stock Exchange. We believe that molybdenum-focused equities are a viable investment to redeploy this capital."
The analysts said that the market "is being increasingly supplied by primary molybdenum mines as the share of supply from secondary or by-production production from copper mining declines." They estimate that 46% of global moly production will be from primary mines, up from 40% in 2006. "We believe that as a result, long-term prices will be higher as prices will be determined more by the economics of the primary mining industry, rather than as a by-product of copper production."
To meet the demand for moly until 2010, new primary molybdenum mines will have to be developed, according to Scotia's analysis. "Many of the attractive projects are held by small capitalization companies, which may suggest they will need to issue equity to finance the development of new mines. This need to access the equity markets will, in our view, increase investor awareness of this segment of the mining industry."
RECOMMENDATIONS
Scotia Capital has initiated coverage of Thompson Creek Metals (TSX: TCM), Idaho General Mines (AMEX: GMO), and Moly Mines (TSX: MOL). Noting that there are only two large pure-play publicly-traded molybdenum producers in the world, Thompson Creek Metals and China Moly, the analysts suggested that they could be joined by a second Chinese moly producer, Jinduicheng Molybdenum Mining Company.
The top eight molybdenum producers include Freeport McMoRan (Phelps Dodge) with 2006 production of 68 million pounds or 17% of the world share; Codelco, 60 million pounds and 15% of global production; Rio Tinto, 37 million pounds and 9% of production; Junduicheng Molybdenum, 27 million pounds and 7% of production; Thompson Creek, 25 million pounds and 6% of production; Southern Copper, 24 million pounds and 6% of production; Antofagasta, 22 million pounds, 5% of production; and China Moly, 22 million pounds, 5% of production.
Scotia Capital has given a 1-Sector Outperform recommendation for Thompson Creek Metals and a one-year target price of Cdn$24, implying a rate of return of 9.3%. The analysts advised that Thompson Creek "may play the role of consolidator in the molybdenum industry."
"As the company is currently generating significant operating cash flow, has ‘borrowing' capacity due to its strong balance sheet, and has the ability to raise new equity efficiently since it is already a public company, Thompson Creek may be able to finance projects that a junior mining and/or developing company could not."
The analysts also noted that annual production of moly from Thompson Creek's mines could increase from 20 million pounds in 2007 to 34 million pounds in 2010.
Scotia also forecasts "big projects, big potential" for Idaho General Mines. They initiated coverage on the company with a 1-Sector Outperform recommendation and a one-year target price of Cdn$9.50, implying a 43.1% return.
With a potential annual production exceeding 60 million pounds from its two Nevada moly properties, Smith and Terentiew suggested that Idaho General "could become the largest pure-play molybdenum producer in the world." Noting the two projects have more 1,300 million pounds of molybdenum, the analysts declared that "Idaho General may have the largest molybdenum resource of any pure-play molybdenum developer or producer in the world."
Scotia rated Moly Mines with a 3-Sector Underperform recommendation and a one-year target price of Cdn$4, implying a potential return of -14.5%. The analysts noted Moly's Spinifex Ridge project in Western Australia is "one of the largest and most advanced stage molybdenum deposits currently being evaluated in the world." The deposit has a resource estimate of more than 600 million pounds of molybdenum.
"We believe that Moly Mines' key advantage over its competitors is its more advanced position in its stage of development," the analysts advised.
THOMPSON CREEK, IDAHO GENERAL RECOMMENDED
Scotia revises moly price forecasts upward from $25.25/lb to $30.43/lb for ‘07
Suggesting that molybdenum markets will be driven by the economics of primary production due to increased product demand, Scotia Capital has substantially revised its moly price forecasts upward.
Author: Dorothy Kosich
Posted: Friday , 05 Oct 2007
RENO, NV -
Scotia Capital has recently initiated coverage of three molybdenum equities, revising its moly price forecast for this year from $25.25/lb to $30.43/lb, the 2008 forecast from $19.25/lb to $33.25/lb, its 2009 forecast from $8/lb to $27/lb and long-term forecast from $7.50/lb to $12/lb.
Metals analysts Lawrence Smith and Alex Terentiew predicted global molybdenum consumption growth of 7.1% in 2007 (previously forecast at 6.2%) and 8.4% in 2008, up from 3.9%.
