EKA are expecting to mine 3.8 million lbs of Molybdenum this year. For the more sceptical amongst you, read this to confirm:

http://moneyam.uk-wire.com/cgi-bin/articles/200412150700023844G.html

They own the mine and the molydbenum in it has been independently varified as stated in the announcement linked above.

Molydbenum currently trades at around $38.50 per lb, you can check this at:

http://www.monterrico.co.uk/s/MetalPrices.asp

so do the sums 3.8m x $39.25 = $149m = 82m

Eureka Mining's market cap is 26m

In 2006 they expect to pull over 10,000 tonnes (20m lbs) of Moly out of that mine.

On top of all that they have recently aquired a mine in Russia with estimated contained metal of 3.32 million tonnes of copper, 3.26 million
ounces of gold and 98.9 million pounds of molybdenum. They hope to complete the feasibility study for this one in 2006:

http://moneyam.uk-wire.com/cgi-bin/articles/200501130700033169H.html

What is molybdenum and what do you do with it. Is Kasakstan politically stable as anything ending in stan makes me very nervous.

MS

Molybdenum is a heavy metal, man - all sorts of industrial uses.

Kazahkstan is the world's tenth (!) largest country. Its political stability can be measured to some extent by the good credit rating it recives from the banking community worldwide.

I am heavily into European Minerals in that country.

DYOR

SD

The fact Molybdenum, Eureka Mining and Kazakstan are so completely unheard of is partly what makes this share so favourably valued at the moment.

It's on my radar screen.

MS

It's on my radar screen.

MS

It is used in stainless steel production and we all know what has happenend to the price of steel, it is very difficult to substitute as it has unique properties as its compounds have very low toxicity for a heavy metal.

Even if you not believe us believe IC they recommended a buy at 156p and it is now at 121p. final drilling results due this month.

its on my radar and i might shoot it down. sorry, silly afternoon...

Nickel can be used in the place of Moly for steel production, but if you look at the price graph for it, you'll see that it is not currently a viable substitute.

Ok Ok Im impressed, will do some homework with a view to joining you, by the way molybdenum as a trace additive is also used as a high pressure lubricant.

regards

Loadsa

Yes apparently it's used a lot in oil piplines also.

What about KY Jelly.

MS

don't mean to give you any negative feedback, but i did read within the past month, in an aussie newspaper (or perhaps it was the Shares mag - aussie version); which had an article about commodities........it reasoned that with the copper prices also being at record highs - and therefore the amount of copper mines coming into production obviously in search of the resultant riches - that the molybdenum price should stabilise quit quickly, and perhaps drop sooner rather than later (by end of 2005 ??) - because apparently molybdenum is a by-product of copper (?) and it will therefore be produced and sold by most copper mines......and although it may only account for up to 5% of the total mine's production, there will be a fair bit of molybdenum coming onto the market.......now that's way too much KY jelly !!

MS - I know about Kay, but I have always wondered why jelly. Nothing to do with that Irish lass of high moral standard, stainless Molly, is it?

:D
SD

You are right belisce6, history has shown that molybdenum prices do tend to shoot up for a period and then come down. You'll be glad to hear that I have thouroughly researched this one also.

The closest historical example for the commodities boom going on currently, is the one that happened at the end of the 1970's. During this boom most major commodities peaked in 1980 and then gradually returned to a normal level. From what I can see, oil was the leader of the pack. Have a look at the link below:

http://minerals.usgs.gov/minerals/pubs/metal_prices/metal_prices1998.pdf
(the table of data lower down on the page gives more useful information)

Copper prices peaked in 1980, having had two very good years in 1978 and 1979 (during which time many more copper mines will have been brought on stream). You will see from the link that molybdenum prices also peaked in 1980 and gradually dropped off over the next three years.

So the first question is:

Do you think the current commodities boom is over?

Personally I would say no. Goldman Sachs seem to agree with me, as do many others. I have no doubt that we have a bubble in the making here, but in terms of the current commodities party we are only at about 10pm. The fact is that although we are bound to get a hang over at some point, but it is still a long way off.

The second question is:

If the commodities boom were to be over tomorrow, how long would it take the Moly price to drop back to historical norms?

Based historical experience I would have to say 3 years.

Given that EKA think this mine would still be very profitable with moly at $10 per pound, that means they still have a lot of time to make a grand exit.

Tallsiii

tallsii,

When is the mining going to commence?

Second half of this year. As I say they are planning to extract 3.8 million pound of moly by the end of the year.

tallsii,

Ok thanks.

is the full 63 million attributable to Eureka? or are there any JV partners?

Do you have any idea of the mining / extraction costs per lb?

There are no JV partners.

EKA will not have an accurate cost per lb until the feasability study is completed. But have a look at the write up of the Shorskoye Molybdenum Project
under the Projects section of their website at the link below:

http://www.eurekamining.co.uk

That was written in November 2003, when the moly price was $5.70 per lb. Presumably they were planing the mine some time before that when the moly price was even lower.

There will be some additional costs incurred due to the fact that they are fasttracking the mine to start production a year early, but I think we can assume that the extraction cost per lb will be significantly below $6 per lb.

ON the move Up 1.5p

Yes people seem to buying now.