This is a followup writing to John Kaisers Dec. 11/07 write up
on Creston Moly. If you don't subscribe, I recommend you do. John has been doing
his bottom fishing reports for many years now and he has given many good recommendations, which have been very worthwhile investments.
Ron Birch
Re:
Trackers
- Thursday, February 07,
2008Title:
Tracker 2008-08: Creston
Moly infill drill results boost grade optimismPublisher:
Kaiser
Bottom-Fish OnlineAuthor:
Copyright 2008
John A Kaiser
Tracker 2008-08
February 7, 2008
Creston Moly Corp (CMS-V: $0.35)
Initial Creston Moly infill drill results boost grade optimism
Synopsis: Lost in all the bad news about lower employment rolls, service
industry contraction, and worsening liquidity for securitized mortgage paper
have been some major developments in the raw materials sector that may represent
an inflection point for a true mania in the resource sector. The formalization
of a takeover bid by BHP-Billiton for Rio Tinto, in the wake of an off-market
purchase by Chinalco and Alcoa of an equity stake in Rio Tinto at a premium to
the market, could be the prelude for a massive takeover battle for the world's
third biggest mining company. Is this a case of a bunch of boys happily playing
with their dumptrucks in a sandbox while their mother is screaming to come
inside before the sky caves in on them? Or do they know something about the sky
that Chicken Little does not understand? If the tide is once again shifting in
favor of the secular bulls, and you did not act on my earlier recommendation to
buy Creston Moly Corp (CMS-V: $0.35), your chance to own this key race to
production contender in the recommended bottom-fish range of $0.30-$0.49 will
soon disappear.
Creston
Moly Corp (CMS-V: $0.35) reported assay results on January 14, 2008 for
6 holes of 16 HQ holes (4,251 m) so far completed on its 100% owned El Creston
molybdenum deposit in Mexico's Sonora state. This 10,000 m program is designed
to establish the precise boundaries of the deposit and secure a reliable grade
for the molybdenite mineralization whose occurrence as coarse flakes and clusters has raised concerns that drill recoveries by previous operators may
have understated or overstated grade. The 43-101 resource calculation based on
previous assays was 92,873,000 indicated tonnes of 0.083% Mo and 84,221,000
inferred tonnes of 0.076% Mo at a 0.035% Mo cutoff. While Creston Moly's promoters have offered hopes that the actual grade would turn out to be higher,
its geologists had harbored concerns that the variability sword might cut the
other way. To solve this problem Creston Moly has been assaying the entire HQ
core on the recommendation and under the chain of custody supervision of Steve
Ristorcelli's Reno based Mine Development Associates.
While the initial results - infill hole 7 yielded an impressive 246.29 m of
0.14% Mo, including 99.2 m of 0.23% Mo - are not enough to give a green light to
Jon George's hopes for a better grade, the toiling geologists in the background
have gained confidence that the new resource calculation expected in May 2008
will involve reliable numbers at least as good as the resource calculation. To
put these grades into monetary perspective, at $30 per lb molybdic oxide the
43-101 grade of 0.083% Mo works out to a $55 rock value, the 0.14% Mo rock value
is $79 per tonne, and at 0.23% Mo it is $152 per tonne.
The market ignored these good infill drill results, as it has recently done
with a number of other advanced molybdenum projects, because they reveal nothing
about the deposit that is new to anybody but a geostatistician. The issue
preoccupying the market is the destiny of metal prices amid growing evidence
that a US recession is already underway. The announcement by Adanac
Molybdenum Corp (AUA-T: $0.72) to curtail winter development work at its
Ruby Creek molybdenum project in northern British Columbia, despite Adanac's
assurances that the outlook still looks great, is a sign of the "pause" market
anxiety is imposing on the race to production. So far, however, there is no sign
that Creston Moly is slowing down its plans. Two Diamond drills are working on
El Creston, and the company is getting closer to announcing several important
development related milestones it has been working on since December.
Not everybody shares the pessimism of the cyclical bears. During the last
quarter of 2007 two of the world's biggest steelmakers, ArcelorMittal and POSCO,
invested $240 million in the Mt Hope molybdenum project of General Moly Inc
(GMO-AMEX: $9.29). ArcelorMittal invested $70 million in General Moly stock
at $8.50, and POSCO is contributing $170 million for a direct 20% stake in Mt
Hope. A week ago Chinalco and Alcoa bought a combined 12% stake in Rio Tinto
from some bearish hedge funds at a 21% premium to the market, reversing a sharp
downtrend that has hammered the mining sector since December. And on February 5
BHP Billiton formalized its takeover bid for Rio Tinto with an improved offer
that values Rio Tinto at $147 billion. Who should one believe: the fabricators
of real things or the Wall Street fabricators of "low risk" paper?
Conclusion: I recommended Creston Moly as a top priority bottom-fish
buy in the $0.30-$0.49 range on December 11, 2007 following a property visit.
The El Creston project, which can be classified as being at the prefeasibility
stage based on steps management is taking to fast-track its development, currently has an implied project value of $58 million. This IPV represents good
speculative value for a dream target of $500 million according to my rational
speculation model. Fair speculative value would imply a stock price of
$0.70-$1.00. In a bullish macro scenario where one assumes that a $30/lb molybdic oxide price will persist for a long period during which few other major
new molybdenum mines other than El Creston come on stream, and where Creston
succeeds in fast-tracking development, a larger dream target value becomes
plausible. Creston Moly thus continues to be a top priority bottom-fish buy. In
fact, if you share my view that the Chinalco/BHP/Rio Tinto developments
represent a major turning point in the general market outlook for the raw
material sector, Creston Moly is a "must-have" for your bottom-fishing
portfolio.
*JK does not own shares in the securities mentioned herein
Copyright � 2008 KAISER BOTTOM FISH (KBFR) All rights reserved. For more
information visit our website at
http://www.kaiserbottomfish.com/ or send email to
info@kaiserbottomfish.com
..
Message sent on Wed Feb 6, 2008 at 8:15:59 PM Pacific Time
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Creston Moly Corp.
|
|
DEVELOPMENT STAGE |
CODE : CMS.V |
ISIN : 373626100 |
CUSIP : 373626100 |
| |
ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Creston Moly is based in Canada. Creston Moly develops copper and molybdenum in Mexico. Its main asset in development is EL CRESTON in Mexico and its main exploration properties are AJAX and MOLY BROOK in Canada. Creston Moly is listed in Canada and in Germany. Its market capitalisation is CA$ 129.6 millions as of today (US$ 132.1 millions, € 92.4 millions). Its stock quote reached its highest recent level on May 11, 2007 at CA$ 1.21, and its lowest recent point on December 12, 2008 at CA$ 0.05. Creston Moly has 287 947 000 shares outstanding. |