Finalizing interim financing2008-09-17 06:40 MT - News Release
Mr. Derek Fisher reports
MOLY MINES LIMITED: INTERIM FINANCING UPDATE
Moly Mines Ltd. is finalizing an interim financing facility of 150-million (U.S.) and expects to be in a position to draw down the funds during October.
The key terms and conditions of the facility have been agreed. Confirmatory due diligence and preparation of legal documentation reflecting the term sheet are now under way.
This facility will provide sufficient working capital for the Spinifex Ridge molybdenum project to maintain its leading position in the world molybdenum industry as it moves toward becoming the first major new molybdenum mine in over 25 years. The company continues to focus on full project financing through its negotiations with prospective strategic investors and with its work with its investment banking advisers.
The Spinifex Ridge project continues to progress with the latest approval being that of the Western Australian Department of Industry and Resources (DoIR) to the company's detailed mining schedule and proposed processing facility. This is the last major permit/approval required for the project and as a consequence the company has now lodged unconditional performance bonds for its mining activities allowing site construction activities to commence.
The development of the Spinifex Ridge deposit is taking place against a background of continuing molybdenum price stability with global Mo prices remaining firm, above $33 (U.S.) per pound. This is in contrast to most of the other metals which have experienced considerable price volatility over the last three years. These Mo prices are driven by continuing expansion of global molybdenum consumption, by the declining exports from China as it restrains its strategic steel-related commodity exports and by the stagnation of molybdenum supply as a byproduct from copper mines.
We seek Safe Harbor.
I guess the market doesn't like the delay. I actually thought the news was a positive.
I bought back a portion of what I sold. I'll see how low it drops before adding the rest.
Here's my thinking.
Who would give interim financing unless the full financing was expected to go through. In my mind this puts Moly mines on a course of either getting the full financing or putting themselves up for sale. The big players are still making huge profits and can easily pay significantly more than todays price to buy out Moly mines. Moly mines is the only significant moly mine ready to go with full permitting in place etc. The cash cost is low and the mine life is huge which would be quite attractive to any number of large mining companies. Therefore I see the worst case scenario as still a lot of upside from todays price. The reason I sold a few days ago is I feared the announcment would be no funding agreement and they were going to sit tight until the spring. This would have been really bad news IMO. The news that we got was as good as could be expected given no update till now.