Wird sich natürlich noch weissen, ob der heutige Kursaufschwung nur eine technische Gegenreaktion oder eine Trendwende war.
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Adanac das Molybdän-Invest!
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du hast Adanac gekauft? Nur ein Trade für dich oder was längerfristiges? Bei North American P. bist du doch auch erst rein oder?
2009 möchte Adanac in Produktion gehen und für den Minenbau benötigt man 600 Mio. $. Aber bei genau dieser Finanzierung happerts z. Zt., denn diese Finanzierung ist noch nicht durch, obwohl die Finanzierung schon längst beschlossene Sache sein sollte. Der Bau der Mine wurde jetzt sogar gestoppt! Klar dass der Aktienkurs darunter leidet und die Aktionäre ungeduldig werden. Die Marketcap beträgt mittlerweile keine 100 Mio. C-$ mehr! Für einen möglichen Juniorproduzenten ein Witz. Und genau darin liegt jetzt meine persönliche Spekulation. Gelingt die Finanzierung dürfte der Kurs explodieren. Gelingt sie nicht, ist die ganze Firmenexistenz in Gefahr (aber selbst dann gäbe es noch Übernahmespekulationen). Wenn die Finanzierung gelingt werde ich meine Position aufstocken und Adanac wird ein Longinvest. Gelingt sie nicht, war´s nur ein Zock. Jetzt bitte genau lesen.
Einiges spricht für ein Gelingen der Finanzierung: (Natürlich reine Spekulation!)
Vergangenen Mittwoch gab´s ein Meeting! ...Adanac to hold Atlin meeting on mining project changes... www.cbc.ca/canada/north/story/2008/02/06/adanac-mine.html
Seltsamerweise stieg am Freitag dann das Volumen heftig an und der Aktienkurs konnte 20 % dazugewinnen (das tägliche Durchschnittsvolumen beträgt 508,430 Aktien. Alleine am Freitag wurden 1,111,633 Aktien umgesetzt.) Vielleicht ist ja etwas "durchgesickert" denn laut der letzten Meldung sollte es im Februar Neuigkeiten zur Finanzierung geben: ...Activities associated with securing all of the financing required to build the Project will be accelerating rapidly in early February... www.adanacmoly.com/adanac_news_detail.php?newsid=175
Besitzer von Zinspapieren schlafen gut; Aktienbesitzer dagegen leben gut
February 15, 2008
Things Aren’t Easy Up At Ruby Creek, But Adanac Remains On Track
By Christian Gradley
There is no skirting the issue, Adanac Molybdenum needs money – the company requires C$600 million to put its Ruby Creek property into production. The attraction for any would-be backers of Adanac would be bringing an estimated C$2.5 billion molybdenum property into production by mid-to-late 2009 - more than a year ahead of any other competitor aiming to develop a primary source of the metal.
Early Autocad drawings of the Ruby Creek Mill
Ruby Creek is a low-grade bulk type deposit located about 40 kilometres northeast of Atlin. On current plans it ought to process 1,100 tonnes per hour, and produce 7.6 million tonnes of molybdenum annually, a figure based on the milling of 157 million tonnes grading 0.058% molybdenum. Construction is to cost between C$460 million and C$640 million. Adding tonnage from continued exploration, though, could speed up the company’s financing campaign. And, this is precisely what Adanac is hoping to be able to do with the approximately $7 million raised through flow-through financing in December. This year the company is considering following-up on its 2007 programme by drilling into the northwest wall of the proposed open pit at Ruby Creek. After intersecting 33.52 metres of 0.162% molybdenum, it is easy to see why the company believes there to be possible development potential in the northwest wall.
Ruby Creek is located in the extreme northwestern corner of British Columbia. Not totally remote though, as the property is situated a mere 124 kilometres from Whitehorse, the capital of the Yukon Territory. And location is the least of the company’s problems. At the forefront is finance and permitting. Adanac has enlisted the services of a U.S. investment bank to aid in its “marketing of the big package,” a C$600 million debt offering. The company, says Adanac executive chairman Larry Reaugh, is fully expecting to have secured the required monies before June, although it’s constantly struggling with cost inflation, and with the current state of the markets the terms might not be as sweet as they would have been a year ago. The company has already procured all of the major equipment it requires, and has spent approximately C$160 million. Millions of dollars have been made in cash down payments. The last remaining item is expected to be delivered in December. So things are moving forward well enough, and so long as the rest of the money comes in Adanac ought to be able to maintain the “18 month leading advantage” it presently prides itself on having.
The other crucial hurdle is permitting. Lately real progress has been made. On November 7th last year the company received the Special Use Permit from the British Columbia Ministry of Forests. This permit has allowed the company to upgrade access roads and associated earthworks. The company has also received its Mining Lease from the Ministry of Energy, Mines and Petroleum Resources and a Mines Act Permit, collectively allowing for mine site construction to commence.
More importantly, though, on September 11th 2007 the company received an environmental assessment certificate. This certificate, one of only three awarded in the past ten years by the government of British Columbia, is a major milestone for the company. Reaugh is exceptionally pleased to have overcome “this major hurdle,” as provincial and federal agencies, the Taku River Tlingit First Nation, and Atlin community members were all a part of this decision making process. At present, the company is in talks with the Taku River Tlingit First Nation over an Impact Benefits Agreement to ensure various environmental and socioeconomic benefits are delivered if mine is successfully developed, and that compensation is given for the loss of traditional Taku River Tlingit land.
But with all that work under its belt, Adanac was recently taken by surprise by a newly ordered federal environmental review. Given the federal government’s involvement in the environmental assessment issued last September, in all likelihood the review should be completed within six months. But it’s having an impact on sentiment, and recently Adanac has been forced to announce a slowing of development work. Reaugh says that the slowdown will allow the company to conserve funds “required to fulfill equipment commitments” and will result in an inevitable slip in Ruby Creek’s timeline. “Yet nothing”, he says “will be demobilized from the site.”
With construction still set to begin in June, though, it is crunch time for the company’s C$600 million debt financing. Since, as Reaugh reaffirms, “Canada needs mines,” and molybdenum is facing tightening supply and increasing demand, you’d still bet on the bankers taking a bite.
Things Aren’t Easy Up At Ruby Creek, But Adanac Remains On Track
By Christian Gradley
There is no skirting the issue, Adanac Molybdenum needs money – the company requires C$600 million to put its Ruby Creek property into production. The attraction for any would-be backers of Adanac would be bringing an estimated C$2.5 billion molybdenum property into production by mid-to-late 2009 - more than a year ahead of any other competitor aiming to develop a primary source of the metal.
Early Autocad drawings of the Ruby Creek Mill
Ruby Creek is a low-grade bulk type deposit located about 40 kilometres northeast of Atlin. On current plans it ought to process 1,100 tonnes per hour, and produce 7.6 million tonnes of molybdenum annually, a figure based on the milling of 157 million tonnes grading 0.058% molybdenum. Construction is to cost between C$460 million and C$640 million. Adding tonnage from continued exploration, though, could speed up the company’s financing campaign. And, this is precisely what Adanac is hoping to be able to do with the approximately $7 million raised through flow-through financing in December. This year the company is considering following-up on its 2007 programme by drilling into the northwest wall of the proposed open pit at Ruby Creek. After intersecting 33.52 metres of 0.162% molybdenum, it is easy to see why the company believes there to be possible development potential in the northwest wall.
Ruby Creek is located in the extreme northwestern corner of British Columbia. Not totally remote though, as the property is situated a mere 124 kilometres from Whitehorse, the capital of the Yukon Territory. And location is the least of the company’s problems. At the forefront is finance and permitting. Adanac has enlisted the services of a U.S. investment bank to aid in its “marketing of the big package,” a C$600 million debt offering. The company, says Adanac executive chairman Larry Reaugh, is fully expecting to have secured the required monies before June, although it’s constantly struggling with cost inflation, and with the current state of the markets the terms might not be as sweet as they would have been a year ago. The company has already procured all of the major equipment it requires, and has spent approximately C$160 million. Millions of dollars have been made in cash down payments. The last remaining item is expected to be delivered in December. So things are moving forward well enough, and so long as the rest of the money comes in Adanac ought to be able to maintain the “18 month leading advantage” it presently prides itself on having.
The other crucial hurdle is permitting. Lately real progress has been made. On November 7th last year the company received the Special Use Permit from the British Columbia Ministry of Forests. This permit has allowed the company to upgrade access roads and associated earthworks. The company has also received its Mining Lease from the Ministry of Energy, Mines and Petroleum Resources and a Mines Act Permit, collectively allowing for mine site construction to commence.
More importantly, though, on September 11th 2007 the company received an environmental assessment certificate. This certificate, one of only three awarded in the past ten years by the government of British Columbia, is a major milestone for the company. Reaugh is exceptionally pleased to have overcome “this major hurdle,” as provincial and federal agencies, the Taku River Tlingit First Nation, and Atlin community members were all a part of this decision making process. At present, the company is in talks with the Taku River Tlingit First Nation over an Impact Benefits Agreement to ensure various environmental and socioeconomic benefits are delivered if mine is successfully developed, and that compensation is given for the loss of traditional Taku River Tlingit land.
But with all that work under its belt, Adanac was recently taken by surprise by a newly ordered federal environmental review. Given the federal government’s involvement in the environmental assessment issued last September, in all likelihood the review should be completed within six months. But it’s having an impact on sentiment, and recently Adanac has been forced to announce a slowing of development work. Reaugh says that the slowdown will allow the company to conserve funds “required to fulfill equipment commitments” and will result in an inevitable slip in Ruby Creek’s timeline. “Yet nothing”, he says “will be demobilized from the site.”
With construction still set to begin in June, though, it is crunch time for the company’s C$600 million debt financing. Since, as Reaugh reaffirms, “Canada needs mines,” and molybdenum is facing tightening supply and increasing demand, you’d still bet on the bankers taking a bite.
In Kanada im Moment, das ist nicht nur ne Gegenreaktion bei AUA, ich glaube eher das da in Kürze was kommt und was durchgesickert ist. Lassen wir uns überraschen....
Tageswert
Tageswert
das ist nicht nur ein Gap close, endlich geht es hier auch mal wieder nach oben. Vielleicht die Brückenfinanzierung oder vielleicht soger Info über die Gesamtfinanzierung?
Tageswert
Tageswert
Adanac appoints Stone as CEO
2008-03-27 16:22 ET - News Release
Mr. David Stone reports:
ADANAC ANNOUNCES ORGANIZATIONAL CHANGES
The Board of Directors of Adanac Molybdenum Corp. (TSX:AUA)(PINK SHEETS:AUAYF)(FRANKFURT:A9N) is pleased to announce that Mr. David Stone has accepted appointment as Chief Executive Officer of the company. Mr. Stone has been an independent director of the company for two years and his appointment puts to full use his extensive mining and corporate experience to enhance corporate governance and aggressively advance the company's Ruby Creek Molybdenum Project.
Mr. Michael MacLeod will continue as company President and Chief Operating Officer. The reduction in his corporate responsibilities will allow Mr. MacLeod to concentrate on securing the full project funding required to build the Ruby Creek mine, processing facilities and related infrastructure.
2008-03-27 16:22 ET - News Release
Mr. David Stone reports:
ADANAC ANNOUNCES ORGANIZATIONAL CHANGES
The Board of Directors of Adanac Molybdenum Corp. (TSX:AUA)(PINK SHEETS:AUAYF)(FRANKFURT:A9N) is pleased to announce that Mr. David Stone has accepted appointment as Chief Executive Officer of the company. Mr. Stone has been an independent director of the company for two years and his appointment puts to full use his extensive mining and corporate experience to enhance corporate governance and aggressively advance the company's Ruby Creek Molybdenum Project.
