What is the metal garnering the title of “the newest precious metal” and why is it attracting so much international attention?  It is called Molybdenum, and is utilized in many different applications such as corrosion resistance and strengthening of stainless steel [read more about moly at www.MolySeek.com]. With all of the construction occurring on an international scale these days, Molybdenum, or “Moly” as it is often called, may be in high demand for quite some time due to the diversity of special situations for which it is required.

The price has risen off a floor of $3.00 US per pound over the past few years to where it is now, which is approximately $25.00 US per pound. That is an 800% increase! The price moved to nearly $40.00 US per pound in 2005 and there are many professional analysts who believe it will remain in the $20-$30 US per pound range in 2006. Many believe that strong demand will continue to keep prices elevated in a manner similar to what we are witnessing in other commodities.

In this report, I will be reviewing a junior mining company specializing in Molybdenum. This is a company that I personally consider to be an undiscovered gem which is all the more surprising given the fact that Moly in general has received such fanfare.

The Ashdown Project is located in Humbolt County in Northwestern Nevada and consists of 101 unpatented mining claims covering approximately 3.15 square miles. The location was mined over the last century by various operators producing approximately 50,000 ounces of gold at 0.35 ounces per ton (opt).  After Win-Eldrich obtained the Ashdown property several decades ago, in excess of $8 million in exploration and development has been spent developing a resource base consisting of high-grade Moly grading:
 

• 146,000 ton resource of 2.9% Moly
  
• 1 million tons at 1% Moly
  

The initial target for production is a section of the Ashdown’s Sylvia vein. It is said to be a 200-foot long deposit calculated to contain 21,550 tons of ore averaging 8% moly, before dilution.
 
How does a 2.9% moly grade sound to you?  Compare this to other moly deposit grades and you will quickly see that we are looking at what may be the richest grading moly deposit!  Dr. Robbins published an independent analysis on Golden Phoenix recently and put it into this perspective:

“In fact, the ore is so rich in moly content that it will take 59 truckloads of Adanac’s richest ore and 68 truckloads of Idaho General’s richest ore to equal the value of just one truckload of ore from Ashdown. Now that is impressive.”

Ashdown moly ore is indeed impressive and considering we are on the brink of production, while other moly plays remain years away, the opportunity Win-Eldrich now holds appears incredibly lucrative.  How potentially profitable?

Highlights:
If we complete a quick summary of WEX, several prominent factors come to light.

• Share Structure: Just over 11 million shares outstanding
  
• Total float is estimated to be just a few million shares
• Balance Sheet: No Debt – Small cash horde.
• Market Capitalization: Just under $10 million US!
• 40% Participation in Ashdown
• Golden Phoenix holds 60%
  

Management has to be commended for their ability to keep Win-Eldrich afloat during difficult times and keeping share dilution to a minimum.  With just over 10 million shares outstanding, a considerable amount of those in firm hands, Win-Eldrich Mines has one of the most attractive and “investor friendly” share structures I have encountered in quite some time.

Balance Sheet.  Win-Eldrich has a clean balance sheet. I am estimating that with the recent moly stock pile sales from the Ashdown property, they should hold a small cash position.  In other words, Win-Eldrich has very minimal debt.

Market Capitalization.  Around $10 million dollars, this appears to be extremely undervalued when you compare this to Golden Phoenix Minerals, now sporting over $60 million market cap with Win-Eldrich around $10 million and the potential earnings from production at Ashdown.

Why such the discrepancy?  There are several points to consider. 

• Golden-Phoenix does hold a 60% interest in Ashdown versus Win-Eldrich’s 40%
  
• Golden-Phoenix holds another lucrative property. Mineral Ridge located in Nevada, historical production of over 680,000 ounces of gold primarily from underground operations and now holds a reserve base of just over 200,000 ounces along with plant and equipments.
  
• Market exposure. Golden-Phoenix has done a terrific job of telling their story and keeping good channels of communications between investors and potential investors. About a year ago, a new management team at Golden Phoenix has done a terrific job of turning around the company and should be credited for the turn-around story we have been witnessing.
  

 

The Gold & Geothermal Options:
Win-Eldrich also holds other properties other than the Ashdown project.  They recently acquired an option on Cowden Mine, close proximity to Ashdown, holds a potential resource base of 100,000 ounces of gold.  Drilling is expected sometime this year to confirm this prospect.

Win-Eldrich also has claims to hot springs with geothermal potential around the Ashdown property, near the existing power grid.  “Win-Eldrich expects that ultimately its geothermal resources will have significant economic value based on sale to other customers.” – www.Win-Eldrich.com  “At current prices [energy], a geothermal power plant can produce enough energy to repay capital costs in 5 years, yet it can operate for decades.  … Win-Eldrich has leased about 1,200 acres of land near the Ashdown Mine to produce geothermal energy.” – Win-Eldrich’s 2004 Annual Report

So does this mean that Win-Eldrich is likely undervalued? Yes.  Does this mean that Golden-Phoenix is overvalued? No.

Ashdown Production:

Golden Phoenix is nearing completion of the 100 tons per day mill along with completion a new bypass drift to the rich moly Sylvie Vein.  Now in the final stage of restoring the original decline to begin the 1,000 ton bulk sample program, they are just around the corner from the North Zone which has occurrences of 1 to 4% moly mineralization. The South Zone has 1-20% occurrences. Extremely high grades of moly!

Picture: Tailing impoundment with mill site.

