BLE.TSX Blue Pearl Mining

[stolwyk]

BLE.TSX Blue Pearl Mining: http://www.bluepearl.ca/s/Presentations.asp

Shares after raising cash for takeover of Thomson Creek/Endako: 100.1 mill. and fully diluted: 133.3 mill. These include warrants.

Current price $CAN6.38.

PROJECTS:
Apart from the takeover, BLE is preparing a feasibility study for its Davidson mine (588 mill lbs Mo).

THE TAKEOVER: Cost of the ThomsonCreek/Endako running projects: US$575 mill minus the US$150 mill cash held by Thomson Creek or net US$425 mill.

The current 2005 profit from these 2 assets is US$323 mill. So, these assets previously held by private interests were running on a P/E of about 1.8, only: 575/323.

However, these 2 assets were operating 2/3 of the time and Blue Pearl will run these full time. Add to this their Davidson mine to operate in 2008, and while BLE is now in the top five producers, in 2008, it could be the world's biggest. Current Mo price: US$26/lb.

FINANCING THE TAKEOVER.
An equity issue of 41.9 mill shares @CAN$5.55 has been completed. The Bank will lend them US$450 mill. This includes expenditure on the feasibility study of the Davidson Mine.

PROFITABILITY.
Based on their 100.1 mill shares and 22 mill warrants (Most to convert @CAN$9 before Oct 23, 2011), the outlook is very positive IMHO.
They will most likely also pay to the previous owners US$50 mill. this year, the same next year and US$25 mill finally in 2010, as well as US$23.35 mill, while the interest bill could be some US$32 mill for the next 12 months but they have access to Thomson's Creek's US$150 mill cash and they could become full time producers.

Consider that they could make a profit of some US$280 mill or CAN$315 mill (US:CAN$1.1242) or CAN$3.14/share in the next 12 months, then, based on the current CAN$6.38 sharer price, the P/E is only 2.
And this from a very profitable producer!

BLE will be paying back their debt soon and depending on the Moly price, this may not take long. However, they will need to finance the Davidson mine, to produce in 2008, as well.

SUMMARY: Considering BLE was very lucky in taking over the very profitable high producers Thomson Creek/Endako assets at a low price, backed by Bank finance and the likelyhood, they will be running these full time; add to this the Davidson Mine operating in 2008, they will have by then 3 considerable sized mines operating.

IMHO, Blue Pearl (BLE) is the cheapest Moly producer available by far.

Sources:
1. The website: http://www.bluepearl.ca/s/NewsReleases.asp?ReportID=149369&_Type=News-Releases&_Title=Blue-Pearl-to-Become-One-of-the-Worlds-Largest-Molybdenum-Producers-with-US...

2. http://www.easybourse.com/Website/dynamic/News.php?NewsID=51135&lang=fra&NewsRubrique=2

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

[djones]

The chief executive said Blue Pearl is anticipating that the price of molybdenum - currently changing hands at around US$29 a pound - could fall by as much as 65% over the next two years or so.
"Why? It's conservatism; we've been around too long," he said, noting that molybdenum has traded well below US$10 a pound during the past decade.
Even so, the cyclical market is being driven by the large amount of steel being consumed in the global marketplace, he said, meaning prices could remain buoyant.
If prices do fall, as Blue Pearl expects, then the company's US$450 million debt burden could be paid down within four years. However, if prices remain high, that debt load could be gone within 2.5 years, he said.

[stolwyk]

There is another stock: GMO.AMEX (Idaho General Mines) which hopes to start mining in 2009. It has a staggering 1.3 bill. lbs of Mo. Perhaps Blue Pearl could take that over as well much later on. I hold both. (GMO has a thread on Sharetrader as well).

Gerry

[stolwyk]

Was $6.38 on 26 Oct (See first post). Now $7.40

BLE, given time, could become a very high priced share, considering its P/E is low: see first post.

Thu Oct 26, 2006
Blue Pearl Completes US$575 Million Acquisition Of Integrated Molybdenum Producer Thompson Creek

http://www.bluepearl.ca/s/NewsReleases.asp?ReportID=155795&_Type=News-Releases&_Title=Blue-Pearl-Completes-US575-Million-Acquisition-Of-Integrated-Molybdenum-Pro...

"We are delighted to close this acquisition, which marks the birth of a new major Canadian mining company at a time when the ranks of Canadian metal producers are thinning," said Blue Pearl Chairman and CEO Ian McDonald. "In terms of annual revenue we should rank in the top 15 list of Canadian mining companies, and Blue Pearl will be an integrated North American primary moly producer playing a significant role in the global market for molybdenum."

Mr. McDonald noted that with molybdenum prices trading above the US$25-per-pound level over the past two years and briefly hovering around US$40 in mid-2005, Thompson Creek has experienced strong financial performance.

