General Moly Announces Completion of Permitting Process for the Mt. Hope Project
Stock up 7% on this news I assume. So, what are the risks in this stock now? Moly is at $11 per pound which is near the low end of the expected range. Seems like nothing but blue sky ahead with more and more positive announcements to come and potential increase in moly price.
OWned this now for years, and have waited for so many of these things to finally come around. I don't see a lot to move GMO in the near future. It should get a bump when the financing gets finalized. From there, during the +/- 2 year construction period, it will probably drift along with the market.
Upside could come from many factors, not limited to these: General improvement in the US and/or China economy; bump in moly prices, perhaps due to (finally) some moves to improve infrastructure, or further spending on energy infrastructure (more likely); good weather for the winter periods of construction, perhaps moving the schedule ahead a bit. I am sure there are others.
Downsides could come from any of the opposites of the upsides, mostly likely due to continued governmental bickering that continues to muddle the financial picture. Cost overruns during the construction period are likely, as rbnorth54 suggests.
The real money is still 2-3 years out when the moly is mined, shipped and paid for. Only when there are real profits can GMO be expected to swing into double digits.
In all, management has shown the ability to get this horse into the race, in spite of some of the obstacles. No reason to believe they won't get it to the finish line.
Positives is permitting is in, world class management team, world class partners, Posco $100MM partner buy in coming soon
Risks are low moly price, China growth risk, Hanlong financing risk, moly being copper byproduct with no cost basis, escalating construction costs, Nevada Supreme court ruling in favor or plantiff, 2 years to revenue, partners changing terms of agreements.
GMO's market value at $350MM should be at least 50% higher but will slowly move up as the company executes it's business plan.
You forgot to mention that if our Sun was to supernova that would create a huge risk for investors in GMO. Not to even mention an asteroid collision with the earth, unless of course that was a molybdenum asteroid! Seriously, there are always risk but GMO has an excellent management team which Bruce Hansen has lead and thus far they have done an exemplary job bringing this project to where it currently is through some very difficult times for both financing and commodities. From where i sit, life will go on and I am very confident where GMO as a company will be under this leadership in the coming years. I see the only real threat is the general global debt issue and how that will depress moly oxide pricing in the short term. But remember the first 5 years of production is already sold in the $14 to $15 price. So I see mid term protection for GMO with regards to moly pricing to be ok for the next 7 years (2 years of construction + 5 years of commited sales).