Moly
Site of the Spinifex Ridge molybdenum-copper project in the Pilbara region of Western Australia. Source: HWT Image Library
CHINESE-CONTROLLED Moly Mines has again delayed the start-up of its Spinifex Ridge molybdenum and copper project in Western Australia, forfeiting a funding deal because weak molybdenum prices and a strong Australian dollar make it unprofitable.
The company said it would not take up a $US454 million ($449m) syndicated facility agreement it had to finance the project with China Development Bank because it would not be able to approve the project in time.
The announcement came a day after the WA government said falling commodities prices and a rising dollar had wiped almost $1 billion from the state's expected royalty earnings in the four years to 2014-15.
"Moly Mines has formed the view that the continued weakness of global molybdenum prices and the strength of the Australian dollar has rendered the . . . project sub-economic and that these factors will not correct themselves before the expiry of the SFA in May 2012," Moly, 56.6 per cent owned by China's Hanlong Mining, said yesterday.
Shares in the miner slipped 2c, or 6 per cent, to 31.5c on the announcement. The slide was limited because Moly had previously flagged the economic troubles the project was having.
The shares are down about 74 per cent from where they were a year ago.
In Moly's most recent quarterly report, released in October, the company said weak molybdenum prices and the strong dollar continued to delay a decision on Spinifex Ridge.
China Development Bank has instead agreed to reduce funding available under the facility to $US244m but make this available for new projects identified by Moly Mines, under what the parties are calling a strategic alliance. This will be subject to due diligence, internal bank credit approval and Chinese government approvals.
"(While) it is disappointing that the economics do not allow us to proceed with the Spinifex Ridge molybdenum and copper mine at this stage, the strategic alliance further cements the excellent rapport we have built with CDB and supports a platform of further growth," Moly managing director Derek Fisher said.