Chinese imports of molybdenum concentrate and molybdenum oxide nearly doubled from January to February as overseas sellers stepped up competition with Chinese producers. This did little, although, to correct prices. Molybdenum fell from four-year highs that peaked below $40 a lb to current lows under $9.00
At current prices, moly miners are at best breaking even. Industry participants are not certain when to pin point a recovery; however, indications suggest a pick up in late 2009 or early 2010. For now, business is slow leaving some dealers bracing themselves for an even tougher time in the second quarter. Traders said prices for molybdic oxide are currently going for between $8.30 and $8.80 a pound, while ferromolybdenum is a touch higher at $9.50 to $10 a pound.
Thompson Creek Metals’ CEO agrees that short-term demand will remain weak; however, he sees strengthening demand long term. Some steel producers have given word they may be ready to buy molybdenum again in the coming weeks, chief executive Kevin Loughery told an investor and analyst group last week. “We’ve had conversations with a variety of customers who tell us they are not in the market now, but next month or the month after, there will be some orders forthcoming,” he said. “While that is not hard information,” he added, “it is the kind of information the molybdenum miner and producer gets from its customers that it can usually rely on.”
Thompson Creek began selling molybdenum to Chinese buyers last November and has continued to do so since then, selling directly to steel producers who have contacted the miner for their metal. “So far, about 20 per cent of our material has gone to China,” said Loughery. However, the vast amount of output cuts could easily push prices well beyond past records, when demand rebounds. Steelmakers will struggle to secure supplies of molybdenum, in 2011, as the economic crisis spurs producers to shelve 100 million pounds of new supply, according to Erdene Resource Group
The now liquidated Sprott Molybdenum Corporation recently announced its 2008 year end results. On January 9th, 2009, the Corporation’s Board of Directors had determined that a distribution to shareholders of all or substantially all of the assets of the Corporation would be in the best interests of both the Corporation and its shareholders.
After reading the announced results, it becomes apparent why the company decided to liquidate. The Corporation suffered significant losses during fiscal 2008. For the twelve months ended December 31, 2008, portfolio investments generated a loss of 76.94 per cent, the net asset value per common share depreciated by 71.62 per cent and the value of the common stock declined by 71.46 per cent. During the year, the fair market value of portfolio investments declined below their cost, generating unrealised capital losses. At year end, unrealised capital losses amounted to approximately $69 million. During fiscal 2008, the Corporation sold its holdings of 599,803 lbs of physical molybdenum, in the form of molybdenum oxide, realizing a 2008 loss of $5.0 million on the sale.
As a result of the above developments, as at December 31, 2008 the Corporation’s assets of $68.0 million amounted to $0.3 million and included legal, audit, capital tax and other miscellaneous payables. The net asset value of the Corporation as at December 31, 2008 was $68 million or $1.72 per common share, as compared to $263 million or $6.06 per common share as at December 31, 2007. Throughout the first quarter of 2009, the manager continued to liquidate portfolio investments held by the Corporation and, as at March 26, 2008, the Corporation’s net asset per share was $1.74, of which $1.67 was held in cash, short term receivables and short term investments, net of liabilities.
Augusta Resource Corporation (TSX: AZC) has arranged for a non-brokered private placement of 3.35 million units at a price of $1.50 per unit for gross proceeds of $5,025,000. Each unit comprises one common share and one non-transferable share purchase warrant entitling the holder to purchase one common share at a price of $2.30 per common share for a period of one year following the close of the transaction. The shares were purchased by Mr. Beaty, who with this purchase has increased his position in Augusta to 12.3 per cent. Augusta is a base metals company focused on advancing the Rosemont Copper deposit near Tucson, Arizona. Rosemont currently hosts a large copper/molybdenum reserve that may account for about 10 per cent of US copper output once in production in late 2011.