We have attached a “letter to the editors” we submitted this morning to the American Metal Market that it published this evening in support of Steel Development Co., LLC for your convenience.  We have attached two spreadsheet tables from our prior August 6, 2009 research report on Steel Development Co., LLC that we wrote after visiting John Correnti, its CEO, in Mississippi last summer.   Steel Development Co., LLC proposes to build four 350,000 ton rebar micromills across the U.S. plus a 3+ million ton sheet minimill to total a 4.4 million ton configuration.  Its first micromill is being developed in Amory, MS.

 

Separately, we updated our analyses of General Moly upon which we had not written since November 2008.  Despite using a $3 per lb lower long-term moly forecast of $17 than we estimated in 2008, estimated direct production costs at $8 or $2.71 above GMO's $5.29 per lb forecast and providing an extra one-year contingency in its timetable, we estimate GMO trades at 1.5 times normal earnings after the mines are built.  We drew particular comfort from the less dilutive equity financings via Hanlong and low cost $665 mm Chinese bank loans, the permitting process and the April 2010 global daily steel output record.  Our interviews with the lead alfalfa farmer opposing the Mt. Hope encouraged us in that the man was rational and well-reasoned, rather than some doctrinnaire or emotional opponent such as Shoshone Indian bands, the Sierra Club or Great Basin Minewatch or particular Federal agencies.  We believe legitimate objections will be addressed via collection of more data to be made public, specific remedies or changes or else fair compensation should alfalfa yields fall in the Diamond Valley roughly 15 miles from GMO's intended well water fields.  

 

Faithfully,

 

John C. Tumazos, CFA