RE: Interesting opinionHi VT.
I think he makes some good points, but generalizes a lot in his selection of companies and metals..... He does mention Vanadium, but stated deposit is in Quebec (I assume he is referring to Apella Resources Lac Dore deposit. Grades are in the range of .4 to .5 %. I agree that isn't economic at historical prices and that is what a person needs to look at. If a mine can't produce economically at metal prices of 5-10 years ago, then it might be better to look for a different deposit. Largo is in a very different position with Maracas in that it will be the lowest cost primary producer in the world and will be economic at lower historical metal prices, unlike deposits like Windimurra in Australia that have similar grades to the Quebec deposits.....
I think his outlook on tungsten doesn't include the current supply demand situation. China is consuming almost every pound of tungsten it produces. As long as China continues to grow, end users of tungsten concentrates and APT don't have a reliable supply of product. Period. There is next to no production outside China. NTC's Cantung now produces I think about 5% of world supply. They probably have about 4-5 years of mine life left and are looking to have the Mactung deposit producing when Cantung shuts down, to have the ability to keep supplying their market share. Tungsten (and Vanadium for that matter) continue to see a growth in the % of metal used per tonne of steel. That means even with zero economic growth the demand for the metal continues to grow. I agree with his outlook on Moly in that there is just so much supply ready to come on stream when needed. There are litterally dozens of deposits that could be put in production in North America in a 5-7 year timeframe but all of them couldn't come on without depressing the price even further. That leaves the investor with a wild card, do they own the one that might get built. Tungsten on the other hand has a very limited number of deposits world wide that are mineable. Largo's ND isn't the perfect deposit. The moly is a good credit only as long as Tungsten can be produced at a profit, and will add to those profits. What we don't want to see is ND needing the moly to be profitable. I don't think it will. The grades are high enough for tungsten at ND to have conservativecash costs in the range of $5-6 per lb and current pricing is about $10 per lb. I expect when they finally get to finishing the scoping study that we will see a 'mineable' resource in the range of 150MM tonnes at a grade of .13 Wo3. Cash costs should be in the $12-$13 per tonne and at a grade of .13 and 75% recovery you get 2.15 lbs/tonne. Take $12 per tonne divided by 2.15lbs gives cash cost of $5.58 per lb. (NTC just turned a profitable quarter at Cantung with cash costs of $8.63 per lb) Granted if tungsten prices took a 50% haircut like a lot of metals, the deposit would not be economic so by this guys standards ND isn't one he would invest in. LGO has Maracas though and I think that is where the majority of the value is here. ND is icing on the cake if tungsten prices stay strong.
Anyways, its easy to say 'stay away from all of these metals....' but I think if one is able to look at the economics of a particular deposit and the supply/demand situation of the metal in question, then investing in specific companies and properties is fine no matter what the commodity.
lurk