Mr. Michael MacLeod will continue as company President and Chief Operating Officer. The reduction in his corporate responsibilities will allow Mr. MacLeod to concentrate on securing the full project funding required to build the Ruby Creek mine, processing facilities and related infrastructure.
Adanac Announces Organizational Changes
Thursday, March 27th 2008 - Vancouver, British Columbia (MOLY @ 33.25US/lb)
The Board of Directors of Adanac Molybdenum Corp. (TSX: AUA) (PINKSHEETS: AUAYF) (FRANKFURT: A9N) is pleased to announce that Mr. David Stone has accepted appointment as Chief Executive Officer of the company. Mr. Stone has been an independent director of the company for two years, and his appointment puts to full use his extensive mining and corporate experience to enhance corporate governance and aggressively advance the company’s Ruby Creek Molybdenum Project.
Mr. Michael MacLeod will continue as company President and Chief Operating Officer. The reduction in his corporate responsibilities will allow Mr. MacLeod to concentrate on securing the full project funding required to build the Ruby Creek mine, processing facilities and related infrastructure.
To provide continuity and a seamless transition, Mr. Larry Reaugh has agreed to step down as Executive Chairman of the Board and as a director of the company. Mr. Reaugh will remain active in the affairs of the company, providing the benefits and insights of his long experience running junior mining companies as a strategic consultant to management and the Board. The Board, management and staff of Adanac would like to explicitly recognize and thank Mr. Reaugh for his substantial contributions as the initiator and driving force behind Adanac and its Ruby Creek Project.
Adanac Molybdenum Corp. is engaged in the exploration and development of mines to produce molybdenum and other ferro-alloy metals. Its flagship property is the Ruby Creek molybdenum project located near Atlin, BC. The property contains an open pit reserve of 157.7 million tonnes grading 0.058% Mo using a 0.040% cut-off grade.
On Behalf of Management
ADANAC MOLYBDENUM CORPORATION
David Stone
Chief Executive Officer
Thursday, March 27th 2008 - Vancouver, British Columbia (MOLY @ 33.25US/lb)
The Board of Directors of Adanac Molybdenum Corp. (TSX: AUA) (PINKSHEETS: AUAYF) (FRANKFURT: A9N) is pleased to announce that Mr. David Stone has accepted appointment as Chief Executive Officer of the company. Mr. Stone has been an independent director of the company for two years, and his appointment puts to full use his extensive mining and corporate experience to enhance corporate governance and aggressively advance the company’s Ruby Creek Molybdenum Project.
Mr. Michael MacLeod will continue as company President and Chief Operating Officer. The reduction in his corporate responsibilities will allow Mr. MacLeod to concentrate on securing the full project funding required to build the Ruby Creek mine, processing facilities and related infrastructure.
To provide continuity and a seamless transition, Mr. Larry Reaugh has agreed to step down as Executive Chairman of the Board and as a director of the company. Mr. Reaugh will remain active in the affairs of the company, providing the benefits and insights of his long experience running junior mining companies as a strategic consultant to management and the Board. The Board, management and staff of Adanac would like to explicitly recognize and thank Mr. Reaugh for his substantial contributions as the initiator and driving force behind Adanac and its Ruby Creek Project.
Adanac Molybdenum Corp. is engaged in the exploration and development of mines to produce molybdenum and other ferro-alloy metals. Its flagship property is the Ruby Creek molybdenum project located near Atlin, BC. The property contains an open pit reserve of 157.7 million tonnes grading 0.058% Mo using a 0.040% cut-off grade.
On Behalf of Management
ADANAC MOLYBDENUM CORPORATION
David Stone
Chief Executive Officer
Adanac Molybdenum halted at 6:27 a.m. PT
2008-04-16 09:29 ET - Halt Trading
Adanac Molybdenum Corp. has been halted effective 6:27 a.m. Pacific Time on April 16, 2008, pending news.
2008-04-16 09:29 ET - Halt Trading
Adanac Molybdenum Corp. has been halted effective 6:27 a.m. Pacific Time on April 16, 2008, pending news.
Headline: Adanac Announces $80 Million Bridge Financing Offer
Symbol: AUA
VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 16, 2008) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Adanac Molybdenum Corporation (TSX:AUA)(PINK SHEETS:AUAYF)(FRANKFURT:A9N) today announced the Company has signed a term sheet with a leading global institutional investor to provide $80 million bridge financing to fund continued development of the company's proposed Ruby Creek molybdenum project. The financing would be in the form of senior secured notes, and is subject to regulatory approval, due diligence by the investor and mutual agreement of definitive terms; with final acceptance by both parties expected by mid-May, 2008.
"This financing would advance our Ruby Creek project to the next level" said Dr. David Stone, CEO. "The funding would enable Adanac to continue its engineering and construction planning activities and take possession of processing equipment we have ordered for the molybdenum mine. It represents a strong vote of confidence from the financial market for building the project, and would provide the funds to see the company through the time period to secure the balance of the money necessary to build and start-up the mine, processing facilities and related infrastructure."
The offer was arranged through Adanac's United States based investment banker and forms part of the overall project financing initiative; underway since it was previously announced on October 17, 2007; which is contemplated as a debt and equity offering of approximately $750 million. Completion of the balance of the project financing is targeted for the summer of 2008.
Adanac Molybdenum Corporation is engaged in the exploration and development of mines to produce molybdenum and other ferro-alloy metals. Its flagship property is the Ruby Creek molybdenum project located near Atlin, BC. The property contains an open pit reserve of 157.7 million tonnes grading 0.058% Mo using a 0.040% cut-off grade. This news release has been reviewed by Michael Petrina, P.Eng. a qualified person pursuant to National Instrument 43-101.
On Behalf of Management
Symbol: AUA
VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 16, 2008) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Adanac Molybdenum Corporation (TSX:AUA)(PINK SHEETS:AUAYF)(FRANKFURT:A9N) today announced the Company has signed a term sheet with a leading global institutional investor to provide $80 million bridge financing to fund continued development of the company's proposed Ruby Creek molybdenum project. The financing would be in the form of senior secured notes, and is subject to regulatory approval, due diligence by the investor and mutual agreement of definitive terms; with final acceptance by both parties expected by mid-May, 2008.
"This financing would advance our Ruby Creek project to the next level" said Dr. David Stone, CEO. "The funding would enable Adanac to continue its engineering and construction planning activities and take possession of processing equipment we have ordered for the molybdenum mine. It represents a strong vote of confidence from the financial market for building the project, and would provide the funds to see the company through the time period to secure the balance of the money necessary to build and start-up the mine, processing facilities and related infrastructure."
The offer was arranged through Adanac's United States based investment banker and forms part of the overall project financing initiative; underway since it was previously announced on October 17, 2007; which is contemplated as a debt and equity offering of approximately $750 million. Completion of the balance of the project financing is targeted for the summer of 2008.
Adanac Molybdenum Corporation is engaged in the exploration and development of mines to produce molybdenum and other ferro-alloy metals. Its flagship property is the Ruby Creek molybdenum project located near Atlin, BC. The property contains an open pit reserve of 157.7 million tonnes grading 0.058% Mo using a 0.040% cut-off grade. This news release has been reviewed by Michael Petrina, P.Eng. a qualified person pursuant to National Instrument 43-101.
On Behalf of Management
Auf Wiedersehen Allzeittiefs. Es geht weiter mit dem Handel, und die lassen es krachen...
Hi Tageswert
Was kann man von der Meldung jetzt erwarten? Hört sich ja nicht schlecht an und wenn das wirklich so ein Meilenstein ist wie Stone gesagt hat, dann könnten die jetzigen Kurse doch bald Geschichte sein, hoffen wir das Beste.
Bin denke ich zu guten Zeitpunkten eingestiegen und die Stabilisierung um die 0,30 € hat auch gut ausgesehen.
Wenn Du mir ein kurzes Update aus Deiner Sicht schreiben könntest wär ich Dir sehr dankbar.
Bis dann und ich hoffe alle Aktionäre die Durchgehalten haben werden belohnt.
Ok
Ciao
Zelle
Was kann man von der Meldung jetzt erwarten? Hört sich ja nicht schlecht an und wenn das wirklich so ein Meilenstein ist wie Stone gesagt hat, dann könnten die jetzigen Kurse doch bald Geschichte sein, hoffen wir das Beste.
Bin denke ich zu guten Zeitpunkten eingestiegen und die Stabilisierung um die 0,30 € hat auch gut ausgesehen.
Wenn Du mir ein kurzes Update aus Deiner Sicht schreiben könntest wär ich Dir sehr dankbar.
Bis dann und ich hoffe alle Aktionäre die Durchgehalten haben werden belohnt.
Ok
Ciao
Zelle
Ganz einfach die Brückenfinanzierung ist Grundvoraussetzung für die spätere Minenfinanzierung. Dadurch wird auch möglichen Finanzierungspartnern ein Kurshalten signalisiert. Manche haben bereits Adanac totgeschrieben, dies ist aber heute ein wichtiger Schritt zum nächsten. Minenaufbauten können weitergehen, Material ist bereis bestellt, Finanzierung erfolgt hoffentlich im Sommer und dann schau dir TCM an und du weisst wie es weitergeht.
Ich will nicht mit Kurszielen rumwerfen, aber wenn die Finanzierung durch ist sind hier ein paar Euro pro Share drin.
Tageswert
Ich will nicht mit Kurszielen rumwerfen, aber wenn die Finanzierung durch ist sind hier ein paar Euro pro Share drin.
Tageswert
Vielen Dank für die schnelle Antwort.
So interpretiere ich die Nachricht auch und das könnte so etwas wie ein Startschuss sein, Moly Mines hat es vorgemacht!
Fianzierung ist jetzt der nächste Schritt und dann werden andere Adressen aufmerksam werden.
Bis bald
Zelle
P.S. Ich bin ein stiller Mitleser und freue mich immer über Deine Beiträge, mach weiter so!!
So interpretiere ich die Nachricht auch und das könnte so etwas wie ein Startschuss sein, Moly Mines hat es vorgemacht!
Fianzierung ist jetzt der nächste Schritt und dann werden andere Adressen aufmerksam werden.
Bis bald
Zelle
P.S. Ich bin ein stiller Mitleser und freue mich immer über Deine Beiträge, mach weiter so!!
wer nun tiefstmöglich investiert ist, hat mit AUA sicherlich in nächster Zeit sehr viel Spass. Der Startschuss ist bereits heute gefallen.
Bitte Bitte, hast Dir verdient!
Meine Kaufe waren bei 0,50 € und 0,40 €, damit kann ich leben!
Meine Kaufe waren bei 0,50 € und 0,40 €, damit kann ich leben!
www.miningweekly.com/article.php?a_id=131517
Kampf gegen die Liquiditätskrise:
Adanac Molybdenum erhält Angebot über Brückenfinanzierung
Adanac Molybdenum hat soeben vermeldet, ein Angebot für eine Brückenfinanzierung über 80 Millionen US-Dollar (USD) erhalten zu haben. Der kanadische Molybdän-Explorer hätte mit diesem Angebot die Möglichkeit, die Arbeiten an der geplanten Ruby-Creek-Mine planmäßig fortzusetzen. Das Projekt verfügt über 157,7 Millionen Tonnen Molybdän und soll eines der größten reinen Molybdän-Projekte der Welt werden. Die Brückenfinanzierung soll in Form einer festverzinsliche Anleihe geleistet und bis Mitte Mai von beiden Parteien akzeptiert werden. Die Aktie des in den vergangenen Monaten deutlich abgestraften Explorers sprang nach der Ankündigung in Frankfurt rund vierzig Prozent nach oben. Immer wieder war ein Erfolg der Finanzierungsrunde über insgesamt 750 Millionen USD für den Minenbau angezweifelt worden. Die nun vermeldete Übergangsfinanzierung mit einem “führenden institutionellen Investor” macht den leidgeprüften Adanac-Aktionären neue Hoffnung.
