Moly gains new backer for $1.1bn project

German steel maker ThyssenKrupp has thrown its support behind Moly Mines Ltd's delayed $1.1 billion Spinifex Ridge project by signing a 10 year offtake agreement and agreeing to invest equity in the project.

Moly managing director Derek Fisher described the agreement as "keystone to the project financing".

This followed Moly's announcement in March that completion of project financing would be delayed to the second half of 2008, which it attributed to difficult market conditions.

It also followed a Moly statement last month that the company's advisors did not consider completion of offtake arrangements "to be a pre-requisite to full project financing".

Under the offtake deal, ThyssenKrupp Metallurgie GmBH (TKMet) will take delivery and purchase the molybdenum after it has been toll processed by Chilean metallurgical group Molymet in Santiago.

Pricing will be determined at time of the sale, exposing Moly Mines to changes in the molybdenum price.

Additionally, TKMet has agreed to participate in equity financing component for the project, subject to final ThyssenKrupp board approvals.

Moly already has established a relationship with ThyssenKrupp, last year placing a $51 million order with its subsidiary Polysius for long-lead capital items for the project, including a primary crusher, grinding roll units and ball mills.

Dr Fisher said the off-take agreement cements a close alliance with TKMet and the ThyssenKrupp group "and sends a powerful mesage to the international financial community".