17/03/2008 - 10:14

Moly Mines' Spinifex Ridge project facing delays

17/03/2008 - 10:14

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West Perth-based Moly Mines Ltd's Spinifex Ridge molybdenum project faces delays of at least three months after the company disclosed that it had been unable to complete its financial negotiations and its regulatory approvals in line with its original sch

West Perth-based Moly Mines Ltd's Spinifex Ridge molybdenum project faces delays of at least three months after the company disclosed that it had been unable to complete its financial negotiations and its regulatory approvals in line with its original schedule.

Moly had been aiming to achieve financial close by the end of this month but now says full project finance may not be achieved unil the second half of calendar 2008.

 

The company annoucement is pasted below:


Since late last year, Moly Mines Limited (ASX/TSX: MOL) has been actively involved in executing key initiatives necessary for the financing, construction and operation of the Spinifex Ridge Molybdenum Project. These workstreams have included:
- Negotiating and executing various contracts for capital and operating works;
- Progressing final permitting;
- Conducting detailed engineering and design works; and
- Corporate structuring, financial modelling and preparation of debt and equity offering documentation.

The Project's construction preparation continues to proceed well with a substantial number of contracts necessary for the construction and operation of the Project being awarded, including:
- Completion of orders for long lead items of capital equipment necessary for the Project's mining and comminution circuit, including the award of the primary crusher, secondary crushers, high pressure grinding rolls and ball mills.
- Toll Treatment Agreement with Molymet signed in December 2007 for the toll roasting of 100% of the molybdenum concentrates produced at the Project.
- Award of accommodation camp construction contract in January 2008.
- Award of a A$1.1 billion mining contract to Macmahon Holdings Limited in February 2008.

A steady flow of contract awards are expected over the next several months.

As previously announced, native title approvals have been received for all Project tenure on the Njamal claimant areas. Mining leases and general purpose licences required for the Project's mining areas, processing and tailings disposal facilities have been granted. However some other government processes have taken longer than allowed for in the existing Project delivery timeline and have contributed to delays in the Project financing and execution schedule. The Company has not yet concluded energy arrangements for the Project and the schedule delay provides the opportunity to finalise these negotiations prior to the financing of the Project.

The first several months of 2008 have been marred by one of the most difficult capital markets environments for many decades. The Company has previously announced that it was targeting financial completion for the Project by the end of Quarter 1, 2008. This schedule now appears unlikely in light of the delays caused by the matters discussed above and the state of the global capital markets.

As a consequence of these matters the Board of Moly Mines advises that full Project finance may not be
achieved until the second half of calendar 2008.

Resource diamond and RC drilling recommenced at Spinifex Ridge during December 2007. This drilling has identified substantial additional molybdenum and copper mineralization outside the limits of the current resource, including in areas that were being drilled to sterilize them for mine waste storage. A new resource study incorporating data from this drilling program is underway, It is anticipated that this will lead to a major extension in the modelled Project mine life and provide significant value enhancement to the Company.

Despite the unfavourable capital markets, the commodities markets remain very strong and Molybdenum oxide prices have been steadily rising over the last 12 months to ~US$34.00/lb. Many market commentators and industry analysts believe molybdenum prices could increase further over the next 2 years as supply continues to stagnate against strong demand.

As at the end of February 2008, the Company had A$80.8 million on hand.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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