Adanac Molybdenum erhält Angebot über Brückenfinanzierung
Adanac Molybdenum hat soeben vermeldet, ein Angebot für eine Brückenfinanzierung über 80 Millionen US-Dollar (USD) erhalten zu haben. Der kanadische Molybdän-Explorer hätte mit diesem Angebot die Möglichkeit, die Arbeiten an der geplanten Ruby-Creek-Mine planmäßig fortzusetzen. Das Projekt verfügt über 157,7 Millionen Tonnen Molybdän und soll eines der größten reinen Molybdän-Projekte der Welt werden. Die Brückenfinanzierung soll in Form einer festverzinsliche Anleihe geleistet und bis Mitte Mai von beiden Parteien akzeptiert werden. Die Aktie des in den vergangenen Monaten deutlich abgestraften Explorers sprang nach der Ankündigung in Frankfurt rund vierzig Prozent nach oben. Immer wieder war ein Erfolg der Finanzierungsrunde über insgesamt 750 Millionen USD für den Minenbau angezweifelt worden. Die nun vermeldete Übergangsfinanzierung mit einem “führenden institutionellen Investor” macht den leidgeprüften Adanac-Aktionären neue Hoffnung.
In Kürze sollte das Management den endgültigen Abschluss der Brückenfinanzierung bekannt geben.
Breaking News
Adanac Extends Closing
08:41 EDT Thursday, May 22, 2008
VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 22, 2008) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Adanac Molybdenum Corporation (TSX:AUA)(PINK SHEETS:AUAYF)(FRANKFURT:A9N) today announced it has extended the closing of the financing previously announced on April 16,2008 to the end of the week in response to documentation delays and the Victoria Day Holiday in Canada.
Adanac Extends Closing
08:41 EDT Thursday, May 22, 2008
VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 22, 2008) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Adanac Molybdenum Corporation (TSX:AUA)(PINK SHEETS:AUAYF)(FRANKFURT:A9N) today announced it has extended the closing of the financing previously announced on April 16,2008 to the end of the week in response to documentation delays and the Victoria Day Holiday in Canada.
AUA UPDATE
For months I have sat back quietly and anxiously observing the unfolding events surrounding Adanac Molybdenum Corp. Like any shareholder, I am anything but happy with the performance of the shares.
As all of you know; AUA is in a position to actively pursue the raising of funds to put Ruby Creek into production. Unfortunately for shareholders the timing of raising these funds coincided with the subprime meltdown. Make no mistake about the seriousness of the subprime meltdown. This is a direct challenge to the financial system of the US as well as the rest of the world.
As a result of this meltdown in conjunction with other things which I will address later on, money that is available for investments in projects such as Ruby Creek has become overly cautious. I can fully understand this hesitation and I also understand, but totally disagree, with any kind of rationale attempting to explain or justify the share price at these levels.
TIME TO PUT IT ALL ON THE TABLE!
Many concerned investors have called and emailed me over the last several months with very heavy concerns about the investments they have made in AUA. Technicians and sophisticated investors understand the ugly and pathetic price action in the stock is not a good forecast of things to come. In every case I have encouraged investors to examine what they see going forward in the molybdenum markets.
It is times like this where your opinion may differ from mine and therefore it is necessary for each you to do your own homework and come to your own conclusions
HEALTH OF THE MOLYBDENUM MARKET:
Ongoing research in the moly market reveals that the demand for moly continues to increase at 5%+/year while the supply continues to fall at 5%/year. Analysts continue to foresee this pattern into the future until new supply is able to come online. The price of moly has been firm and slowly rising for many months and analysts believe the price of moly will continue to move higher. The growth in China and India continues to be very strong and few analysts expect any weakness of any significance for a long time to come. Most believe a slowdown in the US will have very little impact upon the growth in these two countries. In other words, the rest of the world, through the development of their own markets, continues to wean itself off of the dependence of the US consumer. The time is rapidly approaching where internal growth in China and India is reaching the stage where it is becoming an absolute necessity to keep the valuable natural resources that they produce available for use only at home.
I believe there is a very real possibility that a decade from now the world will look at the natural resource markets and then wonder how companies with the resources of AUA were allowed to be overlooked, ignored and eventually bought out at prices that in no way reflect the future fully developed value of these in ground and untapped resources. The fact that China has now implemented policies which inhibit and prohibit the future free trade of these resources mined within their own borders is proof to me that those, on the demand side of the market, who know and understand the supply shortfalls of the future, are sending a message that should be heard and listened to by all.
In otherwords, I continue to view the overall health of the moly market as being very positive to those who benefit from taking moly out of the ground. As a result, I view investments in the natural resource sector and base metals sector as investments that offer the potential for exceptional returns to those who have the foresight to recognize the fact that there is a limited supply to meet the increasing demand which may stay very strong and continue to grow for years to come.
JUNIOR MINING SUPPORT LACKING;
History has shown, mining projects, like Ruby Creek, that have advanced to the stage of development, where production is only a matter of time and money usually have many financing options available to them in raising the funds to go into production.
I have been involved with AUA for over three years now. In that period of time I have closely observed how the management of Ruby Creek has turned an exploration project into an economic body of ore destined to become a major primary molybdenum mine.
What most people do not realize about the AUA Ruby Creek story is the fact that this whole project was funded and brought to this stage of development without the aid of any major fund or institution. I find this to be both remarkable and very confusing. Remarkable in light of the point that I do not know of any other major projects, not to say there are none, that have advanced to this stage of development where the only obstacle left is the major financing to go into production without having the support of any major funds and institutions.
I am a numbers cruncher and when I put numbers together dealing with the estimated future revenues based on criteria that supports these numbers I find myself real confused in the fact that funds, institutions, pension plans, moly producers as well as moly end users have not, to this point in time, been motivated to take an interest in AUA and Ruby Creek. When estimates from Ruby Creek are compared with the production and earnings from current moly producers I find that Ruby Creek has estimates that, in my opinion, most moly producers would or should welcome as a part of their own.
In a prior AUA Update dated last December I laid out the format as to how I arrived at the numbers I use to get the estimates I have. For those of you who may not have that article I would be glad to resend it to you if would like to read it again or if you did not receive it in the first place.
For purposes of illustration, I will now take these numbers and show investors what AUA, assuming it were in production, would contribute to the actual year end numbers of a major mining company. Everyone familiar with the base metals industry is aware of Teck Cominco TCK therefore I am going to use the recently reported year end 2007 numbers from TCK for the purposes of illustrating my estimated EBIDA numbers for AUA and how they would compare to the actual 2007 EBIDA numbers from TCK.
THE NUMBERS COMPARED TO TECK COMINCO TCK 2007 RESULTS
With financing in 2008 AUA should be in production in the 1st half of 2010. I will use multiple costs and production numbers to show a wide range of potential EBIDA Cash Flow for comparison sake.
TCK 2007 Results
Total TCK outstanding shares 442,000,000
ACTUAL TCK 2007 EPS $3.74
Total TCK 2007 Earnings $1,615 Billion
TCK 2007 EBIDA $2.6Billion
Average moly price received by TCK in 2007 = $30/lb
AUA EBIDA Numbers assuming $30/lb/Rev with three different cost levels and four different production levels. These are my numbers and I personally believe 12,000,000lbs/yr production to be very conservative with the likelihood that real production will fall between the 15,000,000lbs/yr and 18,000,000 lbs/yr.
Cap-ex of Ruby Creek is now expected to be around $700,000,000
Below is a table showing AUA EBIDA Numbers (in millions) based upon production and costs as listed in the table and price/lb of moly at $30/lb.
AUA ESTIMATED EBIDA CASH FLOW IN MILLIONS
Cost/lb $ 8 $10 $12
Lbs/year
12,000,000 $264 $240 $216
15,000,000 $330 $300 $270
18,000,000 $396 $360 $324
21,000,000 $462 $420 $378
Worst case payback $700,000,000 cap ex divided by $216,000,000 = 3.24 years
Best case payback $700,000,000 divided by $462,000,000 = 1.515 years
Using 15,000,000lbs/yr and 18,000,000lbs/yr gives us payback of 2.59-1.767 years
In this section I will compare the Estimated AUA EBIDA Numbers as a percentage of the 2007 TCK EBIDA Numbers
% AUA EBIDA VS TCK 2007 EBIDA OF $2.6 B
Cost/Lb $8 $10 $12
LBS/YR
12,000,000 10.1% 9.23% 8.30%
15,000,000 12.69% 11.54% 10.38%
18,000,000 15.23% 13.85% 12.46%
21,000,000 17.77% 16.15% 14.54%
Here again on a worst case basis AUA would increase the EBIDA of TCK by 8.3% using 12,000,000 lb/prod/yr with a $12/lb cost and 10.1% using an $8 cost/lb. Using the more likely 15,000,000 lb/yr with a $12/lb cost EBIDA of TCK would increase by 10.38% and 12.69% using $8/cost/lb. With 18,000,000 lb/yr with a cost of $12/lb would increase TCK EBIDA by 12.46% and 15.23% using $8/lb cost.
These numbers alone do not mean much until the cost associated to acquire AUA are taken into consideration.
AUA currently has roughly 150,000,000 shares outstanding fully diluted. With a current market price of roughly $.75/sh the total market cap of AUA is a paltry $112,500,000. The total picture becomes highly visible when one realizes that for Teck Cominco to buy AUA out near its all-time high of $3.00/sh dilution to TCK with 442,000,000 using its own stock as payment at the current price of $45/sh would be:
Aua market cap = $450,000,000 Divided by the current market price of TCK @ $45/sh = 10,000,000 shares dilution to TCK or 10,000,000 divided by 442,000,000 = 2.26% dilution to TCK
I know that in the case of AUA everything is an estimate and the 18 month construction time frame plus the Cap-ex cost of $700,000,000 is not taken into consideration. But the real question I have for the management of TCK is “wouldn’t you like to increase your EBIDA numbers from 8.3% to 15.23% for dilution of only 2.26% to your shareholders?” The added bonus to this is the extra12,000,000-18,000,000lbs of molybdenum you will produce a year. The addition of AUA would more than triple your 2007 moly production of 7,350,000 lbs.
At year end Teck Cominco had a cash balance of $1,400,000,000 and a 2007 cash flow of $1,700,000,000. With this size of a “war chest” I find it confusing to understand, knowing that AUA is still first in line to come into production and the fact that AUA is a Canadian Project, how an initial investment in the open market of $11,250,000, or .8% of cash on hand, with AUA @ $.75/sh giving TCK an initial 10% ownership of AUA would not be something well worth considering just to get a “little toe in the water.” I find it very difficult to refer to this as an investment since we all know that if Teck Cominco’s name were to become associated with AUA the price of AUA”s stock would soar overnight making this investment a home run. Picking up AUA shares in the open market at the current depressed prices would also decrease the overall price paid to acquire AUA in the event of a buyout.
NEXT IS THOMPSON CREEK METALS TCM:
Since Blue Pearl bought out the privately owned Thompson Creek Mines I have been a little envious. Overnight this little company hit the big time by becoming the owners of the 4th and 5th largest primary moly mine producers in the world. The purchase of Thompson Creek turned out to be a real coup. I have said this in recent articles and time is proving that these guys seem to know what they are doing.