"The increase in our long-term price is based primarily in the incentive price necessary to include sufficient new capacity into production, taking into account our estimates of capital and operating costs," they said. "We are now assuming that the long-term price is reached in 2015, rather than 2010, which was previously assumed."
Scotia's analysts asserted that they believe "molybdenum equities will transition from being considered special situation to being mainstream mining equities."
"In our opinion the molybdenum market is undergoing an evaluation from being driven by by-product copper production to becoming more driven by the economics of primary product," Smith and Terentiew suggested. "Similarly, we believe this evolution will be reflected in the equity markets, where an investable universe of molybdenum-focused equities are emerging."
Scotia's analysis revealed that industry consolidation has seen the "investable universe of aluminum and nickel names disappear from the Toronto Stock Exchange. We believe that molybdenum-focused equities are a viable investment to redeploy this capital."
The analysts said that the market "is being increasingly supplied by primary molybdenum mines as the share of supply from secondary or by-production production from copper mining declines." They estimate that 46% of global moly production will be from primary mines, up from 40% in 2006. "We believe that as a result, long-term prices will be higher as prices will be determined more by the economics of the primary mining industry, rather than as a by-product of copper production."
To meet the demand for moly until 2010, new primary molybdenum mines will have to be developed, according to Scotia's analysis. "Many of the attractive projects are held by small capitalization companies, which may suggest they will need to issue equity to finance the development of new mines. This need to access the equity markets will, in our view, increase investor awareness of this segment of the mining industry."
RECOMMENDATIONS
Scotia Capital has initiated coverage of Thompson Creek Metals (TSX: TCM), Idaho General Mines (AMEX: GMO), and Moly Mines (TSX: MOL). Noting that there are only two large pure-play publicly-traded molybdenum producers in the world, Thompson Creek Metals and China Moly, the analysts suggested that they could be joined by a second Chinese moly producer, Jinduicheng Molybdenum Mining Company.
The top eight molybdenum producers include Freeport McMoRan (Phelps Dodge) with 2006 production of 68 million pounds or 17% of the world share; Codelco, 60 million pounds and 15% of global production; Rio Tinto, 37 million pounds and 9% of production; Junduicheng Molybdenum, 27 million pounds and 7% of production; Thompson Creek, 25 million pounds and 6% of production; Southern Copper, 24 million pounds and 6% of production; Antofagasta, 22 million pounds, 5% of production; and China Moly, 22 million pounds, 5% of production.
Scotia Capital has given a 1-Sector Outperform recommendation for Thompson Creek Metals and a one-year target price of Cdn$24, implying a rate of return of 9.3%. The analysts advised that Thompson Creek "may play the role of consolidator in the molybdenum industry."
"As the company is currently generating significant operating cash flow, has ‘borrowing' capacity due to its strong balance sheet, and has the ability to raise new equity efficiently since it is already a public company, Thompson Creek may be able to finance projects that a junior mining and/or developing company could not."
The analysts also noted that annual production of moly from Thompson Creek's mines could increase from 20 million pounds in 2007 to 34 million pounds in 2010.
Scotia also forecasts "big projects, big potential" for Idaho General Mines. They initiated coverage on the company with a 1-Sector Outperform recommendation and a one-year target price of Cdn$9.50, implying a 43.1% return.
With a potential annual production exceeding 60 million pounds from its two Nevada moly properties, Smith and Terentiew suggested that Idaho General "could become the largest pure-play molybdenum producer in the world." Noting the two projects have more 1,300 million pounds of molybdenum, the analysts declared that "Idaho General may have the largest molybdenum resource of any pure-play molybdenum developer or producer in the world."
Scotia rated Moly Mines with a 3-Sector Underperform recommendation and a one-year target price of Cdn$4, implying a potential return of -14.5%. The analysts noted Moly's Spinifex Ridge project in Western Australia is "one of the largest and most advanced stage molybdenum deposits currently being evaluated in the world." The deposit has a resource estimate of more than 600 million pounds of molybdenum.
"We believe that Moly Mines' key advantage over its competitors is its more advanced position in its stage of development," the analysts advised.
1 Recommendations
Loading...
Loading...
New Message
Please
login
to post a reply