Cash Flow Potential 
I will use a crude, but conservative, method here to project potential earnings from full operations. Assuming Moly is selling at $25/lbs, production costs should be no more than $10/lbs.  Grading an average 2.9% moly, with even richer average moly rock in the Southern Moly zone, the 100 tons a day operation running at 250 days a year comes out to around $22 million in profit. 

Using these conservative figures based off current market conditions and reported grades, Win-Eldrich is set to capture around $9 million of this.  This positive cash flow equates to around $0.80 a share/year and this is for a stock trading around the same price!

Reserves:
Ashdown must prove to the market that operations will not last the anticipated 5-6 years (based off the 146,000 tons grading 2.9% Moly using a 100 ton per day mill) and extend the resource mineralization.  Exploration potential is rated as high with gold resources also a future target.  Should they be able to extend reserves and resources, Ashdown should be able to extend its production life.

Again, here are reported resources at Ashdown:

• 146,000 ton resource of 2.9% Moly
  
• 1 million tons at 1% Moly
  
• 0.088 opt Gold – 1,125,000 tons / approximately 100,000 ounces
  

- Note: Resources are not NI 43-101 compliant

Moly Price:
I make no claim as an expert with projections on the Moly price.  I have listened to so called professionals over the past few years and their projections have all been wrong.  New researchers are doing a better job defining the market and I encourage you to visit www.MolySeek.com to learn more yourself.

While many moly companies remain years away from production, some of them require a relatively high price of moly for profitability.  I do feel moly has favorable conditions to not fall below the $10/lbs mark, in fact it will likely hold at much higher levels that that.  Yet should the price fall to or below $10/lbs, many moly plays will be in some real trouble.  I do not see this risk factor present in Ashdown productions.  The moly deposit would continue to be profitable even around $10/lbs thanks to the high grade ore!

WEX.V [Win-Eldrich] Stock Price

Win-Eldrich Mines trades under the symbol WEX on the TSX-V exchange.  Investors in the U.S. can invest in WEX.V using the pink sheet equivalent symbol, applying the U.S. Dollar rate, symbol: WIDMF

As should be the case, Golden-Phoenix [GPMX] is moving higher in anticipation of imminent commencement of the bulk sample program and the pending full operations permit. Since really the start of 2006, we have seen two powerful swings in the price of GPXM, now trading around $0.40 a share.  As I have stated above, based of Ashdown and Mineral Ridge, GPXM does not appear to be even closely valued at these levels.  Upside potential remains strong if indeed the expected results transpire.

 

 

Yet despite the excitement in GPXM’s share price, WEX.v remains depressed, unnoticed and somewhat illiquid.  Technical analysis of WEX.v shows that there is very good support in the low C$0.80’s area. The next upside resistance for WEX.v to deal with is C$1.25, with a close above this level likely to create another impulse leg higher.

 

Based off the action in GPXM in the past few months, WEX.v remains a great risk/reward venture at these levels.  I believe that some well-deserved market attention is all this stock needs to move higher.  It can be relatively illiquid at times, but this should begin to change as the stock moves higher.

Win-Eldrich - The Hidden Moly Gem & Full Disclosure:
The Moly secret is making its way into the public domain.  This has resulted in tremendous gains in Moly equities recently.  Here are some examples:

GPXM has risen from a low of 9 cents a share to over 40 cents recently, nearly a 400% increase!

 

 

 

Idaho General Mines (IGMI) started 2006 by surging from nearly a $1 a share to nearly $4, nearly a 400% increase!

 

 

 

Adanac Moly (AUA.v) has surged from around $0.50 to C$2, a 400% increase!

 

 

 

Blue Pearl (BLE.to) has surged from under C$1 to around C$4, around a 400% increase!

 

 

 

United Bolero (UNB.v) has moved from around C$0.15 to C$0.60, a 400% increase!

 

 

 

So why does Win-Eldrich's stock trade at a perceived market discount? 

The answer must reside somewhere in the concept that management has not adequately communicated their exciting story to the marketplace.  Investor communications have been minimal, at best, and attracting new investors to the company has not been high on the list of company priorities.  This creates a superior opportunity to invest in an equity (with minimal investor knowledge) at a potential discount to the real market value.

I perceive the risk/reward of Win-Eldrich has highly favorable.  Perhaps your research concludes the same analysis? 

As such, I maintain a large position in this equity, after initially entering it over 1 ½ years ago.  I continue to buy around these levels as progress is made towards production and I feel more confident my initial analysis on Ashdown remains correct.

With my large exposure to WEX.v, I do expect to begin taking profits at prices much higher than today’s, employing a strategy of selling into rallies I can see taking this equity to levels multiples higher.  I will not try to time the top, but I do know it is much higher than we see today. 

I remain a shareholder in Golden Phoenix Minerals as well.  Even after a strong rally over the past months, I believe it remains undervalued and its upside potential remains strong. I recommend you read D. Stewart Armstrong’s great report on GPXM on GoldSeek.com: Golden Phoenix Minerals: The Shoot-Out at Mineral Ridge

I also implore readers to do your own research.  Keep updated on the Win-Eldrich Mines story on MolySeek.com and I recommend you keep updated on Ashdown not on Win-Eldrich’s website (www.win-eldrich.com) but on Golden-Phoenix’s website: www.golden-phoenix.com  It provides excellent updates on the mine and mill site at Ashdown keeping investors well informed.

- Peter Spina, Analyst at GoldForecaster.com
Proprietor of GoldSeek.com, SilverSeek.com & MolySeek.com

I was not paid to write this independent report.  As stated above, I hold positions in both equities participating in the gold-moly Ashdown project.  Golden-Phoenix does a very small amount of advertising on GoldSeek.com of which I am the proprietor.