At this time Thompson Creek TCM has $236,000,000 in long term debt remaining from the buyout of Thompson Creek. This figure fell from $402,000,000 the year before. This $166,000,000 decrease in long term debt equates to a decrease of 42% in their long term debt. After paying their debt down 42% Thompson Creek was still able to post net earnings of $157,000,000 or $1.24/sh fully diluted. These earnings were realized from 75% ownership of the Endako Mine, the Thompson Creek Mine and a wholly owned metallurgical facility near Pittsburgh Pa. that roasts 10% of the world’s molybdenum.
Total TCM moly production for 2007 was less than 20,000,000lbs which was sold for an average price of $28.77/lb. TCM estimates that moly production for 2008 from the Endako Mine (75% net) will range from 6,500,000-7,500,000lbs and the Thompson Creek Mine is expected to have production of 16,500,000-17,000,000lbs. This gives TCM total estimated 2008 moly production numbers of 23,000,000-24,500,000lbs.
TCM has 145,000,000 fully diluted shares outstanding @ $20/sh TCM has a market cap of roughly $3,000,000,000. Now I want to do something a little different.
Let’s assume that TCM does achieve moly production of 25,000,000 lbs and AUA has production of 15,000,000lbs/year when it comes online in 2010. The PA roaster lost money in 2007 so I will not include anything for it in the numbers I am going to show.
Estimated 2008 production of 25,000,000lbs moly has equated into a market cap of $3,000,000,000.
AUA estimated production beginning second half 2010 is 15,000,000 lbs/year = 60% of TCM 2008 estimated production numbers. Now I know the capital has to be raised and there is probably a minimum of an 18 month timeframe to put Ruby Creek into production after the money is raised but the question I have here is “if all things were equal and AUA was owned by TCM “would the market cap of TCM be increased by 60% or $1,800,000,000 since 15,000,000lbs production = 60% of 25,000,000lbs?”
$3,000,000,000 X 60% = $1,800,000,000
Now deduct $1,000,000,000 for production and financing costs leaving $800,000,000 of future net worth that will increase proportionately as the debt to put Ruby Creek into production is paid off.
It is also very important for investors to understand that Ruby Creek has in excess of 20 years worth of reserves and the recent drilling has found what is expected to be 2 new bodies of ore with grades well in excess of the conservative grades stated in the 2006 feasibility report. Aua is expecting additional assay results from drilling that was completed in 2007. You must also remember that the best grades the company has are to be found in these recent drill programs. When Ruby Creek comes online, if it were owned by TCM, would make a very nice addition to Endako and Thompson Creek since both of these mines have their best years of production behind them.
If the $800,000,000 were applicable then that would value AUA at a substantially higher price than the current market of $.75/sh with a total market cap of $112,500,000.
$800,000,000 divided by 150,000,000 AUA fully diluted shares = $5.23/sh
Again my point comes back to the fact that companies like Teck Cominco and Thompson Creek Metals would be well ahead of the game by owning Ruby Creek while at the same time playing defense and denying Ruby Creek’s production from those they view as competition. This brings me to the last point I want to make in dealing with another possible mine that is being talked about as being reactivated.
THE CLIMAX MINE AND FREEPORT MCMORAN FMX:
“Why reactivate the Climax Mine?”
Freeport McMoRan FMX is the largest producer of molybdenum in the world. I have no intentions of breaking down the numbers in FMX like I did for TCK. What I do find as very important here is the fact that FMX has stated they will reactivate the Climax Mine in Colorado. Now this could reflect two thoughts. The first is the intention to really bring the Climax Mine back online and into production.
The second thought is to use this as a deterrent to keep financing from becoming available to those who need it to get their moly mines online. Creating the illusion of a future glut of moly is an easy way to slow new mines from coming online. This is a great defensive move as it keeps the production of moly to those who are already there. In essence the pie is split between a small group of producers.
There is proof moly producers believed moly prices would fall back to the old levels as major moly producers high-graded their ore bodies cherry picking the best grades. The high-grading of their ore bodies can only mean a supply decrease in the future as these same producers are forced to produce from lower grade bodies of ore.
It appears that anyone who felt moly prices would retrace to the old levels were wrong.
The only man I know of who had the future supply and demand for moly mapped out correctly was the “Founding Father” of AUA Larry Reaugh. Make no mistake about the fact that Larry Reaugh was several years ahead of anyone else when it came to recognizing the future for base metals. I will get Into Larry lastly when I address the recent changes in the corporate management of AUA.
Now back to point one of reactivating the Climax Mine. The question I have here is real simple “WHY?” This mine has been shut down for years. The costs associated with reopening and permitting this mine could be competitive with the costs associated with putting Ruby Creek into production by the time FMX does all the work and receives the permits.
I have read that there is a billion gallons of contaminated water within the underground structure of the Climax Mine that must be dealt with. Who knows what the true cost and time constraints are going to be to clean up this problem? Who knows what the permitting hassles are going to be? I can see this as possibly becoming a nightmare of gigantic proportions before it is all said and done. In the end permits could still be denied.
On the other hand, everything has fallen into place for AUA. The question I have for the management of FMX is real simple “why would you go through all the hassles of reactivating the Climax Mine when you have Ruby Creek in a tidy package waiting to be financed?” By turning your attentions to Ruby Creek you would be denying your competition the opportunity to acquire Ruby Creek and the molybdenum supply that will come out of the ground. The bonus to all this is the fact that you would still own the Climax Mine and if necessary have the option to reactivate it anytime you want while denying your competition ownership rights of AUA.
At this point in time Ruby Creek is like a neatly wrapped Christmas present under the tree just waiting to be opened by its eventual owners.
Now I want to compare Ruby Creek to a competitive project called Mount Hope owned by General Moly GMO.
MOUNT HOPE OWNED BY GENERAL MOLY GMO:
Here is another company that I must admit I have to tip my hat too. These guys through all their management changes seem to have their project on the right track. I am impressed with the support they have garnered in moving forward. I believe these guys have strengths where the management of AUA has shown weakness. These guys have the institutional support necessary to move their project along in a manner that will keep dilution to a minimum.
Gmo has Arcelor Mittal owning 10% of the company and Posco stepping up with financing to where they will own 20% of the moly that comes out of the ground. These companies are the #1 and #3 steel companies in the world. As end users of moly they understand the growth in demand as well as the supply constraints of the moly market. Mt Hope enjoys the advantage of having 1,300,000,000 lbs of reserves versus AUA’s 300,000,000 lbs. I have been told that the large volume of reserves is a very attractive feature that GMO possesses that end users want to see. The only question I have here is how AUA can be discounted when their main body of ore has in excess of twenty two years worth of production reserves and the body of ore is open in two directions? A special bonus to AUA is the probability that the most recent drill results from Ruby Creek may have discovered two new bodies of ore that have both depth and the best grades found to date.
In the end, who knows just what the total reserves of Ruby Creek will be when the final drill bit is taken out of the ground? I think there is a very strong possibility that the reserves of AUA will rival those of Mount Hope.
This brings me to the point where analysts like to compare these projects based on Net Present Value NPV. If Aua was at the exploratory stage of development I would have no problem with this. The fact of the matter is that AUA is at the stage where funding takes the company into production. With funding I believe evaluations should move from NPV to cash flow and earnings projections. I find it confusing to understand how the NPV of a company is less than the earnings the company will generate over a 2-3 year period of time. You cannot compare “apples to oranges” and expect the results to taste the same.
POSCO 20% INTEREST
Posco is in the process of acquiring ownership of 20% of the moly that will come out of the ground at Mount Hope. For this right they will be responsible for all cap-ex and production cost associated with the 20%. In addition to this they will pay GMO a total of $170,000,000 in three staged payments of $50,000,000, $50,000,000 and $70,000,000. $170,000,000 is 20% of the expected total cap-ex cost to put Mount Hope into production. At the time of the announcement the share price of GMO was roughly $10/sh. With 83,000,000 shares outstanding fully diluted this also represents roughly 20% of the market cap of GMO. I find it rather opportune to have both your market cap and your cap-ex roughly the same upon completing an agreement of this nature.
Posco estimates that the amount of moly they will receive each year will total 7,700,000/lbs. If one were to equate this venture to AUA the 7,700,000lbs would equal about half of the roughly 15,000,000lbs of production that I believe AUA can achieve when it comes into production.
Let’s look at some numbers and see what this $170,000,000 would look like if it were put into AUA for half of its production.
For months I have sat back quietly and anxiously observing the unfolding events surrounding Adanac Molybdenum Corp. Like any shareholder, I am anything but happy with the performance of the shares.
As all of you know; AUA is in a position to actively pursue the raising of funds to put Ruby Creek into production. Unfortunately for shareholders the timing of raising these funds coincided with the subprime meltdown. Make no mistake about the seriousness of the subprime meltdown. This is a direct challenge to the financial system of the US as well as the rest of the world.
As a result of this meltdown in conjunction with other things which I will address later on, money that is available for investments in projects such as Ruby Creek has become overly cautious. I can fully understand this hesitation and I also understand, but totally disagree, with any kind of rationale attempting to explain or justify the share price at these levels.
TIME TO PUT IT ALL ON THE TABLE!
Many concerned investors have called and emailed me over the last several months with very heavy concerns about the investments they have made in AUA. Technicians and sophisticated investors understand the ugly and pathetic price action in the stock is not a good forecast of things to come. In every case I have encouraged investors to examine what they see going forward in the molybdenum markets.
It is times like this where your opinion may differ from mine and therefore it is necessary for each you to do your own homework and come to your own conclusions
HEALTH OF THE MOLYBDENUM MARKET:
Ongoing research in the moly market reveals that the demand for moly continues to increase at 5%+/year while the supply continues to fall at 5%/year. Analysts continue to foresee this pattern into the future until new supply is able to come online. The price of moly has been firm and slowly rising for many months and analysts believe the price of moly will continue to move higher. The growth in China and India continues to be very strong and few analysts expect any weakness of any significance for a long time to come. Most believe a slowdown in the US will have very little impact upon the growth in these two countries. In other words, the rest of the world, through the development of their own markets, continues to wean itself off of the dependence of the US consumer. The time is rapidly approaching where internal growth in China and India is reaching the stage where it is becoming an absolute necessity to keep the valuable natural resources that they produce available for use only at home.
I believe there is a very real possibility that a decade from now the world will look at the natural resource markets and then wonder how companies with the resources of AUA were allowed to be overlooked, ignored and eventually bought out at prices that in no way reflect the future fully developed value of these in ground and untapped resources. The fact that China has now implemented policies which inhibit and prohibit the future free trade of these resources mined within their own borders is proof to me that those, on the demand side of the market, who know and understand the supply shortfalls of the future, are sending a message that should be heard and listened to by all.
In otherwords, I continue to view the overall health of the moly market as being very positive to those who benefit from taking moly out of the ground. As a result, I view investments in the natural resource sector and base metals sector as investments that offer the potential for exceptional returns to those who have the foresight to recognize the fact that there is a limited supply to meet the increasing demand which may stay very strong and continue to grow for years to come.
JUNIOR MINING SUPPORT LACKING;
History has shown, mining projects, like Ruby Creek, that have advanced to the stage of development, where production is only a matter of time and money usually have many financing options available to them in raising the funds to go into production.
I have been involved with AUA for over three years now. In that period of time I have closely observed how the management of Ruby Creek has turned an exploration project into an economic body of ore destined to become a major primary molybdenum mine.
