Moly Market in Disarray; Mercator Minerals Price Target Cut

Mercator Minerals Ltd. (MLKKF.PK) got off on the right foot Monday morning, rising more than 5% through the first hour of trading in Toronto.

Last week, shares in the copper and molybdenum miner fell like a rock, dropping 42% from Tuesday's close of C$2.56 to C$1.47 on Friday, as moly prices have come under major pressure of late, forcing analysts like Blackmont Capital's George Topping to reduce his price estimates for the next couple of years.

Mr. Topping now predicts moly prices to hit $17 per pound in 2009, down from $25, and $20 per pound from $25 in 2010. His new price forecast reduces Mercator's cash flow per share to C$0.98 per share in 2009 and C$1.64 in 2010 from C$1.38 per share and a C$1.83 per share previously.

The analyst wrote in a note to clients:

While the moly market is currently in disarray, we believe it will stabilize in 2009. Consequently, we maintain our Buy recommendation but lower our target price from C$7.90 per share to C$7.30 per share.

Shares in Mercator were up C$0.07 to C$1.54 at 11:08 a.m. ET on Monday. The stock hit a 52-week high of C$12.94 in late May of this year.

Comments

[GMiki1:]

We need moly for infrastructure build, which means both China's stimulus package and our own coming one will stimulate the moly market. Base metals aren't dead by any means. Wait for the reinflation. Buy the stocks now at a terrific discount.

Of course, most of us don't have cash. But I just bought 1,000 shares of Canadian Zinc this morning for about $200. The company is cash rich and is in the permitting process. Oh, by the way, it has a big silver component of its resource.

2008 Nov 11 11:14 AM