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Additional information

Additional	Information
Market:	TSX-V
Sector:	General Mining
Epic:	MSQ
News:	Latest news
Web Site:	Mosquito Consolidated Gold Mines
Other Articles:	26-07-201020-07-201023-06-2010

Mosquito Consolidated Gold Mines – small company punching well above its weight

Mosquito Consolidated Gold Mines (TSX-V: MSQ) added a potentially game changing project to its diverse portfolio of precious and base metal projects when it acquired the rights to the CUMO project in 2004, which hosts one of the largest molybdenum deposits in the world.

Since acquiring the project at a favorable price during depressed metals markets, Mosquito has been diligently upgrading the size and confidence of the project through the drill bit, and now boasts to have the largest, unexploited, open-pit molybdenum deposit in the world – and it is still growing in size.

A key ingredient in stainless steel, molybdenum prices have been on the upswing since November 2009, driven by demand from China, Japan, Korea and the U.S., as well as limited availability of scrap material.

Mosquito Gold appears to be in an enviable position to capitalize on higher forecast demand for molybdenum. The company is well financed with little debt and has high expectations to become a near-term low-cost producer.

Investor backing

Clearly with a project the size of CUMO, securing finance to develop the mine is a key factor in the future success of the company.   China based investors where recently highlighted in an Ernst & Young report as the emerging force in junior mining finance.  While molybdenum is not a strategic metal in the United States, it is of upmost importance to China’s burgeoning steel industry that is keen to ensure supply.

It should therefore come as no surprise that Mosquito Gold has already attracted the interest of a China based group International Energy and Mineral Resources Investment Company of Beijing (“IEMRICB”), who acquired a total of 9,090,000 common shares representing approximately 15.36% of Mosquito's common shares in June 2009.

Mosquito Gold announced earlier this month that it would be raising $5 million through the sale of 5 million units a $1.00 per unit. Each unit consists of one common share and one transferable share purchase warrant having a one year term for the purchase of one further common share of the Company at the exercise price of $1.25 per share.
Investment Highlights

•    Mosquito owns 100% in CUMO interest with only 23% of the deposit drilled to date.
•    Independent Preliminary Economic Assessment released by management indicates Net Present Value of US$16 Billion at 150,000 tons per day with a 36% Internal Rate of Return, with a 2.3 year payback of capital and a cost of US$3.90/lb Molybdenum oxide. CUMO is capable of generating US$1 to US$1.5 billion in profit per year.  With optimization and more detailed work, the Company’s goal is to get production costs under $3/lb Molybdenum oxide.
•    With the increasing global demand for molybdenum that exceeds the supply and forecasted increasing prices, Mosquito holds four molybdenum projects in the United States. In addition, the Company is well diversified with multi-element projects including significant gold plays.
•    Experienced management team with a proven track record of early success with Mosquito Creek and Caribou gold mines.
•    Poised to take advantage of current and future metal demands.

JP Morgan - In January 2010, JP Morgan predicted prices for molybdenum will likely rise 55% in the next two years. "We also see more sustainability in the recent surge in molybdenum prices compared to the spike this summer," analysts led by Michael Gambardella wrote in a report on Canadian molybdenum miner Thompson Creek Metals (NYSE:TC), a peer of Mosquito Gold.

•    "Molybdenum inventories remain very lean," they wrote.
•    The price for the metal is currently about $15.50 a pound, which is up from $10.70 in November.
•    Gambardella anticipates prices will climb to $21 by the end of this year and $24 by the fourth quarter of 2011 as global industrial output expands.

Idaho – CUMO Project

Mosquito Gold’s CUMO Molybdenum project is situated in the mountains of south-central Idaho. The property comprises a total of 344 claims covering an area of 28.7 sq km or 2,867 hectares with an exploration permit (CE) issued for drilling and excellent road access. Current resource estimates consist of 1.3 Billion tons indicated and an additional 2.25 billion tons inferred of open-pit accessible multi-element mineralization.

The indicated resource hosts 1.8 billion pounds of molybdenum, 2.1 billion pounds of copper, 90.8 million ounces of silver and 123.5 million pounds of tungsten.

Metallurgical test work indicates excellent recoveries of +90% MoS2. More significantly the tailings were found to be clean and non-acid generating, which will lead to major cost savings and a reduction in environmental concerns. Other CUMO highlights:

•    Mining infrastructure, power, water, major road and rail networks and a trained mining-industrial workforce are available within 50 miles of the property.
•    Environmentally, there are no serious hurdles. An existing Molybdenum mine located only 60 miles from CUMO has just been recently permitted by a competitor.
•    Foreign investment into major projects within the USA is encouraged with numerous federal and state incentive programs for project development and there are no impediments to foreign ownership/control of USA companies controlling mineral resources
•    It is estimated that feasibility could be achieved within two to three years, after which one of the world’s largest and most profitable mines would be ready to be placed into production, ready to catch the next high-price metal cycle.

Molybdenum

The ability of molybdenum to withstand extreme temperatures without significantly expanding or softening makes it useful in applications that involve intense heat, including the manufacture of aircraft parts, electrical contacts, industrial motors and filaments. Molybdenum is also used in alloys because of its high corrosion resistance and weldability. Molybdenum contributes corrosion resistance to type 316 stainless steel by lattice strain, increasing the energy required to dissolve out iron atoms from the surface. Most high-strength steel alloys contain 0.25% to 8% molybdenum. Despite such small portions, more than 43,000 tonnes of molybdenum are used as an alloying agent each year in stainless steels, tool steels, cast irons and high temperature superalloys. Molybdenum can be implemented both as an alloying agent and as a flame-resistant coating for other metals. Although its melting point is 2,623 °C (4,753 °F), molybdenum rapidly oxidizes at temperatures above 760 °C (1,400 °F) making it better-suited for use in vacuum environments.

Other Mosquito Gold Mineral Projects

•    Pine Tree-Nevada - The property has been optioned for $1 million cash, 5 million shares, $3 million in work commitments and a 10% management fee.
•    Blackpoint-Nevada - The project covers 410 hectares in Eureka County and hosts a typical Carlin type silica-sericite epithermal gold system.
•    Spruce Mountain-Nevada - The property consists of 52 patented claims and hosts a significant molybdenum silver-lead mineralization.
•    Spring Creek-Idaho - The property consist of 305 un-patented claims and hosts several thick, high grade Molybdenum-Silver bearing quartz veins.
•    Mosquito Mine/Cariboo Gold Quartz Mine - Well B C  - Mosquito Gold holds an earn-in agreement,  a 50% interest in the Cariboo Gold Quartz claim group, and retains a 3% net smelter royalty on the entire property.
•    Brett Claim Group - B C - The company holds a 50% interest in this Republic-type gold property. Over $8 million has been spent by previous operators.
•    Laverty Lake/Red Lake-Ontario - The property has been option-purchased for $500,000 and 1.5 million shares with a 2% net smelter royalty.
•    Cummings Project/Larder Lake Ontario - The property consists of five patented mineral claims located within a major gold bearing belt.

Prospects for the Future

Mosquito Consolidated Gold Mines is well positioned to become a significant primary producer of molybdenum. Large, long-mine life reserves in politically stable countries are becoming more and more of a scarcity. In addition, the unbridled growth in Asia and India indicate continued long-term demand for precious and base metals. A quarter-century into its mine building life, Mosquito Gold now has:

•    Tangible multi-billion-dollar resource assets;
•    Some of the highest NI 43-101 compliant drill results ever achieved;
•    Long mine-life resources;
•    Blue chip partnerships; and
•    Excellent management team.

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