TORONTO (CP) - Shares in Blue Pearl Mining Ltd. (TSX:BLE) rose Wednesday after the Toronto metals company, which has been a darling of TSX investors for the past year, boosted its molybdenum production estimate for the year and restated its commitment to the valuable metal.
"We think the price of moly looks good here for the next year or two at least - probably longer - because there\'s been an under-investment in the moly business for the last 20 years," said Ian McDonald, Blue Pearl\'s executive chairman.
"Investors want the pure play that we give them. I don\'t think what our shareholders want is for us to go into lead or zinc or other metals like that."
Shares in Blue Pearl traded at $8.67, up 43 cents or five per cent in the early afternoon after going as high as $8.73 with more than 5.4 million shares changing hands.
The company has been closely watched by investors who like its pure-play focus on molybdenum, a valuable industrial mineral with corrosion-resistant properties that is used in the lighting industry and in high-end steel alloys and pipeline steel.
Molybdenum traded in a range of $20 to $28 per pound in 2006, boosted by increased demand in China, a strong stainless steel market and oil pipelines projects.
The 2007 estimate of 21 million pounds compares with a previous forecast of 20 million. The total is expected to rise to 27 million pounds in 2008 and 29 million in 2009.
Blue Pearl, a junior miner founded and run by former senior executives of Wheaton River Minerals, became the world\'s largest publicly traded molybdenum-only producer when it acquired Thompson Creek Metals Company in October.
The deal included the Thompson Creek mine in Idaho, a 75 per cent interest in the Endako mine in British Columbia and the Langeloth Metallurgical Complex in Pennsylvania.
Kevin Loughrey, who was instrumental in negotiating that deal, became president and CEO of Blue Pearl last month, replacing McDonald.
The company also owns the Davidson mine, an underground molybdenum deposit near Smithers, B.C., where it is working on a final feasibility study looking at the possibility of mining 2,000 tonnes of high-grade ore per day from the deposit and shipping it to the Endako facility for processing, beginning in 2008.
"Bringing Davidson on is key to us, but we are looking to grow the company outside of our own asset base," McDonald said.
Those plans aren\'t focused around building another molybdenum mine, however, since that\'s a difficult, expensive and time-consuming undertaking.
"There\'s other ways such as purchasing maybe moly byproduct - that\'s the kind of things we\'re looking at," he said, declining to elaborate.
"We\'ve only owned Thompson Creek three months, so it\'s going to take some time."
In its 2007 outlook, Blue Pearl said it will re-evaluate the mineral reserves and mineral resources at the Thompson Creek and Endako mines, based on a long-term US$10 per pound molybdenum price, and revise mine plans based the new estimates.
It also plans to initiate a scoping study at Endako to asses the potential to create a "superpit" by extending the three existing pits to create a very large unified pit, with the commensurate expansion of mill capacity.
UBS analyst Brian MacArthur revised his 2007-2008 earnings per share estimate to $1.07 to $1.48, from $1.19 to $1.46, one Wednesday to "reflect the higher production and higher costs," noting that while revised production was up, so were costs.
UBS has a "buy" rating on the stock, with a conservative target price of $11.
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