03/08/2009 - 14:38

Moly starts talks on $179m facility

03/08/2009 - 14:38

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Moly Mines has warned its future depends on the success of debt restructure talks with its lender as project acquisition plans are put on the backburner.

Moly starts talks on $179m facility

Moly Mines has warned its future depends on the success of debt restructure talks with its lender as project acquisition plans are put on the backburner.

In its quarterly report released today, Moly said it had started negotiations with its lender for the restructure of a $US150 million ($A179 million) interim finance facility.

Moly secured the $US150 million finance facility in September last year from the Trust Company of the West, and had originally planned to repay it through a full project funding of the Spinifex Ridge molybdenum project in the Pilbara.

However molybdenum prices have fallen from more than $US30 a pound to around $US17 a pound, which prompted the company to announce in May that it was looking to acquire a project with cash-flow potential to ease its debt pressures.

At that time the company had shortlisted half a dozen projects.

"Despite the recent increases in molybdenum prices it is unlikely that the Company will be able to restructure the Interim Financing Facility through a full molybdenum project financing as contemplated at the time of the drawdown of the facility," Moly said in its quarterly report today.

"Accordingly the Company has commenced negotiations with its lender for the restructure of the Interim Finance Facility.

"The Company's restructure plans are iterative in nature and could vary considerably as discussions with the Company's lenders continue.

"Obtaining the lenders support will be critical to the Company's future, however there can be no certainty that the Company will be able to successfully complete a restructure.

"To assist in the restructure process, the Company has elected to divest assets that are either surplus to the preferred 10mt/a initial Spinifex Ridge Molybdenum Project start up or are no longer considered to be on the critical path for the Phase 1 10mt/a development.

"The accommodation camp, no longer considered a long lead item, has been sold. A smaller camp will be required for the Project."

At the end of the quarter the company had $64 million cash on hand.

Shares in Moly closed up 11.5 cents at 65.5c today.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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