big swooper, page-24

more stuff on moly January 4, 2005
Will MolyMania Hit the Juniors in 2005?

Synopsis: An obscure but ubiquitous metal called molybdenum underwent a little
noticed tenfold spot price increase during the past two years which has
started to catch the attention of the Canadian exploration industry.
Molybdenum is widely used in steel and other metal alloys to provide
hardness and corrosion resistance. Molybdenum's low toxicity has also
turned it into an important component of catalysts and lubricants, many
of which are used by the oil industry. Molybdenum demand has grown as a
result of the infrastructure development boom in China and the push to
develop and deliver new energy sources that ease global dependency on
Islamic oil. Molybdenum last boomed during the seventies when many of
the known molybdenum deposits in Alaska, British Columbia and western
United States were delineated. Prices collapsed under the pressures of
the 1982 recession and the arrival of molybdenum by-product production
from copper mines. Molybdenum languished in the $1-$3 per lb range for
more than two decades except for a short-lived spike in 1994-1995
related to a temporary mine shutdown. The world's needs were amply met
by Chinese production, several major North American primary molybdenum
mines such as Endako and Henderson, and price-insensitive by-product
production from North and South American copper mines. The sharp
molybdenum price increase in 2004 to nearly $35/lb is due partly to a
structural shift in demand, and partly due to processing bottlenecks.
The industry consensus is that current prices are unsustainable for the
simple reason that at this level an enormous portion of the in ground
inventory of molybdenum is very economic and if developed would soon
enough glut the market. In addition, existing molybdenum producers are
not operating at capacity, and there is some suspicion that the price
spike is due to forces similar to those which pushed American
electricity prices through the roof in 2000. The conventional view is
that prices will retreat sharply in 2005 as existing producers,
particularly the primary molybdenum mines which have been operating
below capacity, act to increase supply by processing higher grade
material or moving to full capacity. Less clear is the price level at
which molybdenum eventually stabilizes, which presents to the
speculative juniors the question of whether to ignore the stunning
price increase as a temporary aberration or to grab long abandoned
known deposits or good exploration targets and promote the story that
this time is different. One's willingness to believe that long term
prices higher than the historical average of the past decades lie ahead
depends on the degree one believes that the economic revolution
underway in Asia has staying power. I hold the view that MolyMania will
catch on in 2005 much as UraMania did in 2004 and will result in
substantial price increases for juniors with good pure molybdenum
projects.