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Moly Mines gets CDB commitment, restructures with Hanlong
11 February 2011
Read more: [Moly Mines][Hanlong Mining][Molybdenum]
Moly Mines has a commitment letter for half of the proposed Chinese financing for the Spinifex Ridge Molybdenum mine in Western Australia. China Development Bank has agreed to provide a $250 million loan, as part of a larger $466 million 12-year debt package. The remainder will come from China Ex-Im bank, and is due by the close of the month.
China Ex-Im is in the final stages of its approval process, completion of which will allow the term sheet to be finalised. The debt margin, priced above US dollar Libor, puts the annual interest rate below 5%.
Majority shareholder Hanlong Mining Investment will provide a further $34 million in subordinated debt, as the Chinese debt falls short of the $500 million funding commitment Hanlong made in October 2009. Hanlong has also agreed to contribute $140 million in equity and a provide $60 million 10-year corporate loan.
Moly Mines will agree a banking base case financial model in the next few months, but says that the total funding requirement will exceed the proposed $500 million. This would force Moly Mines to pursue further financing to fill the gap. However, the deadline for Hanlong to bring in Chinese lenders has been extended to the end of 2011, and it has waived interest payments of $45 million of its $60 million loan to Moly
Financing has experienced numerous delays. Moly Mines originally closed a $150 million bridge with TCW in October 2008, while it sought longer term financing, and this bridge was restructured a year later. The agreement signed with Hanlong in October 2009 set a deadline of 30 September 2010 for closing the project loan. When it became clear that this deadline would be missed, however, it was extended to 31 January 2011.
The mine is located in the Pilbara region of Western Australia and, according to Moly Mines’ 2009 technical report, has an estimated resource of 652 million tonnes of copper and molybdenum.