the australian other rivals years away

Is Queensland Ores too clever by half?
Kevin Andrusiak
March 14, 2007

SURE the sceptics would argue that a company with a market capitalisation of $28 million is being too clever by half when it says it needs to send the hat around and raise $24.5 million.
They would argue, one might guess, that it is too big an ask, especially given that the company calling for the cash is still technically only a mining explorer.

But those who would be seriously considering investing their hard-earned cash via the Queensland Ores $24.5 milloin rights issue and placement have nothing to stop them believing the company's Wolfram Camp project will be Australia's next tungsten and molybdenum producing mine.

And the technicals behind the capital raising do look enticing enough to more than whet the market's appetite.

The placement, which needs to be given the seal of approval at an Extraordinary General Meeting of shareholders on April 16, is for 35 million new shares issued at 35c.

The non-renounceble rights issue will also see 35 million shares issued on the basis of one new share for two existing shares, also at 35c a piece.

But the best news is that subscribers to both the rights issue and the placement will get one option for every two shares exercisable at 35c a share up to the end of November next year, a point at which the company should have 12 months production under its belt.

Finally, the company is making all the right noise about the potential of Wolfram Camp - 90 kilometres south west of Cairns - where it wants to be in production sometime in the last quarter of 2007.

Just last month Queensland Ores boosed its total resources by 45 per cent. It now has banked away 876,000 tonnes of ore containing 3690 tonnes of tungsten and 1490 tonnes of molybdenum.
Only a few year's ago very few people would have been able to pronounce molybdenum, but as my colleague Robin Bromby has said often, it now is one of the more fashionable metals to be involved in. Especially as the world cries out for more stainless steel where molybdenum is seen as a lower cost alternative to nickel.

Moly Mines has a decent sized project called Spinifex Ridge in the West Australian mid-west while other molybdenum wannabes include PacMag Metals, Thor Mining, Intermin Resources and Frontier Resources.

Most of Queensland Ores' rivals are, however, years away from production.


Perth-based Marengo Mining has also been talking up its copper-molybdenum chances in Papua New Guinea, something it boasts as the biggest undeveloped system of its type in the southwest Pacific.

Managing director Les Emery is on the record as saying Rio Tinto's Bingham Canyon moly mine in Utah, the biggest of its type in the world, will be exhausted by 2013.

But there is also China, which holds about 75 per cent of known reserves, to factor into the equation. The Luoyang Luanchuan Molybdenum Group which claims to own the world's biggest deposit containing 2.06 million tonnes of moly.

According to recent reports, global moly production in 2005 was 181,000 tonnes.

But despite all the hype from the resources community, the price of moly has barely changed over the past 12 months as many others in the base metal fraternity went on a rollercoaster ride. From its high of $US40/lb in 2005, the price has stabilised to around $US27/lb over the course of 2007.
Tungsten prices have also steadied after rising from $US66 a tonne in early 2004 to $250 a tonne in February last year. The price has averaged around $US250 a tonne since.


However the stabilisation in moly prices didn't stop Queensland coal mining magnate Ken Talbot from joining the Queensland Ores party late last year.

Talbot spent $2.7 million in December to take a 13.6 per cent stake in the company.

Interestingly, he paid about 35c a share for the stake at a time when the shares were worth 28c.
Queensland Ores' boss Taff Greenwood said in a statement to the Australian Stock Exchange that the equity raising was "an efficient and fair way" of getting the dollars needed to bring Wolfram into production.

"The placement will bolster our registry with some quality longer term investors," he added.

And then in bold: "Following this equity raising, we anticipate that the company will be able to fully fund all development and commissioning activites at Wolfram Camp".

Demand for Queensland Ores shares was hot today in what was otherwise a dark day for the market. The small gain of 2c to 41c was a shining light on trading screens.