Perth-based iron ore miner Moly Mines has announced that it will enter into a $600 million engineering contract with one of China's top engineering companies and ASX-listed GR Engineering Services to develop its Spinifex Ridge molybdenum project.
The fixed-price engineering, procurement and construction (EPC) contract was entered into by Moly Metals and Chinese engineering company CACS Corporation, a subsidiary of Sinomach, China's largest machinery manufacturing and engineering services company.
GR Engineering has agreed to act as a sub-contractor to CACS and will be responsible for design, construction and construction management activities under the contract.
GR Engineering said it's revenue under its contract with CACS is expected to be in the order of $360 million over a 30 month period.
Moly Mines chief executive Derek Fisher said that the partnering of a respected and highly experienced Australian engineering company with the leading Chinese engineering contractor is a positive step for the company and the project.
The contract will not commence until Moly Mines has received unconditional financing of the project and the board of Moly Metals makes a final decision to proceed with the project.
Moly Mines and Hanlong Mining Investment continue to finalise the structure and documentation of the US$500 million in senior secured finance and working capital facilities that have been approved by the China Development Bank or the project.
The Spinifex Ridge molybdenum project, located 170 kilometres east of Port Hedland, is ready for immediate construction pending the completion of such financing.
All environmental approvals have been received and over $120 million of long-lead items of plant have been constructed and delivered to Perth.
A smaller 10 million tonne per annum start up mining and processing operation will be implemented for the initial development of the project, that will produce on average 11 million lbs of molybdenum in concentrate and 13.5 million lbs of copper in concentrate per annum for the first 10 years.
Moly Mines also has an iron ore project which commenced production in late 2010.
The iron ore project's expected annual production rate is 800,000 to 1 million tonnes per annum from deposits located on the same tenements as the Spinifex Ridge molybdenum project.