What most people do not realize about the AUA Ruby Creek story is the fact that this whole project was funded and brought to this stage of development without the aid of any major fund or institution. I find this to be both remarkable and very confusing. Remarkable in light of the point that I do not know of any other major projects, not to say there are none, that have advanced to this stage of development where the only obstacle left is the major financing to go into production without having the support of any major funds and institutions.
I am a numbers cruncher and when I put numbers together dealing with the estimated future revenues based on criteria that supports these numbers I find myself real confused in the fact that funds, institutions, pension plans, moly producers as well as moly end users have not, to this point in time, been motivated to take an interest in AUA and Ruby Creek. When estimates from Ruby Creek are compared with the production and earnings from current moly producers I find that Ruby Creek has estimates that, in my opinion, most moly producers would or should welcome as a part of their own.
In a prior AUA Update dated last December I laid out the format as to how I arrived at the numbers I use to get the estimates I have. For those of you who may not have that article I would be glad to resend it to you if would like to read it again or if you did not receive it in the first place.
For purposes of illustration, I will now take these numbers and show investors what AUA, assuming it were in production, would contribute to the actual year end numbers of a major mining company. Everyone familiar with the base metals industry is aware of Teck Cominco TCK therefore I am going to use the recently reported year end 2007 numbers from TCK for the purposes of illustrating my estimated EBIDA numbers for AUA and how they would compare to the actual 2007 EBIDA numbers from TCK.
THE NUMBERS COMPARED TO TECK COMINCO TCK 2007 RESULTS
With financing in 2008 AUA should be in production in the 1st half of 2010. I will use multiple costs and production numbers to show a wide range of potential EBIDA Cash Flow for comparison sake.
TCK 2007 Results
Total TCK outstanding shares 442,000,000
ACTUAL TCK 2007 EPS $3.74
Total TCK 2007 Earnings $1,615 Billion
TCK 2007 EBIDA $2.6Billion
Average moly price received by TCK in 2007 = $30/lb
AUA EBIDA Numbers assuming $30/lb/Rev with three different cost levels and four different production levels. These are my numbers and I personally believe 12,000,000lbs/yr production to be very conservative with the likelihood that real production will fall between the 15,000,000lbs/yr and 18,000,000 lbs/yr.
Cap-ex of Ruby Creek is now expected to be around $700,000,000
Below is a table showing AUA EBIDA Numbers (in millions) based upon production and costs as listed in the table and price/lb of moly at $30/lb.
AUA ESTIMATED EBIDA CASH FLOW IN MILLIONS
Cost/lb $ 8 $10 $12
Lbs/year
12,000,000 $264 $240 $216
15,000,000 $330 $300 $270
18,000,000 $396 $360 $324
21,000,000 $462 $420 $378
Worst case payback $700,000,000 cap ex divided by $216,000,000 = 3.24 years
Best case payback $700,000,000 divided by $462,000,000 = 1.515 years
Using 15,000,000lbs/yr and 18,000,000lbs/yr gives us payback of 2.59-1.767 years
In this section I will compare the Estimated AUA EBIDA Numbers as a percentage of the 2007 TCK EBIDA Numbers
% AUA EBIDA VS TCK 2007 EBIDA OF $2.6 B
Cost/Lb $8 $10 $12
LBS/YR
12,000,000 10.1% 9.23% 8.30%
15,000,000 12.69% 11.54% 10.38%
18,000,000 15.23% 13.85% 12.46%
21,000,000 17.77% 16.15% 14.54%
Here again on a worst case basis AUA would increase the EBIDA of TCK by 8.3% using 12,000,000 lb/prod/yr with a $12/lb cost and 10.1% using an $8 cost/lb. Using the more likely 15,000,000 lb/yr with a $12/lb cost EBIDA of TCK would increase by 10.38% and 12.69% using $8/cost/lb. With 18,000,000 lb/yr with a cost of $12/lb would increase TCK EBIDA by 12.46% and 15.23% using $8/lb cost.
These numbers alone do not mean much until the cost associated to acquire AUA are taken into consideration.
AUA currently has roughly 150,000,000 shares outstanding fully diluted. With a current market price of roughly $.75/sh the total market cap of AUA is a paltry $112,500,000. The total picture becomes highly visible when one realizes that for Teck Cominco to buy AUA out near its all-time high of $3.00/sh dilution to TCK with 442,000,000 using its own stock as payment at the current price of $45/sh would be:
Aua market cap = $450,000,000 Divided by the current market price of TCK @ $45/sh = 10,000,000 shares dilution to TCK or 10,000,000 divided by 442,000,000 = 2.26% dilution to TCK
I know that in the case of AUA everything is an estimate and the 18 month construction time frame plus the Cap-ex cost of $700,000,000 is not taken into consideration. But the real question I have for the management of TCK is “wouldn’t you like to increase your EBIDA numbers from 8.3% to 15.23% for dilution of only 2.26% to your shareholders?” The added bonus to this is the extra12,000,000-18,000,000lbs of molybdenum you will produce a year. The addition of AUA would more than triple your 2007 moly production of 7,350,000 lbs.
At year end Teck Cominco had a cash balance of $1,400,000,000 and a 2007 cash flow of $1,700,000,000. With this size of a “war chest” I find it confusing to understand, knowing that AUA is still first in line to come into production and the fact that AUA is a Canadian Project, how an initial investment in the open market of $11,250,000, or .8% of cash on hand, with AUA @ $.75/sh giving TCK an initial 10% ownership of AUA would not be something well worth considering just to get a “little toe in the water.” I find it very difficult to refer to this as an investment since we all know that if Teck Cominco’s name were to become associated with AUA the price of AUA”s stock would soar overnight making this investment a home run. Picking up AUA shares in the open market at the current depressed prices would also decrease the overall price paid to acquire AUA in the event of a buyout.
NEXT IS THOMPSON CREEK METALS TCM:
Since Blue Pearl bought out the privately owned Thompson Creek Mines I have been a little envious. Overnight this little company hit the big time by becoming the owners of the 4th and 5th largest primary moly mine producers in the world. The purchase of Thompson Creek turned out to be a real coup. I have said this in recent articles and time is proving that these guys seem to know what they are doing.
At this time Thompson Creek TCM has $236,000,000 in long term debt remaining from the buyout of Thompson Creek. This figure fell from $402,000,000 the year before. This $166,000,000 decrease in long term debt equates to a decrease of 42% in their long term debt. After paying their debt down 42% Thompson Creek was still able to post net earnings of $157,000,000 or $1.24/sh fully diluted. These earnings were realized from 75% ownership of the Endako Mine, the Thompson Creek Mine and a wholly owned metallurgical facility near Pittsburgh Pa. that roasts 10% of the world’s molybdenum.
Total TCM moly production for 2007 was less than 20,000,000lbs which was sold for an average price of $28.77/lb. TCM estimates that moly production for 2008 from the Endako Mine (75% net) will range from 6,500,000-7,500,000lbs and the Thompson Creek Mine is expected to have production of 16,500,000-17,000,000lbs. This gives TCM total estimated 2008 moly production numbers of 23,000,000-24,500,000lbs.
TCM has 145,000,000 fully diluted shares outstanding @ $20/sh TCM has a market cap of roughly $3,000,000,000. Now I want to do something a little different.
Let’s assume that TCM does achieve moly production of 25,000,000 lbs and AUA has production of 15,000,000lbs/year when it comes online in 2010. The PA roaster lost money in 2007 so I will not include anything for it in the numbers I am going to show.
Estimated 2008 production of 25,000,000lbs moly has equated into a market cap of $3,000,000,000.
AUA estimated production beginning second half 2010 is 15,000,000 lbs/year = 60% of TCM 2008 estimated production numbers. Now I know the capital has to be raised and there is probably a minimum of an 18 month timeframe to put Ruby Creek into production after the money is raised but the question I have here is “if all things were equal and AUA was owned by TCM “would the market cap of TCM be increased by 60% or $1,800,000,000 since 15,000,000lbs production = 60% of 25,000,000lbs?”
$3,000,000,000 X 60% = $1,800,000,000
Now deduct $1,000,000,000 for production and financing costs leaving $800,000,000 of future net worth that will increase proportionately as the debt to put Ruby Creek into production is paid off.
It is also very important for investors to understand that Ruby Creek has in excess of 20 years worth of reserves and the recent drilling has found what is expected to be 2 new bodies of ore with grades well in excess of the conservative grades stated in the 2006 feasibility report. Aua is expecting additional assay results from drilling that was completed in 2007. You must also remember that the best grades the company has are to be found in these recent drill programs. When Ruby Creek comes online, if it were owned by TCM, would make a very nice addition to Endako and Thompson Creek since both of these mines have their best years of production behind them.
If the $800,000,000 were applicable then that would value AUA at a substantially higher price than the current market of $.75/sh with a total market cap of $112,500,000.
$800,000,000 divided by 150,000,000 AUA fully diluted shares = $5.23/sh
Again my point comes back to the fact that companies like Teck Cominco and Thompson Creek Metals would be well ahead of the game by owning Ruby Creek while at the same time playing defense and denying Ruby Creek’s production from those they view as competition. This brings me to the last point I want to make in dealing with another possible mine that is being talked about as being reactivated.
THE CLIMAX MINE AND FREEPORT MCMORAN FMX:
“Why reactivate the Climax Mine?”
Freeport McMoRan FMX is the largest producer of molybdenum in the world. I have no intentions of breaking down the numbers in FMX like I did for TCK. What I do find as very important here is the fact that FMX has stated they will reactivate the Climax Mine in Colorado. Now this could reflect two thoughts. The first is the intention to really bring the Climax Mine back online and into production.
The second thought is to use this as a deterrent to keep financing from becoming available to those who need it to get their moly mines online. Creating the illusion of a future glut of moly is an easy way to slow new mines from coming online. This is a great defensive move as it keeps the production of moly to those who are already there. In essence the pie is split between a small group of producers.
There is proof moly producers believed moly prices would fall back to the old levels as major moly producers high-graded their ore bodies cherry picking the best grades. The high-grading of their ore bodies can only mean a supply decrease in the future as these same producers are forced to produce from lower grade bodies of ore.
It appears that anyone who felt moly prices would retrace to the old levels were wrong.
The only man I know of who had the future supply and demand for moly mapped out correctly was the “Founding Father” of AUA Larry Reaugh. Make no mistake about the fact that Larry Reaugh was several years ahead of anyone else when it came to recognizing the future for base metals. I will get Into Larry lastly when I address the recent changes in the corporate management of AUA.
Now back to point one of reactivating the Climax Mine. The question I have here is real simple “WHY?” This mine has been shut down for years. The costs associated with reopening and permitting this mine could be competitive with the costs associated with putting Ruby Creek into production by the time FMX does all the work and receives the permits.
I have read that there is a billion gallons of contaminated water within the underground structure of the Climax Mine that must be dealt with. Who knows what the true cost and time constraints are going to be to clean up this problem? Who knows what the permitting hassles are going to be? I can see this as possibly becoming a nightmare of gigantic proportions before it is all said and done. In the end permits could still be denied.
On the other hand, everything has fallen into place for AUA. The question I have for the management of FMX is real simple “why would you go through all the hassles of reactivating the Climax Mine when you have Ruby Creek in a tidy package waiting to be financed?” By turning your attentions to Ruby Creek you would be denying your competition the opportunity to acquire Ruby Creek and the molybdenum supply that will come out of the ground. The bonus to all this is the fact that you would still own the Climax Mine and if necessary have the option to reactivate it anytime you want while denying your competition ownership rights of AUA.