For the first nine months of fiscal 2006 (ended June 30, 2006), Thompson Creek reported income from operations of US$407 million and net income of US$286 million (unaudited) and, for the full fiscal year ended September 30, 2005 (audited), income from operations of US$456 million and net income of US$323 million".

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

[stolwyk]

PART 1: Roasting Bottlenecks Could Support Firm Molybdenum Price Past 2010:

http://www.molyseek.com/index.php?option=com_content&task=view&id=62&Itemid=2




PART 2: Primary Moly Producers: One Key to the Molybdenum Price
http://www.molyseek.com/index.php?option=com_content&task=view&id=63&Itemid=2

"From aging oil and gas pipelines to new pipeline projects, the next decade is likely to see a large number of pipeline projects across the globe. Because of China ’s scramble to obtain sufficient oil and gas for its ‘emerging’ economy, Russia ’s ambitions to supply Europe and others with its oil and gas and dozens of other projects proposed, planned or under construction, molybdenum should remain in favor for longer than many analysts have forecast. Global pipeline projects could account for as many as 73,000 miles of pipe over the course of the next two decades.

On the high side, if 1,600 tons of pipeline steel were required for every mile of pipeline (52-inch diameter, high pressure), the energy industry would need more than 600 million pounds of molybdenum. That’s about 150 percent of the world’s current production, which would draw away from the many other uses of molybdenum. Just a handful of large pipeline projects would create sufficient price upside to encourage further molybdenum mining project developments".

[stolwyk]

BLUE PEARL PUTS DOWN ROOTS:

http://www.bluepearl.ca/i/pdf/2005Nov18.pdf

[stolwyk]

Both Idaho General Mines (GMO.AMEX) and Blue Pearl Mining (BLE.TSX) are in demand.

Both concern large amounts of Molybdenum. Blue Pearl is producing now to be followed later by GMO which has its own thread on Sharetrader.

BLE is one of the world's top five producers. Combine the two and I believe one is looking at the world's top producer. BLE has 2 expensive roasters which are in dire demand. It therefore has priority in roasting their own production, if needed.

From my first post: BLE was CAN$6.38 on 26 Oct. It is now CAN$7.83 (+ 22.7%). Why? Read post 1.

GMO.AMEX was US$2.20 in August-See post 1 of the GMO thread, it is now US$2.97(+35%) -Still cheap IMHO.


Gerry
Has both BLE and GMO.
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

[stolwyk]

Both Blue Pearl and Idaho are rising strongly: BLE is now CAN$8.35 while Idaho is US$3.17


Gerry

[stolwyk]

1. SUPPLY, DEMAND AND END USE
http://www.internationalmolybdenum.com/record.jsp?type=page&sidebar=moly&ID=38

China has closed down some smaller mines and this has assisted the market. Also, oil refineries working with heavy oils from Venezuela and Saudi and the massive pipe lines from Russia extending to China and Europe will need big quantities. Drilling rigs and nuclear power stations are also users.

BHP was taught a lesson at Prudhou Bay where leaks in the pipes were due to too light content of Moly: quite a lot of damage coupled with less oil production resulted.

BLE.TSX has composed a table of expected moly pricing which is US$26 spot at the moment - there is no futures market - and according to them, the price of Mo would fall from $28 to $20 in 2007, $15 in 2008 and $10 in 2009. They may have used these prices in the takeover of Thomson Creek and these are too low IMHO.

A publication based on numbers of 3 analysts quotes $22.9 in 2007, $19.1 in 2008 and $13.4 in 2009. Again, I believe that the demand will be higher than forecast mainly due to the tremendous use in oil pipes. The current price rose from $25 to $26. Please note that the price of ore or concentrate depends on the Mo content as this is normally quoted in above mentioned prices.

2. METALS SOLD.
"Most mines produce and sell MoS2 concentrate, containing 50 to 55% Mo, which is roasted to produce technical grade molybdic oxide (MoO3 or TMO). Most MoO3/TMO is then converted to ferro molybdenum (FMO) or molybdenum metal for use as an alloying metal. Supply can also be in other forms, eg refined metal powder or ingots, ammonium, calcium and sodium molybdates and other chemical compounds".

I add that the pure ores which have MoS2 require much less roasting than when MoS2 is found with Copper and/or other metals. Many of the latter need multiple stage roasting as do the much higher priced end products. The persisting bottleneck in production is partly caused by a lack of very expensive roasting facilities.

A company which has one or two roasters and has surplus roasting time can ask high payments for treating other's concentrate. This can be a problem for those producers who can't afford to build and maintain a roaster.

Investors are advised to investigate if a company has a roaster; if so, they will be able to supply the end products at much less cost apart from having a market for the end product. Otherwise they will need to sell the concentrated mining ore at much lower prices to the owner of a roaster.

3. MOLY GRADES.
I prefer a Mo grade of 0.07% or higher per tonne. The investor needs to check that MoS2 is not quoted instead because as mentioned, the Mo content is only 50-55% of MoS2 content and publications will normally give the price of Mo only.

