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Win-Eldrich Mines (TSX-V: WEX) - A Primary Moly Producer Print E-mail
Written by Investor Voices LLC   
Tuesday, 03 July 2007

Current Price: 2.50 CAN ($2.35 US)
Initial Coverage: 1.45 CAN ($1.25 US) March 2007
Share Structure: 14.1 Million Fully Diluted
Balance Sheet: No Debt/ $1.5 Million in Cash
Market Cap: $31 Million

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. 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. molychart.png

The price of Moly has risen off a floor of $3.00 US per pound several years ago to where it is now, which is approximately $32.00 US per pound. That is an 1100% 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 $30-$50 US per pound range for several years. Many believe that strong demand will continue to keep prices elevated in a manner similar to what we are witnessing in other commodities.

 "At a recent industry conference, Terry Adams shocked his audience by warning of potential supply/demand imbalances commencing as early as 2011. He believes by 2015, the molybdenum price could get ‘interesting.’  But, this wasn’t the first sign of brewing trouble for molybdenum buyers. In early May, one trader told American Metal Market magazine, “We just don’t have any supply available.” He lamented that primary moly producers, also known as swing producers, have ‘nothing to sell right now.’"
June 18, 2007, SeekingAlpha.com, By James Finch

Win-Eldrich Mines, based out of Toronto, Canada, is truly an exciting story based partly on the fact that over the past several years there has been so much anticipation revolving around their 40% owned flagship property in Ashdown, Nevada. The Ashdown Property, as it is commonly known, is just beginning to gather steam in the second quarter of 2007 because it is a Moly Producer, and there are only 5 Producers of Moly in the world. Production started in Q4 2006 and production levels have been increasing every month since.

“Since product sales began in 2006, the LLC has shown gross revenues of approximately US$177,000 in Q4 2006, US$798,000 in Q1 2007 and approximately US$4,450,000 thus far in Q2 2007.”
June 12, 2007 Press Release

Property and Mine Life
The Ashdown Project is located in Humbolt County in Northwestern Nevada and consists of 101 unpatented mining claims covering approximately 3.15 square miles. Win-Eldrich aquired the property several decades ago and have spent $8 million in exploration expense defining the Moly resource. The latest historic record of the resource shows 146,000 ton resource of 2.9% Moly. The Sylvia Vein is a several hundred foot long visible Moly Vein that is estimated to be 22,000 tons of 8% Moly. To compare these grades to other Moly Producers/Explorers, Dr. Robbins published an independent analysis on the property and stated:

“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.”

ResourceInvestor.com reported on May 7, 2007: “In the next month or so WEX will release a 43-101 which should show 4 million pounds of extremely high-grade moly, averaging a head grade of probably 2% or 40 lbs of moly per tonne (rock value of $1,200/t at $30/lb moly). Because this is an underground mine there are probably more like 10 or 20 million pounds of moly there but those pounds can only be calculated as ongoing development work continues.”

Cashflow Analysis and Conclusion
Ashdown operates at a 100 tpd milling capacity which it’s expected to reach later this year. Based on $30/lb price of Moly ($32/lb today) 2.5% Moly Grade, 88% recovery, and $7 cost per pound (expected to be $5 or less at full capacity), WEX should generate roughly $14 million in Cash flow or $1 per share in cash flow. Moly producers will likely trade at 10x cash flow based off the scarcity of the resource.

WEX is highly leveraged to the price of Moly. If Moly goes up/down $5/lb, WEX’s cash flow per share increases/decreases $0.20 per share. It is my estimation that the price of Moly will continue its bullish trend due to tight supply and increasing demand. At $40/lb Moly, WEX could be generating $1.40 per share in cash flow.

With only 14 million shares outstanding, no debt, $1.5 million cash in the bank and a rare producing Moly mine as an asset, WEX looks to be significantly undervalued at current prices.

Disclosure
The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this report is not a registered financial advisor. Readers should not view this material as offering investment related advice. Authors have taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in stock reports are not a specific buy or sell recommendation and is presented solely for informational purposes only. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise outside of the trading timeframe listed above. Investor Voices LLC has a 12 month investor relations contract with Win-Eldrich Mines of which compensational terms can be viewed at: http://www.investorvoices.com/disclaimer/ 

 
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