Typically, engineering companies conduct scoping, prefeasibility or final feasibility studies up to the stage where the Mo concentrate can be obtained. They work on the assumption that almost any type of this is a marketable product that can be easily sold in the marketplace. However, they do not take into account factors such as the quality of the concentrate (grade and impurities), volume in relation to the market and regularity of production, among other factors that could have a determining impact on the product price and consequently in the end results of a project.
Unlike the copper concentrate trade, in the Mo market these factors may cause some products to be sold at discounts of up to 30% over the Mo price, resulting in a significant impact on the project's returns.

How can our insight add value to a project in the study stage?

• Often, a quality problem can be corrected easily by means metallurgical processes additional to flotation. The assessment of their advisability includes commercial analyses and knowledge of the market terms.
• Unlike other markets, such as copper, information regarding the Mo concentrate market is very scarce: the terms for treatment charges or penalties for different qualities are not published. There is a high concentration of processor market and, therefore, scarce competition. The lower the quality, the scarcer the placement options and the greater the treatment charges.
• The decision of whether to sell the concentrates or to go to the next stage and sell other Mo products in a broader market is not an obvious one. Depending on the volumes expected, on the type and contents of the by-products, on the variability of productions and/or qualities, in addition to other factors, the terms required by concentrate buyers may result less beneficial than moving to a greater degree of production integration or alternatively to assess toll conversion agreements instead of selling concentrates.

In summary, supplementing the engineering studies by means of a specific analysis of the complex Mo market not only adds value but can make the difference in the project returns.

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The marketing strategy can be a key element to obtain financing and, therefore, to the success of the Project. In the past, following a period of high prices in 1979, several new Mo mines were developed, generating huge surpluses; however, several of them had to close down due to lack of market and very low prices.

• It was just in February of 2010 that the LME started a Mo contract. It may take many years until this instrument becomes a realistic option for the delivery of significant surpluses to its warehouses or to enable a new producer to make price hedging for their production.
• The design of a realistic sales strategy and sensitivity analyses are key elements to obtain the financing of Mo projects.

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Currently, there is a large number of shares or financial assets whose value relates mainly to Mo, that are being traded in the market. Among others, Thompson Creek, Molymet, JDC, China Moly, as companies in operation; there is also a large number of emerging companies with Mo projects at different development stages that have issued shares and other financial instruments traded at the stock exchanges in Canada, US and Australia, like Molymines, General Moly, Avanti, Ivanhoe Australia and Creston, among others.

The availability of quality information to help investors in the proper assessment of their assets value and potentiality is very limited. Each company commissions studies to back up its own assessments.

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How sound are the grounds for Mo market analyses supporting the assessments made available by the companies? Isn't reasonable to have available more than just one view when history has shown that the Mo market is truly complex?

At MolyExp we provide a solid, medium and long term Mo market analysis, backed up by our broad database on the fundamental variables, follow-up of new projects, potential production increases, demand forecasts, probable price ranges, all of them sensitivities history has shown to be worth bearing in mind.

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