At this point in time Ruby Creek is like a neatly wrapped Christmas present under the tree just waiting to be opened by its eventual owners.
Now I want to compare Ruby Creek to a competitive project called Mount Hope owned by General Moly GMO.
MOUNT HOPE OWNED BY GENERAL MOLY GMO:
Here is another company that I must admit I have to tip my hat too. These guys through all their management changes seem to have their project on the right track. I am impressed with the support they have garnered in moving forward. I believe these guys have strengths where the management of AUA has shown weakness. These guys have the institutional support necessary to move their project along in a manner that will keep dilution to a minimum.
Gmo has Arcelor Mittal owning 10% of the company and Posco stepping up with financing to where they will own 20% of the moly that comes out of the ground. These companies are the #1 and #3 steel companies in the world. As end users of moly they understand the growth in demand as well as the supply constraints of the moly market. Mt Hope enjoys the advantage of having 1,300,000,000 lbs of reserves versus AUA’s 300,000,000 lbs. I have been told that the large volume of reserves is a very attractive feature that GMO possesses that end users want to see. The only question I have here is how AUA can be discounted when their main body of ore has in excess of twenty two years worth of production reserves and the body of ore is open in two directions? A special bonus to AUA is the probability that the most recent drill results from Ruby Creek may have discovered two new bodies of ore that have both depth and the best grades found to date.
In the end, who knows just what the total reserves of Ruby Creek will be when the final drill bit is taken out of the ground? I think there is a very strong possibility that the reserves of AUA will rival those of Mount Hope.
This brings me to the point where analysts like to compare these projects based on Net Present Value NPV. If Aua was at the exploratory stage of development I would have no problem with this. The fact of the matter is that AUA is at the stage where funding takes the company into production. With funding I believe evaluations should move from NPV to cash flow and earnings projections. I find it confusing to understand how the NPV of a company is less than the earnings the company will generate over a 2-3 year period of time. You cannot compare “apples to oranges” and expect the results to taste the same.
POSCO 20% INTEREST
Posco is in the process of acquiring ownership of 20% of the moly that will come out of the ground at Mount Hope. For this right they will be responsible for all cap-ex and production cost associated with the 20%. In addition to this they will pay GMO a total of $170,000,000 in three staged payments of $50,000,000, $50,000,000 and $70,000,000. $170,000,000 is 20% of the expected total cap-ex cost to put Mount Hope into production. At the time of the announcement the share price of GMO was roughly $10/sh. With 83,000,000 shares outstanding fully diluted this also represents roughly 20% of the market cap of GMO. I find it rather opportune to have both your market cap and your cap-ex roughly the same upon completing an agreement of this nature.
Posco estimates that the amount of moly they will receive each year will total 7,700,000/lbs. If one were to equate this venture to AUA the 7,700,000lbs would equal about half of the roughly 15,000,000lbs of production that I believe AUA can achieve when it comes into production.
Let’s look at some numbers and see what this $170,000,000 would look like if it were put into AUA for half of its production.
MARKET CAP COMPARISON:
With AUA having roughly 150,000,000 sh outstanding fully diluted trading at $.75/sh the total market cap of AUA is $112,500,000. The $170,000,000 that Posco is paying for the right to own 20% of the moly production or 7,700,000 lbs/year would buy 100% of AUA’s 15,000,000lb/year production at a price of $1.13/sh or a premium of 50.6% over today’s current levels.
CAP-EX COMPARISON:
Aua is building a mill that when all is said and done will have the capacity to process 26,000+/t/day. Outside of the normal inflation creep that all companies face during inflationary times there are no specific geological obstacles that would give rise to specific cost overruns except the cost of diesel which is the only real negative that anyone can raise as an obstacle when referring to negatives associated with the Ruby Creek Project.
Diesel costs were originally estimated to be about $2/lb moly. With the craziness in the oil markets that $2 cost can be increased to $3/lb of moly produced. This is an inconvenience but in no way should represent a deal breaker when it comes to financing the Ruby Creek Project. It is believed that once financing is in place the BC Government will go ahead and bring a permanent power source to the area. If this were to happen this would be exceptionally good news for the owners of Ruby Creek. The cost/lb of moly produced would fall dramatically making it even more competitive than it is today.
Let us also recognize that rising diesel costs will affect all companies; some more than others.
Now let’s look at Mount Hope. The latest cap-ex numbers I have seen in dealing with Mount Hope are $850,000,000. I have never been able to understand these numbers. Once Mount Hope is built it will have an operation that is twice the size of AUA’s including a roaster that GMO plans to build. Now could someone explain to me how an operation twice the size of AUA with a roaster, which AUA does not plan to build, can have an estimated cap-ex of $850,000,000 versus the $700,000,000 of AUA?
Now for the real kicker; I have read and heard where the high grade ore of Mount Hope is near surface. Below is a news release I copied and pasted directly from the website of GMO. In this news release, centered on the reporting of five drill holes, Bruce Hansen the CEO of GMO makes it very clear that this high grade ore, which it is, will be processed in the first 5 years of production at a low cost. Somewhere I am missing something; of the 5 drill holes listed below hole MH-184 has the high grade ore that is the closest to surface and it begins at a depth of 365ft. The average depth, where the high grade ore begins, of the five holes listed below is 555 feet. Imagine what the stripping ratio will be to have an open pit where your high grade ore begins at an average depth of 555 feet? I see nothing in the drill hole assays that references any recoverable moly grades above the high grade ore. I wonder what their diesel cost will be to clear the over-burden? These guys must have some “rabbit in their hat to be able to produce this moly with “a low cash cost” in the first five years as stated by CEO Bruce Hanson.
The total depth of the open pit Ruby Creek mine is less than 500 ft with 30 ft of overburden that has to be removed.
GMO News Release posted from GMO Website:
Recent Drilling Confirms High-Grade Core of Mt. Hope Deposit.
June 29, 2007 - Idaho General Mines, Inc. (AMEX:GMO) announced today that it has
completed a drill program at the Mt. Hope project, which has yielded data confirming the
deposit’s high-grade core. The program consisted of five drill holes that produced an
aggregate of over 5,100 feet of core and 1,400 feet of RC drilling. The core material
intersected long runs of mineralization with average Molybdenum grades between
0.145% and 0.118% between 635 and 905 feet in thickness. All holes were drilled
nominally 200 feet apart and targeted mineralization expected to be mined within the first
five years of the mine plan. The Company intends to conduct another drilling program
prior to the end of September 2007, which will consist of approximately 14 holes (over
21,000 feet of core) that target mineralization within the first 10 years of planned
production.
Bruce D. Hansen, Chief Executive Officer said, “These drill results confirm the project’s
high-grade core and support Mt. Hope’s robust economics, particularly in the early years
of production. We believe that our bankable feasibility study scheduled for release in
August will allow us to report proven and probable reserves in accordance with reporting
requirements.”
The Company believes that Mt. Hope’s first five years of high-grade production, with
grade projected at 0.11% Molybdenum, coupled with the project’s low cash cost
structure, should allow the Company to realize high margins and a short capital payback
period.
The specific holes and associated intercepts are listed below:
Hole TD From To Length Assay
ID (feet) (feet) (feet) (feet) (% Mo)
MH-183 1235 405 1235 830 0.1390
MH-184 1270 365 1270 905 0.1453
MH-185 1330 625 1330 705 0.1249
MH-186 1340 635 1340 705 0.1208
MH-187 1380 745 1380 635 0.1181
Note: all holes bottomed in ore. The program is designed to terminate all drilling 50’
below the base of the ten year pit design.
I believe there is a very distinct possibility that the shareholders of GMO may experience some heavy upward revisions to both the cap-ex and the overall cost/lb of moly produced from Mount Hope. I have to believe the people from Posco and Arcelor Mittal realize this and their main interest at this point in time is to have a future interest in a very large body of moly.
This brings me to the point of comparing the market caps. As I stated earlier the market cap and the cap-ex of GMO were both roughly the same when the Posco deal was announced.
In the case of AUA; the cap-ex is roughly $700,000,000 with a market cap of $112,500,000. This is telling me that the share price of AUA is substantially undervalued in relation to that of GMO. I do believe that the cap-ex of GMO will be raised but still that does not justify the paltry market cap of AUA.
I have no doubt that the main reason associated with the discounted price of AUA is directly related to the fact that AUA has failed to attract the support of the institutions and funds. This lack of support has made AUA easy prey in knocking and keeping the share price down.
This brings me to the end users of moly.
MOLY END USER OPPORTUNITY:
If everything I hear and read today is correct about the supply-demand side of the moly market; I think an opportunity has arisen here for the end users of moly that very seldom comes along.
This evolves around the fact that these corporations who are dependent upon a supply of moly to stay in business have a unique advantage of knowing the tightness of the moly market. We already know that the #1 and #3 steel companies in the world have acquired a position in GMO by taking either a direct ownership in GMO or by slicing themselves a future piece of the moly pie as it comes out of the ground.
I believe AUA will get financed because the molybdenum market must develop new mines to fill future shortages on the supply side of the market due to the depletion of old mines and the high-grading done by the majors to take advantage of an attractive moly price. The advantage that AUA enjoys in this market is the fact that they have always been and continue to be the leaders in bringing the first major primary moly mine on-line.
If I were a corporation dependent upon a future supply of moly that may not be there when I need it, I assure you that I would take every precaution to insure that I hedge myself against the potential for a moly shortfall in the future. Ideally, if I used more than 15,000,000 lbs of moly a year I would just buy AUA out and put it into production myself. By doing this I would not only guarantee myself a supply of moly for decades to come but I would guarantee my business a future supply of moly at the COST OF PRODUCTION!
In the real world not everyone has the ability to buy a company out and then raise $700,000,000 to put their project into production. For those who fall into this category; you have the alternative option to purchase shares out of the open market at virtually pennies on the dollar as to what those shares will be worth in the future as someone else comes up with the funds to put Ruby Creek into production.
Investing 101 teaches an investor to invest in industries that the investor has specific knowledge of. At this point in time, the end users of moly are a classic example of perfect timing in the application of this basic rule. End users are the ones in the enviable position of possessing the knowledge that allows them to know that the future is very bright for those in the molybdenum industry. It is the growing demand for molybdenum that assures the world of the fact that projects like Ruby Creek must be put into production to meet these needs.
Armed with this knowledge end users are in the enviable position to take full advantage of what they know. Most people in this situation would just buy commodity futures to guarantee themselves a supply of moly into the future at a fixed price today. The problem is that there are no commodity futures in dealing with moly. Besides, who wants to deal with the margin requirements of the futures market; let alone the mark to market risk that is faced if a hedge happens to work against you?
The solution is very simple. Aua will be bringing roughly 15,000,000+ lbs of moly online in the next couple of years and at current market prices every 1,500,000 lbs of yearly moly production comes at a price of $11,250,000; which incidentally equates into a 10% ownership of the fully diluted shares of AUA. Since end users cannot hedge directly with the future delivery and price of moly why not own an interest in a company that is in the lead in bringing a new supply of moly online? Now think of what this 10% ownership will mean year in and year out as the decades pass. Why stop at owning 10%? Don’t you think a company that offers a solution to meet your corporate future molybdenum demand needs belongs in your pension plan as an investment in your retirement?
Imagine the leverage an end user would have in owning 10%-30 % of AUA’s publicly traded shares. Now throw in an offtake agreement guaranteeing a future supply of moly as well as a built in market for the sale of moly that would directly benefit all shareholders of AUA common stock.
