TGR: You are also interested in molybdenum, correct?

GK: We’re following molybdenum very closely. Molybdenum has behaved in a very funny way lately because the Chinese, all of a sudden, have come into the molybdenum market. Molybdenum is currently at $8 a pound, and China, which has traditionally been very self-sufficient with its domestic production of molybdenum, has imported about 10,000 tons since December.

That’s more than they imported, basically, in all of 2008. We look that as a signal that this is probably physical usage and that they cannot produce it for that price. Because molybdenum does not really affect its end use in a pipeline, for example, if molybdenum is $8 a pound or $30 a pound, the cost of 1km of pipeline is not going to change significantly.

Here's something else that I think is important. We believe copper sets the barometer of the global economy; you could also say that molybdenum is certainly on the pulse, too. With its very high melting point and its anti-corrosive properties, it’s used extensively within infrastructure and energy transport and creation. So you’re going to see it used in things like pipelines, construction, and any kind of energy projects.

When we see a turn in moly, I think you’re going to see a dramatic turn. It’s continued to fall, down to the high $7 range and finally has upticked again to over $8. Now that moly has turned, that could signal the bottom and we can expect and will monitor a potential climb to the upside. Again the interesting thing is that the Chinese are buyers.

So another company that we like that’s sort of a proxy on moly and still within the copper space is Mercator Minerals Ltd.. It's a brand-new operation in Arizona with a moly production focus, with 5 million pounds this year and expanding to just over 10 million pounds next year with Phase 2 completion at their Mineral Park operation. As well, there is 50 to 60 million pounds copper production for diversification. Their cap-ex replacement for operations is around $500 million.

TGR: Any other companies that come to mind that you think our readers should be taking a look at?

GK: A company that has a lot of advantages and is on the path to production (and this is a very difficult market for that), is Copper Mountain Mining Corporation, located in Southern British Columbia. What separates them from other companies is the fact that it was a past producer; they’ve got about $160 million worth of infrastructure and development in place. That’s about $5 per share of dilution that will not need to take place. They’ve signed a Memorandum of Understanding (MOU) with Mitsubishi, who is the strategic partner.

According to that MOU, Mitsubishi is going to earn 25% of Copper Mountain Mining for $28.75 million, or about $4.50 per share, and they’re going to help finance by way of debt about $250 million of the overall development costs. The development costs per the last study were about C$430 million. This pretty much completes their financial obligations. I believe all that Copper Mountain would need to finance on their own is somewhere in the area of about $50 million. So it’s a big project and it’ll be a pretty big producer, 50,000 tons a year and, more importantly, they’ve got the big partner with Mitsubishi.

A lot of companies just can't get capital. Copper Mountain, according to this MOU, only needs about $50 million to go into full production and they do expect that to start in 2011. So it's a company that’s got a very low market cap, about $20 million, and the blueprint and groundwork to finance a project in this economic climate with a very strong partner.

TGR: Thanks, Gianni, for this introduction to the world of copper. We appreciate your time.

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