Thursday, November 6, 2008

Geodex Minerals Engages In Some Belt-Tightening On Its Tungsten Properties, But Overall The Fundamentals Still Look Good

November 03, 2008


[...] The first is the price of tungsten, the primary metal the company has in its portfolio, and the second is the price of molybdenum, which Geodex also has significant quantities of. Geodex’s IR chief Christopher Anderson paid Minesite a visit this week, and explained how tungsten, as a non-terminal traded metal, is now actually reflecting the supply and demand balance better than LME-traded metals, where prices are complicated by hedging and other complex financial products. At US$9.00 per pound, tungsten’s off a bit since the financial crisis began, but not much, and the same goes for moly, which is now down in the high US$20s, but still a long way ahead of where it was a few years ago.

But in a way, the tungsten story is unique, and has its own unique support. When the world’s largest producer, China, switched from being a net exporter to a net importer back in 2005, the tungsten price re-rated dramatically. It’s still up at the new price levels, and given that new mines may now be put back as funding becomes harder to get hold of, supply may be squeezed even further. Certainly development at Geodex’s Sisson Brook project in New Brunswick has been slowed. On the current timetable, the likely date for first production has been pushed back from 2012 to 2013. But that’s planned, rather than forced. Geodex is looking to ride out the storms, rather steer into them. With any luck, when the next big development decision comes to be made on Sisson Brook, the world economic situation may look a little brighter. Read the full story here

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