FUNDS AND INSTITUTIONS:
For two years I have beat my head up against a brick wall in an attempt to understand why funds and institutions have not jumped on board AUA with both feet. In Dec 2007 I wrote an update titled “Save the Last Dance for Me.” In this article I wrote about the lack of institutional and fund support; this is also the article that explains how I arrive at the numbers I use for my EBIDA cash flow estimates.
AUA is a tale of two stories. The first is the extreme oversold condition of the shares in the open market and the second is the complicated task of financing Ruby Creek at the same point in time where the shares of the company are at give-away prices coupled with the subprime debacle.
Only the future will prove if my thoughts and numbers are correct. If the numbers I use in the Teck Cominco comparison turn out to be accurate then I think AUA offers “Home Run” potential with risk limited to accessing financing. I believe bridge financing will be complete on the near term and full project financing in the third quarter of 2008.
With a current market cap of roughly $112,500,000 and first full year EBIDA cash flow estimates of $216,000,000-$400,000,000 I think you can easily see the potential return to shareholders.
At current market prices a 10% interest in AUA is roughly $12,500,000. If you are a fund or an institution with $500,000,000-$1,000,000,000 in assets a 10% interest in AUA would be a 2.5% and 1.25% investment. This is pocket change for a 10% investment in a company on the verge of going into production. Now think of the returns that will go to those who supply the financing to put Ruby Creek into production.
I believe the time is close at hand where a known entity will reveal that they have a position in AUA and the credibility that this company has lacked, as a result of no visible major ownership, will suddenly appear overnight; most likely in a buyout bid.
Any funds or institutions who may have an interest in acquiring a position or participating in a financing should call me at the number listed below.
This brings me to management.
CORPORATE MANAGEMENT: A CHANGING OF THE GUARD:
As all of you know from my prior articles I have written; “without a good management team you may have nothing!” You also know that I have written frequently about “Material Changes.” The bottom line is we have just experienced some major material changes in the management of AUA and Larry Reaugh is no longer Chairman of the Board.
In my three years of being associated with Larry I have made my feelings about this man perfectly clear. When it comes to identifying, acquiring and developing projects he is the best mining man I have had a chance to work with and he is credited with three mining discoveries that have gone into production. This man and the team he developed at AUA led by Mike MacLeod has steered AUA through all kinds of turbulent waters to bring Aua to where it stands today. Outside of financing and the Federal Permit which should be granted in the normal course of events Ruby Creek is ready to go. This could not have happened without Larry Reaugh.
Is Larry perfect? No, he is not. Does he have shortcomings? Yes he does. Has he always made the right decisions? Possibly not but he has always advanced his projects forward building shareholder value.
Make no mistake about it. I personally believe all four of Larry’s companies have projects that the future will recognize as being bargains at today’s prices. With the drilling and developmental successes that Larry has had in all four of his companies long-term shareholders should be sitting on huge profits in each and every one of them. If the institutions and funds were onboard I personally believe shareholders would be very happy at this point in time.
This brings me to the new management. I will go on record right now as saying to the new management team “if you can get Ruby Creek financed with institutional and fund support I will be singing your praises as well.” There are many thoughts and questions going through my head at this point in time which I know the future will answer.
I know virtually nothing about Dr. David Stone and at this point in time he has my full support. Dr. Stone’s history and experience strongly suggest that he has what shareholders need to deliver profits to their portfolios. I hope that he has a plan put together that can bring fair value if not full value to the shareholders. I am and have always been on the side of shareholders. I know if shareholders are making money the financial future of my family is assured.
As I have stated in the past; “I have never sold a share of stock in any of The Reaugh Group of Companies that either Wanda or I personally own. That statement is still true today. In fact I am way more leveraged in these companies than any investor should be. I will have to sell some shares in the future as I have an unpaid tax liability that I am sure the IRS will want to collect.
I welcome phone calls from any of my readers. If you are someone interested in the financing of AUA or acquiring a position of size in AUA I would very much like to speak with you.
As always folks these are my own personal beliefs and it is very important for each of you to do your own homework as the possibility exists that your thinking could be different from mine. For anyone who would like to be taken off my e-mail list just respond and ask to be removed. I am also compensated by AUA as a consultant.
I will follow this with updates on Rocher Deboule, Goldrea Resources and Molycor. The future looks to be very bright on all three of these companies.
I can be reached at;
402-483-4484 between 8:00am-8:00pm CST
mhoy@neb.rr.com
Sorry I have been away for so long but I think you can see that that is all about to change.
Mike,
With AUA having roughly 150,000,000 sh outstanding fully diluted trading at $.75/sh the total market cap of AUA is $112,500,000. The $170,000,000 that Posco is paying for the right to own 20% of the moly production or 7,700,000 lbs/year would buy 100% of AUA’s 15,000,000lb/year production at a price of $1.13/sh or a premium of 50.6% over today’s current levels.
CAP-EX COMPARISON:
Aua is building a mill that when all is said and done will have the capacity to process 26,000+/t/day. Outside of the normal inflation creep that all companies face during inflationary times there are no specific geological obstacles that would give rise to specific cost overruns except the cost of diesel which is the only real negative that anyone can raise as an obstacle when referring to negatives associated with the Ruby Creek Project.
Diesel costs were originally estimated to be about $2/lb moly. With the craziness in the oil markets that $2 cost can be increased to $3/lb of moly produced. This is an inconvenience but in no way should represent a deal breaker when it comes to financing the Ruby Creek Project. It is believed that once financing is in place the BC Government will go ahead and bring a permanent power source to the area. If this were to happen this would be exceptionally good news for the owners of Ruby Creek. The cost/lb of moly produced would fall dramatically making it even more competitive than it is today.
Let us also recognize that rising diesel costs will affect all companies; some more than others.
Now let’s look at Mount Hope. The latest cap-ex numbers I have seen in dealing with Mount Hope are $850,000,000. I have never been able to understand these numbers. Once Mount Hope is built it will have an operation that is twice the size of AUA’s including a roaster that GMO plans to build. Now could someone explain to me how an operation twice the size of AUA with a roaster, which AUA does not plan to build, can have an estimated cap-ex of $850,000,000 versus the $700,000,000 of AUA?
Now for the real kicker; I have read and heard where the high grade ore of Mount Hope is near surface. Below is a news release I copied and pasted directly from the website of GMO. In this news release, centered on the reporting of five drill holes, Bruce Hansen the CEO of GMO makes it very clear that this high grade ore, which it is, will be processed in the first 5 years of production at a low cost. Somewhere I am missing something; of the 5 drill holes listed below hole MH-184 has the high grade ore that is the closest to surface and it begins at a depth of 365ft. The average depth, where the high grade ore begins, of the five holes listed below is 555 feet. Imagine what the stripping ratio will be to have an open pit where your high grade ore begins at an average depth of 555 feet? I see nothing in the drill hole assays that references any recoverable moly grades above the high grade ore. I wonder what their diesel cost will be to clear the over-burden? These guys must have some “rabbit in their hat to be able to produce this moly with “a low cash cost” in the first five years as stated by CEO Bruce Hanson.
The total depth of the open pit Ruby Creek mine is less than 500 ft with 30 ft of overburden that has to be removed.
GMO News Release posted from GMO Website:
Recent Drilling Confirms High-Grade Core of Mt. Hope Deposit.
June 29, 2007 - Idaho General Mines, Inc. (AMEX:GMO) announced today that it has
completed a drill program at the Mt. Hope project, which has yielded data confirming the
deposit’s high-grade core. The program consisted of five drill holes that produced an
aggregate of over 5,100 feet of core and 1,400 feet of RC drilling. The core material
intersected long runs of mineralization with average Molybdenum grades between
0.145% and 0.118% between 635 and 905 feet in thickness. All holes were drilled
nominally 200 feet apart and targeted mineralization expected to be mined within the first
five years of the mine plan. The Company intends to conduct another drilling program
prior to the end of September 2007, which will consist of approximately 14 holes (over
21,000 feet of core) that target mineralization within the first 10 years of planned
production.
Bruce D. Hansen, Chief Executive Officer said, “These drill results confirm the project’s
high-grade core and support Mt. Hope’s robust economics, particularly in the early years
of production. We believe that our bankable feasibility study scheduled for release in
August will allow us to report proven and probable reserves in accordance with reporting
requirements.”
The Company believes that Mt. Hope’s first five years of high-grade production, with
grade projected at 0.11% Molybdenum, coupled with the project’s low cash cost
structure, should allow the Company to realize high margins and a short capital payback
period.
The specific holes and associated intercepts are listed below:
Hole TD From To Length Assay
ID (feet) (feet) (feet) (feet) (% Mo)
MH-183 1235 405 1235 830 0.1390
MH-184 1270 365 1270 905 0.1453
MH-185 1330 625 1330 705 0.1249
MH-186 1340 635 1340 705 0.1208
MH-187 1380 745 1380 635 0.1181
Note: all holes bottomed in ore. The program is designed to terminate all drilling 50’
below the base of the ten year pit design.
I believe there is a very distinct possibility that the shareholders of GMO may experience some heavy upward revisions to both the cap-ex and the overall cost/lb of moly produced from Mount Hope. I have to believe the people from Posco and Arcelor Mittal realize this and their main interest at this point in time is to have a future interest in a very large body of moly.
This brings me to the point of comparing the market caps. As I stated earlier the market cap and the cap-ex of GMO were both roughly the same when the Posco deal was announced.
In the case of AUA; the cap-ex is roughly $700,000,000 with a market cap of $112,500,000. This is telling me that the share price of AUA is substantially undervalued in relation to that of GMO. I do believe that the cap-ex of GMO will be raised but still that does not justify the paltry market cap of AUA.
I have no doubt that the main reason associated with the discounted price of AUA is directly related to the fact that AUA has failed to attract the support of the institutions and funds. This lack of support has made AUA easy prey in knocking and keeping the share price down.
This brings me to the end users of moly.
MOLY END USER OPPORTUNITY:
If everything I hear and read today is correct about the supply-demand side of the moly market; I think an opportunity has arisen here for the end users of moly that very seldom comes along.
This evolves around the fact that these corporations who are dependent upon a supply of moly to stay in business have a unique advantage of knowing the tightness of the moly market. We already know that the #1 and #3 steel companies in the world have acquired a position in GMO by taking either a direct ownership in GMO or by slicing themselves a future piece of the moly pie as it comes out of the ground.
I believe AUA will get financed because the molybdenum market must develop new mines to fill future shortages on the supply side of the market due to the depletion of old mines and the high-grading done by the majors to take advantage of an attractive moly price. The advantage that AUA enjoys in this market is the fact that they have always been and continue to be the leaders in bringing the first major primary moly mine on-line.
If I were a corporation dependent upon a future supply of moly that may not be there when I need it, I assure you that I would take every precaution to insure that I hedge myself against the potential for a moly shortfall in the future. Ideally, if I used more than 15,000,000 lbs of moly a year I would just buy AUA out and put it into production myself. By doing this I would not only guarantee myself a supply of moly for decades to come but I would guarantee my business a future supply of moly at the COST OF PRODUCTION!
In the real world not everyone has the ability to buy a company out and then raise $700,000,000 to put their project into production. For those who fall into this category; you have the alternative option to purchase shares out of the open market at virtually pennies on the dollar as to what those shares will be worth in the future as someone else comes up with the funds to put Ruby Creek into production.
Investing 101 teaches an investor to invest in industries that the investor has specific knowledge of. At this point in time, the end users of moly are a classic example of perfect timing in the application of this basic rule. End users are the ones in the enviable position of possessing the knowledge that allows them to know that the future is very bright for those in the molybdenum industry. It is the growing demand for molybdenum that assures the world of the fact that projects like Ruby Creek must be put into production to meet these needs.
