World's biggest open-pit molybdenum deposit yet to be mined

Drilling plans for a 40-year-old British Columbia mining company s Idaho moly prospect will get a stamp from the U.S. Forest Service in early February.

Whether the FONS stamp sticks is the question for what looks like antiquated, yet potentially potent, properties generator.

We fully expect an administrative process once we get an FONS (finding of no significance) from the Forest Service, says Brian McClay, a 64-year-old lifelong miner and promoter from Canada. Mr. McClay assembled what is being called the CuMo molybdenum and copper property seven years ago.

Opposition to this low-grade moly project will stream from a pack of environmental groups in the Boise National Forest.

Moly, though, is hot in more ways than one. Prices for the element are rising.

Super-high temperatures are needed to melt molybdenum, an alloy agent for steel. We can take the heat; that s what I ve been doing my whole life, says McClay, a plain-speaking Vancouver resident who started working at his father s mines as a teen-ager.

Mr. McClay is CEO and president of project owner Mosquito Consolidated Gold (TSX: V.MSQ, Stock Forum), a company that essentially has one last shot at mining success after 40 years of mini-hits and many missies.

We have a Rolls-Royce that s missing two wheels: permitting and the ability to finance this, he says. The first wheel, after three years of interacting with 23 local, state and federal agencies, started spinning a couple of years ago.

By all estimates, billions of dollars will be needed to finance a 4 billion-ton property. It s called CuMo for its copper, moly and other ore-bound metals. An independent estimate figures at least 125,000 metric tons of ore per day can pass through a proposed pit, which sits north of Idaho City.

Mosquito Consolidated Gold s CuMo Project has been on Brian McClay s front burner since he purchased the open-pittable property for $250,000. That was in 2004, and the seller was a Nevada geologist.

CuMo is said to be the world s largest open-pit molybdenum deposit yet to be mined. That s why Mosquito s market cap is a mere $72 million the word yet.

The expansive tract sits in Grimes Pass country, not far from headwaters for Grimes Creek in southwestern Idaho. The safety of the Boise watershed is one concern of critics who live near or in the scenic valley.

I know we ll have to fight every centimeter of the way, says Mr. McClay over breakfast one day this week. But on our side we have jobs (as many as 1,000 for the region) and a net present value of $16 billion.

Says Craig J. Nelsen, CEO of a molybdenum mine developer in British Columbia: Their grade is pretty low - but it's a huge deposit. Environmental permissions in Idaho for a mine of this size will be a challenge.

Moly, as our Ticker Trax audience understands, is projected to enter a supply deficit in the next two to three years. China is restricting exports in an effort to reform polluting miners in that country. In the USA, some 60,000 tons of moly oxide is pulled from the ground in a year. A great portion derives from another Idaho mine, Thompson Creek.

Mr. McClay says the Idaho Conservation League is leading the CuMo charge, with Sierra Club and other organizations raising questions about bull trout and other species.

Mr. McClay, speaking in a frank style that is, many say, his hallmark, said, We have no environmental show-stoppers, I can assure you that. We commissioned a report that tested every piece of animal s--- on that property. No bull. No wolverines. Nothing.

Brian McClay was born and raised in Vancouver. Stan McClay, his father, was a colorful and successful miner across western Canada. The elder McClay owned stakes in British Columbia's biggest Highmont Mines, among the largest mines in Canada; and Stikine Silver at Eskay Creek Mine.

Brian McClay says he has been working in mining camps since he was a teen-ager. My first job of any serious consequence was at Mt. Washington Copper, an open pit copper mine located near Courtenay on Vancouver Island.

Mosquito Gold s timing? Moly is $17 a pound and projected to rise into the $20s in two years or less. Its use in pipelines, nuclear power plants and high-end stainless steel increases each year. Moly also trades in London as a futures contract, along with cobalt unusual for a miner s metal.

Scores of steel manufacturers and Asia consortiums are partnering or looking to team with prospective moly mines in a bid to lock in a supply of the element. Such arrangements are usually coupled with a partial sale of the asset, usually the mine, as companies raise the hundreds of millions of dollars, or in this case billions, to build mills, lay out pits and secure proper transportation routes.