A dramatic fall in the molybdenum price has forced Moly Mines to consider selling surplus mining items no longer deemed necessary for a proposed smaller start-up operation for its Spinifex Ridge project in the Pilbara.
A dramatic fall in the molybdenum price has forced Moly Mines to consider selling surplus mining items no longer deemed necessary for a proposed smaller start-up operation for its Spinifex Ridge project in the Pilbara.
A dramatic fall in the molybdenum price has forced Moly Mines to consider selling surplus mining items no longer deemed necessary for a proposed smaller start-up operation for its Spinifex Ridge project in the Pilbara.
During the December quarter, the company said it had started a scoping study for an 8 to 10 million tonne per annum operation at Spinifex Ridge, producing some 11 to 13 million pounds of molybdenum each year.
The company was planning a 20mtpa operation and had spent last year sourcing funds for the $1.26 billion project.
During the December quarter, the company said it had completed the construction and payment for the major long lead items of the plant that were on the critical path for the 20mtpa operation.
However, the proposed smaller start-up operation has prompted the company to examine a sales process for the long lead items, including accommodation units, which are deemed to be a "surplus" for stage one of the project.
Today Moly said it had suspended all other development activities for the 20mtpa plant.
In October last year, the company announced it had started cost cutting measures including the winding down of engineering work on the project, the lay off of contractors and freezing of executive salaries.
During the December quarter, the price of molybdenum fell from above $US33 per pound reported in the September quarter to around US10/lb.
"Whilst the current molybdenum price is unlikely to support any new molybdenum project development in the short term, the characteristics of the metal and a constrained supply side still supports a strong price outlook," Moly said today.
"It is anticipated that there will be a significant correction in demand for the metal once the impact of the economy-boosting, infrastructure development programs of the major countries commences."
Moly added revised cost details of the smaller start-up operation will be finalised sometime in March or April this year.
Shares in Moly climbed 0.5 cents to 28c at 15:06 AEDT.