Armed with this knowledge end users are in the enviable position to take full advantage of what they know. Most people in this situation would just buy commodity futures to guarantee themselves a supply of moly into the future at a fixed price today. The problem is that there are no commodity futures in dealing with moly. Besides, who wants to deal with the margin requirements of the futures market; let alone the mark to market risk that is faced if a hedge happens to work against you?
The solution is very simple. Aua will be bringing roughly 15,000,000+ lbs of moly online in the next couple of years and at current market prices every 1,500,000 lbs of yearly moly production comes at a price of $11,250,000; which incidentally equates into a 10% ownership of the fully diluted shares of AUA. Since end users cannot hedge directly with the future delivery and price of moly why not own an interest in a company that is in the lead in bringing a new supply of moly online? Now think of what this 10% ownership will mean year in and year out as the decades pass. Why stop at owning 10%? Don’t you think a company that offers a solution to meet your corporate future molybdenum demand needs belongs in your pension plan as an investment in your retirement?
Imagine the leverage an end user would have in owning 10%-30 % of AUA’s publicly traded shares. Now throw in an offtake agreement guaranteeing a future supply of moly as well as a built in market for the sale of moly that would directly benefit all shareholders of AUA common stock.
FUNDS AND INSTITUTIONS:
For two years I have beat my head up against a brick wall in an attempt to understand why funds and institutions have not jumped on board AUA with both feet. In Dec 2007 I wrote an update titled “Save the Last Dance for Me.” In this article I wrote about the lack of institutional and fund support; this is also the article that explains how I arrive at the numbers I use for my EBIDA cash flow estimates.
AUA is a tale of two stories. The first is the extreme oversold condition of the shares in the open market and the second is the complicated task of financing Ruby Creek at the same point in time where the shares of the company are at give-away prices coupled with the subprime debacle.
Only the future will prove if my thoughts and numbers are correct. If the numbers I use in the Teck Cominco comparison turn out to be accurate then I think AUA offers “Home Run” potential with risk limited to accessing financing. I believe bridge financing will be complete on the near term and full project financing in the third quarter of 2008.
With a current market cap of roughly $112,500,000 and first full year EBIDA cash flow estimates of $216,000,000-$400,000,000 I think you can easily see the potential return to shareholders.
At current market prices a 10% interest in AUA is roughly $12,500,000. If you are a fund or an institution with $500,000,000-$1,000,000,000 in assets a 10% interest in AUA would be a 2.5% and 1.25% investment. This is pocket change for a 10% investment in a company on the verge of going into production. Now think of the returns that will go to those who supply the financing to put Ruby Creek into production.
I believe the time is close at hand where a known entity will reveal that they have a position in AUA and the credibility that this company has lacked, as a result of no visible major ownership, will suddenly appear overnight; most likely in a buyout bid.
Any funds or institutions who may have an interest in acquiring a position or participating in a financing should call me at the number listed below.
This brings me to management.
CORPORATE MANAGEMENT: A CHANGING OF THE GUARD:
As all of you know from my prior articles I have written; “without a good management team you may have nothing!” You also know that I have written frequently about “Material Changes.” The bottom line is we have just experienced some major material changes in the management of AUA and Larry Reaugh is no longer Chairman of the Board.
In my three years of being associated with Larry I have made my feelings about this man perfectly clear. When it comes to identifying, acquiring and developing projects he is the best mining man I have had a chance to work with and he is credited with three mining discoveries that have gone into production. This man and the team he developed at AUA led by Mike MacLeod has steered AUA through all kinds of turbulent waters to bring Aua to where it stands today. Outside of financing and the Federal Permit which should be granted in the normal course of events Ruby Creek is ready to go. This could not have happened without Larry Reaugh.
Is Larry perfect? No, he is not. Does he have shortcomings? Yes he does. Has he always made the right decisions? Possibly not but he has always advanced his projects forward building shareholder value.
Make no mistake about it. I personally believe all four of Larry’s companies have projects that the future will recognize as being bargains at today’s prices. With the drilling and developmental successes that Larry has had in all four of his companies long-term shareholders should be sitting on huge profits in each and every one of them. If the institutions and funds were onboard I personally believe shareholders would be very happy at this point in time.
This brings me to the new management. I will go on record right now as saying to the new management team “if you can get Ruby Creek financed with institutional and fund support I will be singing your praises as well.” There are many thoughts and questions going through my head at this point in time which I know the future will answer.
I know virtually nothing about Dr. David Stone and at this point in time he has my full support. Dr. Stone’s history and experience strongly suggest that he has what shareholders need to deliver profits to their portfolios. I hope that he has a plan put together that can bring fair value if not full value to the shareholders. I am and have always been on the side of shareholders. I know if shareholders are making money the financial future of my family is assured.
As I have stated in the past; “I have never sold a share of stock in any of The Reaugh Group of Companies that either Wanda or I personally own. That statement is still true today. In fact I am way more leveraged in these companies than any investor should be. I will have to sell some shares in the future as I have an unpaid tax liability that I am sure the IRS will want to collect.
I welcome phone calls from any of my readers. If you are someone interested in the financing of AUA or acquiring a position of size in AUA I would very much like to speak with you.
As always folks these are my own personal beliefs and it is very important for each of you to do your own homework as the possibility exists that your thinking could be different from mine. For anyone who would like to be taken off my e-mail list just respond and ask to be removed. I am also compensated by AUA as a consultant.
I will follow this with updates on Rocher Deboule, Goldrea Resources and Molycor. The future looks to be very bright on all three of these companies.
I can be reached at;
402-483-4484 between 8:00am-8:00pm CST
mhoy@neb.rr.com
Sorry I have been away for so long but I think you can see that that is all about to change.
Mike,
Adanac CLOSES BRIDGE FINANCING
May 27, 2008 - Vancouver, British Columbia
Dr. David Stone, CEO, reports:
ADANAC MOLYBDENUM CORPORATION CLOSES THE PREVIOUSLY ANNOUNCED BRIDGE FINANCING PRIVATE PLACEMENT; PROCEEDS TO BE USED TO PARTIALLY FUND EQUIPMENT PURCHASES, DETAILED ENGINEERING, CONSTRUCTION PLANNING AND CORPORATE OVERHEAD FOR THE DEVELOPMENT OF THE PROPOSED RUBY CREEK PROJECT.
Adanac Molybdenum Corporation (TSX: AUA) (Pink Sheets: AUAYF) (Frank: A9N) (“Adanac” or the “Company”) today confirmed it has closed the previously announced financing. At closing, the Bridge Financing will be funded to $68.5 million. The Company has the option to increase the Bridge Financing up to a total of $80 million at any time prior to May 30, 2008.. The proceeds will be used to fund continued development of the company’s proposed Ruby Creek molybdenum project.
The financing is in the form of senior secured notes issued pursuant to a Securities Purchase Agreement signed on 23 May, 2008. The agreements related to the financing will be filed on SEDAR. Under the terms of the financing the Company will grant, in total, warrants to subscribe for a number of shares of Common Stock equal to 21.4054% of the fully-diluted outstanding shares of Common Stock of the Company. The Warrants will expire the earlier of either three (3) years after the closing by the Company of the contemplated raise to secure the balance of the financing to build the project in convertible debt and/or high yield debt, or five (5) years from the date of issuance.
This financing was arranged through Adanac’s United States based investment banker and includes participation from leading global institutional investors. Securing the balance of the funds required to build the mine, mill and related infrastructure is scheduled to be completed by the fourth quarter of 2008.
“This financing enables Adanac to continue its engineering and construction planning activities and take possession of processing equipment we have ordered for the molybdenum mine. It represents a strong vote of confidence from the financial market for building the project.” said Dr. David Stone, CEO.
Adanac Molybdenum Corp. is engaged in the exploration and development of mines to produce molybdenum and other ferro-alloy metals. Its flagship property is the Ruby Creek molybdenum project located near Atlin, BC. The property contains an open pit reserve of 157.7 million tonnes grading 0.058% Mo using a 0.040% cut-off grade. This news release has been reviewed by Michael MacLeod, P.Eng. a qualified person pursuant to National Instrument 43-101 and the President and Chief Operating Officer, of the Company
On Behalf of Management
ADANAC MOLYBDENUM CORPORATION
David Stone
Chief Executive Officer
Information Contact
David Stone
CEO
Head Office: Suite 200 – 2055 152 Street, Surrey, B.C. V4A 4N7
Telephone: 604-535-6834 Facsimile: 604-536-8411
Corporate Office: 2A 15782 Marine Drive, White Rock, B.C. V4B 1E6
Telephone: 604-531-9639 Facsimile: 604-531-9634
Email: info@adanacmoly.com
May 27, 2008 - Vancouver, British Columbia
Dr. David Stone, CEO, reports:
ADANAC MOLYBDENUM CORPORATION CLOSES THE PREVIOUSLY ANNOUNCED BRIDGE FINANCING PRIVATE PLACEMENT; PROCEEDS TO BE USED TO PARTIALLY FUND EQUIPMENT PURCHASES, DETAILED ENGINEERING, CONSTRUCTION PLANNING AND CORPORATE OVERHEAD FOR THE DEVELOPMENT OF THE PROPOSED RUBY CREEK PROJECT.
Adanac Molybdenum Corporation (TSX: AUA) (Pink Sheets: AUAYF) (Frank: A9N) (“Adanac” or the “Company”) today confirmed it has closed the previously announced financing. At closing, the Bridge Financing will be funded to $68.5 million. The Company has the option to increase the Bridge Financing up to a total of $80 million at any time prior to May 30, 2008.. The proceeds will be used to fund continued development of the company’s proposed Ruby Creek molybdenum project.
The financing is in the form of senior secured notes issued pursuant to a Securities Purchase Agreement signed on 23 May, 2008. The agreements related to the financing will be filed on SEDAR. Under the terms of the financing the Company will grant, in total, warrants to subscribe for a number of shares of Common Stock equal to 21.4054% of the fully-diluted outstanding shares of Common Stock of the Company. The Warrants will expire the earlier of either three (3) years after the closing by the Company of the contemplated raise to secure the balance of the financing to build the project in convertible debt and/or high yield debt, or five (5) years from the date of issuance.
This financing was arranged through Adanac’s United States based investment banker and includes participation from leading global institutional investors. Securing the balance of the funds required to build the mine, mill and related infrastructure is scheduled to be completed by the fourth quarter of 2008.
“This financing enables Adanac to continue its engineering and construction planning activities and take possession of processing equipment we have ordered for the molybdenum mine. It represents a strong vote of confidence from the financial market for building the project.” said Dr. David Stone, CEO.
Adanac Molybdenum Corp. is engaged in the exploration and development of mines to produce molybdenum and other ferro-alloy metals. Its flagship property is the Ruby Creek molybdenum project located near Atlin, BC. The property contains an open pit reserve of 157.7 million tonnes grading 0.058% Mo using a 0.040% cut-off grade. This news release has been reviewed by Michael MacLeod, P.Eng. a qualified person pursuant to National Instrument 43-101 and the President and Chief Operating Officer, of the Company
On Behalf of Management
ADANAC MOLYBDENUM CORPORATION
David Stone
Chief Executive Officer
Information Contact
David Stone
CEO
Head Office: Suite 200 – 2055 152 Street, Surrey, B.C. V4A 4N7
Telephone: 604-535-6834 Facsimile: 604-536-8411
Corporate Office: 2A 15782 Marine Drive, White Rock, B.C. V4B 1E6
Telephone: 604-531-9639 Facsimile: 604-531-9634
Email: info@adanacmoly.com
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