Having a deep pocketed investor and customer waiting in the wings is always an advantage when a company is working in a less than certain marketplace. It is also an advantage if this investor typically take the long view and does not expect next quarter profits. As an individual investor, finding a company that has this type of investor waiting is a good way to profit as those with the big cash usually have a solid idea of what will likely happen.
General Moly, Inc., a molybdenum (moly) exploration, extraction and development company, works to find and extract molybdenum ore primarily in Nevada. The company also mines for gold and silver as a related metal.
The company, founded in 1925, is engaged in developing two leases. It controls an 80% stake in its Mt. Hope project and a 100% stake in its Liberty property. Currently, the company is awaiting a decision from the Bureau of Land Management regarding a waste water pond at its Mt. Hope property due later this year or early next year. In this sense, the report is important to the company as it may hold the difference for full financing from the Hanlong Group of China.
This point also holds an indicator of moly and its importance for the manufacture of steel and in particular steel tubing. In recent years China has been sequestering its moly resources and limiting export as it goes about the expansion of its domestic infrastructure. China’s interest in the Mt. Hope project may indicate that its supplies, as they relate to current development plans, may not be adequate. Given China’s recent projections of an annual GDP growth of 8%, this assumption may well be within reason.
Although the company has been experiencing the effects of the global recession of late, its overall cash and development costs appear to be within reason given economic conditions. Equipment upgraded and new purchases are the largest drain on resources but well within reason given the likelihood of the Mt. Hope project, a partner with extremely deep pockets, the willingness to purchase the product and the patience to await government action. Per pound price for the product also holds hope (as it were) with a leading price standing around $12.00 and a projected price of $18. From all appearances General Moly is positioning itself well for a late year move and may present opportunity for a solid investment at lower levels.
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