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Blue Pearl Mining / Sprott Molybdenum Participation Fund
Apr. 11/07
The Fund has announced that the offering is expected to close April 16th.
It was reported that the anticipated and actual shortages will move the Fund units, moly producer stocks and the commodity metal price itself. (The Fund follows the pattern of the same type of fund used to purchase uranium in a period of shortage. That Uranium Participation Fund has been very successful and thus the arrival of the moly fund has generated a lot of publicity for the fund itself but also for Blue Pearl Mining as the premier stock in the field.)
Three Companies are to be included as the Fund begins:
1) Blue Pearl Mining (BLE on Toronto)
As readers of the AMP may know Blue Pearl was a private company that purchased the assets of the Thompson Creek and in a heavily debt based transaction transformed itself into a moly only miner. It has quickly acquired the status of the "go to" stock in the field. UBS has an estimate of $1.06 earnings per share in 2008 giving a P/E ratio of 9 for next year. There is no spot market price for moly. It is a negotiated amount between miners and users. The present tight supplies will likely be accentuated by the Fund becoming a purchaser of the metal - in addition to holding shares in miners. The effect of the Fund purchases may be seen in the next few months. Generally, analysts have been using $30 a pound in calculating earnings and financial ratios.
Blue Pearl has
1) Undertaken a prepayment of $62 million of debt.
2) Sold 3 million shares to the Fund for $36 million, which will be used for debt repayment.
3) Planned for an production expansion of one-third - to 27 million pounds in 2008.
Blue Pearl has enjoyed a steadily rising market price - resulting in new 52 week highs ($13.75 on April 9th). The promotion of the fund and publicity surrounding its launch should help attract new money, not only to the fund itself but to the main companies in the fund.
Already Blue Pearl is seeing increased trading volume in tandem with a rising valuation.
Today ( Tuesday April 10) ,a manager for Sprott was on the television rounds and repeated that his firm had started the Fund because it believes the commodity price is going higher.
He also said that Sprott has been making nine presentations, (to raise funds) a day for the last week or more.
Other companies announced for inclusion;
Roca Mines (ROV on the Venture Exchange)
Mercator Minerals Ltd. (ML on Toronto)
We will comment on these companies in Future issues of this blog.
What Made Mega Jump???
Mega Uranium (MGA on Toronto)
Cannacord Adams gave, as the reason for the big move up Monday:
1) Active exploration program.
2) A diverse Portfolio of prospects in Canada, Australia and four other countries.
3) Joint ventures with Cash Minerals (CHX) and Titanium Uranium (TUE).
4) Purchases from Santoy resources (SAN).
5) Acquisition of Monster Copper (MNS).
6) ANTICIPATION of another deal or exploration results.
AND
7) This company and Pinetree Capital (PNP) are favourites of Jim Dines. These two are featured in his newsletter and interviews. I don\'t know how you calculate what that promotion is worth but followers of his blessing on these two have made money and continue to make money. Pinetree added a half dollar today, Mega was off a dime after a great run yesterday.
Paladin Progress Report
Paladin Resources (PDN on Toronto)
The Company is making good progress but is not yet getting recognition. It announced receipt of a license for Malawi which allows for construction of the Kyelekera project. This project is to be in production next year and to ramp up to 3.3 million pounds by the following year.
The Company is also boosting production in Namibia
Production is stated to be about 25% under contract with the bulk being entered into at today’s higher rates.
Having said this, Paladin, SXR and Laramide were off today. Patience. Patience .
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