April 16, 2007
The Moly Boom
You know the old maxim? When the shoeshine boy (or the cab driver) starts giving you stock tips it's time to get out of the market?
For those who missed this year's uranium and nickel boom, there is still molybdenum. Scarce, hard to substitute, and subject to new export curbs in China, the silvery metal has freak resistance to heat, cold, and corrosion. Hedge funds view it as a leveraged play on the next looming energy crunch.
Plain "moly" to mining men, the metal gives Canary Wharf that shifting glow of blues, whites and reds as the day changes, and prevents London pollution and salt sea breezes wrecking the sheen.
It is the emerging "wonder metal" of the oil, gas, nuclear, coal, and desalination industries, needed for catalysts to remove sulphur.
No, I have no crystal ball here and I'll agree that the analysis in the piece looks viable. But when you see little known metals being puffed as great investments, time to look out I would think. The latter part of the piece sounds very like a puff for a new share issue.
Several of the people I deal with are Moly traders and almost all of them won't take material into stock at the moment. They'll do a pass through (material from producer to end user) but not pile it up in the warehouse thinking that it'll keep on going up. Russian metal that a decade ago we were paying $11 a kg for is now $80 and more.
Now to talk my own book. Anyone interested in becoming the (near) monopoly supplier of scandium to the market? The Russian stocks are near exhaustion, global demand is a multiple of global production and all we need is a mere £ 5 million to build the extraction plant. Could we just pool everyone's credit cards?
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Seriously, why not get some venture money for this? Plenty of VCs out there who would be interested in this. OK, so you need an average IRR of 40%, but if you're building a near-monopoly then that seems achievable.
There is a more direct way, too. There are some tasty tax breaks in the UK for EIS companies. EIS gives an investor a 20% tax credit, gains are tax free, and there is roll-over relief. Attractive to private investors and you can raise the capital yourself.
Why not go for it? Work up the business plan, write the prospectus, make a public offer. Make sure the minimum subscription is low enough for credit card limits, OK?
See www.eisa.org.uk for more details on how to do this.
Posted by: Kay Tie | Apr 16, 2007 12:28:29 PM
£5m for an extraction plant? In the oil and gas industry, by the time you've done all the planning, design, procurement, construction, commissioning and complied with all the necessary environmental and safety regulations, £5m would get you something which resembles a bike shed.
Damn, we'd charge about £3.5m just to blast and coat the pipework.
Posted by: Tim Newman | Apr 17, 2007 7:53:19 AM
I actually was not familiar with that maxim. It seems more like it'd be time to get out of the cab.
Posted by: Stock Tips | Jan 28, 2009 6:31:29 PM