• Shareholder Value Preserved By Maximum Exposure To Moly Price
• Agreement Sends “Powerful Message” To Financial Community – CEO
• Spinifex Ridge On Track For Commissioning In Second Half Of 2009
Ina major step forward for development of its Spinifex Ridgemoly-copperproject in the Pilbara District of Western Australia, MolyMines Limited(ASX, TSX: MOL) has signed a 10-year offtake agreementwith ThyssenKruppMetallurgie Gmbh (TKMet) of Germany for all of itsshare of the planned molybdenum production from the mine.
Atthe planned moly production rate of 24m lb/y and based on currentmolyprices, the value of the agreement is approximately US$7bn.
TKMethas also agreed to participate in the equity financingcomponent for theA$1.1bn Spinifex Ridge project, subject to finalThyssenKrupp Boardapproval.
Commenting on the agreement, Dr Derek Fisher, chiefexecutive of MolyMines said: “This offtake agreement cements a closealliance with TKMetand the ThyssenKrupp Group, one of the world’slargest steel andtechnology groups, and sends a powerful message to theinternationalfinancial community.
“It is also a keystone to theproject financing as investors willtake note that we have successfullypreserved shareholder value byensuring our sales agreement providesmaximum exposure to molybdenumprice.We have resisted the temptation of floor priced contracts withpriceparticipation mechanisms that transfer value away fromshareholders.”
Underthe terms of the agreement, TKMet will take delivery andpurchase of100p.c. of Moly Metals Australia’s interest (currently100p.c.) in molybdenumproductfrom Spinifex Ridge, either as oxide or ferro-moly, after ithas beentoll-processed under the company’s tolling agreement with itsstrategicalliance partner Molymet, the Chilean metallurgical group.
MolyMines says that pricing will be determined with reference totheprevailing market prices and conditions at the time of sale.Thismaintains the company’s full exposure to the molybdenum price, it adds.
MOLY MINES 2
Molyconcentrates produced at Spinifex Ridge will be shipped toMolymet’splant in Santiago, Chile for conversion to moly oxide and/orferro-molyunder the tolling agreement signed last December.
ThyssenKrupp AGis one of the largest industrial groups and steelproducers in Europewith combined annual turnover of more than €50bn in2007 across itsbusiness units. It has over 190,000 employeesworld-wide in 2,500locations in 70 countries. The Group is amongst thelargest producers ofhigh-quality and stainless flat steel products andhas major expansionprogrammes underway in Brazil and the US.
Moly Metals AustraliaPty Ltd is a wholly-owned subsidiary of MolyMines Ltd and the 100p.c.owner of Spinifex Ridge. The project is ontrack for constructioncompletion and commissioning in the second halfof 2009.
SpinifexRidge is located in the East Pilbara District of WesternAustralia,approximately 50km north-east of Marble Bar. The depositcontains aresource of over 1bn tonnes which Moly Mines plans to exploitby aconventional open pit shovel and truck operation, with the oretreated on site for the production of separate moly and copper concentrates.