The in situ value of 0.07%/tonne, based on US$26/tonne for Mo and $A=0.78US, is about AUS$51/tonne, quite adequate in normal circumstances. It is difficult to get much higher values than 1.1% per tonne, unless in smaller parcels or in some underground operations. Malmbjerg (Greenland) has a higher grade but the location could cancel out any benefits and mining has yet not started.

The cash costs need to be looked at as well as do location and permitting for Infrastructure, mines, water use, disposal of waste or tailings, etc. In the US, permitting can take time as an Environmental Impact Report (EIR) can be demanding.


Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.
BLE: CAN$8.61

[stolwyk]

BLE: CAN$9.15, was CAN$6.38 on 26 Oct, an increase of 43.4%

From first post:
"Consider that they could make a profit of some US$280 mill or CAN$315 mill (US:CAN$1.1242) or CAN$3.14/share in the next 12 months, then, based on the current CAN$6.38 share price, the P/E is only 2".

Based on the latest share price, that has now increased to 2*1.434 or 2.9.
However, Mo is US$26, so the PE could be slightly higher than that, say 3.5?

Accounting year is Dec 31 and as the takeover deal was arranged at end of Oct, the full benefits won't be shown till the new year starting 1 Jan 2007.


Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.

[stolwyk]

A new 15 per cent tax on exports of unwrought molybdenum, scrap molybdenum and molybdenum powder
Written by The News
Friday, 29 December 2006
"A new 15 per cent tax on exports of unwrought molybdenum, scrap molybdenum and molybdenum powder would take effect in January, the ministry said.

China is the world’s top supplier of tungsten and molybdenum, both used to strengthen steel. Higher taxes could raise price requirements from Chinese exporters and that may drive up world prices.

“We are watching the market and then will decide what to do,” said an official at Jinduicheng Molybdenum Mining Corp, the country’s top producer of the metal. Industry officials had also expected Beijing to introduce a 5 per cent tax on exports of aluminium billet in 2007 but the alloy was not included on the latest list. The export tax for antimony would be left unchanged at 5.0 per cent, the ministry said."

- More...

http://www.molyseek.com/index.php?option=com_content&task=view&id=65&Itemid=28

Share price: CAN$9.91. Mo: US$25.25

[stolwyk]

Tue Jan 16, 2007
Blue Pearl Mining Announces Outlook And Initiatives

http://www.bluepearl.ca/s/NewsReleases.asp?ReportID=166761&_Type=News-Releases&_Title=Blue-Pearl-Mining-Announces-Outlook-And-Initiatives

COMMENT: Moving into lower grades. That would make the profit somewhat less than predicted.

Davidson Deposit
"A feasibility study on the Davidson Deposit near Smithers, B.C. is currently being conducted by Hatch Ltd. and is expected to be completed during the second quarter of 2007. The study is examining the feasibility of mining 2,000 tonnes of high grade ore per day from the deposit and shipping it to the Endako facility for processing, beginning in 2008. The mineral reserve estimate for this plan is expected in the first quarter of 2007".


"Common shares issued and outstanding: 100,495,080
Fully diluted share capital: 139,784,975":
http://www.bluepearl.ca/s/ShareStructure.asp

Gerry

[BillMcHenry]

Gerry,

Just took a quick look..., wanted to say "thanks" for the direction, and informative info.

[stolwyk]

Is moly on brink of being mining megastar?

http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20070304.wmoly0204/business/Business/businessBN/ctv-business


Extract:
"Mr. Sprott, who divested his ownership of Sprott Securities in 2001, now heads resource-focused money manager Sprott Asset Management Inc., which will manage the molybdenum fund in exchange for a 2-per-cent annual fee.

Toronto-headquartered Blue Pearl Mining Ltd. will serve as a consultant to the fund, and will market, buy and sell the physical moly holdings. Blue Pearl became the world's largest publicly traded pure-play moly miner last year with the acquisition of the Thompson Creek mine in Idaho. It also owns a moly processing plant in Pennsylvania, a 75-per-cent interest in the Endako mine in B.C. and the Davidson development project.

Blue Pearl shares have surged 160 per cent over the past year, as investors piled into the company after it pulled off the $575-million (U.S.) acquisition of the privately held Thompson Creek Metals Co., giving it roughly 5 per cent of the world's annual moly production. GMP Securities LLP is the lead underwriter on the moly offering. Heenan Blaikie LLP is providing legal advice".



Comment: IMHO, good news for Blue Pearl who manufactures the Moly.


Gerry

[stolwyk]

SLIDES:

http://www.bluepearl.ca/pres_03-07/slide1.htm

[stolwyk]

Demand/Supply:

Audio: http://events.onlinebroadcasting.com/bluepearl/030507/frameset.php?args=bluepearl,030507,7,2,lo,2

[stolwyk]

Moly price: $30.50

BLE share price: CAN$13.07

[stolwyk]

Mo price: $30.50

Share price: $17.05
Warrant: $10.58